As filed with the Securities and Exchange Commission on April 4, 2017
Registration No. 333-________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AEP Transmission Company, LLC
(Exact name of registrant issuer as specified in its charter)
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Delaware
(State or other jurisdiction
of incorporation or organization)
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4911
(Primary Standard Industrial
Classification Code Number)
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46-1125168
(I.R.S. Employer
Identification Number)
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1 Riverside Plaza
Columbus, OH 43215-2373
(614) 716-1000
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
Thomas G. Berkemeyer, Associate General Counsel
American Electric Power Service Corporation
1 Riverside Plaza
Columbus, Ohio 43215-2373
(614) 716-1648
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Approximate date of commencement of proposed exchange offers: As soon as practicable after this Registration Statement is declared effective.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.
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If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
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If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act’. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
x
(Do not check if a smaller reporting company)
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Smaller reporting company
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If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)
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Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities
to be Registered
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Amount to be
Registered
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Proposed Maximum
Offering Price per
Note
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Proposed Maximum
Aggregate Offering
Price(1)
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Amount of
Registration Fee
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3.10% Senior Notes, Series F due 2026
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$300,000,000
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100%
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$300,000,000
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$34,770
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4.00% Senior Notes, Series G due 2046
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$400,000,000
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100%
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$400,000,000
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$46,360
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(1)
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Estimated solely for the purpose of calculating the registration fee under Rule 457(f) of the Securities Act of 1933, as amended.
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The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not complete the exchange offers or sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED _____________________, 2017
PRELIMINARY PROSPECTUS
AEP Transmission Company, LLC
Offers to Exchange
$300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F due 2026 and
$400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G due 2046,
each of which have been registered under the Securities Act of 1933, as amended,
for any and all of its outstanding
3.10% Senior Notes, Series D due 2026 and
4.00% Senior Notes, Series E due 2046, respectively
We are conducting the Offers to Exchange described above, or Exchange Offers, in order to provide you with an opportunity to exchange your unregistered outstanding notes referred to above, or Outstanding Notes, for substantially identical notes of the same series that have been registered under the Securities Act, which we refer to as Exchange Notes.
The Exchange Offers
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We will exchange all Outstanding Notes that are validly tendered and not validly withdrawn for an equal principal amount of Exchange Notes that are registered under the Securities Act.
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You may withdraw tenders of Outstanding Notes at any time prior to the expiration of the Exchange Offers.
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The Exchange Offers expire at 5:00 p.m., New York City time, on __________, 2017, unless extended. We do not currently intend to extend the Expiration Date.
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The exchange of Outstanding Notes for Exchange Notes in the Exchange Offers will not be a taxable event to holders for United States federal income tax purposes.
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The terms of the Exchange Notes to be issued in the Exchange Offers are substantially identical to the Outstanding Notes of the respective series, except that the Exchange Notes will be registered under the Securities Act, and do not have any transfer restrictions, registration rights or additional interest provisions.
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Results of the Exchange Offers
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Except as prohibited by applicable law, the Exchange Notes may be sold in the over-the-counter market, in negotiated transactions or through a combination of such methods. There is no existing market for the Exchange Notes to be issued, and we do not plan to list the Exchange Notes on a national securities exchange or market.
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We will not receive any proceeds from the Exchange Offers.
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All untendered Outstanding Notes will remain outstanding and continue to be subject to the restrictions on transfer set forth in the Outstanding Notes and in the indenture governing the Outstanding Notes. In general, the Outstanding Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the Exchange Offers, we do not currently anticipate that we will register the Outstanding Notes under the Securities Act.
Each broker-dealer that receives Exchange Notes for its own account in the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of those Exchange Notes. The letter of transmittal states that by so acknowledging and delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.
This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes where the broker-dealer acquired such Outstanding Notes as a result of market-making or other trading activities. We have agreed that, for a period of 180 days after the Expiration Date, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”
See “Risk Factors” beginning on page 11 for a discussion of certain risks that you should consider before participating in the Exchange Offers.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Exchange Notes to be distributed in the Exchange Offers or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is __________, 2017.
In making your investment decision, you should rely only on the information contained in or incorporated by reference into this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer of the Exchange Notes in any jurisdiction where the offer thereof is not permitted. The information contained in this prospectus speaks only as of the date of this prospectus.
This prospectus incorporates by reference important business and financial information about us from documents filed with the SEC that have not been included herein or delivered herewith. Information incorporated by reference is available without charge at the website that the SEC maintains at http://www.sec.gov, as well as from other sources. See “Available Information and Incorporation by Reference.” In addition, you may request a copy of such document, at no cost, by writing or calling us at the following address or telephone number: Investor Relations, American Electric Power Service Corporation, 1 Riverside Plaza, Columbus, OH 43215; 614-716-1000. In order to receive timely delivery of those materials, you must make your requests no later than five business days before expiration of the applicable exchange offer, or __________, 2017, the present expiration date of the exchange offers.
References to “
AEPTCo
,” “Company,” “we,” “us” and “our” in this prospectus are references to
AEP Transmission Company, LLC
specifically or, if the context requires, to
AEP Transmission Company, LLC
and its subsidiaries, collectively.
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TABLE OF CONTENTS
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Summary
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Risk Factors
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Forward-Looking Statements
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Use of Proceeds
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Capitalization
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Selected Financial Data
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Quantitative and Qualitative Disclosures about Market Risk
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Business
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Management
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Compensation Discussion and Analysis
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Transactions with Related Persons
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The Exchange Offers
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Description of the Exchange Notes
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Material United States Federal Income Tax Consequences Of The Exchange Offers
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Plan of Distribution
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Legal Matters
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Experts
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Available Information
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Index to 2016 Annual Report
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SUMMARY
This summary highlights certain information concerning the Company and this offering that may be contained elsewhere in this prospectus. This summary is not complete and does not contain all the information that may be important to you. You should read this prospectus in its entirety before making an investment decision.
AEP Transmission Company, LLC
Overview
AEP Transmission Company, LLC (“AEPTCo” or the “Company”), a Delaware limited liability company organized in 2006, is the holding company of seven regulated transmission-only electric utilities. AEPTCo is an indirect wholly-owned subsidiary of American Electric Power Company, Inc. (“AEP”).
Our business consists of developing and building new transmission facilities at the request of the regional transmission organizations in which we operate and in replacing and upgrading facilities, assets and components of the existing AEP transmission system as needed to maintain reliability standards and provide service to AEP’s wholesale and retail customers.
Our principal executive offices are located at 1 Riverside Plaza, Columbus, Ohio 43215 (Telephone number (614) 716-1000).
Organizational Structure
State Transcos
AEPTCo’s seven wholly-owned public utility companies are (collectively referred to herein as the “State Transcos”):
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AEP Appalachian Transmission Company, Inc. (“APTCo”),
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AEP Indiana Michigan Transmission Company, Inc. (“IMTCo”),
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AEP Kentucky Transmission Company, Inc. (“KTCo”),
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AEP Ohio Transmission Company, Inc. (“OHTCo”),
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AEP West Virginia Transmission Company, Inc. (“WVTCo”),
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AEP Oklahoma Transmission Company, Inc. (“OKTCo”) and
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AEP Southwestern Transmission Company, Inc. (“SWTCo”).
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The State Transcos are independent of but overlay AEP’s existing electric utility operating companies: Appalachian Power Company, Indiana Michigan Power Company, Kentucky Power Company, Kingsport Power Company, Ohio Power Company, Public Service Company of Oklahoma, Southwestern Electric Power Company and Wheeling Power Company (collectively, the “AEP Operating Companies”). The State Transcos develop, own, operate, and maintain their respective transmission assets. Assets of the State Transcos interconnect to transmission facilities owned by the AEP Operating Companies and unaffiliated transmission owners within the footprints of PJM and SPP. PJM and SPP are regional transmission organizations (“RTOs”) mandated by the Federal Energy Regulatory Commission (“FERC”) to ensure reliable supplies of power, adequate transmission infrastructure and competitive wholesale prices of electricity. PJM is a regional transmission organization serving approximately 61 million people throughout 13 states and the District of Columbia. APTCo, IMTCo, KTCo, OHTCo and WVTCo are located within PJM. SPP is a regional transmission organization serving over 18 million people in fourteen states. OKTCo and SWTCo are located within SPP.
IMTCo, KTCo, OHTCo, OKTCo and WVTCo have received all necessary approvals for formation and currently own and operate transmission assets in their respective jurisdictions. In December 2016, the Virginia State Corporation Commission and West Virginia Public Service Commission granted consent for Appalachian Power Company and APTCo to enter into a joint license agreement that will support APTCo investment in the state of Tennessee. An application for regulatory approval for SWTCo is under consideration in Louisiana.
Regulation
The State Transcos are regulated for rate-making purposes exclusively by FERC and earn revenues through tariff rates charged for the use of their electric transmission systems. The State Transcos establish transmission rates each year through formula rate filings with FERC. The rate filings calculate the revenue requirement needed to cover the costs of operation and debt service and to earn an allowed return on equity. These rates are then included in the Open Access Transmission Tariffs (“OATT”) for SPP and PJM. SPP and PJM collect the revenue requirement from transmission customers under their respective OATTs. The transmission customers under the OATTs include the AEP Operating Companies, other investor-owned utilities, electric cooperatives, municipal entities and power marketers.
The public service commissions in the states where our State Transcos’ assets are located do not have jurisdiction over the State Transcos’ rates or terms and conditions of service. However, certain transmission facilities are subject to certification and/or siting and financing requirements specific to each state. While these proceedings require a statement and justification of need, they also determine line routes and substation locations with the least impact to the environment and general public. The state public service commission or a designated entity will review the State Transco’s application to certify the project.
Operations
As transmission-only companies, our State Transcos function as conduits, allowing for power from generators to be transmitted to local distribution systems. The transmission of electricity by our State Transcos is a central function to the provision of electricity to residential, commercial and industrial end-use consumers. American Electric Power Service Corporation (“AEPSC”) has executed a services agreement pursuant to which AEPSC has agreed to provide services to each of the State Transcos. AEPSC is an AEP service subsidiary that provides management and professional services to AEP and its subsidiaries. AEPSC provides four categories of service to the State Transcos: project evaluation and permitting services, project development services, operation and management services and business services, including billing, insurance, human resources and IT services. All of these services are provided at cost. Additionally, each State Transco has executed a services agreement with the respective incumbent AEP Operating Company in its state or footprint.
Existing and Forecasted Projects
The State Transcos are geographically diverse and have assets in service or under construction across two RTOs and in six states, with additional states planned or pending approval.
As of December 31, 2016, the State Transcos had $4.1 billion of transmission assets in-service with plans to construct approximately $4.4 billion of additional transmission assets through 2019. We anticipate the need for extensive additional investment in transmission infrastructure within PJM and SPP to maintain the required level of grid reliability, resiliency, security and efficiency and to address an aging transmission infrastructure. We also foresee the need to construct additional transmission facilities based on changes in generating resources, such as wind or solar projects, generation additions or retirements, and additional new customer interconnections. We will continue our investment to enhance physical and cyber security of our assets, and are also investing in improving the telecommunication network that supports the operation and control of the grid. Finally, our fundamental obligation to meet state, federal, regulatory and industry standards will continue to drive investment in this category of projects.
A key part of our business is replacing and upgrading transmission facilities, assets and components of the existing AEP System as needed to maintain reliability. Roughly 7,000 miles of AEP's transmission lines were built more than seventy years ago and have surpassed their useful life expectancy. Significant quantities of major transmission equipment, such as transformers and circuit breakers, on AEP’s grid have also surpassed their life expectancy. The State Transcos provide the capability to upgrade existing facilities due to their condition as a result of their age.
Business Strategy
AEPTCo’s business strategy is to own, operate, maintain and invest in transmission infrastructure in order to maintain and enhance system integrity and grid reliability, grid security, safety, reduce transmission constraints and facilitate interconnections of new generating resources and new wholesale customers, as well as enhance competitive wholesale electricity markets. We intend to implement this strategy through the following types of projects:
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Regional Projects: Projects assigned to the AEP System as a result of the regional planning initiatives conducted by PJM or SPP. The RTOs identify the need for transmission in support of regional reliability, transmission service, congestion mitigation, public policy, to support the integration of new generation resources and to support the retirement of generation resources. Regional Projects must be awarded by PJM or SPP in a process approved by FERC under Order 1000, and generally contemplates more than one bidder for any particular Regional Project.
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Local Projects: Improvements to local area reliability by upgrading, rebuilding or replacing existing, aging infrastructure at the AEP Operating Companies. AEP evaluates several criteria to determine the need for Local Projects. These criteria include age, recorded performance issues, condition assessment, anticipated maintenance requirements and criticality to the grid. Projects are assigned to the State Transcos based upon a defined set of criteria. Local projects also include new interconnections discussed below.
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New Interconnections: Construction of new facilities to support customer points of delivery.
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Transmission investment across AEP is primarily driven by the need to revitalize aging infrastructure, our desire to enhance reliability at a local level to improve the customer experience, compliance with regulatory, industry, and governmental standards, requirements to improve telecommunication capability to keep up with changing technologies, and the obligation to address grid limitations identified by the RTOs. The State Transcos are not limited to investing in projects addressing particular transmission drivers. AEP has developed project selection guidelines that help determine which transmission assets can be built, owned and operated by the State Transcos. In essence, the need on the transmission grid determines the transmission project, and the project selection guidelines help determine which components of the transmission project will be placed in the State Transcos.
Generally, greenfield transmission, partial or complete refurbishment of extra high voltage transmission, and complete refurbishment of lower voltage transmission assets qualify for transmission investment in the State Transcos. AEPTCo expects the majority of its transmission investment to go towards improving aging infrastructure, local reliability and upgrades to telecommunication and operational stacks.
The Exchange Offers
In November 2016, we issued the Outstanding Notes in transactions not subject to the registration requirements of the Securities Act of 1933, as amended, or “Securities Act". The term “2026 Exchange Notes” refers to the 3.10% Senior Notes, Series F due 2026 and the term “2046 Exchange Notes” refers to the 4.00% Senior Notes, Series G due 2046, each as registered under the Securities Act, and all of which collectively are referred to as the “Exchange Notes.” The term “Notes” collectively refers to the Outstanding Notes and the Exchange Notes.
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General
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In connection with the issuance of the Outstanding Notes, we entered into a registration rights agreement with representatives of the initial purchasers of the Outstanding Notes pursuant to which we agreed, among other things, to deliver this prospectus to you and to use commercially reasonable efforts to complete the Exchange Offers within 315 days after the date of original issuance of the Outstanding Notes. You are entitled to exchange in the Exchange Offers your Outstanding Notes for the respective series of Exchange Notes that are identical in all material respects to the Outstanding Notes except:
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the Exchange Notes have been registered under the Securities Act and, therefore, will not be subject to the restrictions on transfer applicable to the Outstanding Notes (except as described in “The Exchange Offers-Resale of Exchange Notes” and “Description of the Exchange Notes-Form; Transfers; Exchanges”);
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the Exchange Notes are not entitled to any registration rights which are applicable to the Outstanding Notes under the registration rights agreement, including any rights to additional interest for failure to comply with the registration rights agreement; and
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the Exchange Notes will bear different CUSIP numbers.
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The Exchange Offers
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We are offering to exchange:
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$300,000,000 aggregate principal amount of 3.10% Senior Notes, Series F due 2026 that have been registered under the Securities Act for any and all of our existing 3.10% Senior Notes, Series D due 2026 and
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$400,000,000 aggregate principal amount of 4.00% Senior Notes, Series G due 2046 that have been registered under the Securities Act for any and all of our existing 4.00% Senior Notes, Series E due 2046.
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You may only exchange Outstanding Notes in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. Any untendered Outstanding Notes must also be in a minimum denomination of $2,000.
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Resale
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Based on an interpretation by the staff of the Securities and Exchange Commission, or SEC, set forth in no-action letters issued to third parties, we believe that the Exchange Notes issued pursuant to the Exchange Offers in exchange for the Outstanding Notes may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that:
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you are acquiring the Exchange Notes in the ordinary course of your business; and
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you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the Exchange Notes.
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Any holder of Outstanding Notes who:
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is our affiliate;
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does not acquire Exchange Notes in the ordinary course of its business; or
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tenders its Outstanding Notes in the Exchange Offers with the intention to participate, or for the purpose of participating, in a distribution of Exchange Notes
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cannot rely on the position of the staff of the SEC enunciated in the staff’s no-action letters to
Morgan Stanley & Co. Incorporated
(available June 5, 1991) and
Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in
Shearman & Sterling
(available July 2, 1993), or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Notes.
If you are a broker-dealer and receive Exchange Notes for your own account in exchange for Outstanding Notes that you acquired as a result of market-making activities or other trading activities, you must acknowledge that you will deliver this prospectus in connection with any resale of the Exchange Notes and that you are not our affiliate and did not purchase your Outstanding Notes from us or any of our affiliates. See “Plan of Distribution.”
Our belief that the Exchange Notes may be offered for resale without compliance with the registration or prospectus delivery provisions of the Securities Act is based on interpretations of the SEC for other exchange offers that the SEC expressed in some of its no-action letters to other issuers in exchange offers like ours. We have not sought a no-action letter in connection with the Exchange Offers, and we cannot guarantee that the SEC would make a similar decision about our Exchange Offers. If our belief is wrong, or if you cannot truthfully make the representations mentioned above, and you transfer any Exchange Note issued to you in the Exchange Offers without meeting the registration and prospectus delivery requirements of the Securities Act, or without an exemption from such requirements, you could incur liability under the Securities Act. We are not indemnifying you for any such liability.
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Expiration Date
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The Exchange Offers will expire at 5:00 p.m., New York City time, on __________, 2017, unless extended by us. We do not currently intend to extend the Expiration Date.
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Withdrawal
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You may withdraw the tender of your Outstanding Notes at any time prior to the expiration of the Exchange Offers. We will return to you any of your Outstanding Notes that are not accepted for any reason for exchange, without expense to you, promptly after the expiration or termination of the Exchange Offers.
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Conditions to the Exchange Offers
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Each Exchange Offer is subject to customary conditions. We reserve the right to waive any defects, irregularities or conditions to exchange as to particular Outstanding Notes. See “The Exchange Offers-Conditions to the Exchange Offers.”
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Procedures for Tendering Outstanding Notes
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If you wish to participate in any of the Exchange Offers, you must either:
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complete, sign and date the applicable accompanying letter of transmittal, or a facsimile of the letter of transmittal, in accordance with the instructions contained in this prospectus and the letter of transmittal, and mail or deliver such letter of transmittal or facsimile thereof, together with the Outstanding Notes to be exchanged for Exchange Notes, and any other required documents, to the Exchange Agent at the address set forth on the cover page of the letter of transmittal; or
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if you hold Outstanding Notes through The Depository Trust Company, or “DTC”, comply with DTC’s Automated Tender Offer Program procedures described in this prospectus, by which you will agree to be bound by the letter of transmittal.
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By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things:
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any Exchange Notes received by you will be acquired in the ordinary course of your business;
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you have no arrangements or understanding with any person to participate in the distribution of the Exchange Notes within the meaning of the Securities Act;
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you are not engaged in, and do not intend to engage in, the distribution of the Exchange Notes;
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you are not an “affiliate,” as defined in Rule 405 of the Securities Act, of the Company or, if you are an affiliate, you will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; and
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if you are a broker-dealer, you will receive Exchange Notes for your own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, and you will deliver a prospectus in connection with any resale of such Exchange Notes.
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Special Procedures for Beneficial Owners
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If you are a beneficial owner of Outstanding Notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those Outstanding Notes in any of the Exchange Offers, you should contact the registered holder promptly and instruct the registered holder to tender those Outstanding Notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your Outstanding Notes, either make appropriate arrangements to register ownership of the Outstanding Notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date.
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Guaranteed Delivery Procedures
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If you wish to tender your Outstanding Notes and your Outstanding Notes are not immediately available, or you cannot deliver your Outstanding Notes, the letter of transmittal or any other required documents, or you cannot comply with the procedures under DTC’s Automated Tender Offer Program for transfer of book-entry interests prior to the Expiration Date, you must tender your Outstanding Notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offers-Guaranteed Delivery Procedures.”
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Effect on Holders of Outstanding Notes
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As a result of the making of, and upon acceptance for exchange of all validly tendered Outstanding Notes pursuant to the terms of, the Exchange Offers, we will have fulfilled a covenant under the registration rights agreement. Accordingly, we will not be required to pay additional interest on the Outstanding Notes under the circumstances described in the registration rights agreement. If you do not tender your Outstanding Notes in any of the Exchange Offers, you will continue to be entitled to all the rights and subject to all the limitations applicable to the Outstanding Notes as set forth in the Indenture (as defined below), except we will not have any further obligation to you to provide for the exchange and registration of untendered Outstanding Notes under the registration rights agreement. To the extent that Outstanding Notes are tendered and accepted in the Exchange Offers, the trading market for Outstanding Notes that are not so tendered and accepted could be adversely affected.
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Consequences of Failure to Exchange
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All untendered Outstanding Notes will remain outstanding and continue to be subject to the restrictions on transfer set forth in the Outstanding Notes and in the Indenture. In general, the Outstanding Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the Exchange Offers, we do not currently anticipate that we will register the Outstanding Notes under the Securities Act.
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United States Federal Income Tax Consequences
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The exchange of Outstanding Notes in the Exchange Offers will not be a taxable event to holders for United States federal income tax purposes. See “Material United States Federal Income Tax Consequences Of The Exchange Offers.”
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Use of Proceeds
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We will not receive any proceeds from the issuance of the Exchange Notes in the Exchange Offers. See “Use of Proceeds.”
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Exchange Agent
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The Bank of New York Mellon Trust Company, N.A. is the Exchange Agent for the Exchange Offers. Any questions and requests for assistance with respect to accepting or withdrawing from the Exchange Offers, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery should be directed to the Exchange Agent. The address and telephone number of the Exchange Agent are set forth in the section captioned “The Exchange Offers-Exchange Agent.”
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The Exchange Notes
The summary below describes the principal terms of the Exchange Notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The “Description of the Exchange Notes” section of this prospectus contains more detailed descriptions of the terms and conditions of the Outstanding Notes and Exchange Notes. The Exchange Notes will have terms identical in all material respects to the respective series of Outstanding Notes, except that the Exchange Notes will not contain certain terms with respect to transfer restrictions, registration rights and additional interest for failure to observe certain obligations in the registration rights agreement.
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Issuer
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AEP Transmission Company, LLC.
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The Exchange Notes
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$300,000,000 principal amount of 3.10% Senior Notes, Series F due 2026 and $400,000,000 principal amount of 4.00% Senior Notes, Series G due 2046.
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Maturity
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December 1, 2026 for 2026 Exchange Notes and December 1, 2046 for 2046 Exchange Notes.
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Interest Rate
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3.10% per annum for 2026 Exchange Notes and 4.00% per annum for 2046 Exchange Notes.
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Interest Payment Dates
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June 1 and December 1 of each year, beginning on ________ 1, 2017.
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Ranking
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The Exchange Notes are our senior unsecured obligations and will rank equally in right of payment with all our other senior unsecured obligations and will be effectively subordinated to all of our secured debt, of which we have none outstanding as of April 4, 2017.
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Optional Redemption
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At any time prior to September 1, 2026, we may redeem the 2026 Exchange Notes at any time, in whole or in part, at a “make whole” redemption price equal to the greater of (1) the principal amount being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the 2026 Exchange Notes being redeemed that would be due if such 2026 Exchange Notes matured on September 1, 2026, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined herein), plus 15 basis points, plus in each case accrued and unpaid interest to the redemption date.
At any time prior to June 1, 2046, we may redeem the 2046 Exchange Notes at any time, in whole or in part, at a “make whole” redemption price equal to the greater of (1) the principal amount being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the 2046 Exchange Notes being redeemed that would be due if such 2046 Exchange Notes matured on June 1, 2046, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined herein), plus 20 basis points, plus in each case accrued and unpaid interest to the redemption date.
At any time on or after September 1, 2026, we may redeem the 2026 Exchange Notes in whole or in part at 100% of the principal amount of the 2026 Exchange Notes being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after June 1, 2046, we may redeem the 2046 Exchange Notes in whole or in part at 100% of the principal amount of the 2046 Exchange Notes being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption.
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Certain Covenants
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The Indenture (as defined herein) limits our ability to incur Liens (as defined herein), does not permit Consolidated Priority Debt (as defined herein) to exceed 10% of Consolidated Tangible Net Assets (as defined herein) and limits our ability to merge, consolidate or sell all or substantially all of our assets as an entirety.
These limitations are subject to a number of important qualifications and exceptions. For more information, see “Description of the Exchange Notes-Certain Covenants.”
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Absence of Established Market for the Exchange Notes
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We do not plan to have the Exchange Notes listed on any securities exchange or included in any automated quotation system. There is no existing trading market for the Exchange Notes, and there can be no assurance regarding any future development of a trading market for the Exchange Notes, the price at which holders of the Exchange Notes may be able to sell their Exchange Notes or the ability of such holders to sell their Exchange Notes at all.
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Form of Notes
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The Exchange Notes will be issued in fully registered book-entry form and each series of Exchange Notes will be represented by one or more global certificates, which will be deposited with or on behalf of DTC and registered in the name of DTC’s nominee. Beneficial interests in global certificates will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its direct and indirect participants, and your interest in any global certificate may not be exchanged for certificated Notes, except in limited circumstances described herein. See “Description of the Exchange Notes-Book-Entry Only Issuance-The Depository Trust Company.”
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Trustee
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The Bank of New York Mellon Trust Company, N.A.
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Governing Law
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The Indenture is, and the Exchange Notes will be, governed by, and construed in accordance with, the laws of the State of New York.
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RISK FACTORS
An investment in the Notes, including a decision to tender your Outstanding Notes in the Exchange Offers, involves a number of risks. Risks described below should be carefully considered together with the other information included in this prospectus. Any of the events or circumstances described as risks below could result in a significant or material adverse effect on our business, results of operations, cash flows or financial condition, and a corresponding decline in the market price of or our ability to repay, the Notes. The risks and uncertainties described below may not be the only risks and uncertainties that we face. Additional risks and uncertainties not currently known may also result in a significant or material adverse effect on our business, results of operations, cash flow or financial condition.
Risks Related to Our Business
Certain elements of our State Transcos’ formula rates can be and have been challenged, which could result in lowered rates and/or refunds of amounts previously collected and thus have an adverse effect on our business, financial condition, results of operations and cash flows.
Our State Transcos provide transmission service under rates regulated by the FERC. The FERC has approved the cost-based formula rate templates used by our State Transcos to calculate their respective annual revenue requirements, but it has not expressly approved the amount of actual capital and operating expenditures to be used in the formula rates. All aspects of our State Transcos’ rates accepted or approved by the FERC, including the formula rate templates, the rates of return on the actual equity portion of their respective capital structures and the approved targeted capital structures, are subject to challenge by interested parties at the FERC, or by the FERC on its own initiative. In addition, interested parties may challenge the annual implementation and calculation by our State Transcos of their projected rates and formula rate true up pursuant to their approved formula rate templates under the State Transcos’ formula rate implementation protocols. If a challenger can establish that any of these aspects are unjust, unreasonable, unduly discriminatory or preferential, then the FERC will make appropriate prospective adjustments to them and/or disallow any of our State Transcos’ inclusion of those aspects in the rate setting formula.
In October 2016, several parties filed a joint complaint with the FERC that states the base return on common equity used by various AEP affiliates, including the State Transcos that operate in PJM, in calculating formula transmission rates under the PJM Open Access Transmission Tariff (OATT) is excessive and should be reduced from 10.99% to 8.32%, effective upon the date of the complaint. Management believes its financial statements adequately address the impact of the complaint. If the FERC orders revenue reductions as a result of the complaint, including refunds from the date of the complaint filing, it could reduce future net income and cash flows and impact financial condition.
End-use consumers and entities supplying electricity to end-use consumers may also attempt to influence government and/or regulators to change the rate setting methodologies that apply to our State Transcos, particularly if rates for delivered electricity increase substantially.
Our actual capital investment may be lower than planned, which would cause a lower than anticipated rate base and would therefore result in lower revenues and earnings compared to our current expectations.
Each of our State Transcos’ rate base, revenues and earnings are determined in part by additions to property, plant and equipment and when those additions are placed in service. We anticipate making significant capital investments over the next several years; however, the amounts could change significantly due to factors beyond our control. If our State Transcos’ capital investment and the resulting in-service property, plant and equipment are lower than anticipated for any reason, our State Transcos will have a lower than anticipated rate base, thus causing their revenue requirements and future earnings to be lower than anticipated.
Changes in energy laws, regulations or policies could impact our business, financial condition, results of operations and cash flows.
Each of our State Transcos is regulated by the FERC as a “public utility” under federal law and is a transmission owner in PJM or SPP. We cannot predict whether the approved rate methodologies for any of our State Transcos will be changed. In addition, the U.S. Congress periodically considers enacting energy legislation that could assign new responsibilities to the FERC, modify existing law or provide the FERC or another entity with increased authority to regulate transmission matters. We cannot predict whether, and to what extent, our State Transcos may be affected by any such changes in federal energy laws, regulations or policies in the future. While our State Transcos are subject to FERC’s exclusive jurisdiction for purposes of rate regulation, changes in state laws affecting other matters, such as transmission siting and construction, could limit investment opportunities available to us.
We depend on the AEP Operating Companies for a substantial portion of our revenues.
Our principal transmission service customers in PJM are AEP Operating Companies. In SPP, our principal transmission service customers are also affiliated AEP Operating Companies. We expect that AEP Operating Companies will continue to be our principal transmission service customers for the foreseeable future. For the year ended December 31, 2016, the AEP Operating Companies were responsible for approximately 77% of our consolidated transmission revenues.
Most of the real property rights on which our assets are situated result from affiliate license agreements and are dependent on the terms of the underlying easements and other rights of our affiliates.
We do not hold title to the majority of real property on which our electric transmission assets are located. Instead, under the provisions of certain affiliate contracts, we are permitted to occupy and maintain our facilities upon real property held by the respective AEP Operating Companies that overlay our operations. Our ability to continue to occupy such real property is dependent upon the terms of such affiliate contracts and upon the underlying real property rights of the AEP Operating Companies, which may be encumbered by easements, mineral rights and other similar encumbrances that may affect the use of such real property. We can give no assurance that (i) we will continue to be affiliates of the AEP Operating Companies, (ii) suitable replacement arrangements can be obtained in the event that the AEP Operating Companies are not our affiliates, and (iii) the underlying easements and other rights are sufficient to permit us to operate our assets in a manner free from interruption.
We contract with third parties and affiliates to provide services for certain aspects of our business. If any of these agreements are terminated, we may face a shortage of labor or replacement contractors to provide the services formerly provided by these third parties.
We enter into various agreements and arrangements with third parties and affiliates to provide services for construction, maintenance and operations of certain aspects of our business, which, if terminated, could result in a shortage of a readily available workforce to provide these services. If any of these agreements or arrangements is terminated for any reason, we may face difficulty finding a qualified replacement work force to provide such services, which could have an adverse effect on our ability to carry on our business and on our results of operations.
Hazards associated with high-voltage electricity transmission may result in suspension of our operations or the imposition of civil or criminal penalties.
Our operations are subject to the usual hazards associated with high-voltage electricity transmission, including explosions, fires, inclement weather, natural disasters, mechanical failure, unscheduled downtime, equipment interruptions, remediation, chemical spills, discharges or releases of toxic or hazardous substances or gases and other environmental risks. The hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties. AEPTCo maintains property and casualty insurance, but we are not fully insured against all potential hazards incident to our business, such as damage to poles, towers and lines or losses caused by outages.
We are subject to environmental regulations and to laws that can give rise to substantial liabilities.
We are subject to federal, state and local environmental laws and regulations, which impose requirements to minimize environmental and other impacts from our construction activities, limitations on the discharge of pollutants into the environment, establish standards for the management, treatment, storage, transportation and disposal of solid and hazardous wastes and hazardous materials, and impose obligations to investigate and remediate contamination in certain circumstances. Liabilities relating to investigation and remediation of contamination, as well as other liabilities concerning hazardous materials or contamination such as claims for personal injury or property damage, may arise at many locations, including formerly owned or operated properties and sites where wastes were treated or disposed of in accordance with historic standards, as well as properties we currently own or operate. Such liabilities may also be joint and several, meaning that a party can be held responsible for more than its share of the liability involved, or even the entire share.
Failure to comply with environmental laws and regulations applicable to us could result in civil or criminal penalties and remediation costs. Our assets and operations also involve the use of materials classified as hazardous, toxic or otherwise dangerous. Some of our facilities and properties are located near environmentally sensitive areas such as wetlands and habitats of endangered or threatened species. Compliance with these laws and regulations, and liabilities concerning contamination or hazardous materials, may adversely affect our costs and, therefore, our business, financial condition and results of operations.
We are subject to various regulatory requirements, including reliability standards; contract filing requirements; reporting, recordkeeping and accounting requirements; and transaction approval requirements.
Under federal law, owners and operators of the bulk power transmission system are subject to mandatory reliability standards, including both operational and cybersecurity standards, promulgated by the North American Electric Reliability Corporation (“NERC”) and enforced by the FERC. The standards are based on the functions that need to be performed to ensure the bulk power system operates reliably and are guided by reliability and market interface principles. Compliance with new reliability standards may subject us to higher operating costs and/or increased capital expenditures. If we were found not to be in compliance with the mandatory reliability standards, we could be subject to sanctions, including substantial monetary penalties, which likely would not be recoverable.
Our subsidiaries must comply with FERC requirements for approval of certain transactions; reporting, recordkeeping and accounting requirements; and for filing contracts related to the provision of jurisdictional services. Under FERC policy, failure to file jurisdictional agreements on a timely basis may result in foregoing the time value of revenues collected under the agreement, but not to the point where a loss would be incurred. The failure to obtain timely approval of transactions or to comply with applicable reporting, recordkeeping or accounting requirements could subject us to penalties that could have a material adverse effect on our financial condition, results of operations and cash flows.
Acts of war, terrorist attacks, cyberattacks, natural disasters, severe weather and other catastrophic events may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Acts of war, terrorist attacks, cyberattacks, natural disasters, severe weather and other catastrophic events may negatively affect our business, financial condition and cash flows in unpredictable ways, such as increased security measures and disruptions of markets. Energy related assets, including, for example, our transmission facilities and the generation and distribution facilities that we interconnect with, may be at risk of acts of war, terrorist attacks and cyberattacks, as well as natural disasters, severe weather and other catastrophic events. In addition to any physical damage caused by such events, cyberattacks targeting our information systems could impair our records, networks, systems and programs, or transmit viruses to other systems. Such events or the threat of such events may increase costs associated with heightened security requirements. In addition, such events or threats may have a material effect on the economy in general and could result in a decline in energy consumption, which may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Risks Relating to Our Corporate and Financial Structure
We are a holding company with no operations, and unless we receive dividends or other payments from our subsidiaries, we may be unable to fulfill our other cash obligations.
As a holding company with no business operations, our material assets consist primarily of the stock interests in the State Transcos. Our only sources of cash to pay interest on our indebtedness are dividends and other payments received by us from time to time from the State Transcos, capital contributions from AEP, proceeds raised from the sale of our debt and borrowings. Each of the State Transcos, however, is legally distinct from us and has no obligation, contingent or otherwise, to make funds available to us (apart from payment obligations in connection with loans that we have made to the State Transcos). The ability of each of our State Transcos to pay dividends and make other payments to us is subject to, among other things, the availability of funds, after taking into account capital expenditure requirements, the terms of its indebtedness, applicable state laws and regulations of the FERC.
AEPTCo is the sole obligor of the Exchange Notes and the State Transcos will not guarantee AEPTCo’s obligations under the Exchange Notes. Although certain debt covenants limit external debt at the subsidiary level, the Exchange Notes will be structurally subordinated to the debt and other liabilities of the State Transcos and the assets of the State Transcos may not be available to make payments on the Exchange Notes.
None of the State Transcos will guarantee AEPTCo’s obligations under the Exchange Notes. Although certain debt covenants limit external debt at the subsidiary level, the Exchange Notes are structurally subordinated to all of the debt and other liabilities of the State Transcos (other than debt owed to AEPTCo, “Parent Debt”). For a description of such covenants, see “Description of Exchange Notes-Certain Covenants” and Note 10, respectively, to our audited consolidated financial statements, included elsewhere in this prospectus. In the event that any of the State Transcos becomes insolvent, liquidates, reorganizes, dissolves or otherwise winds up, holders of that State Transco’s debt and its trade creditors generally will be entitled to payment on their claims from the assets of that State Transco before any of those assets are made available to AEPTCo. Consequently, the claims of holders of the Exchange Notes will be effectively subordinated to all of the debt and other liabilities of the State Transcos, including trade payables.
As of December 31, 2016, the State Transcos had an aggregate of $4 million in debt outstanding, other than Parent Debt.
Although the Exchange Notes are designated as “senior” your right to receive payment on the Exchange Notes will be unsecured and effectively subordinated to any future secured debt of AEPTCo, to the extent of the value of the collateral therefor.
The Exchange Notes will be general senior unsecured obligations and therefor will be effectively subordinated to AEPTCo’s future secured indebtedness. As of April 4, 2017, AEPTCo had no secured indebtedness outstanding.
Although the Indenture will place some limitations on our ability to create liens securing indebtedness, there are significant exceptions to these limitations that would allow us to secure indebtedness without equally and ratably securing the Exchange Notes. If AEPTCo were to incur secured indebtedness and if AEPTCo defaulted on the Exchange Notes or certain other indebtedness or became bankrupt, liquidated or reorganized, any secured creditor could use the value of the collateral securing that debt to satisfy their secured indebtedness before you would receive any payment on the Exchange Notes, unless the Exchange Notes were similarly secured as described in “Description of Exchange Notes-Certain Covenants-Limitation on Liens” herein. If the value of such collateral is not sufficient to pay any secured indebtedness in full, AEPTCo’s secured creditors would share the value of AEPTCo’s other assets, if any, with you and the holders of other claims against AEPTCo which rank equally with the Exchange Notes.
AEPTCo could enter into various transactions that could increase the amount of its outstanding indebtedness, or adversely affect its capital structure or credit ratings, or otherwise adversely affect the holders of the Exchange Notes.
The terms of the Exchange Notes will not prevent AEPTCo from entering into a variety of acquisition, refinancing, recapitalization or other highly-leveraged transactions. As a result, AEPTCo may enter into a transaction even though the transaction could increase the total amount of its outstanding indebtedness, adversely affect its capital
structure or credit ratings or otherwise adversely affect the holders of the Exchange Notes. As of December 31, 2016, AEPTCo had approximately $1.9 billion of indebtedness outstanding.
Certain provisions in our debt instruments limit our financial and operating flexibility.
Our outstanding debt instruments contain numerous financial and operating covenants that place significant restrictions on, among other things, our ability to:
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incur Consolidated Priority Debt;
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dispose of certain assets;
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enter into certain lines of business;
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engage in transactions with affiliates;
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engage in mergers and consolidations
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Our outstanding debt instruments also require us to meet certain financial ratios, such as maintaining certain debt to capitalization ratios. Our ability to comply with these and other requirements and restrictions may be affected by changes in economic or business conditions, results of operations or other events beyond our control. A failure to comply with the obligations contained in any of our debt instruments could result in acceleration of certain of our outstanding debt and the acceleration of debt under other instruments evidencing indebtedness that may contain cross-acceleration provisions.
Certain covenants with respect to the Exchange Notes and our outstanding indebtedness are described under “Description of Exchange Notes-Certain Covenants” and in Note 10, respectively, to our audited consolidated financial statements, included elsewhere in this prospectus.
Adverse changes in our credit ratings may negatively affect us.
Our ability to access capital markets is important to our ability to operate our business. Increased scrutiny of the energy industry and the impact of regulation, as well as changes in our financial performance and unfavorable conditions in the capital markets could result in credit agencies reexamining our credit ratings. A downgrade in our credit ratings could restrict or discontinue our ability to access capital markets at attractive rates and increase our borrowing costs.
We are subject to control by AEP.
We are an indirect wholly-owned subsidiary of AEP and, therefore, AEP ultimately controls the decision of all matters submitted for shareholder approval. In circumstances involving a conflict of interest between AEP, on the one hand, and our creditors, on the other, AEP could exercise this power to the detriment of our creditors, including holders of the Exchange Notes.
Risks Related to the Exchange Offers
There may be adverse consequences if you do not exchange your Outstanding Notes.
If you do not exchange your Outstanding Notes for Exchange Notes in the Exchange Offers, you will continue to be subject to restrictions on transfer of your Outstanding Notes as set forth in the offering memorandum distributed in connection with the private offering of the Outstanding Notes. In general, the Outstanding Notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the Outstanding Notes under the Securities Act. You should refer to “Prospectus Summary-The Exchange Offers” and “The Exchange Offers” for information about how to tender your Outstanding Notes.
The tender of Outstanding Notes under the Exchange Offers will reduce the outstanding amount of the Outstanding Notes, which may have an adverse effect upon, and increase the volatility of, the market prices of the Outstanding Notes due to a reduction in liquidity.
Your ability to transfer the Exchange Notes may be limited if there is no active trading market, and there is no assurance that any active trading market will develop for the Exchange Notes.
We are offering the Exchange Notes to the holders of the Outstanding Notes. We do not intend to list the Exchange Notes on any securities exchange. There is currently no established market for the Exchange Notes. If no active trading market develops, you may not be able to resell your Exchange Notes at their fair market value or at all. Future trading prices of the Exchange Notes will depend on many factors including, among other things, prevailing interest rates, our operating results and the market for similar securities. No assurance can be given as to the liquidity of or trading market for the Exchange Notes.
Certain persons who participate in the Exchange Offers must deliver a prospectus in connection with resales of the Exchange Notes.
Based on interpretations of the staff of the SEC contained in Exxon Capital Holdings Corp., SEC no-action letter (available May 13, 1988), Morgan Stanley & Co. Inc., SEC no-action letter (available June 5, 1991) and Shearman & Sterling, SEC no-action letter (available July 2, 1993), we believe that you may offer for resale, resell or otherwise transfer the Exchange Notes without compliance with the registration and prospectus delivery requirements of the Securities Act. We cannot guarantee that the SEC would make a similar decision about our Exchange Offers. If our belief is wrong, or if you cannot truthfully make the representations mentioned above, and you transfer any Exchange Note issued to you in the Exchange Offers without meeting the registration and prospectus delivery requirements of the Securities Act, or without an exemption from such requirements, you could incur liability under the Securities Act. Additionally, in some instances described in this prospectus under “Plan of Distribution,” certain holders of Exchange Notes will remain obligated to comply with the registration and prospectus delivery requirements of the Securities Act to transfer the Exchange Notes. If such a holder transfers any Exchange Notes without delivering a prospectus meeting the requirements of the Securities Act or without an applicable exemption from registration under the Securities Act, such a holder may incur liability under the Securities Act. We do not and will not assume, or indemnify such a holder against, this liability.
Risks Related to the Exchange Notes
The following risks apply to the Outstanding Notes and will apply equally to the Exchange Notes.
If the ratings of the Exchange Notes are lowered or withdrawn, the market value of the Exchange Notes could decrease.
A rating is not a recommendation to purchase, hold or sell the Exchange Notes, inasmuch as the rating does not comment as to market price or suitability for a particular investor. The ratings of the Exchange Notes address the rating agencies’ views as to the likelihood of the timely payment of interest and the ultimate repayment of principal of the Exchange Notes pursuant to their respective terms. There is no assurance that a rating will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if in their judgment circumstances in the future so warrant. In the event that any of the ratings initially assigned to the Exchange Notes is subsequently lowered or withdrawn for any reason, the market price of the Exchange Notes may be adversely affected.
FORWARD-LOOKING STATEMENTS
We use forward-looking statements in this prospectus. Statements that are not historical facts are forward-looking statements, and are based on beliefs and assumptions of our management, and on information currently available to management. Forward-looking statements include statements preceded by, followed by or using such words as “believe,” “expect,” “anticipate,” “plan,” “estimate” or similar expressions. Such statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Actual results may materially differ from those implied by forward-looking statements due to known and unknown risks and uncertainties. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:
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The economic climate, growth or contraction within and changes in market demand and demographic patterns in the Company’s service territory.
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Inflationary or deflationary interest rate trends.
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Volatility in the financial markets, particularly developments affecting the availability or cost of capital to finance new capital projects and refinance existing debt.
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The availability and cost of funds to finance working capital and capital needs.
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Weather conditions, including storms and drought conditions.
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The ability to build transmission lines and facilities (including the ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms.
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New legislation, litigation and government regulation;
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A reduction in the federal statutory tax rate could result in an accelerated return of deferred federal income taxes to customers;
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Regulatory decisions, including rate or other recovery of new investments in transmission service.
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The ability to constrain operation and maintenance costs.
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Changes in utility regulation and the allocation of costs within regional transmission organizations, including Pennsylvania-New Jersey-Maryland regional transmission organization (“PJM”) and Southwest Power Pool regional transmission organization (“SPP”).
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Actions of rating agencies, including changes in our ratings.
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Accounting pronouncements periodically issued by accounting standard-setting bodies.
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Other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, cyber security threats and other catastrophic events.
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In light of these risks and uncertainties, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. For additional details regarding these and other risks and uncertainties, see “RISK FACTORS” in this prospectus.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the Exchange Notes pursuant to the Exchange Offers. In consideration for issuing the Exchange Notes as contemplated in this prospectus, we will receive in exchange a like principal amount of Outstanding Notes, the terms of which are identical in all material respects to the Exchange Notes of the related series, except that the Exchange Notes will not contain terms with respect to transfer restrictions, registration rights and additional interest for failure to observe certain obligations in the registration rights agreement. The Outstanding Notes surrendered in exchange for the Exchange Notes will be retired and cancelled, and will not be reissued. Accordingly, the issuance of the Exchange Notes will not result in any increase in our outstanding debt or the receipt of any additional proceeds.
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 2016.
You should read the data set forth below in conjunction with “USE OF PROCEEDS,” “SELECTED FINANCIAL DATA,” “MANAGEMENT’S DISCUSSION AND ANALYSIS,” and our audited consolidated financial statements as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014, and related notes included elsewhere in this prospectus.
The Outstanding Notes that are surrendered in exchange for the Exchange Notes will be retired and cancelled and cannot be reissued. As a result, the issuance of the Exchange Notes will not result in any change in our capitalization.
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As of
December 31
, 2016
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(in millions)
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Long-Term Debt and Advances from Affiliates
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Long-Term Debt
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$
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1,932
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Advances from Affiliates (a)
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4
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Total Long-Term Debt and Advances from Affiliates
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$
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1,936
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Total Equity
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1,958
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Total Capitalization
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$
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3,894
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(a)
Represents Advances from AEP’s Utility Money Pool.
SELECTED FINANCIAL DATA
The selected financial data presented below for the years ended December 31, 2013 and 2012 and as of December 31, 2014, 2013 and 2012 have been derived from AEPTCo’s audited consolidated financial statements and are not included elsewhere in this prospectus. The selected financial data for the years ended December 31, 2016, 2015 and 2014 and as of December 31, 2016 and 2015 have been derived from AEPTCo’s audited consolidated financial statements which are included elsewhere in this prospectus. Historical results are not necessarily indicative of future results.
You should read the data set forth below in conjunction with “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” and AEPTCo’s audited consolidated financial statements and related notes included elsewhere in this prospectus.
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Years Ended December 31,
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2016
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2015
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2014
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2013
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2012
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(in thousands)
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STATEMENTS OF INCOME DATA
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Total Revenues
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$
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478,043
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$
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310,175
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$
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182,249
|
|
|
$
|
77,666
|
|
|
$
|
24,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
280,166
|
|
|
$
|
174,349
|
|
|
$
|
113,770
|
|
|
$
|
41,141
|
|
|
$
|
10,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Tax Expense
|
|
$
|
286,768
|
|
|
$
|
192,987
|
|
|
$
|
137,317
|
|
|
$
|
60,825
|
|
|
$
|
22,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
192,689
|
|
|
$
|
132,944
|
|
|
$
|
101,225
|
|
|
$
|
48,735
|
|
|
$
|
18,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
|
|
(in thousands)
|
|
BALANCE SHEETS DATA
|
|
|
|
|
|
|
|
|
|
|
|
Total Transmission Property
|
|
$
|
5,054,185
|
|
|
$
|
3,749,790
|
|
|
$
|
2,620,442
|
|
|
$
|
1,636,081
|
|
|
$
|
748,172
|
|
|
Accumulated Depreciation and Amortization
|
|
99,566
|
|
|
51,677
|
|
|
24,500
|
|
|
9,551
|
|
|
2,676
|
|
|
Total Transmission Property – Net
|
|
$
|
4,954,619
|
|
|
$
|
3,698,113
|
|
|
$
|
2,595,942
|
|
|
$
|
1,626,530
|
|
|
$
|
745,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets (a)
|
|
$
|
5,349,795
|
|
|
$
|
4,156,444
|
|
|
$
|
2,929,805
|
|
|
$
|
1,748,780
|
|
|
$
|
825,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Member’s Equity
|
|
$
|
1,957,582
|
|
|
$
|
1,552,884
|
|
|
$
|
1,140,940
|
|
|
$
|
692,215
|
|
|
$
|
320,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term Debt (a)
|
|
$
|
1,931,984
|
|
|
$
|
1,544,401
|
|
|
$
|
1,094,907
|
|
|
$
|
616,914
|
|
|
$
|
323,289
|
|
(a) Amounts reflect the adoption of ASU 2015-3 “Simplifying the Presentation of Debt Issuance Costs.”
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis by management focuses on those factors that had a material effect on AEPTCo’s results of operations and financial condition during the periods presented and should be read in connection with AEPTCo’s audited consolidated financial statements and related notes included elsewhere in this prospectus. The discussion contains certain forward-looking statements that involve risk and uncertainties. See “FORWARD LOOKING STATEMENTS” and “RISK FACTORS.”
EXECUTIVE OVERVIEW
Company Overview
AEP Transmission Company, LLC (“AEPTCo” or the “Company”) is a holding company for seven FERC regulated transmission-only electric utilities. AEPTCo is an indirect wholly-owned subsidiary of American Electric Power Company, Inc. (“AEP”).
AEPTCo’s seven wholly-owned public utility companies are (collectively referred to herein as the “State Transcos”):
|
|
|
|
•
|
AEP Appalachian Transmission Company, Inc. (“APTCo”),
|
|
|
|
|
•
|
AEP Indiana Michigan Transmission Company, Inc. (“IMTCo”),
|
|
|
|
|
•
|
AEP Kentucky Transmission Company, Inc. (“KTCo”)
|
|
|
|
|
•
|
AEP Ohio Transmission Company, Inc. (“OHTCo”)
|
|
|
|
|
•
|
AEP West Virginia Transmission Company, Inc. (“WVTCo”)
|
|
|
|
|
•
|
AEP Oklahoma Transmission Company, Inc. (“OKTCo”)
|
|
|
|
|
•
|
AEP Southwestern Transmission Company, Inc. (“SWTCo”).
|
AEPTCo’s business activities are the development, construction and operation of transmission facilities through investments in seven wholly-owned FERC-regulated transmission only electric subsidiaries.
FERC Transmission Complaint
In October 2016, several parties filed a joint complaint with the FERC that states the base return on common equity used by various AEP affiliates, including the State Transcos that operate in PJM, in calculating formula transmission rates under the PJM Open Access Transmission Tariff (OATT) is excessive and should be reduced from 10.99% to 8.32%, effective upon the date of the complaint. Management believes its financial statements adequately address the impact of the complaint. If the FERC orders revenue reductions as a result of the complaint, including refunds from the date of the complaint filing, it could reduce future net income and cash flows and impact financial condition.
RESULTS OF OPERATIONS
The table below summarizes the significant components of AEPTCo’s net income for the years ended December 31, 2016, 2015 and 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Transmission Revenues
|
|
$
|
478,043
|
|
|
$
|
310,175
|
|
|
$
|
182,249
|
|
|
Other Operation and Maintenance
|
|
43,656
|
|
|
27,474
|
|
|
12,971
|
|
|
Depreciation and Amortization
|
|
65,875
|
|
|
42,350
|
|
|
23,698
|
|
|
Taxes Other Than Income Taxes
|
|
88,346
|
|
|
66,002
|
|
|
31,810
|
|
|
Operating Income
|
|
280,166
|
|
|
174,349
|
|
|
113,770
|
|
|
Interest Income - Affiliated
|
|
375
|
|
|
154
|
|
|
59
|
|
|
Allowance for Equity Funds Used During Construction
|
|
52,261
|
|
|
53,080
|
|
|
44,873
|
|
|
Interest Expense
|
|
(46,034
|
)
|
|
(34,596
|
)
|
|
(21,385
|
)
|
|
Income Before Income Tax Expense
|
|
286,768
|
|
|
192,987
|
|
|
137,317
|
|
|
Income Tax Expense
|
|
94,079
|
|
|
60,043
|
|
|
36,092
|
|
|
Net Income
|
|
$
|
192,689
|
|
|
$
|
132,944
|
|
|
$
|
101,225
|
|
Summary of Net Plant In Service and CWIP for AEPTCo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Net Plant In Service
|
|
$
|
3,973,287
|
|
|
$
|
2,763,906
|
|
|
$
|
1,794,988
|
|
|
CWIP
|
|
981,332
|
|
|
934,207
|
|
|
800,954
|
|
2016 Compared to 2015
Reconciliation of Year Ended December 31, 2015 to Year Ended December 31, 2016
Net Income
(in thousands)
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
$
|
132,944
|
|
|
|
|
|
|
Changes in Transmission Revenues:
|
|
|
|
Transmission Revenues
|
|
167,868
|
|
|
Total Change in Transmission Revenues
|
|
167,868
|
|
|
|
|
|
|
Changes in Expenses and Other:
|
|
|
|
Other Operation and Maintenance
|
|
(16,182
|
)
|
|
Depreciation and Amortization
|
|
(23,525
|
)
|
|
Taxes Other Than Income Taxes
|
|
(22,344
|
)
|
|
Interest Income - Affiliated
|
|
221
|
|
|
Allowance for Equity Funds Used During Construction
|
|
(819
|
)
|
|
Interest Expense
|
|
(11,438
|
)
|
|
Total Change in Expenses and Other
|
|
(74,087
|
)
|
|
|
|
|
|
Income Tax Expense
|
|
(34,036
|
)
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
$
|
192,689
|
|
The major components of the increase in transmission revenues, which consists of wholesale sales to affiliates and non-affiliates were as follows:
|
|
|
|
•
|
Transmission Revenues
increased $168 million primarily due to the following:
|
|
|
|
|
•
|
A $140 million increase due to formula rate increases driven by continued investment in transmission assets and the related increases in recoverable operating expenses.
|
|
|
|
|
•
|
A $28 million increase due to annual formula rate true-up adjustments.
|
Expenses and Other and Income Tax Expense changed between years as follows:
|
|
|
|
•
|
Other Operation and Maintenance
expenses increased $16 million primarily due to increased transmission investment.
|
|
|
|
|
•
|
Depreciation and Amortization
expenses increased $24 million primarily due to higher depreciable base.
|
|
|
|
|
•
|
Taxes Other Than Income Taxes
increased $22 million primarily due to increased property taxes as a result of additional transmission investment.
|
|
|
|
|
•
|
Interest Expense
increased $11 million primarily due to higher outstanding long-term debt balances.
|
|
|
|
|
•
|
Income Tax Expense
increased $34 million primarily due to an increase in pretax book income.
|
2015
Compared to
2014
Reconciliation of Year Ended December 31,
2014
to Year Ended December 31,
2015
Net Income
(in thousands)
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014
|
|
$
|
101,225
|
|
|
|
|
|
|
Changes in Transmission Revenues:
|
|
|
|
Transmission Revenues
|
|
127,926
|
|
|
Total Change in Transmission Revenues
|
|
127,926
|
|
|
|
|
|
|
Changes in Expenses and Other:
|
|
|
|
Other Operation and Maintenance
|
|
(14,503
|
)
|
|
Depreciation and Amortization
|
|
(18,652
|
)
|
|
Taxes Other Than Income Taxes
|
|
(34,192
|
)
|
|
Interest Income - Affiliated
|
|
95
|
|
|
Allowance for Equity Funds Used During Construction
|
|
8,207
|
|
|
Interest Expense
|
|
(13,211
|
)
|
|
Total Change in Expenses and Other
|
|
(72,256
|
)
|
|
|
|
|
|
Income Tax Expense
|
|
(23,951
|
)
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
$
|
132,944
|
|
The major components of the increase in transmission revenues, which consists of wholesale sales to affiliates and non-affiliates were as follows:
|
|
|
|
•
|
Transmission Revenues
increased $128 million primarily due to the following:
|
|
|
|
|
•
|
A $116 million increase due to formula rate increases driven by continued investment in transmission assets and the related increases in recoverable operating expenses.
|
|
|
|
|
•
|
A $12 million increase due to annual formula rate true-up adjustments.
|
Expenses and Other and Income Tax Expense changed between years as follows:
|
|
|
|
•
|
Other Operation and Maintenance
expenses increased $15 million primarily due to increased transmission investment.
|
|
|
|
|
•
|
Depreciation and Amortization
expenses increased $19 million primarily due to higher depreciable base.
|
|
|
|
|
•
|
Taxes Other Than Income Taxes
increased $34 million primarily due to increased property taxes as a result of additional transmission investment.
|
|
|
|
|
•
|
Allowance for Equity Funds Used During Construction
increased $8 million primarily due to increased transmission investment.
|
|
|
|
|
•
|
Interest Expense
increased $13 million primarily due to higher outstanding long-term debt balances.
|
|
|
|
|
•
|
Income Tax Expense
increased $24 million primarily due to an increase in pretax book income.
|
FINANCIAL CONDITION
AEPTCo measures financial condition by the strength of its balance sheet and the liquidity provided by its cash flows.
LIQUIDITY AND CAPITAL RESOURCES
Debt and Equity Capitalization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
(dollars in thousands)
|
|
Long-term Debt
|
|
$
|
1,931,984
|
|
|
49.6
|
%
|
|
$
|
1,544,401
|
|
|
49.6
|
%
|
|
Advances from Affiliates
|
|
4,077
|
|
|
0.1
|
%
|
|
16,857
|
|
|
0.5
|
%
|
|
Total Debt
|
|
1,936,061
|
|
|
49.7
|
%
|
|
1,561,258
|
|
|
50.1
|
%
|
|
Member’s Equity
|
|
1,957,582
|
|
|
50.3
|
%
|
|
1,552,884
|
|
|
49.9
|
%
|
|
Total Debt and Equity Capitalization
|
|
$
|
3,893,643
|
|
|
100.0
|
%
|
|
$
|
3,114,142
|
|
|
100.0
|
%
|
AEPTCo’s ratio of debt-to-total capital changed primarily due to an increase in debt related to increased construction expenditures and an increase in member’s equity related to capital contributions from member.
Liquidity
Liquidity, or access to cash, is an important factor in determining AEPTCo’s financial stability. AEPTCo has access to AEP’s liquidity through AEP’s corporate borrowing program. AEP uses its corporate borrowing program to meet the short-term borrowing needs of AEP’s subsidiaries, including AEPTCo Parent and the State Transcos. These short-term borrowings are generally used by AEPTCo to fund working capital needs, property acquisitions and construction until long-term funding is arranged. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries and a Nonutility Money Pool, which funds certain AEP nonutility subsidiaries. APTCo, IMTCo, KTCo, OHTCo, OKTCo and WVTCo have been approved to participate in the Utility Money Pool. In addition, for AEP subsidiaries including AEPTCo Parent and SWTCo, that are not participants in either money pool due to regulatory or operational reasons, the corporate borrowing program funds the short-term debt requirements of those subsidiaries as direct borrowers. The corporate borrowing program is backed by AEP’s commercial paper program and corporate credit facilities. Management believes AEPTCo has adequate liquidity under the AEP’s corporate borrowing program.
Commercial Paper Credit Facilities
AEP manages liquidity by maintaining adequate external financing commitments. As of December 31, 2016, AEP had $3.5 billion in aggregate credit facility commitments to support its operations. AEP’s $3 billion credit facility allows management to issue letters of credit in an amount up to $1.2 billion in support of subsidiary needs, including AEPTCo. AEPTCo does not maintain separate credit facilities. During 2016, the maximum amount of commercial paper AEP had outstanding was $1.5 billion. The weighted-average interest rate for AEP’s commercial paper during 2016 was 0.80%. As of December 31,
2016
, AEP’s available liquidity was approximately $2.7 billion as illustrated in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
Maturity
|
|
|
|
(in millions)
|
|
|
|
Commercial Paper Backup:
|
|
|
|
|
|
Revolving Credit Facility
|
|
$
|
3,000.0
|
|
|
June 2021
|
|
Revolving Credit Facility
|
|
500.0
|
|
|
June 2018
|
|
Total
|
|
3,500.0
|
|
|
|
|
Cash and Cash Equivalents
|
|
210.5
|
|
|
|
|
Total Liquidity Sources
|
|
3,710.5
|
|
|
|
|
Less: AEP Commercial Paper Outstanding
|
|
1,040.0
|
|
|
|
|
|
|
|
|
|
|
Net Available Liquidity
|
|
$
|
2,670.5
|
|
|
|
Additional liquidity is available to AEPTCo from cash from operations, the issuance of long-term debt as well as equity contributions from AEP. Management is committed to maintaining adequate liquidity.
Other Credit Facilities
AEP has an uncommitted facility that gives the issuer of the facility the right to accept or decline each request made under the facility. AEP issues letters of credit under four uncommitted facilities totaling $300 million. As of December 31,
2016
, the maximum future payments for letters of credit issued under the uncommitted facilities was $150 million with maturities ranging from January 2017 to February 2018. As of December 31, 2016 AEPTCo had no letters of credit outstanding under these facilities.
Financing Plan
AEPTCo plans to refinance long-term debt as it becomes due and issue incremental debt, as needed, to support future capital expenditure plans.
Debt Covenants and Borrowing Limitations
AEPTCo’s long-term debt agreements and AEP’s credit agreements contain certain covenants and require AEPTCo and AEP to maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. The method for calculating outstanding debt and capitalization is contractually defined in AEPTCo’s long-term debt agreements and AEP’s credit agreements. Debt as defined in AEP’s credit agreements excludes securitization bonds and debt of AEP Credit. As of December 31, 2016, this contractually-defined percentage for AEP and AEPTCo was 53.6% and 49.8%, respectively. AEPTCo also has a priority debt limitation on external debt under its long-term debt agreements that limits such debt incurred by AEPTCo’s State Transco subsidiaries to 10% of AEPTCo’s tangible net assets. The method for calculating the priority debt limitation is contractually defined in AEPTCo’s long-term debt obligations. Nonperformance under these covenants could result in an event of default under these credit agreements. In addition, subject to certain exceptions, AEPTCo Parent has covenanted that it will not incur debt secured by a lien unless its other indebtedness is similarly secured. As of December 31, 2016, AEP and AEPTCo were in compliance with all of the covenants contained in their long-term debt and credit agreements. In addition, the acceleration of AEP’s payment obligations, or the obligations of certain of AEP’s major subsidiaries, including AEPTCo, prior to maturity under any other agreement or instrument relating to debt outstanding in excess of $50 million, would cause an event of default under these credit agreements.
The AEP credit facilities do not permit the lenders to refuse a draw on any facility if a material adverse change occurs.
Utility Money Pool borrowings and external borrowings may not exceed amounts authorized by regulatory orders and AEP manages its borrowings to stay within those authorized limits.
For a further discussion of AEPTCo’s debt covenants, see Note 10 to AEPTCo’s audited consolidated financial statements and related notes appearing elsewhere in this prospectus.
Credit Ratings
AEPTCo does not have any long-term debt or credit arrangements that would require material changes in payment schedules or terminations as a result of a credit downgrade.
CASH FLOW
AEPTCo relies primarily on cash flows from operations and debt issuances to fund its liquidity and investing activities. AEPTCo’s investing and capital requirements are primarily capital expenditures and repaying advances received from affiliates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Cash and Cash Equivalents at Beginning of Period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Net Cash Flows from Operating Activities
|
|
548,884
|
|
|
199,366
|
|
|
263,857
|
|
|
Net Cash Flows Used for Investing Activities
|
|
(1,135,017
|
)
|
|
(940,064
|
)
|
|
(1,007,462
|
)
|
|
Net Cash Flows from Financing Activities
|
|
586,133
|
|
|
740,698
|
|
|
743,605
|
|
|
Net Change in Cash and Cash Equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
AEPTCo uses advances from affiliates, in addition to capital contributions, as a bridge to long-term debt financing. The levels of borrowing may vary significantly due to the timing of long-term debt financings and the impact of fluctuations in cash flows.
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Net Income
|
|
$
|
192,689
|
|
|
$
|
132,944
|
|
|
$
|
101,225
|
|
|
Deferred Income Taxes
|
|
223,096
|
|
|
183,180
|
|
|
207,141
|
|
|
Allowance for Equity Funds Used During Construction
|
|
(52,261
|
)
|
|
(53,080
|
)
|
|
(44,873
|
)
|
|
Accrued Taxes, Net
|
|
143,837
|
|
|
(53,634
|
)
|
|
20,318
|
|
|
Other
|
|
41,523
|
|
|
(10,044
|
)
|
|
(19,954
|
)
|
|
Net Cash Flows from Operating Activities
|
|
$
|
548,884
|
|
|
$
|
199,366
|
|
|
$
|
263,857
|
|
Net Cash Flows from Operating Activities were $549 million in
2016
consisting primarily of Net Income of $193 million and $223 million of noncash Deferred Income Taxes. The change in Accrued Taxes is primarily due to bonus tax depreciation partially offset by an increase in property taxes due to additional transmission investments. Other changes represent items that had a current period cash flow impact, such as changes in working capital, as well as items that represent future rights or obligations to receive or pay cash, such as regulatory assets.
Net Cash Flows from Operating Activities were $199 million in
2015
consisting primarily of Net Income of $133 million and $183 million of noncash Deferred Income Taxes. The change in Accrued Taxes is primarily due to bonus tax depreciation partially offset by an increase in property taxes due to additional transmission investments. Other changes represent items that had a current period cash flow impact, such as changes in working capital, as well as items that represent future rights or obligations to receive or pay cash, such as regulatory assets.
Net Cash Flows from Operating Activities were $264 million in
2014
consisting primarily of Net Income of $101 million and $207 million of noncash Deferred Income Taxes. Other changes represent items that had a current period cash flow impact, such as changes in working capital, as well as items that represent future rights or obligations to receive or pay cash, such as regulatory assets.
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Construction Expenditures
|
|
$
|
(1,159,495
|
)
|
|
$
|
(1,007,791
|
)
|
|
$
|
(858,259
|
)
|
|
Change in Advances to Affiliates, Net
|
|
29,010
|
|
|
65,354
|
|
|
(151,835
|
)
|
|
Acquisitions of Assets
|
|
(6,518
|
)
|
|
(1,075
|
)
|
|
(11,472
|
)
|
|
Other
|
|
1,986
|
|
|
3,448
|
|
|
14,104
|
|
|
Net Cash Flows Used for Investing Activities
|
|
$
|
(1,135,017
|
)
|
|
$
|
(940,064
|
)
|
|
$
|
(1,007,462
|
)
|
Net Cash Flows Used for Investing Activities were $1.1 billion in
2016
primarily due to Construction Expenditures for transmission investments.
Net Cash Flows Used for Investing Activities were $940 million in
2015
primarily due to Construction Expenditures for transmission investments.
Net Cash Flows Used for Investing Activities were $1 billion in
2014
primarily due to Construction Expenditures for transmission investments.
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Capital Contributions from Member
|
|
$
|
212,009
|
|
|
$
|
279,000
|
|
|
$
|
347,500
|
|
|
Issuance/Retirement of Debt, Net
|
|
386,904
|
|
|
449,008
|
|
|
477,733
|
|
|
Change in Advances from Affiliates, Net
|
|
(12,780
|
)
|
|
12,690
|
|
|
(81,628
|
)
|
|
Net Cash Flows from Financing Activities
|
|
$
|
586,133
|
|
|
$
|
740,698
|
|
|
$
|
743,605
|
|
Net Cash Flows from Financing Activities in
2016
were $586 million. AEPTCo had debt issuances of $687 million, debt retirements of $300 million and received capital contributions of $212 million. See Note 10 to AEPTCo’s audited consolidated financial statements included elsewhere in this prospectus.
Net Cash Flows from Financing Activities in
2015
were $741 million. AEPTCo had debt issuances of $449 million and received capital contributions of $279 million. See Note 10 to AEPTCo’s audited consolidated financial statements included elsewhere in this prospectus.
Net Cash Flows from Financing Activities in
2014
were $744 million. AEPTCo had debt issuances of $478 million and received capital contributions of $348 million. AEPTCo also repaid $82 million of advances from affiliates. See Note 10 to AEPTCo’s audited consolidated financial statements included elsewhere in this prospectus.
BUDGETED CONSTRUCTION EXPENDITURES
Management forecasts approximately $1.5 billion of construction expenditures in 2017. For 2018 and 2019 combined, management forecasts construction expenditures of approximately $3 billion. Estimated construction expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmental regulations, business opportunities, market volatility, economic trends, weather, legal reviews and the ability to access capital. Management expects to fund these construction expenditures through cash flows from operations and financing activities. AEPTCo Parent and SWTCo can borrow directly from AEP to meet short-term borrowing needs. APTCo, IMTCo, KTCo, OHTCo, OKTCo and WVTCo have been approved to participate in the Utility Money Pool to finance their short-term borrowing needs until long-term funding is arranged.
OFF-BALANCE SHEET ARRANGEMENTS
AEPTCo’s current guidelines restrict the use of off-balance sheet financing entities or structures to traditional operating lease arrangements that AEPTCo enters in the normal course of business. As of December 31, 2016 and 2015, AEPTCo had no off-balance sheet arrangements.
CONTRACTUAL OBLIGATION INFORMATION
AEPTCo’s contractual cash obligations include amounts reported on the balance sheets and other obligations disclosed in the footnotes to AEPTCo’s audited consolidated financial statements, included elsewhere in this prospectus. The following table summarizes AEPTCo’s contractual cash obligations as of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual Cash Obligations
|
|
Less Than
1 Year
|
|
2-3 Years
|
|
4-5 Years
|
|
After
5 Years
|
|
Total
|
|
|
|
(in thousands)
|
|
Advances from Affiliates (a)
|
|
$
|
4,077
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,077
|
|
|
Interest on Fixed Rate Portion of Long-term Debt (b)
|
|
77,312
|
|
|
151,853
|
|
|
145,932
|
|
|
1,066,879
|
|
|
1,441,976
|
|
|
Fixed Rate Portion of Long-term Debt (c)
|
|
—
|
|
|
135,000
|
|
|
50,000
|
|
|
1,765,000
|
|
|
1,950,000
|
|
|
Noncancelable Operating Leases (d)
|
|
938
|
|
|
1,258
|
|
|
663
|
|
|
—
|
|
|
2,859
|
|
|
Construction Contracts for Capital Assets (e)
|
|
101,547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101,547
|
|
|
Total
|
|
$
|
183,874
|
|
|
$
|
288,111
|
|
|
$
|
196,595
|
|
|
$
|
2,831,879
|
|
|
$
|
3,500,459
|
|
|
|
|
|
(a)
|
Represents principal only, excluding interest.
|
|
|
|
|
(b)
|
Interest payments are estimated based on final maturity dates of debt securities outstanding as of December 31, 2016 and do not reflect anticipated future refinancing, early redemptions or debt issuances.
|
|
|
|
|
(c)
|
See “Long-term Debt” section of Note 10 to AEPTCo’s audited consolidated financial statements, included elsewhere in this prospectus. Represents principal only, excluding interest and debt issuance costs.
|
|
|
|
|
(d)
|
See Note 9 to AEPTCo’s audited consolidated financial statements, included elsewhere in this prospectus.
|
|
|
|
|
(e)
|
Represents only capital assets for which there are signed contracts. Actual payments are dependent upon and may vary significantly based upon the decision to build, regulatory approval schedules, timing and escalation of project costs.
|
SIGNIFICANT TAX LEGISLATION
The Tax Increase Prevention Act of 2014 provided for a one-year extension of the 50% bonus depreciation and for the extension of research and development, employment and several energy tax credits for 2014.
The Protecting Americans from Tax Hikes Act of 2015 (PATH) included an extension of the 50% bonus depreciation for three years through 2017, phasing down to 40% in 2018 and 30% in 2019. PATH also provided for the extension of research and development, employment and several energy tax credits for 2015. PATH also includes provisions to extend the wind energy production tax credit through 2016 with a three-year phase-out (2017-2019), and to extend the 30% temporary solar investment tax credit for three years through 2019 with a two-year phase-out (2020-2021). PATH also provided for a permanent extension of the Research and Development tax credit.
These enacted provisions had no material impact on net income or financial condition but did have a favorable impact on cash flows in 2014, 2015 and 2016 and are expected to have a favorable impact on future cash flows.
Federal Tax Reform
Management is evaluating the possibility of federal tax reform. While there is no proposed statutory tax language on which to base definitive conclusions, management reviewed the tax proposals currently available, particularly the House Republican Blueprint. Management has assessed the accumulated deferred federal income taxes on the balance sheet as of December 31, 2016 and identified approximately $300 million in potential excess accumulated deferred federal income taxes based on an assumed 20% federal tax rate. Based upon the last major tax reform initiative in 1986, management believes this amount of excess accumulated deferred income tax related to depreciation would flow back to customers through lower rates over the life of the applicable property. Management continues to work with industry groups and legislators to advocate for the benefit of AEPTCo’s customers and shareholder.
CYBER SECURITY
Cyber security presents a growing risk for electric utility systems because a cyber-attack could affect critical energy infrastructure. Breaches to the cyber security of the grid or to the AEP System are potentially disruptive to people, property and commerce and create risk for business, investors and customers. In February 2013, President Obama signed an executive order that addresses how government agencies will operate and support their functions in cyber security as well as redefines how the government interfaces with critical infrastructure, such as the electric grid. The AEP System already operates under regulatory cyber security standards to protect critical infrastructure. The cyber security framework that was being developed through this executive order was reviewed by FERC and the U.S. Department of Energy (DOE). In 2014, the DOE published an Energy Sector Cyber Security Framework Implementation Guide for utilities to use in adopting and implementing the National Institute of Standards and Technology framework. AEP continues to be actively engaged in the framework process.
The electric utility industry is one of the few critical infrastructure functions with mandatory cyber security requirements under the authority of FERC. The Energy Policy Act of 2005 gave FERC the authority to oversee reliability of the bulk power system, including the authority to implement mandatory cyber security reliability standards. The North American Electric Reliability Corporation (NERC), which FERC certified as the nation’s Electric Reliability Organization, developed mandatory critical infrastructure protection cyber security reliability standards. AEP participated in the NERC grid security and emergency response exercises, GridEx, in 2013 and 2015. These efforts, led by NERC, test and further develop the coordination, threat sharing and interaction between utilities and various government agencies relative to potential cyber and physical threats against the nation’s electric grid.
Critical cyber assets, such as data centers, power plants, transmission operations centers and business networks are protected using multiple layers of cyber security and authentication. The AEP System is constantly scanned for risks or threats. Cyber hackers have been able to breach a number of very secure facilities, from federal agencies, banks and retailers to social media sites. As these events become known and develop, AEP continually assesses its cyber security tools and processes to determine where to strengthen its defenses. Management continually reviews its business
continuity plan to develop an effective recovery effort that decreases response times, limits financial impacts and maintains customer confidence following any business interruption. Management works closely with a broad range of departments, including Legal, Regulatory, Corporate Communications, Audit Services, Information Technology and Security, to ensure the corporate response to consequences of any breach or potential breach is appropriate both for internal and external audiences based on the specific circumstances surrounding the event.
Management continues to take steps to enhance the AEP System’s capabilities for identifying risks or threats and has shared that knowledge of threats with utility peers, industry and federal agencies. AEP operates a Cyber Security Intelligence and Response Center responsible for monitoring the AEP System for cyber threats as well as collaborating with internal and external threat sharing partners from both industry and government. AEP is a member of a number of industry specific threat and information sharing communities including the Department of Homeland Security and the Electricity Information Sharing and Analysis Center.
AEP has partnered in the past with a major defense contractor who has significant cyber security experience and technical capabilities developed through their work with the U.S. Department of Defense. AEP works with a consortium of other utilities across the country, learning how best to share information about potential threats and collaborating with each other. AEP continues to work with a nonaffiliated entity to conduct several discussions each year about recognizing and investigating cyber vulnerabilities. Through these types of efforts, AEP is working to protect itself while helping its industry advance its cyber security capabilities.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES AND ACCOUNTING PRONOUNCEMENTS
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures, including amounts related to legal matters and contingencies. Management considers an accounting estimate to be critical if:
|
|
|
|
•
|
It requires assumptions to be made that were uncertain at the time the estimate was made; and
|
|
|
|
|
•
|
Changes in the estimate or different estimates that could have been selected could have a material effect on net income or financial condition.
|
Management discusses the development and selection of critical accounting estimates as presented below with the Audit Committee of AEP’s Board of Directors and the Audit Committee reviews the disclosures relating to them.
Management believes that the current assumptions and other considerations used to estimate amounts reflected in the financial statements are appropriate. However, actual results can differ significantly from those estimates.
The sections that follow present information about AEPTCo’s critical accounting estimates, as well as the effects of
hypothetical changes in the material assumptions used to develop each estimate.
Regulatory Accounting
Nature of Estimates Required
AEPTCo’s financial statements reflect the actions of regulators that can result in the recognition of revenues and expenses in different time periods than enterprises that are not rate-regulated.
AEPTCo recognizes regulatory assets (deferred expenses to be recovered in the future) and regulatory liabilities (deferred future revenue reductions or refunds) for the economic effects of regulation. Specifically, the timing of expense and income recognition is matched with regulated revenues. Liabilities are also recorded for refunds, or probable refunds, to customers that have not been made.
Assumptions and Approach Used
When incurred costs are probable of recovery through regulated rates, regulatory assets are recorded on the balance sheet. Management reviews the probability of recovery at each balance sheet date and whenever new events occur. Similarly, regulatory liabilities are recorded when a determination is made that a refund is probable or when ordered by a commission. Examples of new events that affect probability include changes in the regulatory environment, issuance of a regulatory commission order or passage of new legislation. The assumptions and judgments used by regulatory authorities continue to have an impact on the recovery of costs as well as the return of revenues, rate of return earned on invested capital and timing and amount of assets to be recovered through regulated rates. If recovery of a regulatory asset is no longer probable, that regulatory asset is written-off as a charge against earnings. A write-off of regulatory assets or establishment of a regulatory liability may also reduce future cash flows since there will be no recovery through regulated rates.
Effect if Different Assumptions Used
A change in the above assumptions may result in a material impact on net income. Refer to Note 4 to AEPTCo’s audited consolidated financial statements, included elsewhere in this prospectus for further detail related to regulatory assets and regulatory liabilities.
Revenue Recognition
Transmission Revenue Accounting
Pursuant to an order approved by the FERC, the AEP East Transmission Companies and the AEP West Transmission Companies are included in the OATT administered by PJM and SPP, respectively. The FERC order implemented an annual transmission revenue requirement for each of the AEP East Transmission Companies and the AEP West Transmission Companies. Under this requirement, AEPSC, on behalf of the AEP East Transmission Companies and the AEP West Transmission Companies, makes annual filings in order to recover prudently incurred costs and an allowed return on plant in service. An annual formula rate filing is made for each calendar year using estimated costs, which is used to determine the billings to PJM and SPP ratepayers. The annual rate filing is compared to actual costs with any over- or under-recovery being trued-up with interest and recovered in a future year’s rates.
In accordance with the accounting guidance for “Regulated Operations-Revenue Recognition”, AEPTCo recognizes revenue related to OATT rate true-ups immediately following the annual FERC filings. Any portion of the true-ups applicable to an affiliated company is recorded as Accounts Receivable-Affiliated Companies or Accounts Payable-Affiliated Companies on the balance sheets. Any portion of the true-ups applicable to third parties is recorded as Regulatory Assets or Regulatory Liabilities on the balance sheets.
Long-Lived Assets
Nature of Estimates Required
In accordance with the requirements of “Property, Plant and Equipment” accounting guidance, AEPTCo evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of any such assets may not be recoverable including planned abandonments and a probable disallowance for rate-making on a plant under construction or the assets meet the held-for-sale criteria. AEPTCo utilizes a group composite method of depreciation to estimate the useful lives of long-lived assets. The evaluations of long-lived, held and used assets may result from abandonments, significant decreases in the market price of an asset, a significant adverse change in the extent or manner in which an asset is being used or in its physical condition, a significant adverse change in legal factors or in the business climate that could affect the value of an asset, as well as other economic or operations analyses. If the carrying amount is not recoverable, AEPTCo records an impairment to the extent that the fair value of the asset is less than its book value. Performing an impairment evaluation involves a significant degree of estimation and judgment in areas such as identifying circumstances that indicate an impairment may exist, identifying and grouping affected assets and developing the undiscounted and discounted future cash flows (used to estimate fair value in the
absence of market-based value, in some instances) associated with the asset. For assets held for sale, an impairment is recognized if the expected net sales price is less than its book value. For regulated assets, the earnings impact of an impairment charge could be offset by the establishment of a regulatory asset, if rate recovery is probable.
Assumptions and Approach Used
The fair value of an asset is the amount at which that asset could be bought or sold in a current transaction between willing parties other than in a forced or liquidation sale. Quoted market prices in active markets are the best evidence of fair value and are used as the basis for the measurement, if available. In the absence of quoted prices for identical or similar assets in active markets, AEPTCo estimates fair value using various internal and external valuation methods including cash flow projections or other market indicators of fair value such as bids received, comparable sales or independent appraisals. Cash flow estimates are based on relevant information available at the time the estimates are made. Estimates of future cash flows are, by nature, highly uncertain and may vary significantly from actual results. Also, when measuring fair value, management evaluates the characteristics of the asset or liability to determine if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Such characteristics include, for example, the condition and location of the asset or restrictions on the use of the asset. AEPTCo performs depreciation studies that include a review of any external factors that may affect the useful life to determine composite depreciation rates and related lives which are subject to periodic review by state regulatory commissions for cost-based regulated assets. The fair value of the asset could be different using different estimates and assumptions in these valuation techniques.
Effect if Different Assumptions Used
In connection with the evaluation of long-lived assets in accordance with the requirements of “Property, Plant and Equipment” accounting guidance, the fair value of the asset can vary if different estimates and assumptions would have been used in the applied valuation techniques. The estimate for depreciation rates takes into account the history of interim capital replacements and the amount of salvage expected. In cases of impairment, the best estimate of fair value was made using valuation methods based on the most current information at that time. Fluctuations in realized sales proceeds versus the estimated fair value of the asset are generally due to a variety of factors including, but not limited to, differences in subsequent market conditions, the level of bidder interest, timing and terms of the transactions and management’s analysis of the benefits of the transaction.
ACCOUNTING PRONOUNCEMENTS
New Accounting Pronouncements Adopted During 2016
The FASB issued ASU 2015-01 “Income Statement – Extraordinary and Unusual Items” eliminating the concept of extraordinary items for presentation on the face of the statements of income. Under the new standard, a material event or transaction that is unusual in nature, infrequent or both shall be reported as a separate component of income from continuing operations. Alternatively, it may be disclosed in the notes to financial statements. Management adopted ASU 2015-01 effective January 1, 2016.
The FASB issued ASU 2015-05 “Customer’s Accounting for Fees paid in a Cloud Computing Arrangement” providing guidance to customers about whether a cloud computing arrangement includes a software license. The new accounting guidance is effective for interim and annual periods beginning after December 15, 2015 with early adoption permitted. Management adopted ASU 2015-05 prospectively, effective January 1, 2016, with no impact on results of operations, financial position or cash flows.
Pronouncements Effective in the Future
The FASB issued ASU 2014-09 “Revenue from Contracts with Customers” clarifying the method used to determine the timing and requirements for revenue recognition on the statements of income. Under the new standard, an entity must identify the performance obligations in a contract, determine the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cash flow arising from contracts. The FASB deferred implementation of ASU 2014-09 under the terms in ASU 2015-14, “Revenue from Contracts with Customers (Topic: 606): Deferral of the Effective Date.” The new accounting guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. Management continues to analyze the impact of the new revenue standard and related ASUs. During 2016, initial revenue contract assessments were completed. Material revenue streams were identified within the AEP System and representative contract/transaction types were sampled. Performance obligations identified within each material revenue stream were evaluated to determine whether the obligations were satisfied at a point in time or over time. Contracts determined to be satisfied over time generally qualified for the invoicing practical expedient since the invoiced amounts reasonably represented the value to customers of performance obligations fulfilled to date. Based upon the completed assessments, management does not expect a material impact to the timing of revenue recognized or net income and plans to elect the modified retrospective transition approach upon adoption. Management also continues to monitor unresolved industry implementation issues, including items related to collectability and alternative revenue programs, and will analyze the related impacts to revenue recognition. Management plans to adopt ASU 2014-09 effective January 1, 2018.
The FASB issued ASU 2015-11 “Simplifying the Measurement of Inventory” to simplify the guidance on the subsequent measurement of inventory, excluding inventory measured using last-in, first-out or the retail inventory method. Under the new standard, inventory should be at the lower of cost and net realizable value. The new accounting guidance is effective for interim and annual periods beginning after December 15, 2016 with early adoption permitted. Management adopted ASU 2015-11 prospectively, effective January 1, 2017. There was no impact on results of operations, financial position or cash flows at adoption.
The FASB issued ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities” enhancing the reporting model for financial instruments. Under the new standard, equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are required to be measured at fair value with changes in fair value recognized in net income. The new standard also amends disclosure requirements and requires separate presentation of financial assets and liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. The amendments also clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The new accounting guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The amendments will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. Management is analyzing the impact of this new standard and, at this time, cannot estimate the impact of adoption on net income. Management plans to adopt ASU 2016-01 effective January 1, 2018.
The FASB issued ASU 2016-02 “Accounting for Leases” increasing the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new standard, an entity must recognize an asset and liability for operating leases on the balance sheets. Additionally, a capital lease will be known as a finance lease going forward. Leases with lease terms of 12 months or longer will be subject to the new requirements. Fundamentally, the criteria used to determine lease classification will remain the same, but will be more subjective under the new standard. The new accounting guidance is effective for annual periods beginning after December 15, 2018 with early adoption permitted. The guidance will be applied by means of a modified retrospective approach. The modified retrospective approach will require lessees and lessors to recognize and measure leases at the beginning of the earliest period presented. Management continues to analyze the impact of the new lease standard. During 2016, initial lease contract assessments were
completed. The AEP System lease population was identified and representative lease contracts were sampled. Based upon the completed assessments, management prepared a system gap analysis to outline new disclosure compliance requirements compared to current system capabilities. Lease system options are currently being evaluated. Management plans to elect certain of the following practical expedients upon adoption:
|
|
|
|
|
|
|
Practical Expedient
|
|
Description
|
|
Overall Expedients (for leases commenced prior to adoption date and must be adopted as a package)
|
|
Do not need to reassess whether any expired or existing contracts are/or contain leases, do not need to reassess the lease classification for any expired or existing leases and do not need to reassess initial direct costs for any existing leases.
|
|
Lease and Non-lease Components (elect by class of underlying asset)
|
|
Elect as an accounting policy to not separate non-lease components from lease components and instead account for each lease and associated non-lease component as a single lease component.
|
|
Short-term Lease (elect by class of underlying asset)
|
|
Elect as an accounting policy to not apply the recognition requirements to short-term leases.
|
|
Lease term
|
|
Elect to use hindsight to determine the lease term.
|
Management expects the new standard to impact financial position, but not results of operations or cash flows. Management also continues to monitor unresolved industry implementation issues, including items related to pole attachments, easements and right-of-ways, and will analyze the related impacts to lease accounting. Management plans to adopt ASU 2016-02 effective January 1, 2019.
Future Accounting Changes
The FASB’s standard-setting process is ongoing and until new standards have been finalized and issued, management cannot determine the impact on the reporting of operations and financial position that may result from any such future changes. The FASB is currently working on several projects. The ultimate pronouncements resulting from these and future projects could have an impact on future net income and financial position.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On July 26, 2016, the Audit Committee of the Board of Directors (the “Audit Committee”) of AEP determined not to renew the engagement of Deloitte & Touche LLP, the independent registered public accounting firm or independent auditor (“Deloitte”), as applicable, for the audits of the consolidated financial statements as of and for the fiscal year ending December 31, 2017 of AEP and certain of its subsidiaries, including AEP Transmission Company, LLC and subsidiaries (the “Company” or “AEPTCo”). On July 26, 2016, the Audit Committee appointed PricewaterhouseCoopers LLP as the independent registered public accounting firm or independent auditor, as applicable (“PwC”), to audit the financial statements of AEP and such subsidiaries for the fiscal year ending December 31, 2017. The Audit Committee invited several accounting firms to participate in a competitive bidding process, including Deloitte. The decision to retain PwC was made by the Audit Committee. This action effectively dismissed Deloitte as the independent registered public accounting firm or independent auditor, as applicable, of AEP and such subsidiaries effective upon Deloitte’s completion of its procedures on the financial statements of AEP and such subsidiaries as of and for the year ended December 31, 2016. Deloitte’s dismissal as to AEPTCo was effective on April 4, 2017.
Deloitte’s reports on the financial statements of the Company as of December 31, 2016 and 2015 and for the years then ended did not contain any adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principle. During the period from January 1, 2015 through April 4, 2017, (1) there were no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference thereto in its reports on the financial statements of the Company as of December 31, 2016 and 2015 and for the years then ended, and (2) there have been no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K.
We have provided a copy of the above disclosures to Deloitte and requested Deloitte to provide us with a letter addressed to the SEC stating whether or not Deloitte agrees with those disclosures related to Deloitte. A copy of Deloitte’s letter, dated April 4, 2017, is attached as Exhibit 16(a) to the registration statement of which this prospectus forms a part.
During the fiscal years ended December 31, 2014 and 2015 and through the subsequent interim period July 26, 2016, AEP, its subsidiary registrants and AEPTCo did not consult with PwC regarding any of the matters or events set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Fixed Rate Debt
Based on the borrowing rates currently available for bank loans with similar terms and average maturities, the fair value of AEPTCo’s long-term debt, excluding revolving credit agreements and commercial paper, was $2.0 billion as of December 31, 2016. The book value of AEPTCo’s long-term debt, net of discounts and deferred financing fees and excluding revolving credit agreements and commercial paper, was $1.9 billion as of December 31, 2016. Management performed an analysis calculating the impact of changes in interest rates on the fair value of long-term debt, excluding revolving credit agreements and commercial paper, as of December 31, 2016. An increase of 10% in interest rates used to calculate fair value (from 5.0% to 5.5%, for example) as of December 31, 2016 would decrease the fair value of debt by $85 million and a decrease in interest rates of 10% as of December 31, 2016 would increase the fair value of debt by $92 million at that date.
Corporate Borrowing Program
As of December 31, 2016, AEPTCo had $4 million of utility money pool borrowings outstanding under the AEP Corporate Borrowing Program, which is funded by commercial paper. Due to the short-term nature of these financial instruments, the carrying value of any outstanding short term debt would approximate fair value. Using a hypothetical continuous level of $100 million in utility money pool borrowings outstanding, the impact of a hypothetical 10% increase or decrease in interest rates for commercial paper would increase or decrease AEPTCo’s annual interest expense by less than $1 million.
Credit Risk
The State Transcos are regulated for rate-making purposes exclusively by FERC and employ a formula rate tariff design that incorporates forward looking -plant in service. As electric transmission utilities with rates regulated by FERC, the State Transcos earn revenues through tariff rates charged for the use of their electric transmission systems. The State Transcos establish transmission rates each year through formula rate filings with FERC. The rate filings calculate the revenue requirement needed to cover the costs of operation and debt service and to earn an allowed return on equity. These rates are then included in the OATT for SPP and PJM. SPP and PJM collect the revenue requirement from transmission customers under their respective OATTs. The transmission customers under the OATTs include the AEP Operating Companies, other investor-owned utilities, electric cooperatives, municipal entities and power marketers.
AEPTCo’s primary credit risk is with the AEP Operating Companies. For the years ended December 31, 2016, 2015 and 2014, the AEP Operating Companies were responsible for approximately 77%, 73% and 64%, respectively, of AEPTCo’s consolidated transmission revenues. Any financial difficulties experienced by the AEP Operating Companies could negatively impact AEPTCo’s business. However, PJM and SPP, as the billing agents of the State Transcos, have strict credit policies for its members’ customers, which include customers using our transmission systems. Specifically, PJM and SPP require a letter of credit or cash deposit equal to the credit exposure, which is determined by a credit scoring model and other factors, from any customer using a member’s transmission system.
BUSINESS
Overview
AEPTCo, a Delaware limited liability company organized in 2006, is the holding company of seven regulated transmission-only electric utilities. AEPTCo is an indirect wholly-owned subsidiary of AEP. AEPTCo’s business consists of developing and building new transmission facilities at the request of the regional transmission organizations in which we operate and in replacing and upgrading facilities, assets and components of the existing AEP transmission system as needed to maintain reliability standards and provide service to AEP’s wholesale and retail customers.
AEPTCo’s seven wholly-owned public utility companies are:
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AEP Appalachian Transmission Company, Inc.,
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AEP Indiana Michigan Transmission Company, Inc.,
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AEP Kentucky Transmission Company, Inc.,
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AEP Ohio Transmission Company, Inc.,
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AEP West Virginia Transmission Company, Inc.,
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AEP Oklahoma Transmission Company, Inc., and
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AEP Southwestern Transmission Company, Inc..
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The State Transcos are independent of but overlay AEP’s existing electric utility operating companies: Appalachian Power Company, Indiana Michigan Power Company, Kentucky Power Company, Kingsport Power Company, Ohio Power Company, Public Service Company of Oklahoma, Southwestern Electric Power Company and Wheeling Power Company (collectively, the “AEP Operating Companies”). The State Transcos develop, own, operate, and maintain their respective transmission assets. Assets of the State Transcos interconnect to transmission facilities owned by the AEP Operating Companies and unaffiliated transmission owners within the footprints of the PJM and the SPP. PJM and SPP are RTOs mandated by the FERC to ensure reliable supplies of power, adequate transmission infrastructure and competitive wholesale prices of electricity. PJM is a regional transmission organization serving approximately 61 million people throughout 13 states and the District of Columbia. APTCo, IMTCo, KTCo, OHTCo and WVTCo are located within PJM. SPP is a regional transmission organization serving over 18 million people in fourteen states. OKTCo and SWTCo are located within SPP.
The State Transcos are regulated for rate-making purposes exclusively by FERC and employ a formula rate tariff design that incorporates forward looking -plant in service. Activity between the State Transcos and the AEP Operating Companies is governed by service agreements. IMTCo, KTCo, OHTCo, OKTCo and WVTCo have received all necessary approvals for formation and currently own and operate transmission assets in their respective jurisdictions. In December 2016, the Virginia State Corporation Commission and the Public Service Commission of West Virginia issued separate orders that approve APTCo to construct, own, operate, and maintain transmission facilities and equipment in Tennessee using land and right of way (ROW) of APCo or APTCo in Tennessee. An application for regulatory approval for SWTCo is under consideration in Louisiana.
As electric transmission utilities with rates regulated by FERC, the State Transcos earn revenues through tariff rates charged for the use of their electric transmission systems. The State Transcos establish transmission rates each year through formula rate filings with FERC. The rate filings calculate the revenue requirement needed to cover the costs of operation and debt service and to earn an allowed return on equity. These rates are then included in the OATT for SPP and PJM. SPP and PJM collect the revenue requirement from transmission customers under their respective OATTs. The transmission customers under the OATTs include the AEP Operating Companies, other investor-owned utilities, electric cooperatives, municipal entities and power marketers.
Development of Business
Each State Transco is geographically aligned with an existing AEP Operating Company. Each State Transco develops and owns new transmission assets that are physically connected to the electric system owned and operated by the AEP Operating Companies (the “AEP System”). Our business strategy is to own, operate, maintain and invest in transmission infrastructure in order to maintain and enhance system integrity and grid reliability, grid security, safety, reduce transmission constraints and facilitate interconnections of new generating resources and new wholesale customers, as well as enhance competitive wholesale electricity markets.
Development of transmission projects through the State Transcos is primarily driven by:
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Projects assigned to the AEP System as a result of the regional planning initiatives conducted by the RTOs. The RTOs identify the need for transmission in support of regional reliability, transmission service, congestion mitigation, public policy, to support the integration of new generation resources and to support the retirement of generation resources. These projects are referred to as “Regional Projects.”
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Improvements to local area reliability by upgrading, rebuilding or replacing existing, aging infrastructure at the AEP Operating Companies. Together with New Interconnections described below, these projects are referred to as “Local Projects.”
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Construction of new facilities to support customer points of delivery (“New Interconnections”).
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Transmission investment across AEP is primarily driven by the need to revitalize aging infrastructure, our desire to enhance reliability at a local level to improve the customer experience, compliance with regulatory, industry, and governmental standards, requirements to improve telecommunication capability to keep up with changing technologies, and the obligation to address grid limitations identified by the RTOs. The State Transcos are not limited to investing in projects addressing particular transmission drivers. AEP has developed project selection guidelines that help determine which transmission assets can be built, owned and operated by the State Transcos. In essence, the need on the transmission grid determines the transmission project and the project selection guidelines help determine which components of the transmission project will be placed in the State Transcos.
Generally, greenfield transmission, partial or complete refurbishment of extra high voltage transmission, and complete refurbishment of lower voltage transmission assets qualify for transmission investment in the State Transcos. AEPTCo expects the majority of its transmission investment to go towards improving aging infrastructure, local reliability and upgrades to telecommunication and operational stacks.
Each State Transco is responsible for developing, constructing, owning, operating, and maintaining its respective transmission facilities.
Development of Regional Projects
Both PJM and SPP have sophisticated, long-term transmission planning processes to identify needed system upgrades. In their respective planning processes, each RTO identifies needed upgrades and then publishes those results in an annual plan. The following is an overview of the PJM and SPP regional transmission expansion plans.
The PJM Regional Transmission Expansion Plan (“RTEP”) identifies transmission system enhancements to meet the reliability requirements and ensure an efficient real-time operations of PJM electric transmission grid. PJM’s RTEP process encompasses a comprehensive assessment of system performance, adherence to PJM reliability criteria and compliance with the NERC Standards. The RTEP process also examines market efficiency to identify transmission enhancements that lower costs to consumers by relieving congested lines. Transmission enhancements are examined for their feasibility, impact and costs. This process culminates in a recommended RTEP for the entire PJM footprint that is submitted to PJM’s independent Board of Managers for consideration and approval each year. Under the PJM governing documents, transmission owning utilities in PJM are required to construct Board-approved RTEP projects.
The SPP Transmission Expansion Plan (“STEP”) identifies distinct areas of transmission planning for the future development of the SPP transmission grid. SPP’s engineering staff works closely with members, regulators, and systems interconnecting with SPP to plan future transmission system expansion needs and provide transmission and generation interconnection service necessary to facilitate reliable and efficient delivery of generation resources to end-use customers. The SPP Board of Directors reviews the STEP annually for approval and endorsement of proposed projects. Under the SPP governing documents, transmission owning utilities in SPP are required to construct projects approved by the SPP Board of Directors.
Development of Local Projects
The State Transcos develop additional transmission projects to meet their fundamental obligation to serve customers and to ensure operability of the grid as designed. Local Projects include replacement of aging or obsolete infrastructure and enhancements to improve local reliability needs and support customer connections. These projects focus on upgrading, rebuilding or replacing specific assets that have reached the end of their useful life. AEP evaluates several criteria to determine the need for Local Projects. These criteria include age, recorded performance issues, condition assessment, anticipated maintenance requirements and criticality to the grid. Projects are assigned to the State Transcos based upon a defined set of criteria that are outlined in AEP’s Project Selection Guidelines. The need on the transmission grid determines the transmission project and project selection guidelines help determine which components of the transmission project will be placed in the State Transcos.
Project Approval
Regional Projects are subject to approval by the respective RTO Board. This is preceded by an open stakeholder review and comment period as part of the RTO planning process. Once approved, these Regional Projects are mandatory and must be constructed by the designated transmission owner pursuant to FERC rules that govern the RTOs.
Local Projects do not require RTO Board approval; however, the State Transcos have a plan that entails review of the Local Projects with relevant stakeholders including RTOs. This public vetting provides the stakeholders whose constituents will pay for these projects the opportunity to review and, if desired, to question and comment on those Local Project plans.
State Siting Approval
No prior regulatory approval is typically required to replace existing assets with new equipment of the same electrical rating. Approval is generally required for the replacement of lower voltage facilities with higher voltage lines. These requirements vary by state.
Competition
Local Projects and new interconnections are not subject to competition from other non-affiliated providers, owners or developers of transmission assets or services.
In PJM, Regional Projects situated within a single transmission zone, such as the zone in which the AEP System operates in PJM (the “AEP Transmission Zone”), are not subject to competition. These include: (i) Regional Projects that are fully cost allocated to the AEP Transmission Zone, (ii) time-sensitive Regional Projects that address planning criteria violations that occur within three years, and (iii) Regional Projects that are upgrades to existing transmission facilities. Regional Projects not meeting these criteria must be awarded by PJM or SPP in a process approved by FERC under Order 1000, and generally contemplates more than one bidder for any particular Regional Project.
In PJM, projects with cost allocation in more than one zone are competitive. In the last three years only three projects met this criterion. In SPP greenfield transmission at or above 100 kilovolts (“kV”) is competitive. Most of the transmission solutions in SPP are comprised of upgrades to existing facilities and therefore are not subject to competition. Upkeep of existing assets is a fundamental obligation of a transmission owner and revitalization of existing assets is not open to competition in PJM and SPP.
Existing and Forecasted Projects
The State Transcos are geographically diverse and have assets in service or under construction across two RTOs and in six states, with additional states pending approval.
We anticipate the need for extensive additional investment in transmission infrastructure within PJM and SPP to maintain the required level of grid reliability, resiliency, security and efficiency and to address an aging infrastructure. We also foresee the need to construct additional transmission facilities based on changes in generating resources such as wind or solar projects, generation additions or retirements, and additional new customer interconnections. We will continue our investment to enhance physical and cyber security of our assets, and are also investing in improving the telecommunication network that supports the operation and control of the grid. Finally, our fundamental obligation to meet state, federal, regulatory and industry standards will continue to drive investment in this category of projects.
A key part of our business is replacing and upgrading transmission facilities, assets and components of the existing AEP System as needed to maintain reliability. Roughly 7,000 miles of AEP's transmission lines were built more than seventy years ago and have surpassed their life expectancy. A significant quantity of major transmission equipment, such as transformers and circuit breakers, on AEP's grid have also surpassed their life expectancy. The State Transcos provide the capability to upgrade existing facilities due to their condition as a result of their age.
Operations
As transmission-only companies, our State Transcos function as conduits, allowing for power from generators to be transmitted to local distribution systems. The transmission of electricity by our State Transcos is a central function to the provision of electricity to residential, commercial and industrial end-use consumers. The operations performed fall into the following categories:
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engineering, procurement and project services;
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Planning
AEPSC transmission employees (“AEP Transmission”) use detailed system models and load forecasts to develop our system capital plans. Expansion capital plans are used to identify projects that would address potential future reliability issues and service to new customers, connect new generation resources and/or produce economic savings for customers by eliminating constraints.
AEP Transmission works closely with PJM and SPP in the development of our system capital plans by performing technical evaluations and detailed studies. As the regional planning authorities, PJM and SPP approve regional system improvement plans which include projects to be constructed by their members, including our State Transcos.
Engineering , Procurement and Project Services
AEP Transmission maintains in-house engineering expertise in all facets of the transmission AEP system. AEP Transmission also performs services for the estimating, project management and construction management services for the capital work plan. AEP Transmission performs much of this work and utilizes outside services as needed to supplement capacity to match the work load. AEP Transmission directly procures the majority of equipment used in the construction of its transmission projects. The majority of the construction work is performed by outside contractors.
Maintenance
AEP Transmission performs maintenance, field operations and emergency restoration of our State Transco transmission line and station facilities. AEP Transmission develops and tracks preventive maintenance plans to promote safe and reliable operation of our systems. By performing preventive maintenance on our assets, AEP Transmission minimizes the need for reactive maintenance, resulting in improved reliability and compliance with all applicable NERC and RTO requirements.
Real Time Operations
From our System Control Center located in New Albany, Ohio, transmission system operators continuously monitor the performance of the transmission system of the AEP System. AEP Transmission uses software and communication systems to perform analysis to maintain security and reliability and for contingency planning triggered by any unplanned events. From our geographically dispersed Transmission Dispatch Centers (situated in Roanoke, Virginia; New Albany, Ohio; Tulsa, Oklahoma; and Shreveport, Louisiana) our transmission dispatchers are responsible for the activities related to taking equipment in and out of service to ensure capital construction projects and maintenance programs are completed safely and reliably.
Operating Contracts
AEPSC has executed a services agreement pursuant to which AEPSC has agreed to provide services to each of the State Transcos. AEPSC is an AEP service subsidiary that provides management and professional services to AEP and its subsidiaries. AEPSC provides four categories of service to the State Transcos: project evaluation and permitting services, project development services, operation and management services and business services, including billing, insurance, human resources and IT services. All of these services are provided at cost. Additionally, each State Transco has executed a services agreement with the respective incumbent AEP Operating Company in its state or footprint.
Regulatory Environment
Federal regulators and public policy currently support further investment in transmission. The growth and changing mix of electricity generation and wholesale power sales, combined with historically inadequate transmission investment have resulted in significant transmission constraints across the United States and increased stress on aging transmission equipment. Transmission system investments increase system reliability and reduce the frequency of power outages. Such investments can also reduce transmission constraints and improve access to lower cost generation resources, resulting in a lower overall cost of delivered electricity for end-use consumers. FERC has encouraged new investment in the transmission sector by implementing various financial and other incentives.
FERC has issued orders to promote non-discriminatory transmission access for all transmission customers and has mandated that all transmission systems over which it has jurisdiction must be operated in a comparable, non-discriminatory manner such that any seller of electricity affiliated with a transmission owner or operator is not provided with preferential treatment. FERC requires compliance with certain reliability standards by transmission owners and may take enforcement actions for violations, including the imposition of substantial fines. NERC is responsible for developing and enforcing these mandatory reliability standards. We continually assess our transmission systems against standards established by NERC, as well as the standards of applicable regional entities under NERC that have been delegated certain authority for the purpose of proposing and enforcing reliability standards.
Federal Regulation
and Formula Rate Setting at FERC
The State Transcos are regulated by FERC as electric transmission companies. FERC is an independent regulatory commission that regulates the transmission and wholesale sales of electricity in interstate commerce. FERC also administers accounting and financial reporting regulations and standards of conduct for the companies it regulates.
FERC has approved a formula rate mechanism to recover the State Transcos’ costs of investments in transmission facilities. The approved formula rate mechanism established a revenue requirement for transmission services over the facilities of the State Transcos under the respective PJM and SPP OATTs, as applicable, and implemented a transmission cost of service formula rate. The PJM and SPP OATTs provide standard terms and conditions to ensure consistent service availability and treatment of all transmission customers.
An OATT is the FERC rate schedule that provides the terms and conditions for transmission and related services on a transmission provider’s transmission system. FERC requires transmission providers to offer transmission service to all eligible customers (load-serving entities, generators, and customers in states with supplier choice) on a non- discriminatory basis. Through an OATT, FERC establishes transmission service rates for transmission owners, as derived from their annual transmission revenue requirement (“ATRR”). The ATRR consists of the cost of capital (debt and equity costs), plus income statement items such as operations and maintenance costs, depreciation, interest and taxes. The applicable RTO collects the transmission owner’s ATRR requirements from the transmission customers and provides payment to the transmission owner.
The State Transcos’ ATRR is under the PJM OATT or SPP OATT, as applicable. Under the terms and conditions provided in the applicable OATT, each State Transco files its ATRR annually in May, establishing rates for the one-year forward period of July of the current year through June of the following year (“Rate Year”). Concurrently, the ATRR includes a true-up calculation for the previous Rate Year’s billings, eliminating any potential for over- or under-recovery of expenses or the allowed return on and of the plant in-service. The applicable RTO collects the State Transcos’ ATRR requirements from the RTO transmission customers and provides payment to the State Transcos.
The ATRR calculation allows the State Transcos to collect revenues during the Rate Year for the previous year’s financial activity plus projected plant in-service through the end of the filing year. This provides the State Transcos with a mechanism for revenue recovery of and on actual and projected capital investments. The table below illustrates the formula rate calculation for each of the State Transcos:
The most recent ATRR information was filed in May 2016. Inclusive in each State Transco ATRR is a true-up calculation to provide for any over or under recovery of revenues. The annual true-up calculation provides for the recovery of changes in the cost of capital. Any over or under- recovery of revenue is calculated with interest.
State Regulation
The public service commissions in the states where our State Transcos’ assets are located do not have jurisdiction over the State Transco’s rates or terms and conditions of service. However, certain transmission facilities are subject to certification and/or siting and financing requirements specific to each state. While these proceedings require a statement and justification of need, they also determine line routes and substation locations with the least impact to the environment and general public. The state public service commission or a designated entity will review the State Transco’s application to certify the project.
For a further discussion of rate and regulatory proceedings at FERC and state public service commissions, see Note 3 to our audited consolidated financial statements and related notes appearing elsewhere in this prospectus.
Sources of Revenue
The State Transcos submit their annual revenue requirement to their respective RTO (PJM or SPP). PJM and SPP then charge their respective transmission customers under their respective OATT to collect the revenue requirement of all transmission owners under their respective OATT. The revenues collected from transmission customers are distributed by PJM and SPP to the applicable State Transcos, as transmission owners, based on their individual OATT revenue requirement. The illustration below depicts the revenue collection process.
Principal Customers
Our principal transmission service customers in PJM are affiliated AEP Operating Companies. In SPP, our principal transmission service customers are also affiliated AEP Operating Companies. For the year ended December 31, 2016, the AEP Operating Companies were responsible for approximately 77% of our consolidated transmission revenues. Load serving entities are responsible for their portion of our PJM and SPP formula rate revenue requirement. Our remaining revenues are primarily generated from providing service to other entities such as alternative electricity suppliers and wholesale customers that provide electricity to end-use consumers.
Billing
PJM and SPP are responsible for billing and collecting our transmission service revenues as well as independently administering the transmission tariff in their respective service territory. As the billing agents for our State Transcos, PJM and SPP independently bill our customers on a monthly basis and collect fees for the use of our transmission systems. Should one of these entities default on its payment to the SPP or PJM, that portion of the revenue requirement is shared among the other transmission service customers in the RTO.
Employees
As of December 31, 2016, AEPTCo had no employees. Each State Transco and AEPSC has executed a services agreement pursuant to which AEPSC has agreed to provide services to each of the State Transcos. All such services are provided at cost. Additionally, each State Transco has executed a services agreement with the respective incumbent AEP Operating Company in its state. These form the core operative agreements by which each State Transco obtains services.
Seasonality
The State Transcos’ cost-based formula rates with a true-up mechanism mitigate the seasonality of cash flows as amounts are collected evenly throughout the year. Our State Transcos accrue or defer revenues annually in June of each year to the extent that the actual revenue requirement for the prior PJM and SPP planning year was higher or lower, respectively, than the amounts billed. To the extent that a State Transco’s amounts billed are less than its revenue requirement for the annual period, a revenue accrual is recorded in June for this annual difference.
Environmental Matters
The State Transcos are subject to federal, state and local environmental laws and regulations, which impose requirements on wastewater discharges, regulate the issuance of permits for our construction activities, establish standards for the management, treatment, storage, transportation and disposal of solid and hazardous wastes and hazardous materials, and impose obligations to investigate and remediate contamination in certain circumstances.
The State Transcos currently incur costs to meet the requirements in our permits and satisfy obligations imposed as part of the authorization for the construction of new or expanded facilities. Typically these costs are incorporated into cost of service rates.
Superfund addresses liabilities for costs to clean up contaminated sites due to disposal of hazardous substances. Liabilities relating to investigation and remediation of contamination, as well as other liabilities concerning hazardous materials or contamination, such as claims for personal injury or property damage, can arise at third party sites where such wastes have been treated or disposed of, as well as properties currently owned or operated by us. Allegations that materials were disposed at a particular site are often unsubstantiated and the quantity of materials deposited at a site can be small and often nonhazardous. Although Superfund liability has been interpreted by the courts as joint and several, typically many parties are named as PRPs for each site and several of the parties are financially sound enterprises. At present, management’s estimates do not anticipate material cleanup costs for identified Superfund sites.
Our assets and operations also involve the use of materials classified as hazardous, toxic or otherwise dangerous. Some of these properties include aboveground or underground storage tanks and associated piping. Our facilities and equipment are often situated on or near property owned by others so that, if they are the source of contamination, others’ property may be affected. We are not aware of any pending or threatened claims against us with respect to environmental contamination relating to our properties, or of any investigation or remediation of contamination at our properties that entail costs likely to materially affect us.
Claims have been made or threatened against electric utilities for bodily injury, disease or other damages allegedly related to exposure to electromagnetic fields associated with electric transmission and distribution lines. While we do not believe that a causal link between electromagnetic field exposure and injury has been generally established and accepted in the scientific community, the liabilities and costs imposed on our business could be significant if such a relationship is established or accepted. We are not aware of any pending or threatened claims against us for bodily injury, disease or other damages allegedly related to exposure to electromagnetic fields and electric transmission and distribution lines that entail costs likely to have a material adverse effect on our results of operations, financial position or liquidity.
Properties
Our transmission facilities are located in Indiana, Kentucky, Michigan, Ohio, Oklahoma, and West Virginia and include the following assets:
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639 circuit miles of overhead transmission lines rated at voltages of 34.5 kV to 765 kV;
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other transmission equipment necessary to safely operate the system (e.g., monitoring and metering equipment);
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associated real property held in fee, by lease, or by easement grant; and
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an approximately 190,000 square-foot AEP Transmission headquarters facility in New Albany, Ohio, including furniture, fixtures and office equipment.
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Our State Transcos do not hold title to the majority of real property on which their electric transmission assets are located. Instead, under the provisions of certain affiliate contracts, each of our State Transcos are permitted to occupy and maintain their facilities upon real property held by the respective AEP Operating Company that overlays its operations. The ability of the State Transcos to continue to occupy such real property is dependent upon the terms of such affiliate contracts and upon the underlying real property rights of the AEP Operating Company, which may be encumbered by easements, mineral rights and other similar encumbrances that may affect the use of such real property.
Legal Proceedings
For a discussion of the significant legal proceedings, including, but not limited to, litigation and other matters involving the Company, reference is made to the information in Note 3 and Note 5 to our audited consolidated financial statements, included elsewhere in this prospectus.
In the normal course of business from time to time, other lawsuits, claims, environmental actions and other governmental proceedings can arise against the Company. To the extent that damages are assessed in any of these actions or proceedings, the Company believes that its insurance coverage is adequate. Although we cannot accurately predict the amount of any liability that may ultimately arise with respect to such matters, management, after consultation with legal counsel, does not currently anticipate that liabilities arising out of other currently pending or threatened lawsuits and claims will have a material adverse effect on our financial condition or results of operations.
MANAGEMENT
Set forth below is information regarding AEPTCo’s executive officers and members of our board of managers. There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any executive officer or managers during the past ten years. Some officers serve in the same capacities at AEP and the Company. All of the managers of the Company are employees of AEPSC.
Listed below are the executive officers and managers at March 1, 2017.
Nicholas K. Akins
Chairman of the Board, Chief Executive Officer and Manager of the Company
Chairman of the Board, President and Chief Executive Officer of AEP
Age 56
Chairman of the Board of AEP since January 2014, President of AEP since January 2011 and Chief Executive Officer of AEP since November 2011.
Mr. Akins is a board member of Fifth Third Bancorp.
Lisa M. Barton
President, Chief Operating Officer and Manager of the Company
Executive Vice President - Transmission of AEP
Age 51
Executive Vice President - Transmission of AEPSC since August 2011. She was Senior Vice President - Transmission Strategy and Business Development of AEPSC from November 2010 to July 2011. Ms. Barton is a board member of Transource Energy, a joint venture with Great Plains Energy. She also serves on the board of directors of Electric Transmission Texas (ETT), a joint venture with Berkshire Hathaway Energy Company.
Paul Chodak
Executive Vice President-Utilities of AEP
Age 53
Executive Vice President-Utilities of AEP since January 2017. He was President and Chief Operating Officer of Indiana Michigan Power Company from July 2010 to December 2016.
David M. Feinberg
Vice President, Secretary and Manager of the Company
Executive Vice President, General Counsel and Secretary of AEP
Age 47
Executive Vice President of AEP since January 2013. He was Senior Vice President, General Counsel and Secretary of AEP from January 2012 to December 2012.
Lana L. Hillebrand
Executive Vice President and Chief Administrative Officer of AEP
Age 56
Executive Vice President since January 2017. She was Senior Vice President from December 2012 to December 2016 and Chief Administrative Officer since December 2012. She previously served as South Region leader - Senior Partner at Aon Hewitt from 2010 to 2012.
Charles Patton
Executive Vice President-External Affairs of AEP
Age 57
Executive Vice President-External Affairs of AEP since January 2017. He was President and Chief Operating Officer of Appalachian Power Company from June 2010 to December 2016.
Robert P. Powers
Vice Chairman of AEP
Age 63
Vice Chairman since January 2017. He was Executive Vice President and Chief Operating Officer of AEP from November 2011 to December 2016 and President - Utility Group of AEP from April 2009 to November 2011.
A. Wade Smith
Manager of the Company
Age 52
Mr. Smith is Senior Vice President-Grid Development for AEPSC since August 2015. He was President and Chief Operating Officer of AEP Texas Central Company and AEP Texas North Company from 2010 to August 2015.
Brian X. Tierney
Vice President, Chief Financial Officer and Manager of the Company
Executive Vice President and Chief Financial Officer of AEP since October 2009.
Age 49
COMPENSATION DISCUSSION AND ANALYSIS
The following information relates to AEP. AEP Transmission Company, LLC does not establish its own executive compensation policy and procedures and there is no separate Compensation Committee of its Board of Managers. In this Compensation Discussion and Analysis and the executive compensation tables and narratives that follow, we discuss 2016 compensation paid to our named executive officers for services provided to AEP and us. This section explains AEP’s compensation philosophy, summarizes its compensation programs and reviews compensation decisions for the following named executive officers:
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Name
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Title
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Mr. Akins
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Chairman, Chief Executive Officer and President of AEP
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Mr. Tierney
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Executive Vice President and Chief Financial Officer of AEP
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Mr. Powers
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Vice Chairman of AEP
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Mr. Feinberg
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Executive Vice President and General Counsel of AEP
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Ms. Barton
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Executive Vice President Transmission of AEP
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Executive Summary
2016 Business Performance Highlights.
During 2016, AEP continued its focus on becoming the next premier regulated energy company. AEP executed on its strategy of investing in core regulated businesses to improve service to customers, while demonstrating continuous improvement in its operations. AEP’s Transmission Holding Company business thrived and contributed 54 cents per share to 2016 operating earnings, an increase of 38 percent over 2015. In 2016, AEP also took steps to significantly reduce earnings volatility by reducing exposure to non-regulated businesses. AEP announced the sale of four of our competitive power plants, which was completed in January 2017. This should help AEP produce more consistent earnings by removing the volatility associated with those competitive generation plants and their exposure to the capacity and energy markets. In October 2016, AEP increased its quarterly dividend by 5.4 percent, the seventh consecutive yearly increase.
2016 Incentive Compensation Highlights.
With respect to 2016 annual incentive compensation, the HR Committee:
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Increased the target performance goal for annual incentive compensation by $0.25 per share, a 7.1 percent increase over AEP’s 2015 target and $0.05 above the mid-point of our public operating earnings guidance at the time the HR Committee set the goal.
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Increased the performance needed for a maximum payout from $0.15 to $0.20 per share above the target level, which increased the maximum payout performance level 8.2 percent over the comparable 2015 level.
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Established threshold (33.3 percent of target payout), target and maximum (200 percent of target payout) operating earnings per share performance levels for 2016 annual incentive compensation at $3.65, $3.75 and $3.95 per share, respectively.
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AEP’s 2016 operating earnings per share, together with AEP’s performance on strategic measures and safety, produced a score of 170.5 percent of target.
With respect to the 2014-2016 performance unit grant, the HR Committee certified the following results and pay outcomes:
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Cumulative operating earnings per share score was 200 percent of target.
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Relative total shareholder return (TSR) placed AEP at the 58th percentile of the S&P 500 Electric Utilities Industry Index, which resulted in a 127.7 percent of a target score.
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These combined equally weighted scores resulted in a payout of 163.9 percent of target for this performance period.
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2016 Executive Compensation Changes
. In 2016, the HR Committee made the following key changes in our executive compensation program:
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Increased the CEO’s stock ownership target from five times to six times his base salary.
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Increased the minimum vesting for stock options and stock appreciation rights (SARs) to pro-rata vesting over a period of at least three years, with a carve-out for up to five percent of the shares available under AEP’s Long-term incentive Plan (LTIP).
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Added a “Hold Until Met” requirement for stock options and SARs, which requires AEP executives to hold the net shares they realize through stock option and SAR exercises until such time as they have met their stock ownership requirement.
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Amended AEP’s Recoupment Policy to expand the policy to apply to restatements or corrections in situations where the covered employee is not culpable, and changed the covered employee group to generally include officers who are Senior Vice Presidents and higher.
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Other Executive Compensation Changes
. In February 2017, the HR Committee approved another change to LTIP awards to executive officers. Starting with the LTIP grants in 2017, the performance units and the RSUs will both settle in AEP shares, rather than cash.
Compensation Governance Best Practices
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Below is a summary of our executive compensation practices, which we believe align with best practices:
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Significant stock ownership requirements for executive officers, which included a recently increased stock ownership requirement for the CEO of six times base salary;
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A substantial portion of the compensation for executive officers is tied to annual and long-term performance;
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A recoupment policy that allows AEP to claw back incentive compensation;
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An insider trading policy that prohibits our executives and directors from hedging their AEP stock holdings and from pledging AEP stock;
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Long-term incentive awards with double trigger vesting that results in accelerated vesting of these awards only if there is a change in control followed by an involuntary or constructive separation from service;
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No reimbursement or tax gross-up for excise taxes triggered under change in control agreements;
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No company paid country club memberships for executive officers;
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Generally prohibit personal use of AEP provided aircraft, to the extent that such use has an incremental cost to AEP; and
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No tax gross-ups, other than for relocations.
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Results of 2016 Advisory Vote to Approve Executive Compensation
At AEP’s annual meeting of shareholders held in April 2016, approximately 94 percent of the votes cast on AEP’s say-on-pay proposal voted in favor of the proposal. After consideration of this vote, the HR Committee continued to apply the same principles and philosophy it has used in previous years in determining executive compensation. The HR Committee will continue to consider the outcome of AEP’s say-on-pay vote and other sources of stakeholder feedback when establishing compensation programs and making compensation decisions for the named executive officers.
Overview
The HR Committee oversees and determines AEP’s executive compensation (other than that of the CEO). The HR Committee makes recommendations to the independent members of the board of directors about the compensation of the CEO, and the independent board members determine the CEO’s compensation.
AEP’s executive compensation program is designed to:
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Attract, retain, motivate and reward an outstanding leadership team with market competitive compensation and benefits to achieve both excellent team and individual performance;
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Reflect AEP’s financial and operational size and the complexity of its multi-state operations;
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Provide a substantial portion of executive officers’ total compensation opportunity in the form of performance based incentive compensation;
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Align the interests of AEP’s named executive officers with those of AEP’s shareholders by providing a majority of the total compensation opportunity for executive officers in the form of stock-based compensation with a value that is linked to the total return on AEP’s common stock and by maintaining significant stock ownership requirements for executives;
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Support the implementation of AEP’s business strategy by tying annual incentive awards to operating earnings per share and the achievement of specific strategic and safety objectives; and
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Promote the stability of the management team by creating strong retention incentives with multi-year vesting schedules for long-term incentive compensation.
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Overall, AEP’s executive compensation program generally targets each named executive officer’s total direct compensation opportunity (base salary, annual incentive opportunity and long-term incentive opportunity) at the median of AEP’s Compensation Peer Group, as described under “Compensation Peer Group”. The HR Committee’s independent compensation consultant, Meridian Compensation Partners, LLC (Meridian), participates in HR Committee meetings, assists the HR Committee in developing the compensation program and regularly meets with the HR Committee in executive session without management present.
Program Design
The program for executive officers includes base salary, annual incentive compensation, long-term incentive compensation and a comprehensive benefits program. AEP provides a balance of annual and long-term incentive compensation that is consistent with the compensation mix provided by AEP’s Compensation Peer Group. For AEP’s annual incentive compensation, the HR Committee balances meeting AEP’s operating earnings per share target with strategic and safety objectives. For 2016, operating earnings per share had a 75 percent weight for annual incentive compensation and the remaining 25 percent weight was tied to strategic and safety goals.
For 2016, 75 percent of AEP’s long-term incentive compensation was awarded in the form of performance units with three-year performance measures tied to (1) AEP’s total shareholder return as a percentile of the companies in the S&P 500 Electric Utilities Industry Index and (2) AEP’s three-year cumulative operating earnings per share relative to a Board-approved target. The performance units are subject to a three-year vesting period. The remaining 25 percent of AEP’s long-term incentive compensation was awarded as restricted stock units (RSUs) that vest over 40 months in three approximately equal installments on the May 1st following the first, second and third anniversaries of the grant date.
The HR Committee annually reviews the mix of the three elements of total direct compensation: base salary, annual incentive compensation and long-term incentive compensation. As illustrated in the charts below, in 2016, 69 percent of the target total direct compensation for the CEO and 61 percent on average for the other named executive officers was performance-based (target annual incentive compensation and grant date value of performance units). An additional 17 percent of the CEO’s target total direct compensation and an additional 14 percent on average for the other named executive officers was provided in the form of time-vesting RSUs (grant date value) which are tied to AEP’s stock price.
Compensation Peer Group
The HR Committee, supported by its independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), annually reviews AEP’s executive compensation relative to a peer group of companies that represent the talent markets with which AEP must compete to attract and retain executives. The companies included in the Compensation Peer Group were chosen from electric utility companies that were comparable in size to AEP in terms of revenues and market capitalization. AEP’s Compensation Peer Group for 2016, which was unchanged from 2015, consisted of the 17 utility companies shown below.
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AES Corporation
Consolidated Edison Inc.
DTE Energy Company
Edison International
Exelon Corporation
NextEra Energy, Inc.
PPL Corporation
Sempra Energy
Centerpoint Energy, Inc.
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Dominion Resources, Inc.
Duke Energy Corporation
Entergy Corporation
FirstEnergy Corp.
PG&E Corporation
Public Service Enterprise Group Inc.
Southern Company
Xcel Energy Inc.
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The table below shows that, at the time the Compensation Peer Group data was collected in July 2015, AEP’s revenue and market capitalization were above the 50
th
percentile, and closer to the 75
th
percentile, of the Compensation Peer Group.
2016 Compensation Peer Group
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Revenue(1)
($ million)
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Market
Cap(1)
($ million)
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Compensation Peer Group
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25th Percentile
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$11,686
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$14,441
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50th Percentile
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$12,919
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$21,079
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75th Percentile
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$17,090
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$27,649
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AEP
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$17,020
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$27,751
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(1)
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The HR Committee selected the 2016 Compensation Peer Group in September 2015 based on Fiscal Year-End 2014 revenue, and market capitalization as of July 31, 2015.
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Meridian annually provides the HR Committee with an executive compensation study covering each named executive officer position and other executive positions based on survey information derived from the Compensation Peer Group. The Meridian study benchmarked each of our named executive officer’s total direct compensation (and each component of compensation) against the median market value of total direct compensation paid by the Compensation Peer Group to officers serving in similar capacities. The market values were adjusted for AEP’s relative size based on AEP’s revenue or the executive’s revenue responsibility using regression analysis for all positions for which data was available. The HR Committee considers percentiles other than the median and may select any percentile as a benchmark if, in its judgment, such other benchmarks provide a better comparison based on the specific scope of the job being matched or other criteria.
If a named executive officer’s total direct compensation opportunity is above or below a +/- 15 percent range around the market median, the HR Committee may adjust elements of the named executive officer’s compensation over time to bring the executive’s total compensation opportunity into the target range.
Executive Compensation Program Detail
Summary of Executive Compensation Components.
The following table summarizes the major components of AEP’s executive compensation program.
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Component
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Purpose
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Key Attributes
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Base Salary
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To provide a market-competitive and consistent minimum level of compensation that is paid throughout the year.
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A 3 percent executive merit budget and an additional 0.5% for other types of salary adjustments was approved by the HR Committee for 2016.
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Merit and other salary increases for executives are awarded by the HR Committee based on a variety of factors.
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Annual Incentive Compensation
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To focus executive officers on achieving annual earnings and other performance objectives that are critical to AEP’s success, which for 2016 included:
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Annual incentive targets are established by the HR Committee based on compensation and performance information provided by the HR Committee’s independent compensation consultant as well as objectives put forth by AEP management and endorsed by the HR Committee.
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Operating Earnings (75 percent weight)
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Safety (10 percent weight), and
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Actual awards for employees as a group are capped at 200 percent of target, while awards for individual employees are capped at 250 percent of their target.
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Strategic Initiatives (15 percent weight).
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To communicate and align executives’ and employees’ efforts with AEP’s performance objectives.
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Operating earnings per share was chosen as the primary performance measure for 2016.
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The CEO’s award is determined by the independent members of the Board of Directors, and the other named executive officer awards are determined and approved by the HR Committee and based on:
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Achievement against performance objectives, and
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A subjective evaluation of each named executive officer’s individual performance for the year.
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Long-Term Incentive Compensation
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To motivate AEP management to maximize shareholder value by linking a substantial portion of their potential compensation directly to longer-term shareholder returns.
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For 2016, the HR Committee provided long-term incentive awards in the form of three-year performance units for 75 percent of the grant value and restricted stock units (RSUs) for 25 percent of the grant value.
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To help ensure that AEP management remains focused on longer-term results, which the HR Committee considers essential given the large amount of long-term investment in physical assets required in our business.
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Long-term incentive award opportunities for named executive officers are based on market data, as reflected in either position based or salary grade-based award guidelines, and subjective consideration of each named executive officer’s potential contribution to shareholder value during the performance period.
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To reduce executive turnover and maintain management consistency.
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For the 2016-2018 performance unit awards, the HR Committee established the following equally weighted performance measures:
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Three-year cumulative operating earnings per share relative to a target approved by the HR Committee, and
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Three-year total shareholder return relative to the S&P 500 Electric Utilities Industry Index.
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Base Salary.
The HR Committee determines merit and other salary increases for AEP’s named executive officers based on the following factors:
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The current scope and responsibilities of the position;
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AEP’s merit and other increase budgets;
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Sustained individual performance as assessed by each executive’s direct manager;
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The market competitiveness of the executive’s salary, total cash compensation and total compensation;
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The experience and future potential of each executive; and
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Reporting relationships.
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The HR Committee approved merit increases for 2016 base salaries in the 2-4 percent range for our named executive officers.
Annual Incentive Compensation.
Annual Incentive Target Opportunity.
Annual incentive compensation focuses executive officers on achieving annual earnings objectives and other performance objectives that are critical to AEP’s success. The HR Committee, in consultation with Meridian and Company management, establishes the annual incentive target opportunities for each executive officer position primarily based on market competitive compensation for the executive’s position as shown in Meridian’s annual executive compensation study. For 2016, the HR Committee established the following annual incentive target opportunities for the named executive officers:
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125 percent of base earnings for the CEO (Mr. Akins);
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80 percent of base earnings for the CFO (Mr. Tierney);
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80 percent of base earnings for the Vice Chairman (Mr. Powers);
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70 percent of base earnings for the EVP and General Counsel (Mr. Feinberg); and
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70 percent of base earnings for the EVP-Transmission (Ms. Barton).
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Annual Performance Objectives.
For 2016, the HR Committee approved the following performance measures for the reasons indicated.
Operating Earnings per Share.
The HR Committee chose operating earnings per share because it largely reflects management’s performance in operating AEP. It is also strongly correlated with shareholder returns and is the primary measure by which AEP communicates its actual and expected future financial performance to the investment community and employees. The operating earnings per share measure is also well understood by both our shareholders and employees. Management and the HR Committee believe that operating earnings per share growth is the primary means for AEP to create long-term shareholder value.
Safety.
With safety as an AEP core value, maintaining the safety of AEP employees and the general public is always a primary consideration. Accordingly, safety measures comprised 10 percent of the 2016 scorecard. 7.5 percent was based on the improvement in AEP’s DART Rate compared to its three-year average DART rate. DART is an acronym for Days Away, Restricted or Job Transfer and is an industry accepted measure that focuses on more serious injuries. The remaining 2.5 percent was a fatality measure. The fatality measure would pay out at target if there was not a fatal work-related employee incident during the year.
Strategic Initiatives.
Fifteen percent of the scorecard was tied to strategic initiatives, including six percent for Business Transformation initiatives, five percent for Customer Experience initiatives and four percent for Culture and Employee Engagement initiatives.
The six percent for Business Transformation initiatives consisted of three measures. The first related to the completion of a strategic business assessment of certain competitive generation units. The second was based on the volume of start-up projects captured by AEP OnSite Partners and AEP Renewables, which are AEP’s competitive subsidiaries focused on building renewable power projects. The last measure was based on expanding AEP’s transmission business.
The five percent for Customer Experience included three measures. The first category measures the reliability of our wires assets: SAIDI (System Average Incident Duration Index), which is a standard measure in our industry. The second category measured improvement in AEP’s rankings in the J.D. Power and Associates Customer Satisfaction Survey. The last measure was for distribution network remediation, and was based on the number of circuit feet replaced.
The four percent for Culture & Employee Engagement consisted of four measures. The Power Up & Lead category measured the number of employees that participated in a cultural education program during the year. The Gallup Survey measured improvements in the overall average score over AEP’s prior year survey. The Diversity category measured improvement in AEP’s female and minority representation rates for each EEO group. The last measure was based on the number of Lean Management System deployments completed and initiated during the year, as well as the number of Introduction to Lean Management Systems events completed during the year.
Performance Score for Annual Incentive Plan.
In 2016, AEP had operating earnings per share of $3.94, which exceeded the upper end of our original operating earnings guidance for the year of $3.60-$3.80 per share. This earnings result, together with AEP’s performance on the measures discussed above (safety and strategic initiatives), produced a result of 170.5 percent of the target award opportunity for executive officers.
For 2016, GAAP earnings per share reported in AEP’s financial statements were $1.24. This is $2.70 per share lower than operating earnings, primarily due to the impairment of certain unregulated merchant generation assets.
Balanced Scorecard.
For 2016, the HR Committee approved a balanced scorecard which tied annual incentive awards to AEP’s operating earnings, safety and strategic objectives for the year. The HR Committee used this balanced scorecard because it mitigates the risk that executives will focus on one or a few objectives, such as short-term financial performance, to the detriment of other objectives. The chart below shows the weightings for each performance measure, the threshold, target and maximum performance goals, 2016 actual results and related weighted scores.
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Weight
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Threshold
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Target
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Maximum
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Actual
Performance
Result
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Actual
Award
Score
(as a percent
of target
opportunity)
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Weighted
Score
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Operating Earnings Per Share (75%)
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75%
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$3.65
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$3.75
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$3.95
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$3.941
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195.5%
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1.466
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Safety (10%)
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DART (Days Away, Restricted or Job Transfer) Rate, an industry measure focused on serious injuries
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7.5%
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0 percent
Improvement
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10 percent
Improvement
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20 percent
Improvement
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0 percent
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0.0%
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0.000
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Fatality Measure (the number of fatal work related
employee incidents)
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2.5%
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One or more
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None
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None for more
than one year
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Two employee
fatalities
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0.0%
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0.000
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Strategic Initiatives (15%)
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Business Transformation Measures (6%)
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Strategic Business Assessment of Certain Competitive
Generation Plants
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2%
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Incomplete
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Board approves a sale contract or recommendation to retain these plants
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Sale contract and Board approves plan for use of proceeds
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A sale contract was executed, and the Board approved the plan for use of proceeds
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200.0%
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0.040
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Volume of AEP OnSite Partners and AEP Renewables
Start-up Projects
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2%
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$0
million
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$20
million
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$50
million
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$299
million
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200.0%
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0.040
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Volume of Transmission Investment Opportunities
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2%
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$100
million
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$200
million
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$300
million
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$485
million
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200.0%
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0.040
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Customer Experience Measures (5%)
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Wires Reliability- measure based on a customer
weighted average of SAIDI (System Average Incident Duration Index) Performance Scores of AEP operating companies
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2%
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Generally 80% percent of target
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Regulatory targets or a glide path to the regional peer group average
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120 percent of target
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114.0% Average Operating Company Score
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114.0%
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0.023
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Customer Satisfaction - measure based on a weighted
average of J.D. Power Residential Customer Satisfaction Index scores for AEP operating companies
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2%
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No improvement
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Peer Group improvement
rate
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Glide path improvement to the Regional Peer Group Average
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200.0% Average Operating Company Score
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200.0%
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0.040
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Network remediation
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1%
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286,931 circuit
feet replaced
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382,575 circuit feet replaced
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478,218 circuit feet replaced
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>527,000 circuit
feet replaced
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200.0%
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0.020
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Culture and Employee Engagement Measures (4%)
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Employee Engagement - based on improvement in
average overall score of a survey of AEP employees
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1%
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0.07
improvement
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0.10
improvement
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0.20
improvement
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0.08
Improvement
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33.3%
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0.003
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Employee Diversity - measure based on increased
representation of women and minorities in all EEO categories
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1%
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Higher of 80 percent target or 0 percent improvement
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Higher of 100 percent target or 0 percent improvement
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Higher of 120 percent of target or 0 percent improvement
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Female Representation Score: 65.6%
Minority Representation Score: 82.3%
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74.0%
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0.007
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AEP Culture Development - measure based on the
number of employees that participated in an employee development program
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1%
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3,900
participants
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5,200
participants
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6,500
participants
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5,240
participants
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103.1%
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0.010
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Lean Management Sustainability (number of pilot areas
and non-pilot areas completed)
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1%
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1 pilot & 30 non-pilots
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3 pilots & 40 non-pilots
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3 pilots & 50 non-pilots plus 3 additional pilots initiated
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3 pilots and 48 non-pilots completed plus 1 additional pilot initiated
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156.7%
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0.016
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Total Score
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1.705
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2016 Individual Award Calculations.
Based on the results under the Balanced Scorecard, the HR Committee approved a weighted score of 170.5 percent. The HR Committee then subjectively evaluated the individual performance of each named executive officer to determine the actual award payouts. The HR Committee considered the progress made during 2016 focusing AEP on its core regulated businesses for Mr. Akins and the successful performance of the transmission business in 2016 for Ms. Barton.
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Name
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2016
Base
Earnings*
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Annual
Incentive
Target %
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Weighted
Score Under
Performance
Score Card
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Calculated
Annual
Incentive
Opportunity
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2016 Actual
Payouts
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Mr. Akins
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$1,318,442
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x
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125%
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x
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170.5%
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=
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$2,809,930
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$3,000,000
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|
|
|
|
|
|
|
|
|
|
Mr. Tierney
|
$727,257
|
x
|
80%
|
x
|
170.5%
|
=
|
$991,979
|
$990,000
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Powers
|
$720,499
|
x
|
80%
|
x
|
170.5%
|
=
|
$982,761
|
$980,000
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Feinberg
|
$612,175
|
x
|
70%
|
x
|
170.5%
|
=
|
$730,631
|
$730,000
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Barton
|
$529,473
|
x
|
70%
|
x
|
170.5%
|
=
|
$631,926
|
$650,000
|
|
|
|
|
*
|
Based on salary paid in 2016, which is slightly different than the salary earned for 2016 shown in the Summary Compensation Table.
|
The independent members of the Board approved the 2016 annual incentive award for the CEO. The HR Committee approved the 2016 annual incentive awards for the other named executive officers.
Long-Term Incentive Compensation.
The HR Committee grants long-term incentive compensation to executive officers on an annual award cycle. AEP annually reviews the mix of long-term incentive compensation provided to its executives. For the 2016 award cycle, 75 percent of the grant date value of long-term incentives was awarded as three-year performance units and 25 percent of the grant date value was awarded as time-vesting restricted stock units (RSUs). The HR Committee increased the blend of performance units to RSUs in the long-term incentive mix from 70/30 to 75/25 for 2016 to increase the portion of the long-term incentive award that is performance-based.
The HR Committee establishes target long-term incentive award opportunities for each named executive officer based primarily on a market competitive long-term and total compensation analysis provided by Meridian for executives serving in similar positions in AEP’s Compensation Peer Group.
The independent members of the Board approved the 2016 long-term incentive award for the CEO. The HR Committee approved the 2016 long-term incentive awards for the other named executive officers.
2016 Long-Term Incentive Awards
|
|
|
|
|
|
|
|
|
Name
|
Number of
Performance
Units Granted
(at Target)
|
Number of
RSUs Granted
|
Total
Units Granted
|
Total
Grant Date
Fair Value
|
|
Mr. Akins
|
80,306
|
26,769
|
107,075
|
$6,720,027
|
|
Mr. Tierney
|
22,646
|
7,549
|
30,195
|
$1,895,038
|
|
Mr. Powers
|
22,646
|
7,549
|
30,195
|
$1,895,038
|
|
Mr. Feinberg
|
13,467
|
4,489
|
17,956
|
$1,126,919
|
|
Ms. Barton
|
11,987
|
3,995
|
15,982
|
$1,003,030
|
Differences in grant date fair value between the awards for individual named executive officers primarily reflect differences in market median compensation for the executives shown in the annual executive compensation study conducted by Meridian.
In February 2017, Mr. Powers announced his retirement from AEP in August 2017. Mr. Powers will remain Vice Chairman of AEP until his retirement. Mr. Powers did not receive a 2017 long-term incentive (LTIP) award because of his announced retirement, but AEP intends to provide a cash payment to Mr. Powers instead. In connection with Mr. Powers’ retirement, AEP and Mr. Powers anticipate entering into a separation and release of all claims agreement, containing among other things, certain non-solicitation, confidentiality and cooperation agreements. It is anticipated that this agreement will provide a cash payment that would provide him (i) an amount to make up for his not receiving a 2017 LTIP award (if it had been granted, a portion of his 2017 - 2019 performance units would have remained outstanding upon his August 2017 retirement), and (ii) a portion of the compensation Mr. Powers would have received if he had remained with AEP through a later retirement date.
Performance Units.
The HR Committee granted 75 percent of the aggregate grant date value of AEP’s 2016 long-term incentive awards as performance unit awards for the 2016 - 2018 performance period. Each performance unit has an economic value equivalent to a share of AEP common stock. AEP grants performance units at the beginning of each year with a three-year performance and vesting period. Vested performance units are paid in cash except to the extent they are voluntarily deferred or are needed to meet an executive’s stock ownership requirement, in which case the vested performance units are mandatorily deferred into AEP Career Shares. AEP Career Shares are not paid to participants until after their employment with AEP ends.
Dividends are reinvested in additional performance units that are subject to the same performance measures and vesting requirements as the underlying performance units on which they were granted. The total number of performance units held at the end of the performance period is multiplied by the equally weighted score for the two performance measures shown below to determine the number of performance units earned. Each unit is then paid out at the average closing price of AEP common stock for the last 20 trading days of the performance period or mandatorily deferred as Career Shares if needed to satisfy an executive officer’s stock ownership requirement. The maximum score for each performance measure is 200 percent. For the 2016-2018 performance units, the cumulative operating earnings per share target is $11.42.
Performance Measures for 2016 - 2018 Performance Units
|
|
|
|
|
|
|
|
|
Performance Measure
|
Weight
|
Threshold
Performance
|
Target
Performance
|
Maximum Payout
Performance
|
|
3-Year Cumulative Operating Earnings Per Share
|
50%
|
$10.621
(30% payout)
|
$11.42
(100% payout)
|
$12.219
(200% payout)
|
|
|
|
|
|
|
|
3-Year Total Shareholder
Return vs. S&P 500 Electric Utilities Industry Index
|
50%
|
20
th
Percentile
(0% payout)
|
50
th
Percentile
(100% payout)
|
80
th
Percentile
(200% payout)
|
The HR Committee selected a cumulative measure of operating earnings to ensure that earnings for all three years contribute equally to the award calculation. The HR Committee also selected a total shareholder return measure for these awards to provide an external performance comparison that reflects the effectiveness of management’s strategic decisions and actions over the three-year performance period relative to other large electric utilities.
Restricted Stock Units.
Each RSU has an economic value equivalent to one share of AEP common stock. The HR Committee granted 25 percent of the aggregate grant date value of AEP’s 2016 long-term incentive awards as RSUs. These RSUs vest over a forty month period, subject to the executive’s continued employment, in three approximately equal installments on May 1, 2017, May 1, 2018 and May 1, 2019. Dividends are reinvested in additional RSUs that are subject to the same vesting requirements applicable to the underlying RSUs on which they were granted. Upon vesting, these RSUs pay out in cash to executive officers at the average closing price of AEP common stock for the last 20 trading days of the vesting period.
Stock Ownership Requirements.
The HR Committee believes that linking a significant portion of executives’ financial rewards to AEP’s success, as reflected by the value of AEP stock, gives executives a stake similar to that of AEP’s shareholders and encourages long-term management strategies that benefit shareholders. Therefore, the HR Committee requires certain officers (51 individuals as of January 1, 2017), including the named executive officers, to accumulate and hold a specific amount of AEP common stock or stock equivalents. The HR Committee annually reviews the stock ownership level for each executive officer and periodically adjusts these levels. Each named executive officer met his or her stock ownership requirement as of March 1, 2017.
During 2016, the HR Committee increased the CEO’s stock ownership requirement from five times to six times his base salary. The other named executive officers’ targets are three times their respective base salaries.
Equity Retention (Holding Period).
Until an executive officer meets his or her stock ownership requirement, performance units awarded under the Long-term Incentive Plan (“LTIP”) are mandatorily deferred into AEP Career Shares to the extent necessary to meet their stock ownership requirement. If an executive has not met his or her stock ownership requirement within five years of the date it became effective or subsequently falls below it, the HR Committee may require the executive to defer a portion of his or her annual incentive compensation award into AEP Career Shares.
In 2016, the LTIP was amended to add a “Hold Until Met” requirement for stock options and SARs, which requires AEP executives to hold the net shares they realize through stock option and SAR exercises until such time as they have met their stock ownership requirement. However, no stock options or SARs were granted or outstanding during 2016.
Benefits.
AEP generally provides the same health and welfare benefits to named executive officers as it provides to other employees. AEP also provides the named executive officers with either four or five weeks of paid vacation, depending on their length of service and position.
AEP’s named executive officers participate in the same tax-qualified defined benefit pension plan and defined contribution savings plan as other eligible employees. AEP’s named executive officers also participate in the AEP’s non-qualified retirement benefit plans, which largely provide “supplemental benefits” that would otherwise be offered through the tax-qualified plans except for the limits imposed by the Internal Revenue Code on those tax-qualified plans. This allows eligible employees to accumulate replacement income for their retirement based on the same benefit formulas as the tax qualified plans but without the limitations that are imposed by the Internal Revenue Code on the tax-qualified plans.
The HR Committee recognizes that the non-qualified plans result in the deferral of the AEP’s income tax deduction related to these benefits until such benefits are paid, but the HR Committee believes that executives generally should be entitled to the same retirement benefits, as a percentage of their eligible pay, as AEP’s other employees and that these benefits are prevalent among similar companies. The HR Committee also provides these benefits as part of a market competitive total rewards package.
AEP limits both the amount and types of compensation that are included in the qualified and non-qualified retirement plans because the HR Committee and AEP management believe that compensation over certain limits and certain types of compensation should not be further enhanced by including it in retirement benefit calculations. Therefore:
|
|
|
|
•
|
Long-term incentive compensation is not included in the calculations that determine retirement and other benefits under AEP’s benefit plans,
|
|
|
|
|
•
|
The cash balance formula of AEP’s non-qualified pension plan (the “AEP Supplemental Benefit Plan”) limits eligible compensation to the greater of $1 million or twice the participant’s base salary, and
|
|
|
|
|
•
|
Eligible compensation is also limited to $2 million under the non-qualified Supplemental Retirement Savings Plan.
|
AEP provides group term life insurance benefits to all employees, including the named executive officers, in the amount of two times their base salary.
For executives whom AEP asks to relocate, it is AEP’s practice to offer relocation assistance to offset their moving expenses. This policy better enables AEP to obtain high quality new hires and to relocate internal job candidates.
Perquisites.
The HR Committee annually reviews the perquisites provided by AEP. In 2016, AEP provided independent financial counseling and tax preparation services to assist executives with financial planning and tax filings. Income is imputed to executives and taxes are withheld for these services.
The HR Committee is sensitive to concerns regarding the expense of corporate aircraft and the public perception regarding personal use of such aircraft. Accordingly, the HR Committee generally prohibits personal use of corporate aircraft that has an incremental cost to AEP. AEP allows personal travel on business trips using the corporate aircraft if there is no incremental cost to AEP. Income is imputed and taxes are withheld on the value of personal travel on corporate aircraft in accordance with IRS guidelines.
Other Compensation Information
Recoupment of Incentive Compensation.
In 2016, the Board amended the AEP’s Policy on Recouping Incentive Compensation, commonly referred to as a “clawback” policy. The policy was amended to provide that our executive officers and certain other senior executives would be subject to a ‘no fault’ “clawback”. The Board may recover incentive compensation whether or not the executive’s actions involve misconduct. The Board believes, subject to the exercise of its discretion based on the facts and circumstances of a particular case, that incentive compensation should be reimbursed to AEP if, in the Board’s determination:
|
|
|
|
•
|
Such incentive compensation was received by an executive where the payment or the award was predicated upon the achievement of financial or other results that were subsequently materially restated or corrected, and
|
|
|
|
|
•
|
Such incentive compensation would have been materially lower had the achievement been calculated on such restated or corrected financial or other results.
|
The Board adopted the initial clawback policy in February 2007, and the HR Committee has directed AEP to design and administer all of its incentive compensation programs in a manner that provides for AEP’s ability to obtain such reimbursement. AEP will seek reimbursement, if and to the extent that, in the Board’s view, such reimbursement is warranted by the facts and circumstances of the particular case or if the applicable legal requirements impose more stringent requirements on AEP to obtain reimbursement of such compensation. AEP may also retain any deferred compensation previously credited to an executive if, when, and to the extent that it otherwise would become payable. This right to reimbursement is in addition to, and not in substitution for, any and all other rights AEP might have to pursue reimbursement or such other remedies against an executive for misconduct in the course of employment by AEP or otherwise based on applicable legal considerations.
Role of the CEO and Compensation Consultant in Determining Executive Compensation.
The HR Committee invites the CEO and all directors to attend HR Committee meetings. The HR Committee regularly holds executive sessions without management present. The Chairman of the Board and the Chair of the HR Committee have the authority to call meetings of the HR Committee.
The CEO has assigned AEP’s Executive Vice President & Chief Administrative Officer and AEP’s Director - Compensation and Executive Benefits to support the HR Committee. These individuals work closely with the HR Committee Chairman, the CEO and Meridian to research and develop requested information, prepare meeting materials, implement the HR Committee’s actions and administer AEP’s executive compensation and benefit programs consistent with the objectives established by the HR Committee. Meetings are held with the CEO, the HR Committee Chairman and Meridian prior to HR Committee meetings to review and finalize the agenda and meeting materials.
The CEO regularly discusses his strategic vision and direction for AEP during HR Committee meetings with Meridian in attendance. Likewise, Meridian regularly discusses compensation strategy alternatives, in light of the CEO’s strategic vision and direction, during HR Committee meetings with the CEO in attendance. The HR Committee believes that this open dialogue and exchange of ideas is important to the development and implementation of a successful executive compensation strategy.
The CEO discusses the individual performance of the named executive officers with the HR Committee and recommends their compensation to the HR Committee. The CEO also has substantial input into salary budgets and changes to incentive targets. The CEO also has substantial input into the development of employment offers for outside candidates for executive positions, although the HR Committee must approve all employment offers for executive officers.
Change In Control Agreements.
The HR Committee provides Change In Control agreements to specified executives, including all the named executive officers, to help align the interests of these executives with those of AEP’s shareholders by mitigating the financial impact that would occur to them if their employment was terminated as a result of a change in control. The HR Committee also considers change in control agreements as an important tool for attracting and retaining executives for some positions. The HR Committee limits participation to those executives whose full support and sustained contributions would be needed during a lengthy and complex corporate transaction.
While the HR Committee believes these agreements are consistent with the practices of its peer companies, the most important reason for these agreements is to protect AEP and the interests of shareholders in the event of an anticipated or actual change in control. During such transitions, retaining and continuing to motivate AEP’s key executives would be critical to protecting shareholder value. In a change of control situation, outside competitors are more likely to try to recruit top performers away from AEP, and our executive officers may consider other opportunities when faced with uncertainty about retaining their positions. Therefore, the HR Committee uses these agreements to provide security and protection to our officers in such circumstances for the long-term benefit of AEP and its shareholders.
The Board has adopted a policy that requires shareholder approval of future executive severance agreements that provide benefits generally exceeding 2.99 times the sum of the named executive officer’s salary plus annual incentive compensation. In consultation with Meridian, the HR Committee periodically reviews change in control agreement practices of companies in our Compensation Peer Group. The HR Committee has found that change in control agreements are common among these companies, and that 2.99 or 3 multiples are the most common for named executive officers. Therefore, the HR Committee approved change in control multiples of 2.99 times base salary and annual incentive compensation for each of the named executive officers. Most of the other executives covered by change in control agreements have a lesser multiple of 2.0 times base salary and annual incentive compensation. All of the agreements have a “double trigger,” which means the severance payments and benefits would be provided only upon a change in control accompanied by an involuntary termination or constructive termination within two years after the change in control.
None of AEP’s Change In Control agreements provide a tax gross-up for excise taxes.
Long-term incentive compensation may also vest in the event of a change in control. In the event an executive’s employment is terminated within one year after a change in control under qualifying conditions, such as by AEP without cause or by the executive for good reason, then all of the executive’s outstanding performance units will vest and be paid at the target performance score. All outstanding RSU awards have a double trigger change in control provision.
Other compensation and benefits provided to executive officers in the event their employment is terminated as a result of a change in control are consistent with that provided in the event an executive’s employment is terminated due to a consolidation, restructuring or downsizing as described below.
Other Employment Separations.
AEP has an Executive Severance Plan that provides severance benefits to selected officers of AEP, including the named executive officers, who agree to its terms, including confidentiality, non-solicitation and non-disparagement obligations. Executives remain eligible for benefits under the general severance plan described below; however, any benefits provided under the Executive Severance Plan will be reduced by any amounts provided under the general severance plan. Benefits for our named executive officers under the Executive Severance Plan (which would be triggered by a good reason resignation or an involuntary termination) include pay continuation of two times their base salary and target annual incentive award payable over two years, and are conditioned on the executive officer’s release of claims against AEP and agreement not to compete with AEP for two years.
AEP also maintains a broad-based severance plan that provides two weeks of base pay per year of service to all employees, including named executive officers, if their employment is terminated due to a consolidation, restructuring or downsizing, subject to the employee’s agreement to waive claims against AEP. In addition, our severance benefits for all employees include outplacement services and access to health benefits at active employee rates for up to 18 months (and at Company-subsidized retiree rates thereafter until age 65 for employees who are at least age 50 with 10 years of service at the time of their employment termination).
Named executive officers and other employees remain eligible for an annual incentive award based on their eligible pay for the year reflecting the portion of the year worked, if they separate from service prior to year-end due to their retirement (on or after age 55 with at least five years of service, except employees who retire as part of a voluntary or involuntary severance program). In the event of a participant’s death, this amount is paid to their estate.
A prorated portion of outstanding performance units vest if a participant retires, which is defined as a termination, other than for cause, after the executive reaches age 55 with five years of service or if a participant is severed. A prorated portion of outstanding performance units would also vest to a participant’s heirs in the event of the participant’s death. The pro-rated performance units are not payable until the end of the performance period and remain subject to all the performance objectives.
In 2016, executive officers were also entitled to 12 months of continued financial counseling service in the event they are severed from service as the result of a restructuring, consolidation or downsizing or they retire (after age 55 and 5 years of AEP service). In the event of their death, their spouse or the executor of their estate would be eligible for this benefit.
Insider Trading, Hedging and Pledging.
AEP’s insider trading policy prohibits directors and executive officers from hedging their AEP stock holdings through short sales and the use of options, warrants, puts and calls or similar instruments. The policy also prohibits directors and executive officers from pledging AEP stock as collateral for any loan.
Tax Considerations.
Section 162(m) of the Internal Revenue Code (Section 162 (m)) limits AEP’s ability to deduct compensation in excess of $1,000,000 paid in any year to AEP’s CEO or any of the next three highest compensated named executive officers other than the CFO (the “162m Officers”). The HR Committee considers the limits imposed by Section 162(m) when designing compensation and benefit programs.
Performance units, which were granted under the shareholder approved Long-Term Incentive Plan, are consistent with the Section 162(m) requirements for tax deductibility by AEP as performance-based compensation. AEP’s Shareholders approved the Long-Term Incentive Plan in 2015; therefore, payments for performance units are potentially tax deductible for AEP.
AEP’s RSUs are not considered to be performance-based under Section 162(m). Therefore, any amounts attributable to those RSUs are not tax deductible if and to the extent that such units cause the compensation of the covered named executive officer to exceed $1,000,000 for the year.
No assurance can be given that awards intended by the HR Committee to satisfy the requirements for qualified performance-based compensation under Section 162(m) will in fact do so. The HR Committee has and may continue to grant awards that may not constitute qualified performance-based compensation under Section 162(m) if the HR Committee determines that granting such awards is in the best interests of AEP.
Executive Compensation
Summary Compensation Table
The following table provides summary information concerning compensation earned by our Chief Executive Officer, our Chief Financial Officer and the three other most highly compensated executive officers, to whom we refer collectively as the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position
|
Year
|
Salary
($)(1)
|
Bonus
($)
|
Stock
Awards
($)(2)
|
Non-
Equity
Incentive
Plan
Compen-
sation
($)(3)
|
Change in
Pension
Value
and Non-
qualified
Deferred
Compen-
sation
Earnings
($)(4)
|
All
Other
Compen-
sation
($)(5)
|
Total
($)
|
|
Nicholas K. Akins-
|
2016
|
1,325,077
|
-
|
6,720,027
|
3,000,000
|
323,949
|
103,687
|
11,472,740
|
|
Chairman of the Board and
Chief Executive Officer
|
2015
|
1,279,900
|
-
|
6,719,981
|
3,150,000
|
199,027
|
103,658
|
11,452,566
|
|
2014
|
1,240,754
|
-
|
6,720,019
|
2,950,000
|
359,787
|
102,960
|
11,373,520
|
|
|
|
|
|
|
|
|
|
|
|
Brian X. Tierney-
|
2016
|
730,800
|
-
|
1,895,038
|
990,000
|
131,575
|
95,026
|
3,842,439
|
|
Executive Vice President and
Chief Financial Officer
|
2015
|
709,246
|
-
|
1,907,216
|
1,100,000
|
0
|
84,125
|
3,800,587
|
|
2014
|
695,339
|
-
|
1,881,251
|
1,050,000
|
269,994
|
82,448
|
3,979,032
|
|
|
|
|
|
|
|
|
|
|
|
Robert P. Powers-
|
2016
|
723,773
|
-
|
1,895,038
|
980,000
|
335,960
|
93,931
|
4,028,702
|
|
Vice Chairman
|
2015
|
709,246
|
-
|
1,888,008
|
1,075,000
|
0
|
90,234
|
3,762,488
|
|
2014
|
695,339
|
-
|
1,881,251
|
1,012,000
|
746,589
|
82,706
|
4,417,885
|
|
|
|
|
|
|
|
|
|
|
|
David M. Feinberg-
|
2016
|
615,358
|
-
|
1,126,919
|
730,000
|
85,179
|
75,435
|
2,632,891
|
|
Executive Vice President and General Counsel
|
2015
|
591,426
|
-
|
998,394
|
800,000
|
59,069
|
68,163
|
2,517,052
|
|
2014
|
568,679
|
-
|
962,482
|
675,000
|
69,384
|
63,293
|
2,338,838
|
|
|
|
|
|
|
|
|
|
|
|
Lisa M. Barton-
|
2016
|
532,039
|
-
|
1,003,030
|
650,000
|
95,020
|
68,007
|
2,348,096
|
|
Executive Vice President- Transmission
|
2015
|
516,750
|
-
|
998,394
|
686,000
|
49,931
|
59,042
|
2,310,117
|
|
2014
|
452,735
|
-
|
804,984
|
540,000
|
71,814
|
47,919
|
1,917,452
|
|
|
|
|
(1)
|
Amounts in the salary column are composed of executive salaries earned for the year shown, which include 261 days of pay for 2016. This is one day more than the standard 260 calendar work days and holidays in a year.
|
|
|
|
|
(2)
|
The amounts reported in this column reflect the aggregate grant date fair value, calculated in accordance with FASB ASC Topic 718, of performance units and RSUs granted under AEP’s Long-Term Incentive Plan. See Note 15 the Consolidated Financial Statements included in AEP’s Form 10-K for the year ended December 31, 2016 for a discussion of the relevant assumptions used in calculating these amounts. With respect to the performance units, the estimates of the grant date fair values determined in accordance with FASB ASC Topic 718 assumes the vesting of 100% of the performance units awarded. The value realized for the performance units, if any, will depend on AEP’s performance during a three-year performance and vesting period. The potential payout can range from 0 percent to 200 percent of the target number of performance units, plus any dividend equivalents. Therefore, the maximum amount payable for the 2016 performance units is equal to $10,080,010 for Mr. Akins; $2,842,526 for each of Messrs. Tierney and Powers; $1,690,378 for Mr. Feinberg and $1,504,608 for Ms. Barton; and the maximum amount payable for the 2015 performance units is equal to $9,407,974 for Mr. Akins, $2,670,090 for Mr. Tierney, $2,643,716 for Mr. Powers, $1,397,704 for Mr. Feinberg and $1,397,704 for Ms. Barton. The RSUs vest over a forty month period.
|
|
|
|
|
(3)
|
The amounts shown in this column are annual incentive compensation paid under the Annual Incentive Compensation Plan for 2016 and the Senior Officer Incentive Plan for 2015 and 2014. At the outset of each year, the HR Committee sets annual incentive targets and performance criteria that are used after year-end to determine if and the extent to which executive officers may receive annual incentive award payments under this plan.
|
|
|
|
|
(4)
|
The amounts shown in this column are attributable to the increase in the actuarial values of each of the named executive officer’s combined benefits under AEP’s qualified and non-qualified defined benefit plans determined using interest rate and mortality assumptions consistent with those used in AEP’s financial statements. See Note 8 to the Consolidated Financial Statements included in AEP’s Form 10-K for the year ended December 31, 2016 for a discussion of the relevant assumptions. None of the named executive officer received preferential or above-market earnings on deferred compensation.
|
(5) Amounts shown in the All Other Compensation column for 2016 include: (a) Company contributions to the Company’s Retirement Savings Plan, (b) Company contributions to
the Company’s Supplemental Retirement Savings Plan and (c) perquisites. The amounts are listed in the following table:
|
|
|
|
|
|
|
|
|
|
Type
|
Nicholas K.
Akins
|
Brian X.
Tierney
|
Robert P.
Powers
|
David M.
Feinberg
|
Lisa M.
Barton
|
|
Retirement Savings Plan Match
|
$11,629
|
$11,925
|
$11,925
|
$11,925
|
$11,925
|
|
Supplemental Retirement Savings Plan Match
|
$78,075
|
$70,302
|
$68,873
|
$51,623
|
$42,771
|
|
Perquisites
|
$13,983
|
$12,799
|
$13,133
|
$11,887
|
$13,311
|
|
Total
|
$103,687
|
$95,026
|
$93,931
|
$75,435
|
$68,007
|
|
|
|
|
|
Perquisites provided in 2016 included: financial counseling and tax preparation services, and, for Mr. Akins, director’s accidental death insurance premium. Executive officers may also have the occasional personal use of event tickets when such tickets are not being used for business purposes, however, there is no associated incremental cost. From time to time executive officers may receive customary gifts from third parties that sponsor sporting events (subject to our policies on conflicts of interest).
|
Grants of Plan-Based Awards for 2016
The following table provides information on plan-based awards granted in 2016 to each of our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Grant
Date
|
Estimated Future
Payouts Under Non-Equity
Incentive Plan Awards(1)
|
Estimated Future
Payouts Under
Equity Incentive Plan
Awards(3)
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(6)
|
Grant Date
Fair
Value of
Stock and
Option
Awards
($)(7)
|
|
Threshold
($)
|
Target
($)
|
Maximum
($)(2)
|
Threshold
(#)(4)
|
Target
(#)
|
Maximum
(#)(5)
|
|
Nicholas K. Akins
|
|
|
|
|
|
|
|
|
|
|
2016 Annual Incentive
Compensation Plan
|
|
-
|
1,648,053
|
4,120,133
|
|
|
|
|
|
|
2016 - 2018 Performance Units
|
2/23/16
|
|
|
|
12,046
|
80,306
|
160,612
|
|
5,040,005
|
|
Restricted Stock Units
|
2/23/16
|
|
|
|
|
|
|
26,769
|
1,680,022
|
|
Brian X. Tierney
|
|
|
|
|
|
|
|
|
|
|
2016 Annual Incentive
Compensation Plan
|
|
-
|
581,806
|
1,454,515
|
|
|
|
|
|
|
2016 - 2018 Performance Units
|
2/23/16
|
|
|
|
3,397
|
22,646
|
45,292
|
|
1,421,263
|
|
Restricted Stock Units
|
2/23/16
|
|
|
|
|
|
|
7,549
|
473,775
|
|
Robert P. Powers
|
|
|
|
|
|
|
|
|
|
|
2016 Annual Incentive
Compensation Plan
|
|
-
|
576,399
|
1,440,998
|
|
|
|
|
|
|
2016 - 2018 Performance Units
|
2/23/16
|
|
|
|
3,397
|
22,646
|
45,292
|
|
1,421,263
|
|
Restricted Stock Units
|
2/23/16
|
|
|
|
|
|
|
7,549
|
473,775
|
|
David M. Feinberg
|
|
|
|
|
|
|
|
|
|
|
2016 Annual Incentive
Compensation Plan
|
|
-
|
428,523
|
1,071,308
|
|
|
|
|
|
|
2016 - 2018 Performance Units
|
2/23/16
|
|
|
|
2,020
|
13,467
|
26,934
|
|
845,189
|
|
Restricted Stock Units
|
2/23/16
|
|
|
|
|
|
|
4,489
|
281,730
|
|
Lisa M. Barton
|
|
|
|
|
|
|
|
|
|
|
2016 Annual Incentive
Compensation Plan
|
|
-
|
370,631
|
926,578
|
|
|
|
|
|
|
2016 - 2018 Performance Units
|
2/23/16
|
|
|
|
1,798
|
11,987
|
23,974
|
|
752,304
|
|
Restricted Stock Units
|
2/23/16
|
|
|
|
|
|
|
3,995
|
250,726
|
|
|
|
|
(1)
|
Represents potential payouts under the 2016 Annual Incentive Compensation Plan (ICP), which are based on base earnings paid during the year.
|
|
|
|
|
(2)
|
The amounts shown in this column represent 250 percent of the target award for each of the named executive officers, which is maximum amount generally payable to any individual employee under the ICP.
|
|
|
|
|
(3)
|
Represents performance units awarded under AEP’s Long-Term Incentive Plan for the 2016-2018 performance period. These awards generally vest at the end of the three year performance period based on our attainment of specified performance measures. For further information on these awards, see the description under 2016 Stock Award Grants below. The number of performance units does not include additional units that may accrue due to dividend credits.
|
|
|
|
|
(4)
|
The amounts shown in the Threshold column represent 15% of the target award for each of the named executive officers because the Operating Earnings per Share measure has a 30% payout for threshold performance, the Total Shareholder Return measure has a 0% payout for threshold performance and these measures are equally weighted. However, the Operating Earnings per Share threshold does not guarantee a minimum payout because the score would be 0% of target if threshold performance is not achieved.
|
|
|
|
|
(5)
|
The amounts shown in this column represent 200 percent of the target award for each of the named executive officers, which is the maximum overall score for the 2016-2018 performance units.
|
|
|
|
|
(6)
|
Represents restricted stock units awarded under the Long-Term Incentive Plan. These awards generally vest in three equal installments on May 1, 2017, May 1, 2018 and May 1, 2019. The number of restricted stock units does not include additional units that may accrue due to dividend credits.
|
|
|
|
|
(7)
|
Amount represents the grant date fair value of performance units and RSUs measured in accordance with FASB ASC Topic 718, utilizing the assumptions discussed in Note 15 to AEP’s consolidated financial statements for the fiscal year ended December 31, 2016, without taking into account estimated forfeitures. With respect to performance units, the grant date fair value assumes the target number of performance units granted will vest. The actual number of performance units earned will depend on AEP’s performance over the 2016 through 2018 period, which could vary from 0 percent to 200 percent of the target award plus dividend credits. The value of performance units earned will be equal to AEP’s average closing share price for the last 20 trading days of the performance period multiplied by the number of performance units earned.
|
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
2016 Stock Award Grants.
Effective February 23, 2016, the named executive officers were granted long-term incentive awards as part of AEP’s regular annual grant cycle. These awards were granted with double trigger change in control provisions that provide early vesting of awards in the event of a change in control and a covered separation from service. Of these awards, 75 percent were granted in the form of performance units for the 2016-2018 three-year performance period that generally vest, subject to the participant’s continued AEP employment, at the end of the performance period. Performance units are generally equivalent in value to shares of AEP common stock. Dividend equivalents are reinvested in additional performance units with the same vesting conditions as the underlying performance units.
The 2016-2018 performance units, including the dividend credits, are subject to two equally weighted performance measures for the three-year performance period, which are:
|
|
|
|
•
|
Three-year total shareholder return relative to the S&P 500 Electric Utilities Industry Index, and
|
|
|
|
|
•
|
Three-year cumulative operating earnings per share relative to a performance objective established by the HR Committee.
|
The scores for these performance measures determine the percentage of the performance units earned at the end of the performance period, which can range from zero percent to 200 percent. Generally, recipients must remain employed by AEP through the end of the vesting period to receive a payout.
The remaining 25 percent of AEP’s long-term incentive awards were granted in the form of RSUs that generally vest, subject to the executive officer’s continued employment, in three equal installments on May 1, 2017, May 1, 2018 and May 1, 2019. Generally, recipients must remain employed by AEP through the vesting date to receive a payout for the RSUs that vest on such date. Upon vesting, the RSUs pay out in cash to executive officers.
Employment Agreements.
Mr. Powers has an agreement with AEP, which credits him with 17 additional years of service under AEP’s Supplemental Benefit Plan. In 1997, AEP granted additional years of credited service to Mr. Powers when he joined AEP to offset pension benefits that he would have been able to earn from his prior employer due to his length of service at that company.
Outstanding Equity Awards at Fiscal Year-End for 2016
The following table provides information with respect to holdings of restricted stock units and performance units by the named executive officers at December 31, 2016. The named executive officers do not have any outstanding stock options.
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
Name
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have
Not Vested
(#)
|
Equity Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other Rights
That Have Not
Vested ($)(1)
|
|
Nicholas K. Akins
|
|
|
|
|
|
2015 - 2017 Performance Units(2)
|
|
|
85,513
|
10,767,797
|
|
2016 - 2018 Performance Units(2)
|
|
|
83,201
|
10,476,670
|
|
2014 Restricted Stock Units(3)
|
16,294
|
1,025,870
|
|
|
|
2015 Restricted Stock Units(4)
|
24,432
|
1,538,239
|
|
|
|
2016 Restricted Stock Units(5)
|
27,734
|
1,746,133
|
|
|
|
Brian X. Tierney
|
|
|
|
|
|
2015 - 2017 Performance Units(2)
|
|
|
24,270
|
3,056,078
|
|
2016 - 2018 Performance Units(2)
|
|
|
23,462
|
2,954,335
|
|
2014 Restricted Stock Units(3)
|
4,562
|
287,224
|
|
|
|
2015 Restricted Stock Units(4)
|
6,935
|
436,628
|
|
|
|
2016 Restricted Stock Units(5)
|
7,821
|
492,410
|
|
|
|
Robert P. Powers
|
|
|
|
|
|
2015 - 2017 Performance Units(2)
|
|
|
24,025
|
3,025,228
|
|
2016 - 2018 Performance Units(2)
|
|
|
23,462
|
2,954,335
|
|
2014 Restricted Stock Units(3)
|
4,562
|
287,224
|
|
|
|
2015 Restricted Stock Units(4)
|
6,865
|
432,220
|
|
|
|
2016 Restricted Stock Units(5)
|
7,821
|
492,410
|
|
|
|
David M. Feinberg
|
|
|
|
|
|
2015 - 2017 Performance Units(2)
|
|
|
12,704
|
1,599,688
|
|
2016 - 2018 Performance Units(2)
|
|
|
13,952
|
1,756,836
|
|
2014 Restricted Stock Units(3)
|
2,334
|
146,949
|
|
|
|
2015 Restricted Stock Units(4)
|
3,631
|
228,608
|
|
|
|
2016 Restricted Stock Units(5)
|
4,651
|
292,827
|
|
|
|
Lisa M. Barton
|
|
|
|
|
|
2015 - 2017 Performance Units(2)
|
|
|
12,704
|
1,599,688
|
|
2016 - 2018 Performance Units(2)
|
|
|
12,419
|
1,563,800
|
|
2014 Restricted Stock Units(3)
|
1,952
|
122,898
|
|
|
|
2015 Restricted Stock Units(4)
|
3,631
|
228,608
|
|
|
|
2016 Restricted Stock Units(5)
|
4,139
|
260,591
|
|
|
|
|
|
|
(1)
|
Pursuant to applicable SEC rules, the market value of the performance units reported in this column was computed by multiplying the closing price of AEP’s common stock on December 31, 2016 ($62.96) by the maximum number of performance units issuable (200% of the target amount set forth in the preceding column) because the results for 2016 were above target for the performance units. However, the actual number of performance units credited upon vesting will be based on AEP’s actual performance over the applicable three year period.
|
|
|
|
|
(2)
|
AEP currently grants performance units at the beginning of each year with a three-year performance and vesting period. This results in awards for overlapping successive three-year performance periods. These awards generally vest at the end of the three year performance period. The performance units awarded for the 2014 - 2016 performance period, including associated dividend credits, vested at December 31, 2016 and are shown in the Options Exercises and Stock Vested for 2016 table below. The awards shown for the 2015 - 2017 and 2016 - 2018 performance periods include performance units resulting from reinvested dividends which are subject to the same performance criteria.
|
|
|
|
|
(3)
|
Amounts include RSUs resulting from reinvested dividends. They will generally vest, subject to the executive officer’s continued employment, on May 1, 2017. These RSUs were granted on December 10, 2013.
|
|
|
|
|
(4)
|
Amounts include RSUs resulting from reinvested dividends. They will generally vest, subject to the executive officer’s continued employment, in two equal installments, on May 1, 2017 and May 1, 2018. These RSUs were granted on February 24, 2015.
|
(5) These RSUs were granted on February 23, 2016 and include restricted stock units resulting from reinvested dividends. They will generally vest, subject to the executive officer’s continued employment, in three equal installments, on May 1, 2017, May 1, 2018 and May 1, 2019.
Option Exercises and Stock Vested for 2016
The following table provides information with respect to the vesting of RSUs and performance units in 2016 that were granted to our named executive officers in previous years. The named executive officers did not exercise any stock options in 2016.
|
|
|
|
|
|
|
|
|
|
Option Awards
|
Stock Awards
|
|
Name
|
Number
of Shares
Acquired
on
Exercise
(#)
|
Value
Realized
on
Exercise
($)
|
Number
of Shares
Acquired
on
Vesting
(#)(1)
|
Value
Realized
on
Vesting ($)
(2)
|
|
Nicholas K. Akins
|
-
|
-
|
231,032
|
14,607,502
|
|
Brian X. Tierney
|
-
|
-
|
64,751
|
4,094,107
|
|
Robert P. Powers
|
-
|
-
|
64,717
|
4,091,919
|
|
David M. Feinberg
|
-
|
-
|
33,114
|
2,093,732
|
|
Lisa M. Barton
|
-
|
-
|
29,601
|
1,871,621
|
|
|
|
|
(1)
|
This column includes the following performance units and related dividend equivalents for the 2014 - 2016 performance period that vested on December 31, 2016: 186,941 for Mr. Akins; 52,334 for each of Messrs. Tierney and Powers; 26,775 for Mr. Feinberg; and 22,393 for Ms. Barton. This column also includes the following RSUs that vested on May 2, 2016: 44,091 for Mr. Akins; 12,417 for Mr. Tierney; 12,383 for Mr. Powers; 6,339 for Mr. Feinberg; and 4,680 for Ms. Barton. This column also includes 2,528 RSUs that vested on October 3, 2016 for Ms. Barton.
|
|
|
|
|
(2)
|
As is required, the value included in this column for the 2014-2016 performance units is computed by multiplying the number of units by the closing price of AEP’s common stock on the vesting date of December 31, 2016 ($62.96). However, the actual value realized from these units was based on the 20-day average closing market price of AEP common stock prior to the vesting date ($61.86). Also as required, this column includes the value of RSUs that vested on May 2, 2016 computed by multiplying the number of units vesting by the closing price of AEP’s common stock on this date, which was $64.36 per share. However, the actual value realized from these units was based on the 20-day average closing market price of AEP common stock prior to the vesting date ($64.776).This column also included the value of RSUs for Ms. Barton that vested on October 3, 2016, which had a market value of $63.51 per share (the closing price of AEP’s common stock on the vesting date).
|
2014 - 2016 Performance Units
Performance units that were granted for the 2014 - 2016 performance period vested on December 31, 2016. The combined score for the 2014-2016 performance period was 163.9 percent of target. The final score calculation for these performance measures is shown in the chart below.
|
|
|
|
|
|
|
|
|
|
|
|
Performance Measures
|
Threshold
Performance
|
Target
Performance
|
Maximum
Payout
Performance
|
Actual
Performance
|
Score
|
Weight
|
Weighted
Score
|
|
3-Year Cumulative Operating
Earnings Per Share
|
$9.90
(30% payout)
|
$10.250
(100% Payout)
|
$10.97
(200% Payout)
|
$11.056
|
200.0%
|
50%
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
3-Year Total
Shareholder Return vs.
S&P Electric Utilities
|
20
th
Percentile
(0% Payout)
|
50
th
Percentile
(100% Payout)
|
80
th
Percentile
(200% Payout)
|
58.3
Percentile
|
127.7%
|
50%
|
63.9%
|
|
Composite Result
|
|
|
|
|
|
|
163.9%
|
Pension Benefits for 2016
The following table provides information regarding the pension benefits for our named executive officers under AEP’s pension plans. The material terms of the plans are described following the table.
|
|
|
|
|
|
|
|
|
Name
|
Plan Name
|
Number of
Years
Credited
Service (#)
|
Present Value
of
Accumulated
Benefit($)(1)
|
Payments
During
Last
Fiscal
Year($)
|
|
Nicholas K Akins
|
AEP Retirement Plan
|
34.6
|
599,058
|
—
|
|
|
CSW Executive Retirement Plan
|
34.6
|
1,344,710
|
—
|
|
Brian X. Tierney
|
AEP Retirement Plan
|
18.7
|
326,573
|
—
|
|
|
AEP Supplemental Benefit Plan
|
18.7
|
1,013,205
|
—
|
|
Robert P. Powers
|
AEP Retirement Plan
|
18.5
|
603,373
|
—
|
|
|
AEP Supplemental Benefit Plan
|
35.5 (2)
|
3,901,685
|
—
|
|
David M. Feinberg
|
AEP Retirement Plan
|
5.7
|
81,087
|
—
|
|
|
AEP Supplemental Benefit Plan
|
5.7
|
211,716
|
—
|
|
Lisa M. Barton
|
AEP Retirement Plan
|
10.1
|
153,106
|
—
|
|
|
AEP Supplemental Benefit Plan
|
10.1
|
210,420
|
—
|
|
|
|
|
(1)
|
The Present Value of Accumulated Benefits is based on the benefit accrued under the applicable plan through December 31, 2016, and the following assumptions (which are consistent with those used in AEP’s financial statements):
|
|
|
|
|
•
|
The named executive officer retires at normal retirement age (age 65), except for Mr. Tierney, whose benefit is calculated at age 62 because he is eligible for an unreduced annuity benefit when he reaches that age, and Mr. Powers whose benefit is calculated as of December 31, 2016 because he is eligible for an unreduced annuity benefit because he has already reached age 62.
|
|
|
|
|
•
|
The named executive commences the payment of benefits (the “accrued benefit”) immediately upon retirement.
|
|
|
|
|
•
|
The value of the annuity benefit at the named executive officer’s assumed retirement age is determined based upon the accrued benefit, an assumed interest rate of 4.05 percent, 3.85 percent and 3.85 percent for the benefits accrued under the AEP Retirement Plan, AEP Supplemental Benefit Plan and the CSW Executive Retirement Plan, respectively, and assumed mortality based upon modified versions of the RP-2014 mortality tables. Base mortality rates are derived from the RP-2014 table factored to 2006 with no collar adjustment for the qualified pension benefits and a white collar adjustment for non-qualified pension benefits. Mortality improvements are projected generationally with rates that grade linearly by year from MP-2014 in 2007 to 0.75% in 2015 and thereafter and that also grade linearly by age to zero at age 95 from age 85. The value of the lump sum benefit at that assumed retirement age is determined based upon the accrued benefit, an assumed interest rate of 4.20 percent and assumed mortality based on current law IRS lump sum mortality. The present value of each named executive officer’s benefits is determined by discounting the value of benefits described above at the assumed retirement age to each executive’s current age using an assumed interest rate of 4.05 percent, 3.85 percent and 3.85 percent for the benefits accrued under the AEP Retirement Plan, AEP Supplemental Benefit Plan and CSW Executive Retirement Plan, respectively.
|
|
|
|
|
•
|
For the AEP Retirement Plan, the present value of the accrued benefit is weighted based on 75 percent lump sum and 25 percent annuity (or 40 percent lump sum and 60 percent annuity for Mr. Powers due to his eligibility for early retirement under the final average pay benefit formula), based on the assumption that participants elect those benefit options in that proportion. For the AEP Supplemental Benefit Plan and the CSW Executive Retirement Plan, the present value of the accrued benefits is weighted based on 100 percent lump sum.
|
|
|
|
|
(2)
|
Under a letter agreement negotiated pursuant to his hire in 1998, AEP credits Mr. Powers with 17 years of service in addition to his actual years of service with AEP to offset pension benefits that he would have been able to earn from his prior employer due to his length of service at that company. The additional years of service credit have augmented the present value of his accumulated benefits under the AEP Supplemental Benefit Plan by $2,308,901. The benefits enhanced under this letter agreement were frozen as of December 31, 2010 (see Final Average Pay Formula below).
|
Overview.
AEP maintains tax-qualified and nonqualified defined benefit pension plans for eligible employees. The nonqualified plans provide (i) benefits that cannot be paid under the tax-qualified plan because of maximum limitations imposed on such plans by the Internal Revenue Code and (ii) benefits pursuant to an individual agreement with one of the named executive officers (Mr. Powers). The plans are designed to provide a retirement income to executives and their spouses, as well as a market competitive benefit opportunity as part of a market competitive total rewards package.
AEP Retirement Plan.
The AEP Retirement Plan is a tax-qualified defined benefit pension plan under which benefits are generally determined by reference to a cash balance formula. The AEP Retirement Plan also encompasses the Central and South West Corporation Cash Balance Retirement Plan (the “CSW Retirement Plan”), which was merged into the AEP Retirement Plan effective December 31, 2008. As of December 31, 2016, each of the named executive officers was vested in their AEP Retirement Plan benefit.
In addition, employees who have continuously participated in the AEP Retirement Plan (but not the CSW Retirement Plan) since December 31, 2000 (“Grandfathered AEP Participants,” which includes Mr. Tierney and Mr. Powers) remain eligible for an alternate pension benefit calculated by reference to a final average pay formula. The benefits under this final average pay formula were frozen as of December 31, 2010.
Cash Balance Formula
. Under the cash balance formula, each participant has an account established to which dollar credits are allocated each year.
|
|
|
|
1.
|
Company Credits.
Each year, participants’ accounts are credited with an amount equal to a percentage of their salary for that year and annual incentive award for the prior year. The applicable percentage is based on the participant’s age and years of service. The following table shows the applicable percentage:
|
|
|
|
|
|
|
Sum of Age Plus
Years of Service
|
Applicable
Percentage
|
|
Less than 30
|
3.0%
|
|
30-39
|
3.5%
|
|
40-49
|
4.5%
|
|
50-59
|
5.5%
|
|
60-69
|
7.0%
|
|
70 or more
|
8.5%
|
Each year, the IRS calculates a limit on the amount of eligible pay that can be used to calculate pension benefits in a qualified plan. For 2016, the limit was $265,000.
|
|
|
|
2.
|
Interest Credits.
All amounts in the cash balance accounts earn interest at the average interest rate on 30-year Treasury securities for the month of November of the prior year, with a floor of 4 percent. For 2016, the interest rate was 4 percent.
|
Final Average Pay Formula
. Grandfathered AEP Participants receive their benefits under the cash balance formula or the final average pay formula, whichever provides the higher benefit. On December 31, 2010, the final average pay benefit payable at the Grandfathered AEP Participant’s normal retirement age was frozen, meaning that their final average pay formula benefit is not affected by the participant’s service or compensation subsequent to this date. This frozen final average pay normal retirement benefit is based on the following calculation as of December 31, 2010: the participant’s then years of service times the sum of (i) 1.1 percent of the participant’s then high 36 consecutive months of base pay (“High 36”); plus (ii) 0.5 percent of the amount by which the participant’s then High 36 exceeded the participant’s applicable average Social Security covered compensation.
Grandfathered AEP Participants may become entitled to a subsidized early retirement benefit under the final average pay formula if they remain employed with AEP through age 55 with at least three years of service. The early retirement benefit payable under the final average pay formula is the unreduced normal retirement age benefit if it commences at age 62 or later. The early retirement benefit is reduced by 3 percent for each year prior to age 62 that the benefits are commenced. Mr. Powers is eligible for an unreduced early retirement benefit.
AEP Supplemental Benefit Plan.
The AEP Supplemental Benefit Plan is a nonqualified defined benefit pension plan. It generally provides eligible participants with benefits that are in excess of those provided under the AEP Retirement Plan (without regard to the provisions now included as the result of the merger of the CSW Retirement Plan into the AEP Retirement Plan) as determined upon the participant’s termination of employment. These excess benefits are calculated under the terms of the AEP Retirement Plan described above with the following modifications: (i) additional years of service or benefit credits are taken into account; (ii) annual incentive pay was taken into account for purposes of the frozen final average pay formula; and (iii) the limitations imposed by the Internal Revenue Code on annual compensation and annual benefits are disregarded. However, eligible pay taken into account under the cash balance formula is limited to the greater of $1 million or two times the participant’s year-end base salary.
Mr. Powers negotiated 17 additional years of service under the AEP Supplemental Benefit Plan when he joined AEP in 1997 to offset pension benefits that he would have been able to earn from his prior employer due to his length of service at that company.
Participants do not become vested in their AEP Supplemental Plan benefit until they become vested in their AEP Retirement Plan benefit or upon a change in control. As of December 31, 2016, each of the named executive officers was fully vested in their AEP Supplemental Benefit Plan benefit.
CSW Executive Retirement Plan.
The CSW Executive Retirement Plan is a nonqualified defined benefit pension plan. It generally provides eligible participants with benefits that are in excess of those provided under the terms of the former CSW Retirement Plan (which was merged into the AEP Retirement Plan) as determined upon the participant’s termination of employment. The excess benefits are calculated without regard to the limitations imposed by the Internal Revenue Code on annual compensation and annual benefits. As of December 31, 2016, Mr. Akins was fully vested in his CSW Executive Retirement Plan benefit.
Nonqualified Deferred Compensation for 2016
The following table provides information regarding contributions, earnings and balances for our named executive officers under AEP’s three non-qualified deferred compensation plans which are each further described below.
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|
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Name
|
Plan
Name(1)
|
Executive
Contributions
in Last FY(2)
($)
|
Registrant
Contributions
in Last FY(3)
($)
|
Aggregate
Earnings
in Last
FY(4)
($)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance at
Last FYE(5)
($)
|
|
Nicholas K. Akins
|
SRSP
|
104,100
|
78,075
|
46,755
|
-
|
1,599,366
|
|
|
ICDP
|
-
|
-
|
11,906
|
-
|
326,005
|
|
|
SORP
|
-
|
-
|
753,815
|
-
|
6,569,464
|
|
Brian X. Tierney
|
SRSP
|
156,226
|
70,302
|
237,843
|
-
|
3,441,925
|
|
|
SORP
|
-
|
-
|
134,642
|
-
|
1,173,398
|
|
Robert P. Powers
|
SRSP
|
91,830
|
68,873
|
277,992
|
-
|
3,825,841
|
|
|
ICDP
|
-
|
-
|
65,611
|
-
|
976,618
|
|
|
SORP
|
-
|
-
|
378,673
|
-
|
3,300,123
|
|
David M. Feinberg
|
SRSP
|
68,831
|
51,623
|
12,614
|
-
|
466,395
|
|
|
SORP
|
9,418
|
-
|
224,737
|
-
|
1,958,577
|
|
Lisa M. Barton
|
SRSP
|
57,028
|
42,771
|
11,798
|
-
|
432,741
|
|
|
ICDP
|
-
|
-
|
447
|
-
|
27,648
|
|
|
SORP
|
502,170
|
-
|
170,377
|
-
|
1,484,825
|
|
|
|
|
(1)
|
“SRSP” is the American Electric Power System Supplemental Retirement Savings Plan, “ICDP” is the American Electric Power System Incentive Compensation Deferral Plan, and “SORP” is the American Electric Power System Stock Ownership Requirement Plan.
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|
|
(2)
|
The amounts set forth under “Executive Contributions in Last FY” for the SRSP are reported in the Summary Compensation Table as either (i) Salary for 2016 or (ii) the Non-Equity Incentive Plan Compensation for 2015. The amount set forth under “Executive Contributions in Last FY” for the SORP for Mr. Feinberg was reported in the Summary Compensation Table in the Stock Awards column for 2013.
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|
|
(3)
|
The amounts set forth under “Registrant Contributions in Last FY” for the SRSP are reported in the All Other Compensation column of the Summary Compensation Table.
|
|
|
|
|
(4)
|
No amounts set forth under “Aggregate Earnings in Last FY” have been reported in the Summary Compensation Table as there were no above market or preferential earnings credited to any named executive officer’s account in any of the plans.
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(5)
|
The amounts set forth in the “Aggregate Balance at Last FYE” column for the SRSP include the SRSP amounts reported in the “Executive Contributions in Last FY” and “Registrant Contributions in Last FY” columns. In addition, the “Aggregate Balance at Last FYE” for the SRSP includes the following amounts previously reported in the Summary Compensation Table for prior years: $813,631 for Mr. Akins, $941,978 for Mr. Tierney, $952,146 for Mr. Powers and $314,546 for Mr. Feinberg. The amounts set forth in the “Aggregate Balance at Last FYE” for the SORP include the SORP amounts reported in the “Executive Contributions in Last FY.” In addition, the “Aggregate Balance at Last FYE” for the SORP includes the following amounts previously reported in the Summary Compensation Table for prior years: $2,670,419 for Mr. Akins, $5,297 for Mr. Tierney, $4,980 for Mr. Powers and $1,607,646 for Mr. Feinberg.
|
Overview.
AEP maintains non-qualified deferred compensation plans that allow eligible employees, including the named executive officers, to defer receipt of a portion of their base salary, annual incentive compensation and performance unit awards. The plans are unfunded. Participants have an unsecured contractual commitment from AEP to pay the amounts due under the plans from the general assets of AEP. AEP maintains the following non-qualified deferred compensation plans for eligible employees:
|
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|
•
|
The American Electric Power System Supplemental Retirement Savings Plan;
|
|
|
|
|
•
|
The American Electric Power System Incentive Compensation Deferral Plan; and
|
|
|
|
|
•
|
The American Electric Power System Stock Ownership Requirement Plan.
|
Supplemental Retirement Savings Plan.
This plan allows eligible participants to save on a pre-tax basis and to continue to receive AEP matching contributions beyond the limits imposed by the Internal Revenue Code on qualified plans of this type.
|
|
|
|
•
|
Participants can defer up to 50 percent of their base salary and annual incentive award in excess of the IRS’ eligible compensation limit for qualified plans, which was $265,000 for 2016, up to $2,000,000.
|
|
|
|
|
•
|
AEP matches 100 percent of the participant’s contributions up to 1 percent of eligible compensation and 70 percent of the participant’s contributions from the next 5 percent of eligible compensation (for a total AEP match of up to 4.5% of eligible compensation).
|
|
|
|
|
•
|
Participants may not withdraw any amount credited to their account until their termination of employment with AEP. Participants may elect a distribution of their account as a lump-sum or annual installment payments over a period of up to 10 years. Participants may delay the commencement of distributions for up to five years from the date of their termination of employment.
|
|
|
|
|
•
|
Participants may direct the investment of their plan account among the core investment options that are available to all employees in AEP’s qualified Retirement Savings Plan and one additional option that provides interest at a rate set each December at 120 percent of the applicable federal long-term rate with monthly compounding. There were no above-market or preferential earnings with respect to the Supplemental Retirement Savings Plan.
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Incentive Compensation Deferral Plan.
This plan allows eligible employees to defer payment of up to 80 percent of vested performance units.
|
|
|
|
•
|
AEP does not offer any matching contributions.
|
|
|
|
|
•
|
Participants may direct the investment of their plan accounts among the core investment options that are available to all employees in AEP’s qualified Retirement Savings Plan. There were no above-market or preferential earnings with respect to the Incentive Compensation Deferral Plan in 2016.
|
|
|
|
|
•
|
Generally, participants may not withdraw any amount credited to their account until their termination of employment with AEP. However, participants may make one withdrawal of amounts attributable to their pre-2005 contributions prior to termination of employment. The withdrawal amount would be subject to a 10 percent withdrawal penalty. Participants may elect among the same payment options for the distributions of their account value as described above for the Supplemental Retirement Savings Plan.
|
Stock Ownership Requirement Plan.
This plan assists executives in achieving their minimum stock ownership requirements. It does this primarily by tracking the executive’s AEP Career Shares. AEP Career Shares are a form of deferred compensation, which are unfunded and unsecured general obligations of AEP. The rate of return on AEP Career Shares is equivalent to the total return on AEP stock with dividends reinvested. Participants may not withdraw any amount credited to their account until their termination of employment with AEP. Participants may elect among the same payment options for the distribution of the value of their AEP Career Shares as described above for the Supplemental Retirement Savings Plan.
Potential Payments Upon Termination of Employment or Change in Control
AEP has entered into agreements and maintains plans that will require AEP to provide compensation to the named executive officers in the event of a termination of their employment or a change in control of AEP. Actual payments will depend on the circumstances and timing of any termination of employment or change of control. In addition, in connection with any actual termination or change in control transaction, we may enter into agreements or establish arrangements that provide additional or alternative benefits or amounts from those described below. The agreements and plans summarized below are complex legal documents with terms and conditions having precise meanings, which are designed to address many possible but currently hypothetical situations.
Severance.
AEP currently provides full-time employees, including the named executive officers, with severance benefits if their employment is terminated as the direct result of a restructuring or downsizing (“Severance-Eligible Employees”) and the employee releases AEP from any and all claims. These severance benefits include:
|
|
|
|
•
|
A lump sum severance payment equal to two weeks of base pay for each year of AEP service, with a minimum of 8 weeks for employees with at least one year of AEP service;
|
|
|
|
|
•
|
Continued eligibility for medical and dental benefits at the active employee rates for eighteen months or until the participant becomes eligible for coverage from another employer, whichever occurs first;
|
|
|
|
|
•
|
For employees who are at least age 50 with 10 years of AEP service and who do not qualify for AEP’s retiree medical benefits or who will be bridged to such retiree benefit eligibility (described below), AEP also provides medical and dental benefit eligibility at rates equivalent to those provided to retirees until age 65 or until the participant becomes eligible for coverage from another employer, whichever occurs first; and
|
|
|
|
|
•
|
Outplacement services, the incremental cost of which may be up to $28,000 for executive officers.
|
Severance-Eligible Employees who have enough weeks of severance (up to one year) and vacation to cover a period that would allow them to become eligible for retiree medical benefits, which is available to those employees who are at least age 55 with at least 10 years of service (“Retirement-Eligible Employees”) are retained as employees on a paid leave of absence until they become retirement eligible. This benefit applies in lieu of severance and unused vacation payments that these employees would otherwise receive. AEP pays any remaining severance and vacation pay at the time of their retirement. This delay of an employee’s termination date does not apply to the plans providing nonqualified deferred compensation, which define a participant’s termination date by reference to Internal Revenue Code Section 409A.
A Severance-Eligible executive’s termination entitles that executive to a pro-rata portion of any outstanding unvested performance units that the executive has held for at least six months and to the payment of a pro-rata portion of any RSUs to the extent not already vested and paid. The pro-rated performance units will not become payable until the end of the performance period and remain subject to all performance objectives.
Severance-Eligible executives may continue financial counseling and tax preparation services for one year following their termination up to a maximum annual incremental cost to AEP for 2016 of $13,390 plus related incidental expenses of the advisor.
AEP also has an Executive Severance Plan (Executive Severance Plan) that provides severance benefits to selected officers of AEP, including the named executive officers, subject to the executive’s agreement to comply with the provisions of the plan, including confidentiality, non-solicitation, cooperation and non-disparagement provisions during their employment and following termination. Executives remain eligible for benefits under the general severance plan described above; however, any benefits provided under the Executive Severance Plan will be reduced by any amounts provided under the general severance plan. Benefits under the Executive Severance Plan would be triggered by a resignation for “good reason” or an involuntary termination by AEP without “cause” (each as defined below).
The term “cause” with respect to the Executive Severance Plan means:
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|
|
|
(i)
|
Failure or refusal to perform a substantial part of the executive’s assigned duties and responsibilities following notice and a reasonable opportunity to cure (if such failure is capable of cure);
|
|
|
|
|
(ii)
|
Commission of an act of willful misconduct, fraud, embezzlement or dishonesty either in connection with the executive’s duties to AEP or which otherwise is injurious to the best interest or reputation of AEP;
|
|
|
|
|
(iii)
|
Repeated failure to follow specific lawful directions of the Board or any officer to whom the executive reports;
|
|
|
|
|
(iv)
|
A violation of any of the material terms and conditions of any written agreement or agreements the executive may from time to time have with AEP;
|
|
|
|
|
(v)
|
A material violation of any of the rules of conduct of behavior of AEP;
|
|
|
|
|
(vi)
|
Conviction of, or plea of guilty or nolo contendere to, (A) a felony, (B) a misdemeanor involving an act of moral turpitude, or (C) a misdemeanor committed in connection with the executive’s employment with AEP which is injurious to the best interest or reputation of AEP; or
|
|
|
|
|
(vii)
|
Violation of any applicable confidentiality, non-solicitation, or non-disparagement covenants or obligations relating to AEP (including the provisions to which the executive agreed when enrolling in the plan).
|
An executive’s termination of employment that is covered by his or her change in control agreement (described in the next section) or due to mandatory retirement, disability or death would not be considered an involuntary termination that may trigger the payment of benefits under the Executive Severance Plan.
An executive would have “good reason” for resignation under the Executive Severance Plan if there is any reduction in the executive’s then current annual base salary without the executive’s consent; provided, however, that a uniform percentage reduction of 10% or less in the annual base salary of all executives participating in the Executive Severance Plan who are similarly situated would not be considered good reason for resignation. Also, AEP must be given 10 days following receipt of written notice from the executive to restore the executive’s base salary before his or resignation may trigger plan benefits.
If benefits under the Executive Severance Plan are triggered, the affected named executive officers would receive two times their base salary and target annual incentive payable over two years. In addition, a pro-rated portion of their outstanding unvested performance units and RSUs would vest. The pro-rated performance units will not become payable until the end of the performance period and remain subject to all performance objectives. Any severance benefits payable under the Executive Severance Plan and prorated vesting of RSUs are conditioned on the execution of an agreement by the executive officer releasing claims against AEP and committing to a non-competition obligation.
Change In Control.
AEP defines “change in control” under its change in control agreements and Long-Term Incentive Plan as:
|
|
|
|
•
|
The acquisition by any person of the beneficial ownership of securities representing more than one-third of AEP’s voting stock;
|
|
|
|
|
•
|
A merger or consolidation of AEP with another corporation unless AEP’s voting securities outstanding immediately before such merger or consolidation continue to represent at least two-thirds of the total voting power of the surviving entity outstanding immediately after such merger or consolidation; or
|
|
|
|
|
•
|
Approval by the shareholders of the liquidation of AEP or the disposition of all or substantially all of the assets of AEP.
|
AEP has a change in control agreement with each of the named executive officers that is triggered if there is a Qualifying Termination of the named executive officer’s employment. A “Qualifying Termination” for this purpose generally occurs when the executive’s employment is terminated in connection with that change in control (i) by AEP without “cause” or (ii) by the named executive officer for “good reason”, each as defined below. Such termination must be no later than two years after the change in control. These agreements provide for:
|
|
|
|
•
|
A lump sum payment equal to 2.99 times the named executive officer’s annual base salary plus target annual incentive compensation award under the annual incentive program as in effect at the time of termination; and
|
The term “cause” with respect to AEP’s change in control agreements means:
|
|
|
|
(i)
|
The willful and continued failure of the executive to perform the executive’s duties after a written demand for performance is delivered to the executive by the Board; or
|
|
|
|
|
(ii)
|
The willful conduct or omission by the executive, which the Board determines to be illegal; gross misconduct that is injurious to AEP; or a breach of the executive’s fiduciary duty to AEP.
|
The term “good reason” with respect to AEP’s change in control agreements means:
|
|
|
|
(i)
|
An adverse change in the executive’s status, duties or responsibilities from that in effect immediately prior to the change in control;
|
|
|
|
|
(ii)
|
AEP’s failure to pay in a timely fashion the salary or benefits to which the executive is entitled under any employment agreement in effect on the date of the change in control;
|
|
|
|
|
(iii)
|
The reduction of the executive’s salary as in effect on the date of the change in control;
|
|
|
|
|
(iv)
|
Any action taken by AEP that would substantially diminish the aggregate projected value of the executive’s awards or benefits under AEP’s benefit plans or policies;
|
|
|
|
|
(v)
|
A failure by AEP to obtain from any successor the assent to the change in control agreement; or
|
|
|
|
|
(vi)
|
The relocation, without the executive’s prior approval, of the office at which the executive is to perform services to a location that is more than fifty (50) miles from its location immediately prior to the change in control.
|
AEP must be given notice and an opportunity to cure any of these circumstances before they would be considered to be “good reason.”
All awards under the Long-Term Incentive Plan will vest upon a “Qualifying Termination”, which may occur coincident with or within one year after a change in control. The term “Qualifying Termination” with respect to long-term incentive awards generally is the same as that described for the change in control agreements, except that an executive’s mandatory retirement at age 65 is explicitly excluded, and “Cause” is defined more broadly to encompass:
|
|
|
|
(i)
|
Failure or refusal to perform assigned duties and responsibilities in a competent or satisfactory manner;
|
|
|
|
|
(ii)
|
Commission of an act of dishonesty, including, but not limited to, misappropriation of funds or any property of AEP;
|
|
|
|
|
(iii)
|
Engagement in activities or conduct injurious to the best interest or reputation of AEP;
|
|
|
|
|
(v)
|
Violation of any material term or condition of any written agreement with AEP;
|
|
|
|
|
(vi)
|
Violation of any of AEP’s rules of conduct of behavior;
|
|
|
|
|
(vii)
|
Commission of a felony, a misdemeanor involving an act of moral turpitude, or a misdemeanor committed in connection with employment at AEP which is injurious to the best interest or reputation of AEP; or
|
|
|
|
|
(viii)
|
Disclosure, dissemination, or misappropriation of confidential, proprietary, and/or trade secret information.
|
In addition, performance units would be deemed to have been fully earned at 100 percent of the target score upon a “Qualifying Termination” following a change in control. The value of each vested performance unit following a “Qualifying Termination” would be (1) the closing price of a share of AEP common stock on the date of the Qualifying Termination or (2) if the date of the Qualifying Termination is coincident with the change in control and if the change in control is the result of a tender offer, merger, or sale of all or substantially all of the assets of AEP, the price paid per share of common stock in that transaction.
The AEP Supplemental Benefit Plan also provides that all accrued supplemental retirement benefits to the extent then unvested become fully vested upon a change in control.
Termination Scenarios
The following tables show the incremental compensation and benefits that would have been paid to each named executive officer who was employed by AEP on December 31, 2016 assuming the hypothetical circumstances cited in each column occurred on December 31, 2016 and calculated in accordance with the methodology required by the SEC. In connection with any actual termination or change in control, AEP may enter into agreements or establish arrangements that provide additional benefits or amounts, or may alter the terms of benefits described below.
With respect to annual incentive compensation for the completed year, the initial calculated annual incentive opportunity is shown, before any individual discretionary adjustment, which varies from the actual value paid and reported in the Summary Compensation Table.
The values shown in the change in control column are triggered only if the named executive officer’s employment is terminated under the circumstances (described above under Change In Control) that trigger the payment or provision of each of the types of compensation and benefits shown.
No information is provided for terminations due to disability because it is not generally AEP’s practice to terminate the employment of any employee so long as they remain eligible for AEP’s long-term disability benefits. AEP successively provides sick pay and then long-term disability benefits for up to two years to employees with a disability that prevents them from returning to their job. Such disability benefits continue for employees that cannot perform any occupation for which they are reasonably qualified generally until the employee reaches age 65. Because disabled participants remain employed by AEP, they continue to vest in long-term incentive awards while they are disabled. AEP treats a participant’s disability as a termination to the extent required by the regulations issued under Internal Revenue Code Section 409A, but such terminations only trigger the payment of benefits that had previously vested. Employment may be terminated due to disability under a separate definition of employment termination that applies to restricted stock unit awards and compensation and benefit programs that may be considered non-qualified deferred compensation under Section 409A of the Internal Revenue Code. However restricted stock unit awards allow participants terminated due to disability to continue to vest as if their employment had continued so long as they remain continuously disabled.
Potential Incremental Compensation and Benefits
That Would Have Been Provided as the Result of Employment Termination
as of December 31, 2016
For Nicholas K. Akins
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments
Upon Termination
|
Resignation
or Retirement
|
Severance
|
Involuntary
Termination
for Cause
|
Change In
Control
|
Death
|
|
Compensation:
|
|
|
|
|
|
|
Base Salary ($1,320,000)
|
$ 0
|
$2,640,000
|
$0
|
$3,946,800
|
$ 0
|
|
Annual Incentive for Completed Year(1)
|
$2,809,930
|
$2,809,930
|
$0
|
$2,809,930
|
$2,809,930
|
|
Other Payment for Annual Incentives(2)
|
$ 0
|
$3,300,000
|
$0
|
$4,933,500
|
$ 0
|
|
Long-Term Incentives:(3)
|
|
|
|
|
|
|
2015-2017 Performance Units(4)
|
$3,589,266
|
$3,589,266
|
$0
|
$5,383,898
|
$3,589,266
|
|
2016-2018 Performance Units(4)
|
$1,746,112
|
$1,746,112
|
$0
|
$5,238,335
|
$1,746,112
|
|
2014 Restricted Stock Units
|
$ 0
|
$ 695,680
|
$0
|
$1,025,870
|
$1,025,870
|
|
2015 Restricted Stock Units
|
$ 0
|
$ 610,652
|
$0
|
$1,538,239
|
$1,538,239
|
|
2016 Restricted Stock Units
|
$ 0
|
$ 523,840
|
$0
|
$1,746,133
|
$1,746,133
|
|
Benefits:
|
|
|
|
|
|
|
Financial Counseling
|
$ 0
|
$ 13,390
|
$0
|
$ 13,390
|
$ 13,390
|
|
Outplacement Services(5)
|
$ 0
|
$ 28,000
|
$0
|
$ 28,000
|
$ 0
|
|
Total Incremental Compensation and Benefits
|
$8,145,308
|
$15,956,870
|
$0
|
$26,664,095
|
$12,468,940
|
Notes for the Potential Incremental Termination Scenario tables are provided collectively following the last such table.
Potential Incremental Compensation and Benefits
That Would Have Been Provided as the Result of Employment Termination
as of December 31, 2016
For Brian X. Tierney
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon
Termination
|
Resignation
or Retirement
|
Severance
|
Involuntary
Termination
for Cause
|
Change In
Control
|
Death
|
|
Compensation:
|
|
|
|
|
|
|
Base Salary ($728,000)
|
$ 0
|
$1,456,000
|
$0
|
$2,176,720
|
$ 0
|
|
Annual Incentive for Completed Year(1)
|
$991,979
|
$ 991,979
|
$0
|
$ 991,979
|
$ 991,979
|
|
Other Payment for Annual Incentives(2)
|
$ 0
|
$1,164,800
|
$0
|
$1,741,376
|
$ 0
|
|
Long-Term Incentives:(3)
|
|
|
|
|
|
|
2015-2017 Performance Units(4)
|
$ 0
|
$1,018,693
|
$0
|
$1,582,039
|
$1,018,693
|
|
2016-2018 Performance Units(4)
|
$ 0
|
$ 492,389
|
$0
|
$1,477,168
|
$ 492,389
|
|
2014 Restricted Stock Units
|
$ 0
|
$ 194,755
|
$0
|
$ 287,224
|
$ 287,224
|
|
2015 Restricted Stock Units
|
$ 0
|
$ 173,314
|
$0
|
$ 436,628
|
$ 436,628
|
|
2016 Restricted Stock Units
|
$ 0
|
$ 147,723
|
$0
|
$ 492,410
|
$ 492,410
|
|
Benefits:
|
|
|
|
|
|
|
Financial Counseling
|
$ 0
|
$ 13,390
|
$0
|
$ 13,390
|
$ 13,390
|
|
Outplacement Services(5)
|
$ 0
|
$ 28,000
|
$0
|
$ 28,000
|
$ 0
|
|
Total Incremental Compensation and Benefits
|
$991,979
|
$5,681,043
|
$0
|
$9,172,394
|
$3,732,713
|
Notes for the Potential Incremental Termination Scenario tables are provided collectively following the last such table.
Potential Incremental Compensation and Benefits
That Would Have Been Provided as the Result of Employment Termination
as of December 31, 2016
For Robert P. Powers
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon
Termination
|
Resignation
or Retirement
|
Severance
|
Involuntary
Termination
for Cause
|
Change-In-
Control
|
Death
|
|
Compensation:
|
|
|
|
|
|
|
Base Salary ($721,000)
|
$ 0
|
$1,442,000
|
$0
|
$2,155,790
|
$ 0
|
|
Annual Incentive for Completed Year(1)
|
$ 982,761
|
$ 982,761
|
$0
|
$ 982,761
|
$ 982,761
|
|
Other Payment for Annual Incentives(2)
|
$ 0
|
$1,153,600
|
$0
|
$1,724,632
|
$ 0
|
|
Long-Term Incentives:(3)
|
|
|
|
|
|
|
2015-2017 Performance Units(4)
|
$1,008,409
|
$1,008,409
|
$0
|
$1,512,614
|
$1,008,409
|
|
2016-2018 Performance Units(4)
|
$492,389
|
$ 492,389
|
$0
|
$1,477,168
|
$ 492,389
|
|
2014 Restricted Stock Units
|
$ 0
|
$ 194,755
|
$0
|
$ 287,224
|
$ 287,224
|
|
2015 Restricted Stock Units
|
$ 0
|
$ 171,566
|
$0
|
$ 432,220
|
$ 432,220
|
|
2016 Restricted Stock Units
|
$ 0
|
$ 147,723
|
$0
|
$ 492,410
|
$ 492,410
|
|
Benefits:
|
|
|
|
|
|
|
Financial Counseling
|
$ 0
|
$ 13,390
|
$0
|
$ 13,390
|
$ 13,390
|
|
Outplacement Services(5)
|
$ 0
|
$ 28,000
|
$0
|
$ 28,000
|
$ 0
|
|
Total Incremental Compensation and Benefits
|
$2,483,559
|
$5,634,593
|
$0
|
$9,106,209
|
$3,708,803
|
Notes for the Potential Incremental Termination Scenario tables are provided collectively following the last such table.
Potential Incremental Compensation and Benefits
That Would Have Been Provided as the Result of Employment Termination
as of December 31, 2016
For David M. Feinberg
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon
Termination
|
Resignation
or Retirement
|
Severance
|
Involuntary
Termination
for Cause
|
Change In
Control
|
Death
|
|
Compensation:
|
|
|
|
|
|
|
Base Salary ($613,000)
|
$ 0
|
$1,226,000
|
$0
|
$1,832,870
|
$ 0
|
|
Annual Incentive for Completed
Year(1)
|
$730,631
|
$ 730,631
|
$0
|
$ 730,361
|
$ 730,361
|
|
Other Payment for Annual
Incentives(2)
|
$ 0
|
$ 858,200
|
$0
|
$1,283,009
|
$ 0
|
|
Long-Term Incentives:(3)
|
|
|
|
|
|
|
2015-2017 Performance Units(4)
|
$ 0
|
$ 533,229
|
$0
|
$ 799,844
|
$ 533,229
|
|
2016-2018 Performance Units(4)
|
$ 0
|
$ 292,806
|
$0
|
$ 878,418
|
$ 292,806
|
|
2014 Restricted Stock Units
|
$ 0
|
$ 99,637
|
$0
|
$ 146,949
|
$ 146,949
|
|
2015 Restricted Stock Units
|
$ 0
|
$ 90,725
|
$0
|
$ 228,608
|
$ 228,608
|
|
2016 Restricted Stock Units
|
$ 0
|
$ 87,848
|
|
$ 292,827
|
$ 292,827
|
|
Benefits:
|
|
|
|
|
|
|
Financial Counseling
|
$ 0
|
$ 13,390
|
$0
|
$ 13,390
|
$ 13,390
|
|
Outplacement Services(5)
|
$ 0
|
$ 28,000
|
$0
|
$ 28,000
|
$ 0
|
|
Total Incremental Compensation and Benefits
|
$730,631
|
$3,960,466
|
$0
|
$6,234,546
|
$2,238,440
|
Notes for the Potential Incremental Termination Scenario tables are provided collectively following the last such table.
Potential Incremental Compensation and Benefits
That Would Have Been Provided as the Result of Employment Termination
as of December 31, 2016
For Lisa M. Barton
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon
Termination
|
Resignation
or Retirement
|
Severance
|
Involuntary
Termination
for Cause
|
Change-In-
Control
|
Death
|
|
Compensation:
|
|
|
|
|
|
|
Base Salary ($530,000)
|
$ 0
|
$1,060,000
|
$0
|
$1,584,700
|
$ 0
|
|
Annual Incentive for Completed
Year(1)
|
$631,926
|
$ 631,926
|
$0
|
$ 631,926
|
$ 631,926
|
|
Other Payment for Annual
Incentives(2)
|
$ 0
|
$ 742,000
|
$0
|
$1,109,290
|
$ 0
|
|
Long-Term Incentives:(3)
|
|
|
|
|
|
|
2015-2017 Performance Units(4)
|
$ 0
|
$ 533,229
|
$0
|
$ 799,844
|
$ 533,229
|
|
2016-2018 Performance Units(4)
|
$ 0
|
$ 260,633
|
$0
|
$ 781,900
|
$ 260,633
|
|
2014 Restricted Stock Units
|
$ 0
|
$ 83,338
|
$0
|
$ 122,898
|
$ 122,898
|
|
2015 Restricted Stock Units
|
|
$ 90,725
|
|
$ 228,608
|
$ 228,608
|
|
2016 Restricted Stock Units
|
$ 0
|
$ 78,177
|
$0
|
$ 260,591
|
$ 260,591
|
|
Benefits:
|
|
|
|
|
|
|
Financial Counseling
|
$ 0
|
$ 13,390
|
$0
|
$ 13,390
|
$ 13,390
|
|
Outplacement Services(5)
|
$ 0
|
$ 28,000
|
$0
|
$ 28,000
|
$ 0
|
|
Total Incremental Compensation and Benefits
|
$631,926
|
$3,521,418
|
$0
|
$5,561,147
|
$2,051,275
|
|
|
|
|
(1)
|
Executive officers and all other employees are eligible for an annual incentive award based on their earnings for the year if they remain employed with AEP through year-end, if they die or if they incur a retirement-eligible termination. The amount shown is the calculated annual incentive opportunity, but annual incentives for executive officers are awarded at the discretion of the HR Committee or independent members of the Board pursuant to the award determination process described in the Compensation Discussion and Analysis.
|
|
|
|
|
(2)
|
The amount shown in the Severance column is two times the target annual incentive opportunity for each of the named executive officers. The amount shown in the Change-In-Control column is 2.99 times the target annual incentive opportunity for each of the named executive officers.
|
|
|
|
|
(3)
|
The long-term incentive values shown represent the values that would be paid under such circumstances shown in each column based on the closing price of AEP common stock on December 31, 2016, which is the methodology required by the SEC. These amounts differ from the values calculated in accordance with FASB ASC Topic 718. These amounts also differ from the amounts that would actually be paid under such circumstances, which would be based on the 20-day average closing market price of AEP common stock as of the end of the performance period for performance units and as of the termination date for Restricted Stock Units.
|
|
|
|
|
(4)
|
The target value of performance unit awards are shown. The actual value paid in the event of resignation or retirement, severance or death, if any, will depend on the actual performance score for the full performance period. Any payments for awards under those circumstances are not paid until the end of the three year performance period. In the event of a qualifying termination in connection with a change in control, awards would be paid at a target performance score as soon as administratively practical after the change in control.
|
|
|
|
|
(5)
|
Represents the maximum cost of AEP-paid outplacement services, which AEP provides through an unaffiliated third party vendor.
|
The following table shows the value of previously earned and vested compensation and benefits as of December 31, 2016, that would have been provided to each named executive officer following a termination of his or her employment on December 31, 2016. These amounts were generally earned or vested over multiple years of service to AEP.
Non-Incremental Post-Termination Compensation and Benefits on December 31, 2016
|
|
|
|
|
|
|
|
|
|
Name
|
Long-Term Incentives
|
Benefits
|
|
|
Vested
Performance
Units
(1)
|
AEP Career
Shares
(2)
|
Vacation
Payout
(3)
|
Post
Retirement
Benefits
(4)
|
Deferred
Compensation
(5)
|
|
Nicholas K. Akins
|
$11,769,805
|
$6,686,289
|
$76,154
|
$1,928,163
|
$1,925,371
|
|
Brian X. Tierney
|
$ 3,294,949
|
$1,194,288
|
$26,642
|
$1,270,763
|
$3,441,925
|
|
Robert P. Powers
|
$ 3,294,949
|
$3,358,790
|
$13,750
|
$4,779,432
|
$4,802,459
|
|
David M. Feinberg
|
$ 1,685,754
|
$1,993,377
|
$42,144
|
$ 288,832
|
$ 466,395
|
|
Lisa M. Barton
|
$ 1,409,863
|
$1,511,229
|
$15,798
|
$ 357,706
|
$ 460,389
|
|
|
|
|
(1)
|
Represents the value of performance units that vested on December 31, 2016 calculated using the market value of these shares on December 31, 2016. However, the actual value realized or deferred from these performance units was based on the 20-day average closing market price of AEP common stock on the vesting date.
|
|
|
|
|
(2)
|
Represents the value of AEP share equivalents deferred mandatorily into the AEP Stock Ownership Requirement Plan calculated using the market value of these shares on December 31, 2016. However, the actual value that would have been realized from these AEP share equivalents would have been based on the 20-day average closing market price of AEP common stock at the end of the month of employment termination.
|
|
|
|
|
(3)
|
Represents accumulated but unused vacation.
|
|
|
|
|
(4)
|
Represents the lump sum benefit calculated for the named executive officer pursuant to the terms of the AEP Retirement Plan, the AEP Supplemental Benefit Plan and the CSW Executive Retirement Plan, as applicable.
|
|
|
|
|
(5)
|
Includes balances from the Supplemental Retirement Savings Plan and the Incentive Compensation Deferral Plans, but does not include AEP Career Share balances, which are listed separately in column (2).
|
TRANSACTIONS WITH RELATED PERSONS
The American Electric Power Company, Inc. Related Person Transaction Approval Policy was adopted by AEP’s Board in December 2006. The written Policy is administered by AEP’s Board of Directors’ Committee on Directors and Corporate Governance (“Corporate Governance Committee”).
The Policy defines a “Transaction with a Related Person” as any transaction or series of transactions in which (i) the Company or a subsidiary is a participant, (ii) the aggregate amount involved exceeds $120,000 and (iii) any “Related Person” has a direct or indirect material interest. A “Related Person” is any director or executive officer of AEP and any immediate family member of any such person.
The Corporate Governance Committee considers all of the relevant facts and circumstances in determining whether or not to approve a Transaction with a Related Person and approves only those transactions that it believes are in the best interests of the Company and its shareholders. The Corporate Governance Committee considers various factors, including, among other things: the nature of the Related Person’s interest in the transaction; whether the transaction involves arm’s-length bids or market prices and terms; the materiality of the transaction to each party; the availability of the product or services through other sources; whether the transaction would impair the judgment of a director or executive officer to act in the best interest of the Company; the acceptability of the transaction to the Company’s regulators; and in the case of a non-employee director, whether the transaction would impair his or her independence or status as an “outside” or “non-employee” director.
If Company management determines it is impractical or undesirable to wait until a meeting of the Corporate Governance Committee to consummate a Transaction with a Related Person, the Chair of the Corporate Governance Committee may review and approve the Transaction with a Related Person. Any such approval is reported to the Corporate Governance Committee at or before its next regularly scheduled meeting.
No approval or ratification of a Transaction with a Related Person supersedes the requirements of AEP’s Principles of Business Conduct applicable to any executive officer. To the extent applicable, any Transaction with a Related Person is also considered in light of the requirements set forth in those documents.
Since January 1, 2017, there have been no transactions, and there are no currently proposed transactions, involving an amount exceeding $120,000 in which AEP was or is expected to be a participant and in which any Related Person had a direct or indirect material interest.
None of the managers of the Company are independent.
THE EXCHANGE OFFERS
Purpose and Effect of the Exchange Offers
The Outstanding Notes were issued on November 21, 2016 and sold to the initial purchasers pursuant to a purchase agreement in transactions not requiring registration under the Securities Act. The initial purchasers subsequently sold the Outstanding Notes to qualified institutional buyers (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A, and to persons in offshore transactions in reliance on Regulation S under the Securities Act.
We entered into a registration rights agreement with representatives of the initial purchasers of the Outstanding Notes in which we agreed, under certain circumstances, to file a registration statement relating to offers to exchange the Outstanding Notes for Exchange Notes and to use commercially reasonable efforts to cause such registration statement to be declared effective under the Securities Act no later than 270 days after the original issue date of the Outstanding Notes and to pay additional interest as described below if we do not consummate the Exchange Offers within 315 days after the issue date of the Outstanding Notes. The Exchange Notes will have terms identical in all material respects to the Outstanding Notes of the related series, except that the Exchange Notes will not contain certain terms with respect to transfer restrictions, registration rights and additional interest for failure to observe certain obligations in the registration rights agreement.
Under the circumstances set forth below, we will use commercially reasonable efforts to cause the SEC to declare effective a shelf registration statement with respect to the resale of the Outstanding Notes within the time periods specified in the registration rights agreement and keep the statement effective for one year from the original issue date of the Outstanding Notes, or such shorter period as described in the registration rights agreement. These circumstances include:
|
|
|
|
•
|
if a change in law or in applicable interpretations of the staff of the SEC does not permit us to effect a registered exchange offer;
|
|
|
|
|
•
|
if a registered exchange offer is not consummated within 315 days after the date of issuance of the Outstanding Notes;
|
|
|
|
|
•
|
if any initial purchaser of the Outstanding Notes so requests with respect to Notes not eligible to be exchanged for Exchange Notes in the Exchange Offer and held by it following consummation of the Exchange Offer; or
|
|
|
|
|
•
|
if any holder (other than a holder that is a broker-dealer electing to exchange Outstanding Notes acquired for its own account as a result of market making activities or other trading activities) notifies us during the 20 business days following consummation of an Exchange Offer that it was not eligible to participate in such Exchange Offer or any holder (other than a holder that is a broker-dealer electing to exchange Outstanding Notes acquired for its own account as a result of market making activities or other trading activities) who participates in an Exchange Offer does not receive freely tradeable Exchange Notes in such Exchange Offer.
|
Except for certain circumstances specified in the registration rights agreement, we will pay additional interest if:
|
|
|
|
•
|
neither a registration statement relating to offers to exchange the Outstanding Notes for Exchange Notes nor a shelf registration statement with respect to the resale of the Outstanding Notes (if required) is filed by us within the applicable time periods specified above;
|
|
|
|
|
•
|
neither the Exchange Offer registration statement nor a shelf registration statement (if required) is declared effective by the SEC within the applicable time periods specified above;
|
|
|
|
|
•
|
the applicable Exchange Offer is not consummated within 315 days after the initial issuance of the Outstanding Notes (or if the 315th day is not a business day, by the first business day thereafter); or
|
|
|
|
|
•
|
after the Exchange Offer registration statement or the shelf registration statement, as the case may be, is declared effective, such Exchange Offer registration statement or shelf registration statement thereafter ceases to be effective or usable (subject to certain exceptions) in connection with resales of Exchange Notes or Outstanding Notes, as the case may be, as provided in and during the periods specified in the registration rights agreement.
|
We sometimes refer to an event referred to in the first through fourth bullet items above as a Registration Default.
Additional interest, if payable, will be payable on the Outstanding Notes at a rate of 0.25% per annum for the first 90 days from and including the date on which any Registration Default occurs, and such additional interest rate shall increase by an additional 0.25% per annum thereafter; provided, however, that the additional interest rate on the Outstanding Notes will not at any time exceed 0.50% per annum. Additional interest will cease to accrue on and after the date on which all Registration Defaults have been cured. Any such additional interest payable will be payable on interest payment dates in addition to interest payable from time to time on the Outstanding Notes and Exchange Notes.
If you wish to exchange your Outstanding Notes for Exchange Notes in any of the Exchange Offers, you will be required to make the following written representations:
|
|
|
|
•
|
you are not our affiliate within the meaning of Rule 405 of the Securities Act;
|
|
|
|
|
•
|
you have no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of the Exchange Notes in violation of the provisions of the Securities Act;
|
|
|
|
|
•
|
you are not engaged in, and do not intend to engage in, a distribution of the Exchange Notes; and you are acquiring the Exchange Notes in the ordinary course of your business.
|
Each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes, where the broker-dealer acquired the Outstanding Notes as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes and that it did not purchase its Outstanding Notes from us or any of our affiliates. See “Plan of Distribution.”
Resale of Exchange Notes
We have not requested, and do not intend to request, an interpretation by the staff of the SEC as to whether the Exchange Notes issued pursuant to the Exchange Offers in exchange for the Outstanding Notes may be offered for sale, resold or otherwise transferred by any holder without compliance with the registration and prospectus delivery provisions of the Securities Act. Instead, based on interpretations by the SEC set forth in no-action letters issued to third parties, we believe that you may resell or otherwise transfer Exchange Notes issued in the Exchange Offers without complying with the registration and prospectus delivery provisions of the Securities Act if:
|
|
|
|
•
|
you are acquiring the Exchange Notes in the ordinary course of your business;
|
|
|
|
|
•
|
you have no arrangements or understanding with any person to participate in the distribution of the Exchange Notes within the meaning of the Securities Act;
|
|
|
|
|
•
|
you are not our “affiliate,” as defined in Rule 405 of the Securities Act; and
|
|
|
|
|
•
|
you are not engaged in, and do not intend to engage in, a distribution of the Exchange Notes.
|
If you are our affiliate, or are engaging in, or intend to engage in, or have any arrangement or understanding with any person to participate in, a distribution of the Exchange Notes, or are not acquiring the Exchange Notes in the ordinary course of your business:
|
|
|
|
•
|
you cannot rely on the position of the SEC set forth in
Morgan Stanley & Co. Incorporated
(available June 5, 1991) and
Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling, (available July 2, 1993), or similar no-action letters; and
|
|
|
|
|
•
|
in the absence of an exception from the position stated immediately above, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Notes.
|
This prospectus may be used for an offer to resell or transfer the Exchange Notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the Outstanding Notes as a result of market-making activities or other trading activities may participate in the Exchange Offers. Each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes, where such Outstanding Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the Exchange Notes. Read “Plan of Distribution” for more details regarding the transfer of Exchange Notes.
Our belief that the Exchange Notes may be offered for resale without compliance with the registration or prospectus delivery provisions of the Securities Act is based on interpretations of the SEC for other exchange offers that the SEC expressed in some of its no-action letters to other issuers in exchange offers like ours. We have not sought a no-action letter in connection with the Exchange Offers, and we cannot guarantee that the SEC would make a similar decision about our Exchange Offers. If our belief is wrong, or if you cannot truthfully make the representations mentioned above, and you transfer any Exchange Note issued to you in the Exchange Offers without meeting the registration and prospectus delivery requirements of the Securities Act, or without an exemption from such requirements, you could incur liability under the Securities Act. We are not indemnifying you for any such liability.
Terms of the Exchange Offers
On the terms and subject to the conditions set forth in this prospectus and in the accompanying letters of transmittal, we will accept for exchange in the Exchange Offers any Outstanding Notes that are validly tendered and not validly withdrawn prior to the Expiration Date. Outstanding Notes may only be tendered in minimum denominations of $2,000 and integral multiples of $1,000 in excess of $2,000, and any untendered Outstanding Notes must also be in a minimum denomination of $2,000. We will issue Exchange Notes in principal amount identical to Outstanding Notes surrendered in the Exchange Offers.
The form and terms of the Exchange Notes will be identical in all material respects to the form and terms of the Outstanding Notes of the related series except the Exchange Notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not provide for any payment of additional interest upon our failure to fulfill our obligations under the registration rights agreement to complete the Exchange Offers, or file, and cause to be effective, a shelf registration statement, if required thereby, within the specified time period. The Exchange Notes will evidence the same debt as the Outstanding Notes of the related series. The Exchange Notes will be issued under and entitled to the benefits of the Indenture. For a description of the Indenture, see “Description of the Exchange Notes.”
No interest will be paid in connection with the exchange. The Exchange Notes will bear interest from the last Interest Payment Date (as defined under “Description of the Exchange Notes-Maturity; Interest”) on the Outstanding Notes surrendered in the Exchange Offers. Accordingly, the holders of Outstanding Notes that are accepted for exchange will not receive accrued but unpaid interest on Outstanding Notes at the time of tender. Rather, that interest will be payable on the Exchange Notes delivered in exchange for the Outstanding Notes on the first Interest Payment Date after the Expiration Date (as defined below under “-Expiration Date, Extensions and Amendments”).
The Exchange Offers are not conditioned upon any minimum aggregate principal amount of Outstanding Notes being tendered for exchange.
As of the date of this prospectus, $300,000,000 aggregate principal amount of our 3.10% Senior Notes, Series D due 2026 and $400,000,000 aggregate principal amount of our 4.00% Senior Notes, Series E due 2046 are outstanding. This prospectus and the letters of transmittal are being sent to all registered holders of Outstanding Notes. There will be no fixed record date for determining registered holders of Outstanding Notes entitled to participate in the Exchange Offers. We intend to conduct the Exchange Offers in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC. Outstanding Notes that are not tendered for exchange in the Exchange Offers will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits such holders have under the Indenture relating to such holders’ series of Outstanding Notes except we will not have any further obligation to you to provide for the registration of the Outstanding Notes under the registration rights agreement.
We will be deemed to have accepted for exchange properly tendered Outstanding Notes when we have given written notice of the acceptance to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders for the purposes of receiving the Exchange Notes from us and delivering Exchange Notes to holders. Subject to the terms of the registration rights agreement, we expressly reserve the right to amend or terminate the Exchange Offers and to refuse to accept Exchange Notes upon the occurrence of any of the conditions specified below under “-Conditions to the Exchange Offers.”
If you tender your Outstanding Notes in the Exchange Offers, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of Outstanding Notes. We will pay all charges and expenses, other than certain applicable taxes described below in connection with the Exchange Offers. It is important that you read “-Fees and Expenses” below for more details regarding fees and expenses incurred in the Exchange Offers.
If you are a broker-dealer and receive Exchange Notes for your own account in exchange for Outstanding Notes that you acquired as a result of market-making activities or other trading activities, you must acknowledge that you will deliver this prospectus in connection with any resale of the Exchange Notes and that you did not purchase your Outstanding Notes from us or any of our affiliates. Read “Plan of Distribution” for more details regarding the transfer of Exchange Notes.
We make no recommendation to you as to whether you should tender or refrain from tendering all or any portion of your Outstanding Notes into these Exchange Offers. In addition, no one has been authorized to make this recommendation. You must make your own decision whether to tender into these Exchange Offers and, if so, the aggregate amount of Outstanding Notes to tender after reading this prospectus and the letter of transmittal and consulting with your advisors, if any, based on your financial position and requirements.
Expiration Date, Extensions and Amendments
The Exchange Offers expire at 5:00 p.m., New York City time, on __________, 2017, which we refer to as the “Expiration Date.” However, if we, in our sole discretion, extend the period of time for which the Exchange Offers are open, the term “Expiration Date” will mean the latest time and date to which we shall have extended the expiration of the Exchange Offers.
To extend the period of time during which the Exchange Offers are open, we will notify the Exchange Agent of any extension by written notice, followed by notification by press release or other public announcement to the registered holders of the Outstanding Notes no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. During any extension, all Outstanding Notes previously tendered and not accepted for exchange will remain subject to the applicable Exchange Offer unless validly withdrawn.
We also reserve the right, in our sole discretion:
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to delay accepting for exchange any Outstanding Notes (only in the case that we amend or extend the Exchange Offers);
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to extend the Expiration Date and retain all Outstanding Notes tendered in the Exchange Offers, subject to your right to withdraw your tendered Outstanding Notes as described under “-Withdrawal Rights”;
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to terminate any of the Exchange Offers if we determine that any of the conditions set forth below under “-Conditions to the Exchange Offers” have not been satisfied; and
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subject to the terms of the registration rights agreement, to amend the terms of any of the Exchange Offers in any manner or waive any condition to the Exchange Offers.
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Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by written notice to the registered holders of the Outstanding Notes. If we amend any of the Exchange Offers in a manner that we determine to constitute a material change, we will promptly disclose the amendment by press release or other public announcement as required by Rule 14e-1(d) of the Exchange Act, and we will extend such Exchange Offer to the extent required by law.
In the event we terminate the Exchange Offers, all Outstanding Notes previously tendered will be returned promptly to the tendering holders.
Conditions to the Exchange Offers
Despite any other term of the Exchange Offers, we will not be required to accept for exchange, or to issue Exchange Notes in exchange for, any Outstanding Notes and we may terminate or amend any of the Exchange Offers as provided in this prospectus prior to the Expiration Date if in our reasonable judgment:
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the Exchange Offers or the making of any exchange by a holder violates any applicable law or interpretation of the SEC; or
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any action or proceeding has been instituted or threatened in writing in any court or by or before any governmental agency with respect to the Exchange Offers that, in our judgment, would reasonably be expected to impair our ability to proceed with the Exchange Offers.
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In addition, we will not be obligated to accept for exchange the Outstanding Notes of any holder that has not made to us:
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the representations described under “-Purpose and Effect of the Exchange Offers”; or
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any other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to us an appropriate form for registration of the Exchange Notes under the Securities Act.
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We expressly reserve the right at any time or at various times to extend the period of time during which the Exchange Offers are open. Consequently, we may delay acceptance of any Outstanding Notes by giving notice by press release or other public announcement as required by Rule 14e-1(d) of the Exchange Act of such extension to the holders. We will return any Outstanding Notes that we do not accept for exchange for any reason without expense to the tendering holder promptly after the expiration or termination of the Exchange Offers. We also expressly reserve the right to amend or terminate any of the Exchange Offers and to reject for exchange any Outstanding Notes not previously accepted for exchange, if we determine that any of the conditions of the Exchange Offers specified above have not been satisfied. We will give notice by press release or other public announcement as required by Rule 14e-1(d) of the Exchange Act of any extension, amendment, non-acceptance or termination to the holders of the Outstanding
Notes as promptly as practicable. If we amend an Exchange Offer in a manner that we determine to constitute a material change, including the waiver of a material condition, we will promptly disclose the amendment by press release or other public announcement as required by Rule 14e-1(d) of the Exchange Act and will extend the offer period if necessary so that at least five business days remain in the offer following notice of the material change. In the case of any extension, such notice will be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date.
We reserve the right to waive any defects, irregularities or conditions to the exchange as to particular Outstanding Notes. These conditions are for our sole benefit, and we may assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any or at various times prior to the expiration of the Exchange Offers in our sole discretion. If we fail at any time to exercise any of the foregoing rights, this failure will not constitute a waiver of such right. Each such right will be deemed an ongoing right that we may assert at any time or at various times prior to the expiration of the Exchange Offers.
In addition, we will not accept for exchange any Outstanding Notes tendered, and will not issue Exchange Notes in exchange for any such Outstanding Notes, if at such time any stop order is threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939, as amended.
Procedures for Tendering Outstanding Notes
To tender your Outstanding Notes in the Exchange Offers, you must comply with either of the following:
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complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, have the signature(s) on the letter of transmittal guaranteed if required by the letter of transmittal and mail or deliver such letter of transmittal or facsimile thereof to the Exchange Agent at the address set forth below under “-Exchange Agent” prior to the Expiration Date; or
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comply with DTC’s Automated Tender Offer Program procedures described below.
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In addition:
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the Exchange Agent must receive certificates for Outstanding Notes along with the letter of transmittal prior to the expiration of the Exchange Offers;
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the Exchange Agent must receive a timely confirmation of book-entry transfer of Outstanding Notes into the Exchange Agent’s account at DTC according to the procedures for book-entry transfer described below and a properly transmitted Agent’s Message (defined below) prior to the expiration of the Exchange Offers; or
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you must comply with the guaranteed delivery procedures described below.
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The term “
Agent’s Message
” means a message transmitted by DTC, received by the Exchange Agent and forming part of the book-entry confirmation, which states that:
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DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering Outstanding Notes that are the subject of the book-entry confirmation;
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the participant has received and agrees to be bound by the terms of the letter of transmittal or, in the case of an Agent’s Message relating to guaranteed delivery, that such participant has received and agrees to be bound by the notice of guaranteed delivery; and
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we may enforce that agreement against such participant. DTC is referred to herein as a “book-entry transfer facility.”
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Your tender, if not withdrawn prior to the expiration of the Exchange Offers, constitutes an agreement between us and you upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal.
The method of delivery of Outstanding Notes, letters of transmittal and all other required documents to the Exchange Agent is at your election and risk. Delivery of such documents will be deemed made only when actually received by the Exchange Agent. We recommend that instead of delivery by mail, you use an overnight or hand delivery service, properly insured. If you determine to make delivery by mail, we suggest that you use properly insured, registered mail with return receipt requested. In all cases, you should allow sufficient time to assure timely delivery to the Exchange Agent before the expiration of the Exchange Offers. Letters of transmittal and certificates representing Outstanding Notes should be sent only to the Exchange Agent, and not to us or to DTC or any other book-entry transfer facility. No alternative, conditional or contingent tenders of Outstanding Notes will be accepted, except as described below under “—Guaranteed Delivery Procedures.” You may request that your broker, dealer, commercial bank, trust company or nominee effect the above transactions for you.
If you are a beneficial owner whose Outstanding Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your Outstanding Notes, you should promptly contact the registered holder and instruct the registered holder to tender on your behalf. If you wish to tender the Outstanding Notes yourself, you must, prior to completing and executing the letter of transmittal and delivering your Outstanding Notes, either:
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make appropriate arrangements to register ownership of the Outstanding Notes in your name; or
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obtain a properly completed bond power from the registered holder of Outstanding Notes.
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The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration of the Exchange Offers.
Signatures on the letter of transmittal or a notice of withdrawal (as described below in “-Withdrawal Rights”), as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the Financial Industry Regulatory Authority, a commercial bank or trust company having an office or correspondent in the United States or another “eligible guarantor institution” within the meaning of Rule 17A(d)-15 under the Exchange Act unless the Outstanding Notes surrendered for exchange are tendered:
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by a registered holder of the Outstanding Notes who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instructions” on the letter of transmittal; or
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for the account of an eligible guarantor institution.
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If the letter of transmittal is signed by a person other than the registered holder of any Outstanding Notes listed on the Outstanding Notes, such Outstanding Notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder’s name appears on the Outstanding Notes, and an eligible guarantor institution must guarantee the signature on the bond power.
If the letter of transmittal, any certificates representing Outstanding Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should also indicate when signing and, unless waived by us, they should also submit evidence satisfactory to us of their authority to so act.
The Exchange Agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s Automated Tender Offer Program to tender Outstanding Notes. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the Exchange Agent, electronically transmit their acceptance of Outstanding Notes for exchange by causing DTC to transfer the Outstanding Notes to the Exchange Agent in accordance with DTC’s Automated Tender Offer Program procedures for transfer. DTC will then send an Agent’s Message to the Exchange Agent.
Book-Entry Delivery Procedures
Promptly after the date of this prospectus, the Exchange Agent will establish an account with respect to the Outstanding Notes at DTC, as the book-entry transfer facility, for purposes of the Exchange Offers. Any financial institution that is a participant in the book-entry transfer facility’s system may make book-entry delivery of the Outstanding Notes by causing the book-entry transfer facility to transfer those Outstanding Notes into the Exchange Agent’s account at the facility in accordance with the facility’s procedures for such transfer. To be timely, book-entry delivery of Outstanding Notes requires receipt of a confirmation of a book-entry transfer, or a “book-entry confirmation,” prior to the Expiration Date.
In addition, in order to receive Exchange Notes for tendered Outstanding Notes, an Agent’s Message in connection with a book-entry transfer into the Exchange Agent’s account at the book-entry transfer facility or the letter of transmittal or a manually signed facsimile thereof, together with any required signature guarantees and any other required documents must be delivered or transmitted to and received by the Exchange Agent at its address set forth on the cover page of the letter of transmittal prior to the expiration of the Exchange Offers. Holders of Outstanding Notes who are unable to deliver confirmation of the book-entry tender of their Outstanding Notes into the Exchange Agent’s account at the book-entry transfer facility or an Agent’s Message or a letter of transmittal or a manually signed facsimile thereof in lieu thereof and all other documents required by the letter of transmittal to the Exchange Agent prior to the expiration of the Exchange Offers must tender their Outstanding Notes according to the guaranteed delivery procedures described below. Tender will not be deemed made until such documents are received by the Exchange Agent. Delivery of documents to the book-entry transfer facility does not constitute delivery to the Exchange Agent.
Guaranteed Delivery Procedures
If you wish to tender your Outstanding Notes but your Outstanding Notes are not immediately available or you cannot deliver your Outstanding Notes, the letter of transmittal or any other required documents to the Exchange Agent or comply with the procedures under DTC’s Automatic Tender Offer Program in the case of Outstanding Notes, prior to the Expiration Date, you may still tender if:
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the tender is made through an eligible guarantor institution;
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prior to the Expiration Date, the Exchange Agent receives from such eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail, or hand delivery or a properly transmitted Agent’s Message and notice of guaranteed delivery, that (1) sets forth your name and address, the certificate number(s) of such Outstanding Notes and the principal amount of Outstanding Notes tendered; (2) states that the tender is being made thereby; and (3) guarantees that, within three New York Stock Exchange trading days after the Expiration Date, the letter of transmittal, or facsimile thereof, together with the Outstanding Notes or a book-entry confirmation (including an Agent’s Message), and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with, or transmitted by the eligible guarantor to, the Exchange Agent; and
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the Exchange Agent receives the properly completed and executed letter of transmittal or facsimile thereof, with any required signature guarantees, as well as certificate(s) representing all tendered Outstanding Notes in proper form for transfer or a book-entry confirmation of transfer of the Outstanding Notes (including an Agent’s Message) into the Exchange Agent’s account at DTC and all other documents required by the letter of transmittal within three New York Stock Exchange trading days after the Expiration Date.
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Upon request, the Exchange Agent will send to you a notice of guaranteed delivery if you wish to tender your Outstanding Notes according to the guaranteed delivery procedures.
Acceptance of Outstanding Notes for Exchange
In all cases, we will promptly issue Exchange Notes of the applicable series for Outstanding Notes that we have accepted for exchange under the Exchange Offers only after the Exchange Agent timely receives:
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Outstanding Notes or a timely book-entry confirmation of such Outstanding Notes into the Exchange Agent’s account at the book-entry transfer facility; and
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a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted Agent’s Message.
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In addition, each broker-dealer that is to receive Exchange Notes for its own account in exchange for Outstanding Notes must represent that such Outstanding Notes were acquired by that broker-dealer as a result of market-making activities or other trading activities and must acknowledge that it will deliver a prospectus that meets the requirements of the Securities Act in connection with any resale of the Exchange Notes. The letters of transmittal state that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. See “Plan of Distribution.”
We will interpret the terms and conditions of the Exchange Offers, including the letters of transmittal and the instructions to the letters of transmittal, and will resolve all questions as to the validity, form, eligibility, including time of receipt, and acceptance of Outstanding Notes tendered for exchange. Our determinations in this regard will be final and binding on all parties. We reserve the absolute right to reject any and all tenders of any particular Outstanding Notes not properly tendered or to not accept any particular Outstanding Notes if the acceptance might, in our or our counsel’s judgment, be unlawful. We also reserve the right to waive any defects or irregularities as to any particular Outstanding Notes prior to the expiration of the Exchange Offers.
Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes for exchange must be cured within such reasonable period of time as we determine. Neither the Company, the Exchange Agent nor any other person will be under any duty to give notification of any defect or irregularity with respect to any tender of Outstanding Notes for exchange, nor will any of them incur any liability for any failure to give notification. Any certificates representing Outstanding Notes received by the Exchange Agent that are not properly tendered and as to which the irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holder, unless otherwise provided in the letter of transmittal, promptly after the expiration or termination of the Exchange Offers.
Withdrawal Rights
Except as otherwise provided in this prospectus, you may withdraw your tender of Outstanding Notes at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
For a withdrawal to be effective:
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the Exchange Agent must receive a written notice, which may be by facsimile or letter, of withdrawal at its address set forth below under “-Exchange Agent”; or
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you must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system for such withdrawal.
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Any notice of withdrawal must:
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specify the name of the person who tendered the Outstanding Notes to be withdrawn;
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identify the Outstanding Notes to be withdrawn, including the certificate numbers and principal amount of the Outstanding Notes; and
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where certificates for Outstanding Notes have been transmitted, specify the name in which such Outstanding Notes were registered, if different from that of the withdrawing holder.
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If certificates for Outstanding Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates, you must also submit:
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the serial numbers of the particular certificates to be withdrawn; and
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a signed notice of withdrawal with signatures guaranteed by an eligible institution unless you are an eligible guarantor institution.
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If Outstanding Notes have been tendered pursuant to the procedures for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn Outstanding Notes and otherwise comply with the procedures of the facility. We will determine all questions as to the validity, form and eligibility, including time of receipt of notices of withdrawal, and our determination will be final and binding on all parties. Any Outstanding Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offers. Any Outstanding Notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder, without cost to the holder, or, in the case of book-entry transfer, the Outstanding Notes will be credited to an account at the book-entry transfer facility, promptly after withdrawal, rejection of tender or termination of the Exchange Offers. Properly withdrawn Outstanding Notes may be retendered by following the procedures described under “—Procedures for Tendering Outstanding Notes” above at any time prior to the expiration of the Exchange Offers.
Exchange Agent
The Bank of New York Mellon Trust Company, N.A. has been appointed as the Exchange Agent for the Exchange Offers. The Bank of New York Mellon Trust Company, N.A. also acts as trustee under the Indenture. You should direct all executed letters of transmittal and all questions and requests for assistance with respect to accepting or withdrawing from the Exchange Offers, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery to the Exchange Agent addressed as follows:
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By Mail, Hand or Courier
The Bank of New York Mellon Trust Company, N.A., as Exchange Agent
c/o The Bank of New York Mellon
Corporation
Corporate Trust Operations-Reorganization Unit
111 Sanders Creek Parkway
East Syracuse, NY 13057
Attn: __________
Tel: __________
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By Facsimile Transmission
(eligible institutions only)
(732) 667-9408
To Confirm by Telephone
(__________)
Email:
CT_REORG_UNIT_INQUIRIES@BNYMELLON.COM
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If you deliver the letter of transmittal to an address other than the one set forth above or transmit instructions via facsimile to a number other than the one set forth above, that delivery or those instructions will not be effective.
Fees and Expenses
The registration rights agreement provides that we will bear all expenses in connection with the performance of our obligations relating to the registration of the Exchange Notes and the conduct of the Exchange Offers. These expenses include registration and filing fees, accounting and legal fees and printing costs, among others. We will pay the Exchange Agent reasonable and customary fees for its services and reasonable out-of-pocket expenses. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for customary mailing and handling expenses incurred by them in forwarding this prospectus and related documents to their clients that are holders of Outstanding Notes and for handling or tendering for such clients.
We have not retained any dealer-manager in connection with the Exchange Offers and will not pay any fee or commission to any broker, dealer, nominee or other person for soliciting tenders of Outstanding Notes pursuant to the Exchange Offers.
Accounting Treatment
We will record the Exchange Notes in our accounting records at the same carrying value as the Outstanding Notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchanges. Accordingly, we will not recognize any gain or loss for accounting purposes upon the consummation of the Exchange Offers. We will record the costs of the Exchange Offers as incurred.
Transfer Taxes
We will pay all transfer taxes, if any, applicable to the exchanges of Outstanding Notes under the Exchange Offers. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:
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certificates representing Outstanding Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of Outstanding Notes tendered;
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tendered Outstanding Notes are registered in the name of any person other than the person signing the letter of transmittal; or
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a transfer tax is imposed for any reason other than the exchange of Outstanding Notes under the Exchange Offers.
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If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder.
Holders who tender their Outstanding Notes for exchange will not be required to pay any transfer taxes. However, holders who instruct us to register Exchange Notes in the name of, or request that Outstanding Notes not tendered or not accepted in the Exchange Offers be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer tax.
Consequences of Failure to Exchange
If you do not exchange your Outstanding Notes for Exchange Notes under the Exchange Offers, your Outstanding Notes will remain subject to the restrictions on transfer of such Outstanding Notes:
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as set forth in the legend printed on the Outstanding Notes as a consequence of the issuance of the Outstanding Notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and
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as otherwise set forth in the offering memorandum distributed in connection with the private offerings of the Outstanding Notes.
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In general, you may not offer or sell your Outstanding Notes unless they are registered under the Securities Act or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the Outstanding Notes under the Securities Act.
Other
Participating in the Exchange Offers is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.
We may in the future seek to acquire untendered Outstanding Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any Outstanding Notes that are not tendered in the Exchange Offers or to file a registration statement to permit resales of any untendered Outstanding Notes.
DESCRIPTION OF THE EXCHANGE NOTES
The following summary description sets forth certain terms and provisions of the Exchange Notes. Because this description is a summary, it does not describe every aspect of the Exchange Notes or the Indenture (as defined below) under which the Exchange Notes will be issued, and which is filed as an exhibit to the registration statement of which this prospectus is a part. The Indenture and its associated documents contain the full legal text of the matters described in this section. This summary is subject to and qualified in its entirety by reference to all of the provisions of the Exchange Notes and the Indenture, including definitions of certain terms used in the Indenture. We also include references in parentheses to certain sections of the Indenture. Whenever we refer to particular sections or defined terms of the Indenture in this prospectus, such sections or defined terms are incorporated by reference herein.
General
The form and terms of the Exchange Notes are identical in all material respects to the form and terms of the Outstanding Notes except the Exchange Notes will:
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be registered under the Securities Act;
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not be subject to the restrictions on transfer applicable to the Outstanding Notes (except for the limited restrictions described under “-Form; Transfers and Exchanges”);
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not be entitled to any registration rights that are applicable to the Outstanding Notes under the registration rights agreement, including any right to additional interest; and
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bear different CUSIP numbers.
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We will issue the Exchange Notes under an indenture dated as of November 1, 2016 between us and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by supplemental indentures or company orders (the “Indenture”). This prospectus briefly outlines some provisions of the Indenture. If you would like more information on these provisions, you should review the Indenture and any supplemental indentures or company orders. See “AVAILABLE INFORMATION” on how to locate these documents. You may also review these documents at the Trustee’s offices at 2 North LaSalle Street, 7
th
Floor, Chicago, Illinois 60602 following reasonable advance notice and during normal business hours.
The Indenture does not limit the amount of notes that may be issued. The Indenture permits us to issue notes in one or more series or tranches upon the approval of our board of directors and as provided in one or more company orders or supplemental indentures. Each series of notes may differ as to their terms. We may from time to time, without consent of the holders of the Exchange Notes, issue additional notes having the same ranking, interest rate, maturity and other terms as the Exchange Notes (except for the issue date and the issue price). These additional notes, together with the Exchange Notes, will be a single series of notes under the Indenture.
The Exchange Notes are our senior unsecured obligations and will rank equally with our senior unsecured obligations. As of April 4, 2017, we had no secured indebtedness outstanding.
The Exchange Notes will be denominated in U.S. dollars and we will pay principal and interest in U.S. dollars. The Exchange Notes of each series will be issuable in
minimum denominations of $2,000 and in multiples of $1,000 in excess thereof
. The Exchange Notes will not be subject to any conversion, amortization or sinking fund.
The Exchange Notes will not be guaranteed by, or otherwise be obligations of, AEP or any of its direct or indirect subsidiaries other than AEPTCo.
Principal Amount, Maturity and Interest
The 2026 Exchange Notes will be initially issued in aggregate principal amount of $300,000,000 and the 2046 Exchange Notes will be initially issued in aggregate principal amount of $400,000,000.
The 2026 Exchange Notes will mature and become due and payable, together with any accrued and unpaid interest, on December 1, 2026 and will bear interest at the rate of 3.10% per annum from __________, 2017 until December 1, 2026. The 2046 Exchange Notes will mature and become due and payable, together with any accrued and unpaid interest, on December 1, 2046 and will bear interest at the rate of 4.00% per annum from __________, 2017 until December 1, 2046.
Interest on each note will be payable semi-annually in arrears on each June 1 and December 1 and at redemption, if any, or maturity. The initial interest payment date is June 1, 2017. Each payment of interest shall include interest accrued through the day before such interest payment date. Interest on the Exchange Notes will be computed on the basis of a 360-day year consisting of twelve 30-day months.
We will pay interest on the Exchange Notes of each series (other than interest payable at redemption, if any, or maturity) in immediately available funds to the owners of the Exchange Notes as of the Regular Record Date (as defined below) for each interest payment date. We will pay the principal of the Exchange Notes and any premium and interest payable at redemption, if any, or maturity in immediately available funds at the office of the Trustee at 2 North LaSalle Street, 7
th
Floor, Chicago, Illinois 60602.
If any interest payment date, redemption date or the maturity is not a Business Day (as defined below), we will pay all amounts due on the next succeeding Business Day and no additional interest will be paid.
The “Regular Record Date” will be the May 15 or November 15 prior to the relevant interest payment date, whether or not such day is a Business Day.
“Business Day” means 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.
Optional Redemption
We may redeem any or all series of the Exchange Notes in whole or in part by delivering written notice to the noteholders no more than 60, and not less than 30, days prior to redemption. If we do not redeem all the Exchange Notes of a series at one time, the Trustee will select the Exchange Notes to be redeemed in a manner it determines to be fair, provided that if the Exchange Notes are represented by one or more global notes, the Exchange Notes to be redeemed will be selected in accordance with the procedures of DTC.
At any time prior to September 1, 2026, we may redeem the 2026 Exchange Notes either as a whole or in part at a redemption price equal to the greater of (1) 100% of the principal amount of the 2026 Exchange Notes being redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the 2026 Exchange Notes being redeemed that would be due if such 2026 Exchange Notes matured on September 1, 2026 (excluding the portion of any such interest accrued to, but excluding, the date of redemption), discounted (for purposes of determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basis points, plus, in each case, accrued and unpaid interest thereon to, but excluding, the date of redemption.
At any time prior to June 1, 2046, we may redeem the 2046 Exchange Notes either as a whole or in part at a redemption price equal to the greater of (1) 100% of the principal amount of the 2046 Exchange Notes being redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the 2046 Exchange Notes being redeemed that would be due if such 2046 Exchange Notes matured on June 1, 2046 (excluding the portion of any such interest accrued to, but excluding, the date of redemption), discounted (for purposes of
determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 20 basis points, plus, in each case, accrued and unpaid interest thereon to, but excluding, the date of redemption.
At any time on or after September 1, 2026, we may redeem the 2026 Exchange Notes in whole or in part at 100% of the principal amount of the 2026 Exchange Notes being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after June 1, 2046, we may redeem the 2046 Exchange Notes in whole or in part at 100% of the principal amount of the 2046 Exchange Notes being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption.
“Comparable Treasury Issue,” applicable to each series, means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“remaining life”) of the Exchange Notes (assuming, for this purpose, that the 2026 Exchange Notes matured on September 1, 2026 and the 2046 Exchange Notes matured on June 1, 2046) 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 Exchange Notes.
“Comparable Treasury Price,” applicable to each series, means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if we obtain fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.
“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by us and notified by us
to the Trustee.
“Reference Treasury Dealer” means a primary U.S. Government securities dealer or dealers selected by us and notified by us to the Trustee.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by us and notified to the Trustee, 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 us and
the Trustee by such Reference Treasury Dealer at or before 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption, the rate per annum equal to the semiannual 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.
Agreement to Provide Information
So long as any Exchange Notes are outstanding under the Indenture, during such periods as we are not subject to the periodic reporting requirements of Section 13 or 15(d) of the Exchange Act, we will furnish to prospective purchasers of the Notes, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act for compliance with Rule 144A.
Certain Covenants
Consolidation, Merger or Sale
We may merge or consolidate with any corporation or sell all or substantially all of our assets as an entirety as long as the successor or purchaser of such assets expressly assumes, the payment of principal, and premium, if any, and interest on the Exchange Notes.
Limitation on Consolidated Priority Debt
The Company covenants that so long as any of the Exchange Notes are outstanding that it will not permit Consolidated Priority Debt to exceed 10% of Consolidated Tangible Net Assets for a period in excess of five consecutive Business Days.
Limitation on Liens
The Company covenants that for so long as any of the Exchange Notes are outstanding that it will not create or suffer to exist or permit any of its subsidiaries to create or suffer to exist any Secured Debt, unless, at the same time, the Exchange Notes that are outstanding are also secured by such Lien on an equal and ratable basis; provided, however, the foregoing does not limit
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(ii)
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Any other Lien not covered in clause (i) as long as immediately after the creation of such Lien the aggregate principal amount of Secured Debt does not exceed 10% of Consolidated Tangible Net Assets.
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Definitions
“Consolidated Priority Debt” means all Priority Debt of the Company and its subsidiaries determined on a consolidated basis eliminating inter‑company items.
“Consolidated Tangible Net Assets” means the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the most recent quarterly or annual, as applicable, consolidated balance sheet of the Company and its consolidated subsidiaries, 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 consolidated current liabilities of the Company and its consolidated subsidiaries appearing on such balance sheet.
“Debt” means any indebtedness for borrowed money.
“Lien or Liens” means any mortgage, pledge, security interest, or other lien on any utility properties or tangible assets, including, without limitation, the capital stock or comparable equity interests of its subsidiaries, now owned or hereafter acquired by the Company or its subsidiaries.
“Permitted Liens” means
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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;
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Any extensions, renewals or replacements (or successive extensions, renewals or replacements), in whole or in part, of Liens permitted by the foregoing clauses;
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The pledge of any bonds or other securities at any time issued under any of the Secured Debt permitted by the above clauses; and
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The creation or existence of leases (operating or capital) made, or existing on property acquired, in the ordinary course of business.
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Priority Debt” means, without duplication, any Debt of the Company’s subsidiaries;
provided
that there shall be excluded from any calculation of Priority Debt, (i) the Debt of any subsidiary owing to the Company or a subsidiary of the Company, and (ii) the Debt of any entity which becomes a subsidiary after the issuance of the Exchange Notes and any extension, renewal or refunding thereof;
provided
that such Debt was not incurred in contemplation of such entity becoming a subsidiary.
“Secured Debt” means any Debt of the Company or any of its subsidiaries secured by a Lien (other than a Permitted Lien).
Events of Default
“Event of Default” means, with respect to any particular series of notes, any of the following:
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failure to pay for three business days the principal of (or premium, if any, on) any note of that series when due and payable;
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failure to pay for 30 days any interest on any note of that series when due and payable;
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failure to perform any other requirements in any notes of that series, or in the Indenture in regard to such notes, for 90 days after notice; or
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certain events of bankruptcy or insolvency.
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An Event of Default for a particular series of notes does not necessarily mean that an Event of Default has occurred for any other series of notes issued under the Indenture. If an Event of Default occurs and continues, the Trustee or the holders of at least 33% of the principal amount of the notes of the series affected may require us to repay the entire principal of the notes of such series immediately (Repayment Acceleration). In most instances, the holders of at least a majority in aggregate principal amount of the notes of the affected series may rescind a previously triggered Repayment Acceleration. However, if we cause an Event of Default because we have failed to pay (unaccelerated) principal, premium, if any, or interest, Repayment Acceleration may be rescinded only if we have first cured our default by depositing with the Trustee enough money to pay all (unaccelerated) past due amounts and penalties, if any.
The Trustee must within 90 days after a default occurs, notify the holders of the notes of the series of default unless such default has been cured or waived. We are required to file an annual certificate with the Trustee, signed by an officer, concerning our compliance with the conditions and covenants of the Indenture and specifying any default by us under any provisions of the Indenture.
Subject to the provisions of the Indenture relating to its duties in case of default, the Trustee shall be under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any holders unless such holders offer the Trustee indemnity satisfactory to the Trustee. Subject to the provisions of the Indenture, the holders of a majority in principal amount of the notes of any series may direct the time, method and place of conducting any proceedings for any remedy available to, or exercising any trust or power conferred on, the Trustee with respect to such notes.
Modification of Indenture
Under the Indenture, our rights and obligations and the rights of the holders of any notes may be changed. Any change affecting the rights of the holders of any series of notes requires the consent of the holders of not less than a majority in aggregate principal amount of the outstanding Exchange Notes of all series affected by the change, voting as one class. However, we cannot change the terms of payment of principal or interest, or a reduction in the percentage required for changes or a waiver of default, unless the affected holders consent. We may issue additional series of notes and take other action that does not affect the rights of holders of any series by executing supplemental indentures without the consent of any noteholders.
Legal Defeasance
We will be discharged from our obligations on the Exchange Notes of any series at any time if:
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we deposit with the Trustee sufficient cash or government securities to pay the principal, interest, any premium and any other sums due to the stated maturity date or a redemption date of the Exchange Notes of the series,
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immediately after such deposit, no default exists, and
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we deliver to the Trustee an opinion of counsel, who may be an employee of, or counsel for, the Company, stating that the United States federal income tax obligations of noteholders of that series will not change as a result of our performing the action described above, with such opinion based upon a ruling of the Internal Revenue Service (IRS) issued to us or a change of law or regulation occurring after the date hereof.
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If this happens, the noteholders of the series will not be entitled to the benefits of the Indenture except for registration of transfer and exchange of Exchange Notes and replacement of lost, stolen or mutilated Exchange Notes.
Covenant Defeasance
We will be discharged from our obligations under any restrictive covenant applicable to the Exchange Notes of a particular series if:
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we deposit with the Trustee cash or government securities sufficient to pay the principal, interest and any premium due on or prior to maturity,
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immediately after such deposit, no default exists, and
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we deliver to the Trustee an opinion of counsel, who may be an employee of, or counsel for, the Company, stating that the United States federal income tax obligations of noteholders of that series will not change as a result of our performing the action described above.
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If this happens, any later breach of that particular restrictive covenant will not result in Repayment Acceleration. If we cause an Event of Default apart from breaching that restrictive covenant, there may not be sufficient money or government obligations on deposit with the Trustee to pay all amounts due on the Exchange Notes of that series. In that instance, we would remain liable for such amounts.
Governing Law
The Indenture and Exchange Notes will be governed by the laws of the State of New York.
Concerning the Trustee
We and our affiliates use or will use some of the banking services of the Trustee and other services of its affiliates in the normal course of business.
Book-Entry Only Issuance-The Depository Trust Company
DTC will act as the initial securities depository for the Exchange Notes
. The Exchange Notes issued in exchange for Outstanding Notes will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered note certificate will be issued for each issue of the Exchange Notes, each in the aggregate principal amount of such issue, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the SEC. More information about DTC can be found at
www.dtcc.com
. The contents of such website do not constitute part of this prospectus.
Purchases of Exchange Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Exchange Notes on DTC’s records. The ownership interest of each actual purchaser of each note (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Exchange Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Exchange Notes, except in the event that use of the book-entry system for the Exchange Notes is discontinued.
To facilitate subsequent transfers, all Exchange Notes deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Exchange Notes with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Exchange Notes; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Exchange Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Exchange Notes may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Exchange Notes, such as redemptions, tenders, defaults, and proposed amendments to the Exchange Notes documents. For example, Beneficial Owners of Exchange Notes may wish to ascertain that the nominee holding the Exchange Notes for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Exchange Notes are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Exchange Notes unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to us as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Exchange Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds and distributions on the Exchange Notes will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from us or the Trustee on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Exchange Notes held for the accounts of customers in bearer form or registered in “street name”, and will be the responsibility of such Participant and not of DTC, the Trustee or us, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and distributions to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is our or the Trustee’s responsibility, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Exchange Notes purchased or tendered, through its Participant, to the Tender/Remarketing Agent, and shall effect delivery of such Exchange Notes by causing the Direct Participant to transfer the Participant’s interest in the Exchange Notes, on DTC’s records, to the Tender/Remarketing Agent. The requirement for physical delivery of the Exchange Notes in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Exchange Notes are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Exchange Notes to the Tender/Remarketing Agent’s DTC account.
DTC may discontinue providing its services as depository with respect to the Exchange Notes at any time by giving reasonable notice to us. Under such circumstances, in the event that a successor depository is not obtained, note certificates are required to be printed and delivered.
We may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, note certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for the accuracy thereof.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFERS
The exchange of Outstanding Notes for Exchange Notes of the corresponding series in the Exchange Offers will not constitute a taxable event to holders for United States federal income tax purposes. Consequently, no gain or loss will be recognized by a holder upon receipt of an Exchange Note, the holding period of the Exchange Note will include the holding period of the Outstanding Note exchanged therefor and the basis of the Exchange Note will be the same as the basis of the Outstanding Note immediately before the exchange.
In any event, persons considering the exchange of Outstanding Notes for Exchange Notes should consult their own tax advisors concerning the United States federal income tax consequences in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes where such Outstanding Notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the Expiration Date, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the Exchange Offers may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offers and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an “underwriter” within the meaning of the Securities Act, and any profit on any such resale of Exchange Notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. Subject to certain limitations set forth in the registration rights agreement, we have agreed to pay all expenses incident to the Exchange Offers (including the expenses of one counsel for the holders of the Outstanding Notes) other than commissions or concessions of any brokers or dealers and will indemnify you (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Thomas G. Berkemeyer or William E. Johnson, Associate General Counsel and Senior Counsel, respectively, of American Electric Power Service Corporation, our service company affiliate, will issue an opinion about the legality of the Exchange Notes for us.
EXPERTS
The financial statements included in this Prospectus and the related financial statement schedule included elsewhere in the Registration Statement, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements and financial statement schedule are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form S-4 under the Securities Act with respect to the Exchange Notes. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. For further information with respect to us and the Exchange Notes, reference is made to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document are not complete.
We have agreed to make certain information available to holders of the Notes, as described under “Description of the Exchange Notes-Agreement to Provide Information.”
The Company is not currently subject to the informational requirements of the Exchange Act. As a result of the offering of the Exchange Notes, we will become subject to the informational requirements of the Exchange Act and, in accordance therewith, will file reports and other information with the SEC. These reports and other information can be inspected and copied at the public reference room maintained by the SEC at 100 F Street, N.E., Room 1580, Washington D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also read and copy these SEC filings by visiting the SEC’s website at http://www.sec.gov.
You may request additional copies of our reports or copies of our other SEC filings at no cost by writing or telephoning us at the following address:
AEP Transmission Company, LLC
1 Riverside Plaza
Columbus, Ohio 43215
Attention: Investor Relations
Telephone: (614) 716-1000
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AEPTCo Annual Report Index
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Page Number
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Glossary of Terms
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Report of Independent Registered Public Accounting Firm
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Consolidated Statements of Income
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Consolidated Statements of Changes in Member’s Equity
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Consolidated Balance Sheets
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Consolidated Statements of Cash Flows
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Index of Notes to Consolidated Financial Statements
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AEP Transmission Company, LLC
and Subsidiaries
2016 Annual Report
Audited Consolidated Financial Statements
GLOSSARY OF TERMS
When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below.
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Term
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Meaning
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AEP
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American Electric Power Company, Inc., an investor-owned electric public utility holding company which includes American Electric Power Company, Inc. (Parent) and majority owned consolidated subsidiaries and consolidated affiliates.
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AEP Credit
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AEP Credit, Inc., a consolidated variable interest entity of AEP which securitizes accounts receivable and accrued utility revenues for affiliated electric utility companies.
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AEP East Transmission
Companies
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APTCo, IMTCo, KTCo, OHTCo and WVTCo.
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AEP System
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American Electric Power System, an electric system, owned and operated by AEP subsidiaries.
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AEP Texas
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AEP Texas Inc., an AEP electric utility subsidiary.
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AEP Transmission Holdco
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AEP Transmission Holding Company, LLC, a wholly-owned subsidiary of AEP.
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AEP West Transmission
Companies
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OKTCo and SWTCo.
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AEPEP
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AEP Energy Partners, Inc., a subsidiary of AEP dedicated to wholesale marketing and trading, hedging activities, asset management and commercial and industrial sales in the deregulated Ohio and Texas market.
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AEPSC
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American Electric Power Service Corporation, an AEP service subsidiary providing management and professional services to AEP and its subsidiaries.
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AEPTCo
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AEP Transmission Company, LLC, and its consolidated State Transcos, a subsidiary of AEP Transmission Holdco.
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AEPTCo Parent
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AEP Transmission Company, LLC, the holding company of the State Transcos within the AEPTCo consolidation.
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AFUDC
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Allowance for Funds Used During Construction.
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APCo
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Appalachian Power Company, an AEP electric utility subsidiary.
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APSC
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Arkansas Public Service Commission.
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APTCo
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AEP Appalachian Transmission Company, Inc., a wholly-owned AEPTCo transmission subsidiary.
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ASU
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Accounting Standards Update.
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CSW
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Central and South West Corporation, a subsidiary of AEP (Effective January 21, 2003, the legal name of Central and South West Corporation was changed to AEP Utilities, Inc.).
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CSW Energy, Inc.
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A wholly-owned subsidiary of AEP Utilities, Inc., CSW Energy Inc. is a holding company managing investments in wind farms.
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CWIP
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Construction Work in Progress.
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FASB
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Financial Accounting Standards Board.
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FERC
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Federal Energy Regulatory Commission.
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GAAP
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Accounting Principles Generally Accepted in the United States of America.
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I&M
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Indiana Michigan Power Company, an AEP electric utility subsidiary.
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IMTCo
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AEP Indiana Michigan Transmission Company, Inc., a wholly-owned AEPTCo transmission subsidiary.
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IRS
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|
Internal Revenue Service.
|
|
KPCo
|
|
Kentucky Power Company, an AEP electric utility subsidiary.
|
|
KTCo
|
|
AEP Kentucky Transmission Company, Inc., a wholly-owned AEPTCo transmission subsidiary.
|
|
LPSC
|
|
Louisiana Public Service Commission.
|
|
OATT
|
|
Open Access Transmission Tariff.
|
|
OHTCo
|
|
AEP Ohio Transmission Company, Inc., a wholly-owned AEPTCo transmission subsidiary.
|
|
|
|
|
|
|
|
OKTCo
|
|
AEP Oklahoma Transmission Company, Inc., a wholly-owned AEPTCo transmission subsidiary.
|
|
OPCo
|
|
Ohio Power Company, an AEP electric utility subsidiary.
|
|
Parent
|
|
American Electric Power Company, Inc., the equity owner of AEP subsidiaries within the AEP consolidation.
|
|
PJM
|
|
Pennsylvania - New Jersey - Maryland regional transmission organization.
|
|
PSO
|
|
Public Service Company of Oklahoma, an AEP electric utility subsidiary.
|
|
SPP
|
|
Southwest Power Pool regional transmission organization.
|
|
State Transcos
|
|
Wholly-owned AEPTCo transmission subsidiaries; APTCo, IMTCo, KTCo, OHTCo, OKTCo, SWTCo and WVTCo.
|
|
SWEPCo
|
|
Southwestern Electric Power Company, an AEP electric utility subsidiary.
|
|
SWTCo
|
|
AEP Southwestern Transmission Company, Inc., a wholly-owned AEPTCo transmission subsidiary.
|
|
Transmission Agreement
|
|
Dated November 2010, as amended, by and among APCo, I&M, KGPCo, KPCo, OPCo and WPCo, which allocates costs and benefits in connection with the operation of transmission assets.
|
|
Transmission Coordination Agreement
|
|
Dated January 1, 1997, as amended, by and among PSO, SWEPCo and AEPSC, which allocates costs and benefits in connection with the operation of transmission assets.
|
|
Transource Energy
|
|
Transource Energy, LLC, a consolidated variable interest entity formed for the purpose of investing in utilities which develop, acquire, construct, own and operate transmission facilities in accordance with FERC-approved rates.
|
|
Transource Missouri
|
|
A 100% wholly-owned subsidiary of Transource Energy.
|
|
Utility Money Pool
|
|
Centralized funding mechanism AEP uses to meet the short-term cash requirements of certain utility subsidiaries.
|
|
VIE
|
|
Variable Interest Entity.
|
|
Virginia SCC
|
|
Virginia State Corporation Commission.
|
|
WPCo
|
|
Wheeling Power Company, an AEP electric utility subsidiary.
|
|
WVPSC
|
|
Public Service Commission of West Virginia.
|
|
WVTCo
|
|
AEP West Virginia Transmission Company, Inc., a wholly-owned AEPTCo transmission subsidiary.
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Managers and Shareholder of
AEP Transmission Company, LLC
We have audited the accompanying consolidated balance sheets of AEP Transmission Company, LLC and subsidiaries (the "Company") as of December 31, 2016 and 2015, and the related consolidated statements of income, changes in member’s equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the financial statement schedule listed in Item 21 at Exhibit 99(e). These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of AEP Transmission Company, LLC and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Columbus, Ohio
April 4, 2017
AEP TRANSMISSION COMPANY, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31,
2016
,
2015
and
2014
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
REVENUES
|
|
|
|
|
|
|
|
Transmission Revenues
|
|
$
|
110,448
|
|
|
$
|
84,326
|
|
|
$
|
65,745
|
|
|
Sales to AEP Affiliates
|
|
367,506
|
|
|
225,572
|
|
|
116,458
|
|
|
Other Revenues
|
|
89
|
|
|
277
|
|
|
46
|
|
|
TOTAL REVENUES
|
|
478,043
|
|
|
310,175
|
|
|
182,249
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
Other Operation
|
|
36,960
|
|
|
22,441
|
|
|
12,333
|
|
|
Maintenance
|
|
6,696
|
|
|
5,033
|
|
|
638
|
|
|
Depreciation and Amortization
|
|
65,875
|
|
|
42,350
|
|
|
23,698
|
|
|
Taxes Other Than Income Taxes
|
|
88,346
|
|
|
66,002
|
|
|
31,810
|
|
|
TOTAL EXPENSES
|
|
197,877
|
|
|
135,826
|
|
|
68,479
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
280,166
|
|
|
174,349
|
|
|
113,770
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
Interest Income − Affiliated
|
|
375
|
|
|
154
|
|
|
59
|
|
|
Allowance for Equity Funds Used During Construction
|
|
52,261
|
|
|
53,080
|
|
|
44,873
|
|
|
Interest Expense
|
|
(46,034
|
)
|
|
(34,596
|
)
|
|
(21,385
|
)
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAX EXPENSE
|
|
286,768
|
|
|
192,987
|
|
|
137,317
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense
|
|
94,079
|
|
|
60,043
|
|
|
36,092
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
192,689
|
|
|
$
|
132,944
|
|
|
$
|
101,225
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements beginning on page
F- 9
.
|
AEP TRANSMISSION COMPANY, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER’S EQUITY
For the Years Ended December 31,
2016
,
2015
and
2014
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Total Member’s Equity
|
|
TOTAL MEMBER’S EQUITY – DECEMBER 31, 2013
|
|
$
|
616,500
|
|
|
$
|
75,715
|
|
|
$
|
692,215
|
|
|
|
|
|
|
|
|
|
|
Capital Contributions from Member
|
|
347,500
|
|
|
—
|
|
|
347,500
|
|
|
Net Income
|
|
—
|
|
|
101,225
|
|
|
101,225
|
|
|
TOTAL MEMBER’S EQUITY – DECEMBER 31, 2014
|
|
964,000
|
|
|
176,940
|
|
|
1,140,940
|
|
|
|
|
|
|
|
|
|
|
|
Capital Contributions from Member
|
|
279,000
|
|
|
—
|
|
|
279,000
|
|
|
Net Income
|
|
—
|
|
|
132,944
|
|
|
132,944
|
|
|
TOTAL MEMBER’S EQUITY – DECEMBER 31, 2015
|
|
1,243,000
|
|
|
309,884
|
|
|
1,552,884
|
|
|
|
|
|
|
|
|
|
|
|
Capital Contributions from Member
|
|
212,009
|
|
|
—
|
|
|
212,009
|
|
|
Net Income
|
|
—
|
|
|
192,689
|
|
|
192,689
|
|
|
TOTAL MEMBER’S EQUITY – DECEMBER 31, 2016
|
|
$
|
1,455,009
|
|
|
$
|
502,573
|
|
|
$
|
1,957,582
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements beginning on page
F- 9
.
|
|
|
|
|
AEP TRANSMISSION COMPANY, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
2016
and
2015
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
CURRENT ASSETS
|
|
|
|
|
|
Advances to Affiliates
|
|
$
|
67,108
|
|
|
$
|
96,118
|
|
|
Accounts Receivable:
|
|
|
|
|
|
|
|
Customers
|
|
11,306
|
|
|
12,842
|
|
|
|
|
Affiliated Companies
|
|
66,632
|
|
|
42,449
|
|
|
|
|
|
Total Accounts Receivable
|
|
77,938
|
|
|
55,291
|
|
|
Materials and Supplies
|
|
5,001
|
|
|
—
|
|
|
Accrued Tax Benefits
|
|
26,002
|
|
|
131,962
|
|
|
Prepayments and Other Current Assets
|
|
2,717
|
|
|
2,783
|
|
|
TOTAL CURRENT ASSETS
|
|
178,766
|
|
|
286,154
|
|
|
|
|
|
|
|
|
TRANSMISSION PROPERTY
|
|
|
|
|
|
Transmission Property
|
|
3,973,516
|
|
|
2,800,116
|
|
|
Other Property, Plant and Equipment
|
|
99,337
|
|
|
15,467
|
|
|
Construction Work in Progress
|
|
981,332
|
|
|
934,207
|
|
|
Total Transmission Property
|
|
5,054,185
|
|
|
3,749,790
|
|
|
Accumulated Depreciation and Amortization
|
|
99,566
|
|
|
51,677
|
|
|
TOTAL TRANSMISSION PROPERTY – NET
|
|
4,954,619
|
|
|
3,698,113
|
|
|
|
|
|
|
|
|
OTHER NONCURRENT ASSETS
|
|
|
|
|
|
Regulatory Assets
|
|
112,311
|
|
|
82,755
|
|
|
Deferred Property Taxes
|
|
102,157
|
|
|
86,834
|
|
|
Deferred Charges and Other Noncurrent Assets
|
|
1,942
|
|
|
2,588
|
|
|
TOTAL OTHER NONCURRENT ASSETS
|
|
216,410
|
|
|
172,177
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
5,349,795
|
|
|
$
|
4,156,444
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements beginning on page
F- 9
.
|
AEP TRANSMISSION COMPANY, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND MEMBER’S EQUITY
December 31,
2016
and
2015
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
Advances from Affiliates
|
|
$
|
4,077
|
|
|
$
|
16,857
|
|
|
Accounts Payable:
|
|
|
|
|
|
|
|
General
|
|
289,740
|
|
|
192,755
|
|
|
|
|
Affiliated Companies
|
|
43,098
|
|
|
29,977
|
|
|
Accrued Taxes
|
|
191,777
|
|
|
153,900
|
|
|
Accrued Interest
|
|
10,541
|
|
|
7,968
|
|
|
Other Current Liabilities
|
|
10,890
|
|
|
16,963
|
|
|
TOTAL CURRENT LIABILITIES
|
|
550,123
|
|
|
418,420
|
|
|
|
|
|
|
|
|
NONCURRENT LIABILITIES
|
|
|
|
|
|
Long-term Debt − Nonaffiliated
|
|
1,931,984
|
|
|
1,544,401
|
|
|
Deferred Income Taxes
|
|
862,051
|
|
|
612,451
|
|
|
Regulatory Liabilities
|
|
44,049
|
|
|
28,056
|
|
|
Deferred Credits and Other Noncurrent Liabilities
|
|
4,006
|
|
|
232
|
|
|
TOTAL NONCURRENT LIABILITIES
|
|
2,842,090
|
|
|
2,185,140
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
3,392,213
|
|
|
2,603,560
|
|
|
|
|
|
|
|
|
Rate Matters (Note 3)
|
|
|
|
|
|
Commitments and Contingencies (Note 5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEMBER’S EQUITY
|
|
|
|
|
|
Paid-in Capital
|
|
1,455,009
|
|
|
1,243,000
|
|
|
Retained Earnings
|
|
502,573
|
|
|
309,884
|
|
|
TOTAL MEMBER’S EQUITY
|
|
1,957,582
|
|
|
1,552,884
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND MEMBER’S EQUITY
|
|
$
|
5,349,795
|
|
|
$
|
4,156,444
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements beginning on page
F- 9
.
|
AEP TRANSMISSION COMPANY, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2016
,
2015
and
2014
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
192,689
|
|
|
$
|
132,944
|
|
|
$
|
101,225
|
|
|
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
65,875
|
|
|
42,350
|
|
|
23,698
|
|
|
Deferred Income Taxes
|
|
223,096
|
|
|
183,180
|
|
|
207,141
|
|
|
Allowance for Equity Funds Used During Construction
|
|
(52,261
|
)
|
|
(53,080
|
)
|
|
(44,873
|
)
|
|
Property Taxes
|
|
(15,323
|
)
|
|
(25,620
|
)
|
|
(30,034
|
)
|
|
Change in Other Noncurrent Assets
|
|
(2,822
|
)
|
|
1,817
|
|
|
(7,444
|
)
|
|
Change in Other Noncurrent Liabilities
|
|
4,448
|
|
|
620
|
|
|
327
|
|
|
Changes in Certain Components of Working Capital:
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
(22,647
|
)
|
|
(26,271
|
)
|
|
(8,819
|
)
|
|
Materials and Supplies
|
|
(5,001
|
)
|
|
—
|
|
|
—
|
|
|
Accounts Payable
|
|
14,307
|
|
|
(3,515
|
)
|
|
762
|
|
|
Accrued Taxes, Net
|
|
143,837
|
|
|
(53,634
|
)
|
|
20,318
|
|
|
Accrued Interest
|
|
2,573
|
|
|
926
|
|
|
2,795
|
|
|
Other Current Assets
|
|
66
|
|
|
(380
|
)
|
|
(1,212
|
)
|
|
Other Current Liabilities
|
|
47
|
|
|
29
|
|
|
(27
|
)
|
|
Net Cash Flows from Operating Activities
|
|
548,884
|
|
|
199,366
|
|
|
263,857
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Construction Expenditures
|
|
(1,159,495
|
)
|
|
(1,007,791
|
)
|
|
(858,259
|
)
|
|
Change in Advances to Affiliates, Net
|
|
29,010
|
|
|
65,354
|
|
|
(151,835
|
)
|
|
Acquisitions of Assets
|
|
(6,518
|
)
|
|
(1,075
|
)
|
|
(11,472
|
)
|
|
Proceeds from Sales of Assets to Affiliates
|
|
—
|
|
|
217
|
|
|
238
|
|
|
Other Investing Activities
|
|
1,986
|
|
|
3,231
|
|
|
13,866
|
|
|
Net Cash Flows Used for Investing Activities
|
|
(1,135,017
|
)
|
|
(940,064
|
)
|
|
(1,007,462
|
)
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Capital Contributions from Member
|
|
212,009
|
|
|
279,000
|
|
|
347,500
|
|
|
Issuance of Long-term Debt − Nonaffiliated
|
|
686,904
|
|
|
449,008
|
|
|
477,733
|
|
|
Change in Advances from Affiliates, Net
|
|
(12,780
|
)
|
|
12,690
|
|
|
(81,628
|
)
|
|
Retirement of Long-term debt - Nonaffiliated
|
|
(300,000
|
)
|
|
—
|
|
|
—
|
|
|
Net Cash Flows from Financing Activities
|
|
586,133
|
|
|
740,698
|
|
|
743,605
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash and Cash Equivalents at Beginning of Period
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY INFORMATION
|
|
|
|
|
|
|
|
Cash Paid for Interest, Net of Capitalized Amounts
|
|
$
|
41,997
|
|
|
$
|
32,474
|
|
|
$
|
17,654
|
|
|
Net Cash Paid (Received) for Income Taxes
|
|
(235,084
|
)
|
|
(11,198
|
)
|
|
(148,146
|
)
|
|
Construction Expenditures Included in Current Liabilities as of December 31,
|
|
298,304
|
|
|
207,988
|
|
|
135,949
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements beginning on page
F- 9
.
|
INDEX OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
Page
Number
|
|
|
|
|
Organization and Summary of Significant Accounting Policies
|
|
|
New Accounting Pronouncements
|
|
|
Rate Matters
|
|
|
Effects of Regulation
|
|
|
Commitments, Guarantees and Contingencies
|
|
|
Business Segments
|
|
|
Fair Value Measurements
|
|
|
Income Taxes
|
|
|
Leases
|
|
|
Financing Activities
|
|
|
Related Party Transactions
|
|
|
Variable Interest Entities
|
|
|
Transmission Property
|
|
1
.
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
AEPTCo is a single member limited liability company and a wholly-owned subsidiary of AEP Transmission Holdco. AEPTCo formed the State Transcos to build, own and operate transmission facilities in various locations as indicated in the table below.
|
|
|
|
|
|
|
Company
|
|
Location of Facilities
|
|
APTCo
|
|
Tennessee and Virginia
|
|
IMTCo
|
|
Indiana and Michigan
|
|
KTCo
|
|
Kentucky
|
|
OHTCo
|
|
Ohio
|
|
OKTCo
|
|
Oklahoma
|
|
SWTCo
|
|
Arkansas and Louisiana
|
|
WVTCo
|
|
West Virginia
|
APTCo, KTCo, IMTCo, OHTCo and WVTCo are members of PJM. OKTCo and SWTCo are members of SPP. AEPTCo owns all of the State Transcos’ outstanding equity. AEPSC and other AEP subsidiaries provide services to the State Transcos through service agreements. AEPTCo and its subsidiaries do not have employees.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Rates and Service Regulation
The State Transcos’ rates are regulated by the FERC. Historically, the FERC formula rates for the State Transcos were established each July based on prior calendar year’s financial activity and projected plant balances. Effective January 1, 2017, the AEP East Transmission Companies’ implemented the modified PJM OATT formula rate calculation which establishes the annual FERC formula rates on a calendar year basis using the projected calendar year’s financial activity and projected plant balances, subject to refund. Refer to Note 3 for additional information. The FERC also regulates the State Transcos’ and AEPSC’s affiliated transactions, including intercompany billings at cost under the 2005 Public Utility Holding Company Act and the Federal Power Act. The FERC also has jurisdiction over the issuances and acquisitions of securities of the State Transcos, the acquisition or sale of certain utility assets and mergers with another electric utility or holding company. The FERC is permitted to review and audit the relevant books and records of the State Transcos.
Principles of Consolidation
The consolidated financial statements for AEPTCo include its seven wholly-owned transmission subsidiaries (State Transcos). Intercompany items are eliminated in consolidation.
Accounting for the Effects of Cost-Based Regulation
As a holding company of rate-regulated entities, AEPTCo’s consolidated financial statements reflect the actions of regulators that result in the recognition of certain revenues and expenses in different time periods than enterprises that are not rate-regulated. Under the State Transcos’ formula rate mechanism and in accordance with accounting guidance for “Regulated Operations,” the State Transcos record regulatory assets (deferred expenses) and regulatory liabilities (deferred revenue reductions or refunds) to reflect the economic effects of regulation in the same accounting period by matching expenses with their recovery through regulated revenues and by matching income with its passage to customers in cost-based regulated rates.
Use of Estimates
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates include, but are not limited to, long-lived asset impairment, the effects of regulation, long-lived asset recovery and the effects of contingencies. The estimates and assumptions used are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results could ultimately differ from those estimates.
Inventory
Materials and supplies inventories are carried at average cost.
Accounts Receivable
Accounts Receivable - Customers primarily includes receivables from either PJM or SPP based on the monthly allocation of the tariff rates that were authorized by FERC order. Accounts Receivable -Affiliated primarily represents receivables from AEP Operating Companies based on the tariff rates charged to these affiliated companies for the use of the State Transcos electric transmission systems.
Concentrations of Credit Risk and Significant Customers
AEP and its subsidiaries account for the following percentages of AEPTCo’s Total Revenues for the years ended December 31,
2016
,
2015
and
2014
and Total Accounts Receivable as of December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Percentage of Total Revenues
|
|
76.9
|
%
|
|
72.7
|
%
|
|
63.9
|
%
|
|
Percentage of Total Accounts Receivable
|
|
85.5
|
%
|
|
76.8
|
%
|
|
81.1
|
%
|
Transmission Property
Transmission property is stated at original cost. Additions, major replacements and betterments are added to the property accounts. Under the group composite method of depreciation, continuous interim routine replacements of items such as poles, transformers, etc. result in original cost retirements, less salvage, being charged to accumulated depreciation. The group composite method of depreciation assumes that on average, asset components are retired at the end of their useful lives and thus there is no gain or loss. The equipment in each primary electric plant account is identified as a separate group. The depreciation rates that are established take into account the past history of interim capital replacements and the amount of salvage received. These rates and the related lives are subject to periodic review. Removal costs accrued are typically recorded as regulatory liabilities when removal costs accrued exceed actual removal costs incurred. The asset removal costs liability is relieved as removal costs are incurred. A regulatory asset balance will occur if actual removal costs incurred exceed accumulated removal costs accrued.
The costs of labor, materials and overhead incurred to operate and maintain the transmission property is included in operating expenses.
Long-lived assets are required to be tested for impairment when it is determined that the carrying value of the assets may no longer be recoverable or when the assets meet the held-for-sale criteria under the accounting guidance for “Impairment or Disposal of Long-Lived Assets.” When it becomes probable that an asset in service or an asset under construction will be abandoned and regulatory cost recovery has been disallowed, the cost of that asset shall be removed from plant-in-service or CWIP and charged to expense.
The fair value of an asset or investment is the amount at which that asset or investment could be bought or sold in a current transaction between willing parties, as opposed to a forced or liquidation sale. Quoted market prices in active markets are the best evidence of fair value and are used as the basis for the measurement, if available. In the absence of quoted prices for identical or similar assets or investments in active markets, fair value is estimated using various internal and external valuation methods including cash flow analysis and appraisals.
Allowance for Funds Used During Construction (AFUDC)
AFUDC represents the estimated cost of borrowed and equity funds used to finance construction projects that is capitalized and recovered through depreciation over the service life of regulated transmission property. The equity component of AFUDC is recorded in Allowance for Equity Funds Used During Construction and the debt component of AFUDC is recorded as a reduction to Interest Expense.
Valuation of Nonderivative Financial Instruments
The book values of Advances to/from Affiliates, Accounts Receivable and Accounts Payable approximate fair value because of the short-term maturity of these instruments.
Fair Value Measurements of Assets and Liabilities
The accounting guidance for “Fair Value Measurements and Disclosures” establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2. When quoted market prices are not available, pricing may be completed using comparable securities, dealer values, operating data and general market conditions to determine fair value. Valuation models utilize various inputs such as commodity, interest rate and, to a lesser degree, volatility and credit that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, market corroborated inputs (i.e. inputs derived principally from, or correlated to, observable market data) and other observable inputs for the asset or liability.
Revenue Recognition
Regulatory Accounting
AEPTCo’s financial statements reflect the actions of regulators that can result in the recognition of revenues and expenses in different time periods than enterprises that are not rate-regulated. Regulatory assets (deferred expenses) and regulatory liabilities (deferred revenue reductions or refunds) are recorded to reflect the economic effects of regulation in the same accounting period by matching expenses with their recovery through regulated revenues and by matching income with its passage to customers in cost-based regulated rates.
When regulatory assets are probable of recovery through regulated rates, AEPTCo records them as assets on its balance sheets. AEPTCo tests for probability of recovery at each balance sheet date or whenever new events occur. Examples of new events include the issuance of a FERC order or passage of new legislation. If it is determined that recovery of a regulatory asset is no longer probable, AEPTCo writes off that regulatory asset as a charge against income.
Transmission Revenue Accounting
Pursuant to an order approved by the FERC, the AEP East Transmission Companies and the AEP West Transmission Companies are included in the OATT administered by PJM and SPP, respectively. The FERC order implemented an annual transmission revenue requirement for each of the AEP East Transmission Companies and the AEP West Transmission Companies. Under this requirement, AEPSC, on behalf of the AEP East Transmission Companies and the AEP West Transmission Companies, makes annual filings in order to recover prudently incurred costs and an allowed return on plant in service. An annual formula rate filing is made for each calendar year using estimated costs, which is used to determine the billings to PJM and SPP ratepayers. The annual rate filing is compared to actual costs with any over- or under-recovery being trued-up with interest and recovered in a future year’s rates.
In accordance with the accounting guidance for “Regulated Operations-Revenue Recognition”, AEPTCo recognizes revenue related to OATT rate true-ups immediately following the annual FERC filings. Any portion of the true-ups applicable to an affiliated company is recorded as Accounts Receivable-Affiliated Companies or Accounts Payable-Affiliated Companies on the balance sheets. Any portion of the true-ups applicable to third parties is recorded as Regulatory Assets or Regulatory Liabilities on the balance sheets.
Income Taxes
AEPTCo is a single member limited liability company which is a disregarded entity for income tax purposes. AEPTCo uses the liability method of accounting for income taxes. Under the liability method, deferred income taxes are provided for all temporary differences between the book and tax basis of assets and liabilities which will result in a future tax consequence.
When the flow-through method of accounting for temporary differences is reflected in regulated revenues (that is, when deferred taxes are not included in the cost of service for determining regulated rates for electricity), deferred income taxes are recorded and related regulatory assets and liabilities are established to match the regulated revenues and tax expense.
AEPTCo accounts for uncertain tax positions in accordance with the accounting guidance for “Income Taxes.” AEPTCo classifies interest expense or income related to uncertain tax positions as interest expense or income as appropriate and classifies penalties as Other Operation expense on the statements of income. AEPTCo’s uncertain tax positions are immaterial to the financial statements.
Long-term Debt
Debt issuance expenses are deferred and amortized generally utilizing the straight-line method over the term of the related debt. The straight-line method approximates the effective interest method and is consistent with the treatment in rates for regulated operations. The net amortization expense is included in Interest Expense on the statements of income.
Subsequent Events
Management reviewed subsequent events through
April 4, 2017
, the date that AEPTCo’s
2016
Annual Report was issued.
2
.
NEW ACCOUNTING PRONOUNCEMENTS
Upon issuance of final pronouncements, management reviews the new accounting literature to determine its relevance, if any, to AEPTCo’s business. The following final pronouncements will impact the financial statements.
ASU 2014-09 “Revenue from Contracts with Customers” (ASU 2014-09)
In May 2014, the FASB issued ASU 2014-09 clarifying the method used to determine the timing and requirements for revenue recognition on the statements of income. Under the new standard, an entity must identify the performance obligations in a contract, determine the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cash flow arising from contracts.
The FASB deferred implementation of ASU 2014-09 under the terms in ASU 2015-14, “Revenue from Contracts with Customers (Topic: 606): Deferral of the Effective Date.” The new accounting guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted.
Management continues to analyze the impact of the new revenue standard and related ASUs. During 2016, initial revenue contract assessments were completed. Material revenue streams were identified within the AEP System and representative contract/transaction types were sampled. Performance obligations identified within each material revenue stream were evaluated to determine whether the obligations were satisfied at a point in time or over time. Contracts determined to be satisfied over time generally qualified for the invoicing practical expedient since the invoiced amounts reasonably represented the value to customers of performance obligations fulfilled to date. Based upon the completed assessments, management does not expect a material impact to the timing of revenue recognized or net income and plans to elect the modified retrospective transition approach upon adoption. Management also continues to monitor unresolved industry implementation issues, including items related to collectability and alternative revenue programs, and will analyze the related impacts to revenue recognition. Management plans to adopt ASU 2014-09 effective January 1, 2018.
ASU 2015-11 “Simplifying the Measurement of Inventory” (ASU 2015-11)
In July 2015, the FASB issued ASU 2015-11 simplifying the guidance on the subsequent measurement of inventory, excluding inventory measured using last-in, first-out or the retail inventory method. Under the new standard, inventory should be at the lower of cost and net realizable value. The new accounting guidance is effective for interim and annual periods beginning after December 15, 2016 with early adoption permitted. Management adopted ASU 2015-11 prospectively, effective January 1, 2017. There was no impact on results of operations, financial position or cash flows at adoption.
ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01)
In January 2016, the FASB issued ASU 2016-01 enhancing the reporting model for financial instruments. Under the new standard, equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are required to be measured at fair value with changes in fair value recognized in net income. The new standard also amends disclosure requirements and requires separate presentation of financial assets and liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. The amendments also clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.
The new accounting guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The amendments will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. Management is analyzing the impact of this new standard and, at this time, cannot estimate the impact of adoption on net income. Management plans to adopt ASU 2016-01 effective January 1, 2018.
ASU 2016-02 “Accounting for Leases” (ASU 2016-02)
In February 2016, the FASB issued ASU 2016-02 increasing the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new standard, an entity must recognize an asset and liability for operating leases on the balance sheets. Additionally, a capital lease will be known as a finance lease going forward. Leases with lease terms of 12 months or longer will be subject to the new requirements. Fundamentally, the criteria used to determine lease classification will remain the same, but will be more subjective under the new standard.
The new accounting guidance is effective for annual periods beginning after December 15, 2018 with early adoption permitted. The guidance will be applied by means of a modified retrospective approach. The modified retrospective approach will require lessees and lessors to recognize and measure leases at the beginning of the earliest period presented.
Management continues to analyze the impact of the new lease standard. During 2016, initial lease contract assessments were completed. The AEP System lease population was identified and representative lease contracts were sampled. Based upon the completed assessments, management prepared a system gap analysis to outline new disclosure compliance requirements compared to current system capabilities. Lease system options are currently being evaluated. Management plans to elect certain of the following practical expedients upon adoption:
|
|
|
|
|
|
|
Practical Expedient
|
|
Description
|
|
Overall Expedients (for leases commenced prior to adoption date and must be adopted as a package)
|
|
Do not need to reassess whether any expired or existing contracts are/or contain leases, do not need to reassess the lease classification for any expired or existing leases and do not need to reassess initial direct costs for any existing leases.
|
|
Lease and Non-lease Components (elect by class of underlying asset)
|
|
Elect as an accounting policy to not separate non-lease components from lease components and instead account for each lease and associated non-lease component as a single lease component.
|
|
Short-term Lease (elect by class of underlying asset)
|
|
Elect as an accounting policy to not apply the recognition requirements to short-term leases.
|
|
Lease term
|
|
Elect to use hindsight to determine the lease term.
|
Management expects the new standard to impact financial position, but not results of operations or cash flows. Management also continues to monitor unresolved industry implementation issues, including items related to pole attachments and easements and right-of-ways, and will analyze the related impacts to lease accounting. Management plans to adopt ASU 2016-02 effective January 1, 2019.
3
.
RATE MATTERS
The State Transcos are involved in rate and regulatory proceedings at the FERC and their state commissions. This note discusses rate matters and related regulatory proceedings that could have a material impact on AEPTCo’s net income, cash flows and possibly financial condition.
Arkansas and Louisiana Rate Matters
In 2011, SWTCo filed with the LPSC to seek commission approval, to the extent necessary, of SWTCo’s status as a transmission-only public utility in the state of Louisiana. In 2014, SWTCo filed additional supplemental testimony with the LPSC. A decision from the LPSC is pending. Management is unable to predict the outcome of this filing.
As a result of a 2015 APSC order that denied SWTCo's application to operate as a transmission-only public utility in the state of Arkansas, the
December 31, 2016
financial statements reflect a provision for the Arkansas portion of FERC formula revenues.
Virginia Rate Matters
Based on a previous ruling by the Virginia SCC, APTCo can seek certification of future projects in its own name but the Virginia SCC will determine whether the project will ultimately be owned by APTCo or APCo.
Tennessee Rate Matters
As a result of separate orders issued by the Virginia SCC and the WVPSC in December 2016, APTCo can construct, own, operate, and maintain transmission facilities and equipment in Tennessee using land and right of way (ROW) of APCo or APTCo in Tennessee.
SPP OATT Upgrade Costs
Under the SPP OATT, costs of participant-funded transmission upgrades may be recovered, in part, from SPP customers whose transmission service is dependent upon capacity enabled by the upgrades. Prior to 2016, SPP had not charged its customers any amounts attributable to these upgrades. In November 2016, SPP billed transmission service customers, including OKTCo and SWTCo, for upgrade costs incurred since 2008. OKTCo and SWTCo recognized a net unfavorable impact of approximately $496 thousand and $3 thousand, respectively, related to the OATT upgrade costs.
FERC Rate Matters
FERC Transmission Complaint
In October 2016, several parties filed a joint complaint with the FERC that states the base return on common equity used by various AEP affiliates, including the State Transcos that operate in PJM, in calculating formula transmission rates under the PJM OATT is excessive and should be reduced from 10.99% to 8.32%, effective upon the date of the complaint. Management believes its financial statements adequately address the impact of the complaint. If the FERC orders revenue reductions as a result of the complaint, including refunds from the date of the complaint filing, it could reduce future net income and cash flows and impact financial condition.
Proposed Modifications to AEP East Transmission Rates
In November 2016, certain AEP affiliates, including the AEP East Transmission Companies, filed an application with the FERC to modify the PJM OATT formula transmission rate calculation, including an adjustment to recover a tax-related regulatory asset and a shift from historical to estimated expenses, with a proposed effective date of January 1, 2017. The filing proposed that the rates would be implemented based upon the date provided in the resulting FERC order. In March 2017, the FERC accepted the proposed modifications effective January 1, 2017, subject to refund, and set this matter for hearing and settlement procedures. Effective January 1, 2017, the AEP East Transmission Companies’ implemented the modified PJM OATT formula rate calculation which established the 2017 calendar year formula rates based on projected 2017 calendar year financial activity and projected plant balances. As accepted by the FERC, the AEP East Transmission Companies established 2017 calendar year rates based on an annual transmission revenue requirement of $583 million and recovery of the remaining $33 million of 2015 under-recovered revenues included in the May 2016 transmission rate filing. Any under-recovery for the period from January 2016 through December 2016 will be incorporated in the 2018 projected transmission revenue requirement. If the FERC determines that any of these costs are not recoverable, it could reduce future net income and cash flows and impact financial condition.
2016 Transmission Rate Filings for AEP East Transmission Companies
In May 2016, AEPSC, on behalf of the AEP East Transmission Companies, filed annual transmission revenue requirements with the FERC and PJM for the period July 2016 through June 2017. This filing established the following projected revenue requirements and prior year (over)/under-recovery of revenues, including carrying charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
Projected
Revenue
Requirements
|
|
Prior Year
(Over)/Under-Recovery
of Revenues
|
|
|
|
(in thousands)
|
|
APTCo
|
|
$
|
109
|
|
|
$
|
(97
|
)
|
|
IMTCo
|
|
97,839
|
|
|
8,830
|
|
|
KTCo
|
|
6,832
|
|
|
(202
|
)
|
|
OHTCo
|
|
258,134
|
|
|
49,925
|
|
|
WVTCo
|
|
56,960
|
|
|
6,678
|
|
|
Total
–
PJM Activity
|
|
$
|
419,874
|
|
|
$
|
65,134
|
|
PJM implemented these rates in July 2016, subject to refund and true-up. Effective January 1, 2017, the FERC accepted modifications to the formula rate calculation. See “Proposed Modifications to AEP East Transmission Rates” disclosure above.
2015 Transmission Rate Filings for AEP East Transmission Companies
In May 2015, AEPSC, on behalf of the AEP East Transmission Companies, filed annual transmission revenue requirements with the FERC and PJM for the period July 2015 through June 2016. This filing established the following projected revenue requirements and prior year under-recovery of revenues, including carrying charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
Projected
Revenue
Requirements
|
|
Prior Year
Under-Recovery
of Revenues
|
|
|
|
(in thousands)
|
|
APTCo
|
|
$
|
219
|
|
|
$
|
86
|
|
|
IMTCo
|
|
43,818
|
|
|
7,940
|
|
|
KTCo
|
|
3,318
|
|
|
6
|
|
|
OHTCo
|
|
191,022
|
|
|
30,429
|
|
|
WVTCo
|
|
34,567
|
|
|
3,432
|
|
|
Total
–
PJM Activity
|
|
$
|
272,944
|
|
|
$
|
41,893
|
|
PJM implemented these rates in July 2015, subject to refund and true-up.
2016 Transmission Rate Filings for AEP West Transmission Companies
In May 2016, AEPSC, on behalf of the AEP West Transmission Companies, filed annual transmission revenue requirements with the FERC and SPP for the period July 2016 through June 2017. This filing established the following projected revenue requirements and prior year (over)/under recovery
of revenues, including carrying charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
|
|
Prior Year
|
|
|
|
Revenue
|
|
(Over)/Under-Recovery
|
|
Company
|
|
Requirements
|
|
of Revenues
|
|
|
|
(in thousands)
|
|
OKTCo
|
|
$
|
63,676
|
|
|
$
|
5,969
|
|
|
SWTCo
|
|
131
|
|
|
(53
|
)
|
|
Total
–
SPP Activity
|
|
$
|
63,807
|
|
|
$
|
5,916
|
|
SPP implemented these rates in July 2016, subject to refund and true-up.
2015 Transmission Rate Filings for AEP West Transmission Companies
In 2015, AEPSC, on behalf of the AEP West Transmission Companies, filed annual transmission revenue requirements with the FERC and SPP for the period July 2015 through June 2016. This filing established the following projected revenue requirements and prior year (over)/under recovery
of revenues, including carrying charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
|
|
Prior Year
|
|
|
|
Revenue
|
|
(Over)/Under-Recovery
|
|
Company
|
|
Requirements
|
|
of Revenues
|
|
|
|
(in thousands)
|
|
OKTCo
|
|
$
|
46,664
|
|
|
$
|
1,485
|
|
|
SWTCo
|
|
|
144
|
|
|
|
(42
|
)
|
|
Total
–
SPP Activity
|
|
$
|
46,808
|
|
|
$
|
1,443
|
|
SPP implemented these rates in July 2015, subject to refund and true-up.
4
.
EFFECTS OF REGULATION
AEPTCo’s regulatory assets and liabilities are comprised of the following items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Remaining
|
|
Regulatory Assets:
|
|
2016
|
|
2015
|
|
Recovery Period
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Noncurrent Regulatory Assets
|
|
|
|
|
|
|
|
|
|
Regulatory assets approved for recovery:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Assets Currently Earning a Return
|
|
|
|
|
|
|
|
|
|
|
|
Income Taxes, Net (a)
|
|
$
|
106,143
|
|
|
$
|
79,639
|
|
|
57 years
|
|
|
|
Under-Recovered SPP Revenues
|
|
|
1,529
|
|
|
|
—
|
|
|
1 year
|
|
|
Regulatory Assets Currently Not Earning a Return
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under-Recovered OATT Costs
|
|
|
4,639
|
|
|
|
3,116
|
|
|
1 year
|
|
Total Regulatory Assets Approved for Recovery
|
|
|
112,311
|
|
|
|
82,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Noncurrent Regulatory Assets
|
|
$
|
112,311
|
|
|
$
|
82,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Remaining
|
|
Regulatory Liabilities:
|
|
2016
|
|
2015
|
|
Refund Period
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Noncurrent Regulatory Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory liabilities approved for payment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Liabilities Currently Paying a Return
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Removal Costs
|
|
$
|
44,049
|
|
|
$
|
28,056
|
|
|
(b)
|
|
Total Regulatory Liabilities Approved for Payment
|
|
|
44,049
|
|
|
|
28,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Noncurrent Regulatory Liabilities
|
|
$
|
44,049
|
|
|
$
|
28,056
|
|
|
|
|
|
|
|
(a)
|
In March 2017, the FERC accepted proposed modifications to the PJM OATT formula rate calculation, effective January 2017, subject to refund, and set the matter for hearing and settlement. As accepted, the modifications to the PJM OATT formula rate calculation include the recovery of these tax-related regulatory assets.
|
|
|
|
|
(b)
|
Relieved as removal costs are incurred.
|
5
.
COMMITMENTS, GUARANTEES AND CONTINGENCIES
AEPTCo is subject to certain claims and legal actions arising in its ordinary course of business. In addition, business activities of AEPTCo are subject to extensive governmental regulation related to public health and the environment. The ultimate outcome of such pending or potential litigation cannot be predicted. Management accrues contingent liabilities only when management concludes that it is both probable that a liability has been incurred at the date of the financial statements and the amount of loss can be reasonably estimated. When management determines that it is not probable, but rather reasonably possible that a liability has been incurred at the date of the financial statements, management discloses such contingencies and the possible loss or range of loss if such estimate can be made. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the maximum possible loss exposure. Circumstances change over time and actual results may vary significantly from estimates.
For current proceedings not specifically discussed below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on the financial statements.
COMMITMENTS
AEPTCo has construction commitments to support its operations and investments. In managing the overall construction program and in the normal course of business, AEPSC provides project development services and the State Transcos each contractually commit to third-party construction vendors for certain material purchases and other construction services. The State Transcos purchase materials, supplies, services and property, plant and equipment under contract as part of their normal course of business. Certain supply contracts contain penalty provisions for early termination.
In accordance with the accounting guidance for “Commitments”, AEPTCo had no actual contractual commitments as of December 31, 2016.
GUARANTEES
Liabilities for guarantees are recorded in accordance with the accounting guidance for “Guarantees.” There is no collateral held in relation to any guarantees. In the event any guarantee is drawn, there is no recourse to third parties unless specified below.
Indemnifications and Other Guarantees
AEPTCo enters into certain types of contracts which require indemnifications. Typically these contracts include, but are not limited to, lease agreements, purchase agreements and financing agreements. Generally, these agreements may include, but are not limited to, indemnifications around certain tax, contractual and environmental matters. As of December 31,
2016
, there were no material liabilities recorded for any indemnifications.
CONTINGENCIES
Insurance and Potential Losses
AEPTCo maintains property insurance coverage normal and customary for an electric utility, subject to various deductibles. Insurance includes coverage for all risks of physical loss or damage to AEPTCo property, subject to insurance policy conditions and exclusions. Covered property generally includes substations, facilities and inventories. Excluded property generally includes transmission lines, poles and towers. The insurance program for AEPTCo also generally provides coverage against loss arising from certain claims made by third parties and are in excess of retentions absorbed by AEPTCo . Coverage is generally provided by a combination of various industry mutual and/or commercial insurance carriers.
Some potential losses or liabilities may not be insurable or the amount of insurance carried may not be sufficient to meet potential losses and liabilities. Future losses or liabilities, if they occur, which are not completely insured, unless recovered from customers, could reduce future net income and cash flows and impact financial condition.
6
.
BUSINESS SEGMENTS
AEPTCo Parent is the holding company of seven FERC-regulated transmission-only electric utilities (State Transcos). The seven State Transcos have been identified as operating segments of AEPTCo under the accounting guidance for “Segment Reporting”. The State Transcos business consists of developing, constructing and operating transmission facilities at the request of the regional transmission organizations in which they operate and in replacing and upgrading facilities, assets and components of the existing AEP transmission system as needed to maintain reliability standards and providing service to AEP’s wholesale and retail customers. The State Transcos are regulated for rate-making purposes exclusively by FERC and earn revenues through tariff rates charged for the use of their electric transmission systems.
AEPTCo’s Chief Operating Decision Maker (CODM) makes operating decisions, allocates resources to and assesses performance based on these operating segments. The seven State Transco operating segments all have similar economic characteristics and meet all of the criteria under the accounting guidance for “Segment Reporting” to be aggregated into one operating segment. As a result, AEPTCo has one reportable segment. The remainder of AEPTCo’s activities is presented in AEPTCo Parent. While not considered a reportable segment, AEPTCo Parent represents the activity of the holding company which primarily relates to debt financing activity and general corporate activities.
The tables below present AEPTCo’s reportable segment income statement information for the years ended December 31,
2016
,
2015
and
2014
and reportable segment balance sheet information as of December 31,
2016
and
2015
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State Transcos
|
|
AEPTCo Parent
|
|
Reconciling Adjustments
|
|
AEPTCo
Consolidated
|
|
|
(in thousands)
|
|
2016
|
|
|
|
|
|
|
|
|
Revenues from:
|
|
|
|
|
|
|
|
|
External Customers
|
$
|
110,448
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
110,448
|
|
|
Sales to AEP Affiliates
|
367,506
|
|
|
—
|
|
|
—
|
|
|
367,506
|
|
|
Other
|
89
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|
Total Revenues
|
$
|
478,043
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
478,043
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
$
|
65,875
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
65,875
|
|
|
Interest Income - Affiliated
|
60
|
|
|
57,762
|
|
|
(57,447
|
)
|
(a)
|
375
|
|
|
Allowance for Equity Funds Used During Construction
|
52,261
|
|
|
—
|
|
|
—
|
|
|
52,261
|
|
|
Interest Expense
|
45,595
|
|
|
57,886
|
|
|
(57,447
|
)
|
(a)
|
46,034
|
|
|
Income Tax Expense (Credit)
|
94,409
|
|
|
(330
|
)
|
|
—
|
|
|
94,079
|
|
|
Equity Earnings in State Transcos
|
—
|
|
|
193,300
|
|
|
(193,300
|
)
|
(b)
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
$
|
193,300
|
|
|
$
|
192,689
|
|
|
$
|
(193,300
|
)
|
(b)
|
$
|
192,689
|
|
|
|
|
|
|
|
|
|
|
|
Gross Property Additions
|
$
|
1,166,013
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,166,013
|
|
|
|
|
|
|
|
|
|
|
|
Total Transmission Property
|
$
|
5,054,185
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,054,185
|
|
|
Accumulated Depreciation and Amortization
|
99,566
|
|
|
—
|
|
|
—
|
|
|
99,566
|
|
|
Total Transmission Property
–
Net
|
$
|
4,954,619
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,954,619
|
|
|
|
|
|
|
|
|
|
|
|
Notes Receivable - Affiliated
|
$
|
—
|
|
|
$
|
1,950,000
|
|
|
$
|
(1,950,000
|
)
|
(c)
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
5,337,501
|
|
|
$
|
3,947,814
|
|
|
$
|
(3,935,520
|
)
|
(d)
|
$
|
5,349,795
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-term Debt
|
$
|
1,931,984
|
|
|
$
|
1,950,000
|
|
|
$
|
(1,950,000
|
)
|
(c)
|
$
|
1,931,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State Transcos
|
|
AEPTCo Parent
|
|
Reconciling Adjustments
|
|
AEPTCo
Consolidated
|
|
|
(in thousands)
|
|
2015
|
|
|
|
|
|
|
|
|
Revenues from:
|
|
|
|
|
|
|
|
|
External Customers
|
$
|
84,326
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
84,326
|
|
|
Sales to AEP Affiliates
|
225,572
|
|
|
—
|
|
|
—
|
|
|
225,572
|
|
|
Other
|
277
|
|
|
—
|
|
|
—
|
|
|
277
|
|
|
Total Revenues
|
$
|
310,175
|
|
|
—
|
|
|
—
|
|
|
$
|
310,175
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
$
|
42,350
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42,350
|
|
|
Interest Income - Affiliated
|
83
|
|
|
49,619
|
|
|
(49,548
|
)
|
(a)
|
154
|
|
|
Allowance for Equity Funds Used During Construction
|
53,080
|
|
|
—
|
|
|
—
|
|
|
53,080
|
|
|
Interest Expense
|
34,362
|
|
|
49,782
|
|
|
(49,548
|
)
|
(a)
|
34,596
|
|
|
Income Tax Expense (Credit)
|
60,165
|
|
|
(122
|
)
|
|
—
|
|
|
60,043
|
|
|
Equity Earnings in State Transcos
|
—
|
|
|
133,171
|
|
|
(133,171
|
)
|
(b)
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
$
|
133,171
|
|
|
$
|
132,944
|
|
|
$
|
(133,171
|
)
|
(b)
|
$
|
132,944
|
|
|
|
|
|
|
|
|
|
|
|
Gross Property Additions
|
$
|
1,008,866
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,008,866
|
|
|
|
|
|
|
|
|
|
|
|
Total Transmission Property
|
$
|
3,749,790
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,749,790
|
|
|
Accumulated Depreciation and Amortization
|
51,677
|
|
|
—
|
|
|
—
|
|
|
$
|
51,677
|
|
|
Total Transmission Property – Net
|
$
|
3,698,113
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,698,113
|
|
|
|
|
|
|
|
|
|
|
|
Notes Receivable - Affiliated
|
$
|
—
|
|
|
$
|
1,550,000
|
|
|
$
|
(1,550,000
|
)
|
(c)
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
4,143,562
|
|
|
$
|
3,143,160
|
|
|
$
|
(3,130,278
|
)
|
(d)
|
$
|
4,156,444
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-term Debt
|
$
|
1,544,401
|
|
|
$
|
1,550,000
|
|
|
$
|
(1,550,000
|
)
|
(c)
|
$
|
1,544,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State Transcos
|
|
AEPTCo Parent
|
|
Reconciling Adjustments
|
|
AEPTCo
Consolidated
|
|
|
(in thousands)
|
|
2014
|
|
|
|
|
|
|
|
|
Revenues from:
|
|
|
|
|
|
|
|
|
External Customers
|
$
|
65,745
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
65,745
|
|
|
Sales to AEP Affiliates
|
116,458
|
|
|
—
|
|
|
—
|
|
|
116,458
|
|
|
Other
|
46
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|
Total Revenues
|
$
|
182,249
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
182,249
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
$
|
23,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,698
|
|
|
Interest Income - Affiliated
|
37
|
|
|
29,921
|
|
|
(29,899
|
)
|
(a)
|
59
|
|
|
Allowance for Equity Funds Used During Construction
|
44,873
|
|
|
—
|
|
|
—
|
|
|
44,873
|
|
|
Interest Expense
|
21,161
|
|
|
30,123
|
|
|
(29,899
|
)
|
(a)
|
21,385
|
|
|
Income Tax Expense (Credit)
|
36,225
|
|
|
(133
|
)
|
|
—
|
|
|
36,092
|
|
|
Equity Earnings in State Transcos
|
—
|
|
|
101,474
|
|
|
(101,474
|
)
|
(b)
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
$
|
101,474
|
|
|
$
|
101,225
|
|
|
$
|
(101,474
|
)
|
(b)
|
$
|
101,225
|
|
|
|
|
|
|
|
|
|
|
|
Gross Property Additions
|
$
|
869,731
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
869,731
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
2,919,195
|
|
|
$
|
2,266,769
|
|
|
$
|
(2,256,159
|
)
|
(d)
|
$
|
2,929,805
|
|
|
|
|
|
(a)
|
Elimination of intercompany interest income/interest expense on affiliated debt arrangement.
|
|
|
|
|
(b)
|
Elimination of AEPTCo Parent’s equity earnings in the State Transcos.
|
|
|
|
|
(c)
|
Elimination of intercompany debt.
|
|
|
|
|
(d)
|
Primarily relates to the elimination of AEPTCo Parent’s investment in the State Transcos and Notes Receivable from the State Transcos.
|
7
.
FAIR VALUE MEASUREMENTS
Fair Value Measurements of Long-term Debt
The fair values of Long-term Debt are based on quoted market prices, without credit enhancements, for the same or similar issues and the current interest rates offered for instruments with similar maturities classified as Level 2 measurement inputs. These instruments are not marked-to-market. The estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange.
The book values and fair values of Long-term Debt as of December 31,
2016
and December 31,
2015
are summarized in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|
|
Book Value
|
|
Fair Value
|
|
Book Value
|
|
Fair Value
|
|
|
|
(in thousands)
|
|
Long-term Debt
|
|
$
|
1,931,984
|
|
|
$
|
1,984,318
|
|
|
$
|
1,544,401
|
|
|
$
|
1,568,434
|
|
8
.
INCOME TAXES
The details of AEPTCo’s income taxes as reported are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Federal:
|
|
|
|
|
|
|
|
Current
|
|
$
|
(129,442
|
)
|
|
$
|
(126,310
|
)
|
|
$
|
(167,030
|
)
|
|
Deferred
|
|
205,938
|
|
|
171,264
|
|
|
198,048
|
|
|
Total Federal
|
|
76,496
|
|
|
44,954
|
|
|
31,018
|
|
|
|
|
|
|
|
|
|
|
State and Local:
|
|
|
|
|
|
|
|
Current
|
|
425
|
|
|
3,173
|
|
|
(4,019
|
)
|
|
Deferred
|
|
17,158
|
|
|
11,916
|
|
|
9,093
|
|
|
Total State and Local
|
|
17,583
|
|
|
15,089
|
|
|
5,074
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense
|
|
$
|
94,079
|
|
|
$
|
60,043
|
|
|
$
|
36,092
|
|
The following is a reconciliation of the differences between the amount of federal income taxes computed by multiplying book income before income taxes by the federal statutory rate and the amount of income taxes reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Net Income
|
|
$
|
192,689
|
|
|
$
|
132,944
|
|
|
$
|
101,225
|
|
|
Income Tax Expense
|
|
94,079
|
|
|
60,043
|
|
|
36,092
|
|
|
Pretax Income
|
|
$
|
286,768
|
|
|
$
|
192,987
|
|
|
$
|
137,317
|
|
|
|
|
|
|
|
|
|
|
|
Income Taxes on Pretax Income at Statutory Rate (35%)
|
|
$
|
100,369
|
|
|
$
|
67,545
|
|
|
$
|
48,061
|
|
|
Increase (Decrease) in Income Taxes Resulting from the Following Items:
|
|
|
|
|
|
|
|
|
|
|
AFUDC
|
|
(18,291
|
)
|
|
(18,578
|
)
|
|
(15,706
|
)
|
|
State and Local Income Taxes, Net
|
|
11,429
|
|
|
9,773
|
|
|
3,223
|
|
|
Valuation Allowance
|
|
(10
|
)
|
|
45
|
|
|
77
|
|
|
Other
|
|
582
|
|
|
1,258
|
|
|
437
|
|
|
Income Tax Expense
|
|
$
|
94,079
|
|
|
$
|
60,043
|
|
|
$
|
36,092
|
|
|
|
|
|
|
|
|
|
|
Effective Income Tax Rate
|
|
32.8
|
%
|
|
31.1
|
%
|
|
26.3
|
%
|
The following table shows elements of AEPTCo’s net deferred tax liability and significant temporary differences:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
(in thousands)
|
|
Deferred Tax Assets
|
|
$
|
61,443
|
|
|
$
|
42,019
|
|
|
Deferred Tax Liabilities
|
|
(923,494
|
)
|
|
(654,470
|
)
|
|
Net Deferred Tax Liabilities
|
|
$
|
(862,051
|
)
|
|
$
|
(612,451
|
)
|
|
|
|
|
|
|
|
Property Related Temporary Differences
|
|
$
|
(825,620
|
)
|
|
$
|
(569,540
|
)
|
|
Amounts Due from Customers for Future Federal Income Taxes
|
|
(37,150
|
)
|
|
(27,874
|
)
|
|
Deferred State Income Taxes
|
|
(55,573
|
)
|
|
(34,775
|
)
|
|
Deferred Federal Income Taxes on Deferred State Income Taxes
|
|
19,451
|
|
|
12,171
|
|
|
Net Operating Loss Carryforward
|
|
33,391
|
|
|
7,312
|
|
|
Valuation Allowance
|
|
(95
|
)
|
|
(121
|
)
|
|
All Other, Net
|
|
3,545
|
|
|
376
|
|
|
Net Deferred Tax Liabilities
|
|
$
|
(862,051
|
)
|
|
$
|
(612,451
|
)
|
AEP System Tax Allocation Agreement
AEPTCo and its subsidiaries join in the filing of a consolidated federal income tax return with its affiliates in the AEP System. The allocation of the AEP System’s current consolidated federal income tax to the AEP System companies allocates the benefit of current tax losses to the AEP System companies giving rise to such losses in determining their current tax expense. The consolidated net operating loss of the AEP System is allocated to each company in the consolidated group with taxable losses. The tax benefit of Parent is allocated to its subsidiaries with taxable income. With the exception of the allocation of the consolidated AEP System net operating loss and the loss of Parent, the method of allocation reflects a separate return result for each company in the consolidated group.
Federal and State Income Tax Audit Status
AEPTCo and other AEP Subsidiaries are no longer subject to U.S. federal examination for years before 2011. The IRS examination of years 2011, 2012 and 2013 started in April 2014. AEP and subsidiaries received a Revenue Agents Report in April 2016, completing the 2011 through 2013 audit cycle indicating an agreed upon audit. The 2011 through 2013 audit was submitted to the Congressional Joint Committee on Taxation for approval. The Joint Committee referred the audit back to the IRS exam team for further consideration. Although the outcome of tax audits is uncertain, in management’s opinion, adequate provisions for federal income taxes have been made for potential liabilities resulting from such matters. In addition, AEPTCo accrues interest on any uncertain tax positions. Management is not aware of any issues for open tax years that upon final resolution are expected to materially impact net income.
AEPTCo and other AEP subsidiaries file income tax returns in various state and local jurisdictions. These taxing authorities routinely examine the tax returns and AEPTCo and other AEP subsidiaries are currently under examination in several state and local jurisdictions. However, it is possible that previously filed tax returns have positions that may be challenged by these tax authorities. Management believes that adequate provisions for income taxes have been made for potential liabilities resulting from such challenges and that the ultimate resolution of these audits will not materially impact net income.
Net Income Tax Operating Loss Carryforward
As of December 31, 2016, AEPTCo recognized federal net income tax operating losses of $69 million which were driven primarily by bonus depreciation. As of December 31, 2016, AEPTCo had $24 million of unrealized federal net operating loss carryforward tax benefits. Management anticipates future taxable income will be sufficient to realize the remaining net income tax operating loss tax benefits before the federal carryforward expires after 2036. AEPTCo also had state net income tax operating loss carryforwards of $247 million (of which $244 million relates to Oklahoma) and $187 million (of which $185 million relates to Oklahoma), as of December 31, 2016 and 2015, respectively. Management also anticipates future taxable income will be sufficient to realize the remaining state net income tax operating loss tax benefits before the state carryforward expires for each state after 2036, except Arkansas which has an expiration date after 2021.
Tax Credit Carryforward
As of December 31, 2016, AEPTCo had unused alternative minimum tax credit carryforwards of $203 thousand. AEPTCo anticipates future federal taxable income will be sufficient to realize the tax benefits of the federal tax credits.
Valuation Allowance
Management assesses past results and future operations to estimate and evaluate available positive and negative evidence to determine whether sufficient future taxable income will be generated in order to realize existing deferred tax assets. A significant piece of objective negative information evaluated was the state net income tax operating losses sustained in 2016 and prior years. Other objective negative evidence evaluated is the impact recently enacted federal tax legislation will have on future taxable income and on the ability to benefit from the carryforward of charitable contribution deductions. The positive evidence management considered is the history of positive pretax income and the fact that the tax losses resulted from temporary differences that will reverse in future periods. On the basis of the evaluation of all available positive and negative evidence, as of December 31, 2016 and December 31, 2015, a valuation allowance of $95 thousand and $111 thousand, respectively, net of federal tax, has been recorded by AEPTCo in order to recognize only the portion of the deferred tax assets that, more likely than not, will be realized. In addition, AEPTCo recorded a valuation allowance of $10 thousand in the fourth quarter of 2015 related to the expected expiration of charitable contribution carryforward deductions. In the fourth quarter of 2016, AEPTCo reversed the $10 thousand valuation allowance associated with charitable contributions that expired at the end of the year. The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period changes.
Federal Tax Legislation
The Tax Increase Prevention Act of 2014 (the 2014 Act) was enacted in December 2014. Included in the 2014 Act was a one-year extension of the 50% bonus depreciation. The 2014 Act also retroactively extended the life of research and development, employment and several energy tax credits, which expired at the end of 2013. The enacted provisions did not materially impact AEPTCo’s net income or financial condition but did have a favorable impact on cash flows in 2015.
The Protecting Americans from Tax Hikes Act of 2015 (PATH) included an extension of the 50% bonus depreciation for three years through 2017, phasing down to 40% in 2018 and 30% in 2019. PATH also provided for the extension of research and development, employment and several energy tax credits for 2015. PATH also includes provisions to extend the wind energy production tax credit through 2016 with a three-year phase-out (2017-2019), and to extend the 30% temporary solar investment tax credit for three years through 2019 with a two-year phase-out (2020-2021). PATH also provided for a permanent extension of the Research and Development tax credit. The enacted provisions did not materially impact AEPTCo’s net income or financial condition but will have a favorable impact on future cash flows.
Federal Tax Regulations
In 2013, the U.S. Treasury Department issued final and re-proposed regulations regarding the deduction and capitalization of expenditures related to tangible property, effective for the tax years beginning in 2014. In addition, the IRS has issued Revenue Procedures under the Industry Issue Resolutions program that provides specific guidance for the implementation of the regulations for the electric utility industry. These final regulations did not materially impact net income, cash flows or financial condition.
State Tax Legislation − Impacting IMTCo
Legislation was passed by the state of Indiana in May 2011 enacting a phased reduction in corporate income tax rates from 8.5% to 6.5%. The 8.5% Indiana corporate income tax rate will be reduced 0.5% each year beginning after June 30, 2012 with the final reduction occurring in years beginning after June 30, 2015. Additional legislation was passed by the state of Indiana reducing the corporate income tax rate from 6.5% in 2016 to 4.9% beginning after June 30, 2016 with the final reduction occurring in years beginning after June 30, 2021. The enacted legislation did not materially impact AEPTCo’s net income, cash flows or financial condition.
State Tax Legislation − Impacting WVTCo
During the third quarter of 2013, it was determined that the state of West Virginia had achieved certain minimum levels of shortfall reserve funds. As a result, the West Virginia corporate income tax rate was reduced from 7.0% to 6.5% in 2014. The enacted provision did not materially impact AEPTCo’s net income, cash flows or financial condition.
State Tax Legislation − Impacting SWTCo
In March 2016, Louisiana enacted several tax bills impacting income taxes, franchise taxes and sales taxes. The income tax provisions limit the use of Louisiana net operating losses and the sales tax provisions increase the sales tax rate and suspend or eliminate certain exemptions. The legislation is not expected to materially impact AEPTCo’s net income, cash flows or financial condition.
9
.
LEASES
IMTCo, OHTCo, OKTCo and WVTCo have leases of property, plant and equipment. These leases require payments of related property taxes, maintenance and operating costs. The majority of the leases have purchase or renewal options and will be renewed or replaced by other leases.
Lease rentals for operating leases are generally charged to Other Operation expense in accordance with rate-making treatment for regulated operations. AEPTCo’s components of rental costs are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Lease Rental Costs
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Net Lease Expense on Operating Leases
|
|
$
|
864
|
|
|
$
|
471
|
|
|
$
|
352
|
|
|
Total Lease Rental Costs
|
|
$
|
864
|
|
|
$
|
471
|
|
|
$
|
352
|
|
AEPTCo’s future minimum lease payments consisted of the following as of December 31,
2016
:
|
|
|
|
|
|
|
|
|
|
|
Noncancelable
|
|
Future Minimum Lease Payments
|
|
Operating Leases
|
|
|
|
(in thousands)
|
|
2017
|
|
$
|
938
|
|
|
2018
|
|
806
|
|
|
2019
|
|
452
|
|
|
2020
|
|
445
|
|
|
2021
|
|
218
|
|
|
Later Years
|
|
—
|
|
|
Total Future Minimum Lease Payments
|
|
$
|
2,859
|
|
10
.
FINANCING ACTIVITIES
Long-term Debt
The following table details long-term debt outstanding as of December 31,
2016
and
2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate as of
|
|
|
|
Outstanding as of
|
|
|
|
|
|
December 31,
|
|
Interest Rate Ranges as of December 31,
|
|
December 31,
|
|
Type of Debt
|
|
Maturity
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
Senior Unsecured Notes
|
|
2018-2046
|
|
3.93%
|
|
2.68%-5.52%
|
|
2.68%-5.52%
|
|
$
|
1,931,984
|
|
|
$
|
1,244,751
|
|
|
Other Long-term Debt
|
|
2016
|
(a)
|
NA
|
|
NA
|
|
1.16%-1.23%
|
|
—
|
|
|
299,650
|
|
|
Total Long-term Debt
|
|
|
|
|
|
|
|
|
|
$
|
1,931,984
|
|
|
$
|
1,544,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Original maturity of Other Long-term Debt was 2017. AEPTCo Parent retired the Other Long-term Debt in November 2016.
|
|
NA Not applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After
|
|
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2021
|
|
Total
|
|
|
|
(in thousands)
|
|
Principal Amount
|
$
|
—
|
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
$
|
—
|
|
|
$
|
50,000
|
|
|
$
|
1,765,000
|
|
|
$
|
1,950,000
|
|
|
Debt Issuance Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,016
|
)
|
|
Total Long-term Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,931,984
|
|
Corporate Borrowing Program
The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of AEP’s subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions of the AEP System Utility Money Pool agreement filed with the FERC. AEP has a direct financing relationship with AEPTCo Parent and SWTCo to meet their short-term borrowing needs. APTCo, IMTCo, KTCo, OHTCo, OKTCo and WVTCo have been approved to participate in the Utility Money Pool to finance their short-term borrowing needs. SWTCo is awaiting regulatory approval from the LPSC to begin participating in AEP’s Utility Money Pool.
APTCo’s, IMTCo’s, KTCo’s, OHTCo’s, OKTCo’s and WVTCo’s amounts of outstanding loans to (borrowings from) the Utility Money Pool as of December 31,
2016
and
2015
are included in Advances to Affiliates and Advances from Affiliates, respectively, on the balance sheets. APTCo’s, IMTCo’s, KTCo’s, OHTCo’s, OKTCo’s and WVTCo’s money pool activity and corresponding authorized borrowing limits for the years ended December 31,
2016
and
2015
are described in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to
|
|
|
|
|
|
Maximum
|
|
Maximum
|
|
Average
|
|
Average
|
|
(Borrowings from)
|
|
Authorized
|
|
|
|
Borrowings
|
|
Loans
|
|
Borrowings
|
|
Loans
|
|
the Utility
|
|
Short-term
|
|
|
|
from Utility
|
|
to Utility
|
|
from Utility
|
|
to Utility
|
|
Money Pool as of
|
|
Borrowing
|
|
Company
|
|
Money Pool
|
|
Money Pool
|
|
Money Pool
|
|
Money Pool
|
|
December 31, 2016
|
|
Limit
|
|
|
|
(in thousands)
|
|
APTCo
|
|
$
|
1,452
|
|
|
$
|
286
|
|
|
$
|
867
|
|
|
$
|
166
|
|
|
$
|
(1,397
|
)
|
|
$
|
40,000
|
|
|
IMTCo
|
|
|
131,167
|
|
|
|
26,463
|
|
|
|
70,636
|
|
|
|
11,112
|
|
|
|
15,067
|
|
|
|
180,000
|
|
|
KTCo
|
|
|
9,115
|
|
|
|
3,630
|
|
|
|
6,266
|
|
|
|
1,672
|
|
|
|
3,476
|
|
|
|
75,000
|
|
|
OHTCo
|
|
|
111,651
|
|
|
|
46,358
|
|
|
|
51,820
|
|
|
|
15,233
|
|
|
|
34,323
|
|
|
|
250,000
|
|
|
OKTCo
|
|
|
78,673
|
|
|
|
4,215
|
|
|
|
31,146
|
|
|
|
1,936
|
|
|
|
(1,234
|
)
|
|
|
125,000
|
|
|
WVTCo
|
|
|
44,979
|
|
|
|
24,627
|
|
|
|
20,466
|
|
|
|
6,682
|
|
|
|
(401
|
)
|
|
|
125,000
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
49,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to
|
|
|
|
|
|
Maximum
|
|
Maximum
|
|
Average
|
|
Average
|
|
(Borrowings from)
|
|
Authorized
|
|
|
|
Borrowings
|
|
Loans
|
|
Borrowings
|
|
Loans
|
|
the Utility
|
|
Short-term
|
|
|
|
from Utility
|
|
to Utility
|
|
from Utility
|
|
to Utility
|
|
Money Pool as of
|
|
Borrowing
|
|
Company
|
|
Money Pool
|
|
Money Pool
|
|
Money Pool
|
|
Money Pool
|
|
December 31, 2015
|
|
Limit
|
|
|
|
(in thousands)
|
|
APTCo
|
|
$
|
1,385
|
|
|
$
|
—
|
|
|
$
|
804
|
|
|
$
|
—
|
|
|
$
|
(918
|
)
|
|
$
|
40,000
|
|
|
IMTCo
|
|
|
66,157
|
|
|
|
28,715
|
|
|
|
24,965
|
|
|
|
10,999
|
|
|
|
26,461
|
|
|
|
180,000
|
|
|
KTCo
|
|
|
18,103
|
|
|
|
—
|
|
|
|
7,282
|
|
|
|
—
|
|
|
|
(3,526
|
)
|
|
|
75,000
|
|
|
OHTCo
|
|
|
93,496
|
|
|
|
68,781
|
|
|
|
38,177
|
|
|
|
18,823
|
|
|
|
30,900
|
|
|
|
200,000
|
|
|
OKTCo
|
|
|
28,371
|
|
|
|
36,948
|
|
|
|
11,224
|
|
|
|
16,880
|
|
|
|
(11,486
|
)
|
|
|
125,000
|
|
|
WVTCo
|
|
|
50,054
|
|
|
|
25,724
|
|
|
|
19,305
|
|
|
|
11,590
|
|
|
|
24,626
|
|
|
|
175,000
|
|
|
Total
|
|
|
|
|
|
|
|
$
|
66,057
|
|
|
|
|
The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool for APTCo, IMTCo, KTCo, OHTCo, OKTCo, and WVTCo were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Maximum Interest Rate
|
|
1.02
|
%
|
|
0.87
|
%
|
|
0.59
|
%
|
|
Minimum Interest Rate
|
|
0.69
|
%
|
|
0.37
|
%
|
|
0.24
|
%
|
The average interest rates for funds borrowed from and loaned to the Utility Money Pool are summarized for APTCo, IMTCo, KTCo, OHTCo, OKTCo and WVTCo in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest Rate
|
|
Average Interest Rate
|
|
|
|
for Funds Borrowed
|
|
for Funds Loaned
|
|
|
|
from Utility Money Pool for
|
|
to Utility Money Pool for
|
|
|
|
Years Ended December 31,
|
|
Years Ended December 31,
|
|
Company
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
APTCo
|
|
0.82
|
%
|
|
0.48
|
%
|
|
0.30
|
%
|
|
0.89
|
%
|
|
—
|
%
|
|
—
|
%
|
|
IMTCo
|
|
0.85
|
%
|
|
0.46
|
%
|
|
0.28
|
%
|
|
0.76
|
%
|
|
0.65
|
%
|
|
0.37
|
%
|
|
KTCo
|
|
0.81
|
%
|
|
0.48
|
%
|
|
0.30
|
%
|
|
0.97
|
%
|
|
—
|
%
|
|
0.29
|
%
|
|
OHTCo
|
|
0.85
|
%
|
|
0.45
|
%
|
|
0.28
|
%
|
|
0.87
|
%
|
|
0.50
|
%
|
|
0.45
|
%
|
|
OKTCo
|
|
0.83
|
%
|
|
0.50
|
%
|
|
0.28
|
%
|
|
0.94
|
%
|
|
0.47
|
%
|
|
0.40
|
%
|
|
WVTCo
|
|
0.86
|
%
|
|
0.46
|
%
|
|
0.27
|
%
|
|
0.75
|
%
|
|
0.56
|
%
|
|
0.40
|
%
|
The amounts of outstanding loans to (borrowings from) AEP as of December 31,
2016
and
2015
are included in Advances to Affiliates and Advances from Affiliates, respectively, on the balance sheets. Direct borrowing and lending activity with AEP and corresponding authorized borrowing limits for the years ended December 31,
2016
and
2015
are described in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to
|
|
Authorized
|
|
|
|
Maximum
|
|
Maximum
|
|
Average
|
|
Average
|
|
(Borrowings from)
|
|
Short-term
|
|
|
|
Borrowings
|
|
Loans
|
|
Borrowings
|
|
Loans
|
|
AEP as of
|
|
Borrowing
|
|
Company
|
|
from AEP
|
|
to AEP
|
|
from AEP
|
|
to AEP
|
|
December 31, 2016
|
|
Limit
|
|
|
|
(in thousands)
|
|
AEPTCo Parent
|
|
$
|
4,637
|
|
|
$
|
170,392
|
|
|
$
|
4,637
|
|
|
$
|
35,659
|
|
|
$
|
14,242
|
|
|
$
|
NA
|
|
|
SWTCo
|
|
|
1,147
|
|
|
|
—
|
|
|
|
993
|
|
|
|
—
|
|
|
|
(1,045
|
)
|
|
|
75,000
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA Not applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to
|
|
Authorized
|
|
|
|
Maximum
|
|
Maximum
|
|
Average
|
|
Average
|
|
(Borrowings from)
|
|
Short-term
|
|
|
|
Borrowings
|
|
Loans
|
|
Borrowings
|
|
Loans
|
|
AEP as of
|
|
Borrowing
|
|
Company
|
|
from AEP
|
|
to AEP
|
|
from AEP
|
|
to AEP
|
|
December 31, 2015
|
|
Limit
|
|
|
|
(in thousands)
|
|
AEPTCo Parent
|
|
$
|
2,749
|
|
|
$
|
37,349
|
|
|
$
|
1,832
|
|
|
$
|
14,992
|
|
|
$
|
14,131
|
|
|
$
|
NA
|
|
|
SWTCo
|
|
|
1,043
|
|
|
|
—
|
|
|
|
906
|
|
|
|
—
|
|
|
|
(927
|
)
|
|
|
75,000
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA Not applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The maximum and minimum interest rates for funds either borrowed from or loaned to AEP for AEPTCo Parent and SWTCo were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Maximum Interest Rate
|
|
1.02
|
%
|
|
0.87
|
%
|
|
0.59
|
%
|
|
Minimum Interest Rate
|
|
0.69
|
%
|
|
0.37
|
%
|
|
0.24
|
%
|
The average interest rates for funds borrowed from and loaned to AEP are summarized in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest Rate
|
|
Average Interest Rate
|
|
|
|
for Funds Borrowed
|
|
for Funds Loaned
|
|
|
|
from AEP for
|
|
to AEP for
|
|
|
|
Years Ended December 31,
|
|
Years Ended December 31,
|
|
Company
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
AEPTCo Parent
|
|
0.75
|
%
|
|
0.46
|
%
|
|
0.29
|
%
|
|
0.87
|
%
|
|
0.47
|
%
|
|
0.31
|
%
|
|
SWTCo
|
|
0.83
|
%
|
|
0.48
|
%
|
|
0.30
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Interest expense related to the Utility Money Pool and to the direct financing relationship with AEP is included in Interest Expense. AEPTCo Parent and the State Transcos incurred interest expense for amounts borrowed from the Utility Money Pool and AEP as indicated in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Company
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
AEPTCo Parent
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
APTCo
|
|
6
|
|
|
4
|
|
|
14
|
|
|
IMTCo
|
|
557
|
|
|
110
|
|
|
56
|
|
|
KTCo
|
|
46
|
|
|
35
|
|
|
4
|
|
|
OHTCo
|
|
333
|
|
|
112
|
|
|
124
|
|
|
OKTCo
|
|
252
|
|
|
31
|
|
|
40
|
|
|
SWTCo
|
|
8
|
|
|
4
|
|
|
2
|
|
|
WVTCo
|
|
126
|
|
|
80
|
|
|
84
|
|
|
Total Interest Expense
|
|
$
|
1,328
|
|
|
$
|
376
|
|
|
$
|
359
|
|
Interest income related to the Utility Money Pool and to the direct financing relationship with AEP is included in Interest Income on AEPTCo’s statement of income. AEPTCo Parent and the State Transcos earned interest income for amounts loaned to the Utility Money Pool and AEP as indicated in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Company
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
AEPTCo Parent
|
|
$
|
315
|
|
|
$
|
70
|
|
|
$
|
22
|
|
|
IMTCo
|
|
8
|
|
|
4
|
|
|
9
|
|
|
KTCo
|
|
2
|
|
|
—
|
|
|
—
|
|
|
OHTCo
|
|
34
|
|
|
35
|
|
|
11
|
|
|
OKTCo
|
|
1
|
|
|
38
|
|
|
10
|
|
|
WVTCo
|
|
15
|
|
|
7
|
|
|
7
|
|
|
Total Interest Income
|
|
$
|
375
|
|
|
$
|
154
|
|
|
$
|
59
|
|
Debt Covenants
AEPTCo’s note purchase agreements contain certain covenants and require them to maintain percentage of debt to total capitalization at a level that does not exceed 67.5%. The method for calculating outstanding debt and capitalization is contractually defined in the note purchase agreements. In addition, subject to certain conditions, AEPTCo has covenanted that it will not incur debt secured by a lien unless its other indebtedness is similarly secured.
Covenants in AEPTCo’s note purchase agreements also limit the amount of contractually-defined priority debt (which includes a further sub-limit of $50 million of secured debt) to 10% of consolidated tangible net assets. The following table provides detail used in the calculation of AEPTCo’s priority debt covenants as of December 31,
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances from
|
|
Advances to
|
|
Secured
|
|
Priority
|
|
Company
|
|
Affiliates
|
|
Affiliates
|
|
Debt
|
|
Debt
|
|
|
|
(in thousands)
|
|
AEPTCo Parent
|
|
$
|
—
|
|
|
$
|
14,242
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
APTCo
|
|
1,397
|
|
|
—
|
|
|
—
|
|
|
1,397
|
|
|
IMTCo
|
|
—
|
|
|
15,067
|
|
|
—
|
|
|
—
|
|
|
KTCo
|
|
—
|
|
|
3,476
|
|
|
—
|
|
|
—
|
|
|
OHTCo
|
|
—
|
|
|
34,323
|
|
|
—
|
|
|
—
|
|
|
OKTCo
|
|
1,234
|
|
|
—
|
|
|
—
|
|
|
1,234
|
|
|
SWTCo
|
|
1,045
|
|
|
—
|
|
|
—
|
|
|
1,045
|
|
|
WVTCo
|
|
401
|
|
|
—
|
|
|
—
|
|
|
401
|
|
|
Total
|
|
$
|
4,077
|
|
|
$
|
67,108
|
|
|
$
|
—
|
|
|
$
|
4,077
|
|
Nonperformance under these covenants could result in an event of default under these note purchase agreements.
Dividend Restrictions
Federal Power Act
In accordance with the Federal Power Act, the State Transcos are prohibited from paying dividends to AEPTCo Parent out of capital accounts, other than retained earnings, without regulatory approval. As a result, the State Transcos may be limited in their ability to transfer funds to AEPTCo Parent in the form of dividends. As of December 31, 2016, the maximum amount of restricted net assets of the State Transcos that may not be distributed to AEPTCo Parent in the form of a loan, advance or dividend was $1.5 billion. As of December 31, 2016, the Federal Power Act restriction did not limit the ability of the State Transcos to pay dividends out of retained earnings to AEPTCo Parent.
Credit Agreement Leverage Restrictions
Pursuant to the leverage restrictions in AEPTCo’s credit agreement, AEPTCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. This credit agreement leverage restriction can limit the ability of AEPTCo to pay dividends out of retained earnings to AEP Parent. The payment of cash dividends indirectly results in an increase in the percentage of debt to total capitalization of the company distributing the dividend. The method for calculating outstanding debt and capitalization is contractually defined in the credit agreements. As of December 31, 2016, the leverage restriction did not limit the ability of AEPTCo to pay dividends out of retained earnings to AEP Parent.
Capital Contributions Subsequent to Year-End
In January 2017, AEP Transmission Holdco made a capital contribution of $39.5 million to AEPTCo Parent. Consequently, AEPTCo Parent made capital contributions of $20 million, $13 million, $5.5 million and $1 million to IMTCo, OKTCo, OHTCo and WVTCo, respectively.
In February 2017, AEP Transmission Holdco made a capital contribution of $42.5 million to AEPTCo Parent. Consequently, AEPTCo Parent made capital contributions of $14.5 million, $11.5 million, $8.5 million and $8 million to IMTCo, OKTCo, WVTCo and OHTCo, respectively.
In March 2017, AEP Transmission Holdco made a capital contribution of $43.5 million to AEPTCo Parent. Consequently, AEPTCo Parent made capital contributions of $14 million, $12.5 million, $11 million and $6 million to OHTCo, IMTCo, WVTCo and OKTCo, respectively.
11
.
RELATED PARTY TRANSACTIONS
For other related party transactions, also see “Corporate Borrowing Program” and “Debt Covenants” sections of Note
10
.
Affiliated Transmission Revenues
AEP East Transmission Companies
Subsidiaries of AEP that are load serving entities within the PJM region incur PJM transmission services in accordance with the OATT and Transmission Agreement. The AEP East Transmission Companies recorded these affiliated transmission revenues in Sales to AEP Affiliates. These affiliated transmission revenues in
2016
,
2015
and
2014
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Company
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
APTCo
|
|
$
|
856
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
IMTCo
|
|
62,348
|
|
|
33,002
|
|
|
16,586
|
|
|
KTCo
|
|
3,802
|
|
|
1,355
|
|
|
137
|
|
|
OHTCo
|
|
215,592
|
|
|
142,705
|
|
|
70,937
|
|
|
WVTCo
|
|
41,150
|
|
|
18,737
|
|
|
2,722
|
|
|
Total - PJM Activity
|
|
$
|
323,748
|
|
|
$
|
195,799
|
|
|
$
|
90,390
|
|
AEP West Transmission Companies
Subsidiaries of AEP that are load serving entities within the SPP region incur SPP transmission services and base plan funding services in accordance with the OATT and Transmission Coordination Agreement. The AEP West Transmission Companies recorded these affiliated transmission revenues in Sales to AEP Affiliates. These affiliated transmission revenues in
2016
,
2015
and
2014
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Company
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
OKTCo
|
|
$
|
42,372
|
|
|
$
|
29,707
|
|
|
$
|
25,834
|
|
|
SWTCo
|
|
24
|
|
|
66
|
|
|
234
|
|
|
Total - SPP Activity
|
|
$
|
42,396
|
|
|
$
|
29,773
|
|
|
$
|
26,068
|
|
Services Provided by AEP Subsidiaries
AEP subsidiaries perform certain transmission services for other AEP subsidiaries when necessary or practical. The costs of these services are billed on a direct-charge basis, whenever possible, or on reasonable basis of proration for services that benefit multiple companies. The billings for services are made at cost and included no compensation for the use of equity capital.
AEPTCo’s net billings from AEP and AEP’s subsidiaries for the years ended December 31,
2016
,
2015
and
2014
were as follows:
Total Billings to AEPTCo
Years Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billing Company
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
AEP
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
AEPEP
|
|
6
|
|
|
4
|
|
|
—
|
|
|
AEP Texas
|
|
639
|
|
|
545
|
|
|
342
|
|
|
AGR
|
|
2
|
|
|
—
|
|
|
7
|
|
|
APCo
|
|
4,464
|
|
|
4,475
|
|
|
17,854
|
|
|
APTCo
|
|
4
|
|
|
1,268
|
|
|
2,681
|
|
|
CSW Energy, Inc.
|
|
—
|
|
|
—
|
|
|
4
|
|
|
I&M
|
|
12,713
|
|
|
13,132
|
|
|
12,923
|
|
|
IMTCo
|
|
3
|
|
|
(15
|
)
|
|
100
|
|
|
KPCo
|
|
135
|
|
|
463
|
|
|
623
|
|
|
OHTCo
|
|
12
|
|
|
—
|
|
|
43
|
|
|
OPCo
|
|
14,579
|
|
|
7,878
|
|
|
36,624
|
|
|
PSO
|
|
5,797
|
|
|
4,251
|
|
|
2,285
|
|
|
SWEPCo
|
|
420
|
|
|
299
|
|
|
79
|
|
|
SWTCo
|
|
86
|
|
|
—
|
|
|
—
|
|
|
Transource Energy
|
|
136
|
|
|
117
|
|
|
—
|
|
|
Transource Missouri
|
|
—
|
|
|
—
|
|
|
887
|
|
|
WPCo
|
|
132
|
|
|
137
|
|
|
144
|
|
|
WVTCo
|
|
1
|
|
|
—
|
|
|
—
|
|
Sales and Purchases of Property
The State Transcos sold and purchased transmission property recorded in CWIP to/from certain AEP subsidiaries at book value. The following table shows the affiliated sales and purchases for the years ended December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Companies
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
APCo to WVTCo
|
|
$
|
1,131
|
|
|
$
|
—
|
|
|
$
|
1,497
|
|
|
AEP Texas to OHTCo
|
|
—
|
|
|
337
|
|
|
—
|
|
|
WVTCo to OPCo
|
|
—
|
|
|
—
|
|
|
887
|
|
|
OPCo to OHTCo
|
|
421
|
|
|
—
|
|
|
2
|
|
|
PSO to OKTCo
|
|
1,186
|
|
|
61
|
|
|
—
|
|
|
OKTCo to SWEPCo
|
|
—
|
|
|
217
|
|
|
238
|
|
|
I&M to IMTCo
|
|
3,780
|
|
|
—
|
|
|
—
|
|
Joint License Agreement
IMTCo, KTCo, OHTCo and OKTCo entered into 50-year joint license agreements with I&M, KPCo, OPCo and PSO, respectively, allowing either party to occupy the granting party’s facilities or real property. After the expiration of the agreement, the term shall automatically renew for successive one-year terms unless either party provides notice. The joint license billing provides compensation to the granting party for the cost of carrying assets, including depreciation expense, property taxes, interest expense, return on equity and income taxes. For the years ended December 31,
2016
,
2015
and
2014
, IMTCo, KTCo, OHTCo and OKTCo recorded the following costs in Other Operation expense related to these agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Company
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
IMTCo
|
|
$
|
841
|
|
|
$
|
572
|
|
|
$
|
484
|
|
|
OHTCo
|
|
2,257
|
|
|
1,973
|
|
|
1,293
|
|
|
OKTCo
|
|
245
|
|
|
254
|
|
|
185
|
|
|
KTCo
|
|
99
|
|
|
12
|
|
|
—
|
|
12
.
VARIABLE INTEREST ENTITIES
Variable Interest Entities
The accounting guidance for “Variable Interest Entities” is a consolidation model that considers if a company has a variable interest in a VIE. A VIE is a legal entity that possesses any of the following conditions: the entity’s equity at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, equity owners are unable to direct the activities that most significantly impact the legal entity’s economic performance (or they possess disproportionate voting rights in relation to the economic interest in the legal entity), or the equity owners lack the obligation to absorb the legal entity’s expected losses or the right to receive the legal entity’s expected residual returns. Entities are required to consolidate a VIE when it is determined that they have a controlling financial interest in a VIE and therefore, are the primary beneficiary of that VIE, as defined by the accounting guidance for “Variable Interest Entities”. In determining whether AEPTCo is the primary beneficiary of a VIE, management considers whether AEPTCo has the power to direct the most significant activities of the VIE and is obligated to absorb losses or receive the expected residual returns that are significant to the VIE. Management believes that significant assumptions and judgments were applied consistently. AEPTCo is not the primary beneficiary of any VIE and has not provided financial or other support to any VIE that was not previously contractually required.
AEPSC provides certain managerial and professional services to AEP subsidiaries including AEPTCo. Parent is the sole equity owner of AEPSC. AEP management controls the activities of AEPSC. The costs of the services are based on a direct charge or on a prorated basis and billed to the AEP subsidiary companies including AEPTCo at AEPSC’s cost. AEP subsidiaries including AEPTCo have not provided financial or other support outside of the reimbursement of costs for services rendered. AEPSC finances its operations through cost reimbursement from other AEP subsidiaries including AEPTCo. There are no other terms or arrangements between AEPSC and any of the AEP subsidiaries including AEPTCo that could require additional financial support from an AEP subsidiary including AEPTCo or expose them to losses outside of the normal course of business. AEPSC and its billings are subject to regulation by the FERC. AEP subsidiaries including AEPTCo are exposed to losses to the extent they cannot recover the costs of AEPSC through their normal business operations. AEP subsidiaries including AEPTCo are considered to have a significant interest in AEPSC due to their activity in AEPSC’s cost reimbursement structure. However, AEP subsidiaries including AEPTCo do not have control over AEPSC. AEPSC is consolidated by AEP. In the event AEPSC would require financing or other support outside the cost reimbursement billings, this financing would be provided by AEP. AEPTCo’s total billings from AEPSC for the years ended December 31, 2016, 2015 and 2014 were $131 million, $108 million and $89 million, respectively. The carrying amount of liabilities associated with AEPSC as of December 31, 2016 and 2015 were $23 million and $12 million, respectively. Management estimates the maximum exposure of loss to be equal to the amount of such liability.
13
.
TRANSMISSION PROPERTY
Depreciation
IMTCo, KTCo, OHTCo, OKTCo and WVTCo provide for depreciation of Transmission Property on a straight-line basis over the estimated useful lives of property. IMTCo’s, KTCo’s, OHTCo’s, OKTCo’s and WVTCo’s composite depreciation rates and depreciable lives for
2016
,
2015
and
2014
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Company
|
|
Annual Composite
Depreciation Rate
|
|
Depreciable
Life Ranges
|
|
Annual Composite
Depreciation Rate
|
|
Depreciable
Life Ranges
|
|
Annual Composite
Depreciation Rate
|
|
Depreciable
Life Ranges
|
|
|
|
|
|
(in years)
|
|
|
|
(in years)
|
|
|
|
(in years)
|
|
IMTCo
|
|
1.05%
|
|
50
|
-
|
75
|
|
1.17%
|
|
50
|
-
|
65
|
|
1.49%
|
|
50
|
-
|
65
|
|
KTCo
|
|
1.49%
|
|
50
|
|
2.22%
|
|
50
|
|
—%
|
|
NA
|
|
OHTCo
|
|
1.92%
|
|
20
|
-
|
75
|
|
1.53%
|
|
20
|
-
|
75
|
|
1.13%
|
|
25
|
-
|
87
|
|
OKTCo
|
|
1.67%
|
|
54
|
-
|
100
|
|
1.85%
|
|
55
|
-
|
75
|
|
1.72%
|
|
55
|
-
|
75
|
|
WVTCo
|
|
1.17%
|
|
42
|
-
|
68
|
|
0.96%
|
|
42
|
-
|
68
|
|
0.55%
|
|
35
|
-
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA Not applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Retirement Obligations (ARO)
IMTCo, KTCo, OHTCo, OKTCo and WVTCo have identified, but not recognized, ARO liabilities related to electric transmission assets, as a result of certain easements on property on which assets are owned. Generally, such easements are perpetual and require only the retirement and removal of assets upon the cessation of the property’s use. The retirement obligation is not estimable for such easements since IMTCo, KTCo, OHTCo, OKTCo and WVTCo each plan to use their respective facilities indefinitely. The retirement obligation would only be recognized if and when IMTCo, KTCo, OHTCo, OKTCo or WVTCo abandon or cease the use of specific easements, which is not expected.
Allowance for Funds Used During Construction (AFUDC)
AEPTCo’s amounts of allowance for borrowed and equity funds used during construction are summarized in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Allowance for Equity Funds Used During Construction
|
|
$
|
52,261
|
|
|
$
|
53,080
|
|
|
$
|
44,873
|
|
|
Allowance for Borrowed Funds Used During Construction
|
|
15,616
|
|
|
17,713
|
|
|
11,071
|
|
AEP Transmission Company, LLC
Offers to Exchange
$300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F due 2026 and
$400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G due 2046,
each of which have been registered under the Securities Act of 1933, as amended,
for any and all of its outstanding
3.10% Senior Notes, Series D due 2026 and
4.00% Senior Notes, Series E due 2046, respectively
_______________________________
PROSPECTUS
________________________
, 2017
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20.
Indemnification of Directors and Officers.
The Limited Liability Agreement of the Company provides that, unless otherwise prohibited by law, the Company shall indemnify and hold harmless the Managers and officers of the Company and their respective successors from any claim, loss, expense, liability, action or damage resulting from any act or omission performed by or on behalf of or omitted by such person in their capacity as a Manager or officer of the Company, including, without limitation, reasonable costs and expenses of their attorneys engaged in defense of any such act or omission; provided, however, that such persons shall not be indemnified or held harmless for any act or omission that is in violation of any of the provisions of the Limited Liability Agreement or that constitutes fraud, gross negligence or willful misconduct.
Section 145 of the Delaware General Corporation Law provides that a Delaware corporation may indemnify any persons, including officers and directors, who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, for criminal actions or proceedings, had no reasonable cause to believe that his conduct was unlawful. A Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses (including attorneys’ fees) which such officer or director actually and reasonably incurred.
The above is a general summary of certain provisions of the Company’s Limited Liability Agreement and the Delaware General Corporation Law and is subject in all respects to the specific and detailed provisions of the Company’s Limited Liability Agreement and the Delaware General Corporation Law.
Insurance
The Company maintains insurance policies insuring its directors and officers against certain obligations that may be incurred by them.
Item 21.
Exhibits and Financial Statement Schedules.
The following Exhibits indicated by an asterisk preceding the Exhibit number have heretofore been filed with the Commission and pursuant to Rule 12(b)-32 are incorporated herein by reference. The balance of the Exhibits are filed herewith. Exhibits indicated by a [ ] are management contracts or compensatory arrangements that are filed or listed pursuant to Item 601(b)(10)(iii) of Regulation S-K.
|
|
|
|
3(a)
|
Limited Liability Company Agreement of AEP Transmission Company, LLC dated as of January 27, 2006.
|
|
|
|
|
3(b)
|
First Amendment to Limited Liability Company Agreement dated as of May 21, 2013.
|
|
|
|
|
4(a)-1
|
Indenture, dated as of November 1, 2016, between AEP Transmission Company, LLC and The Bank of New York Mellon Trust Company, N.A., as Trustee.
|
|
|
|
|
4(a)-2
|
First Supplemental Indenture dated as of November 21, 2016, to said Indenture.
|
|
|
|
|
4(a)-3
|
Form of Company Order and Officers’ Certificate for the Exchange Notes.
|
|
|
|
|
4(a)-4
|
Form of 2026 Exchange Note.
|
|
|
|
|
4(a)-5
|
Form of 2046 Exchange Note.
|
|
|
|
|
4(b)
|
Registration Rights Agreement, dated November 21, 2016, between AEP Transmission Company, LLC and the Initial Purchasers.
|
|
|
|
|
4(c)-1
|
Note Purchase Agreement, dated as of October 18, 2012 between AEP Transmission Company, LLC and the Initial Purchasers.
|
|
|
|
|
4(c)-2
|
Supplement to Note Purchase Agreement, dated as of November 7, 2013 between AEP Transmission Company, LLC and the Initial Purchasers.
|
|
|
|
|
4(c)-3
|
Supplement to Note Purchase Agreement, dated as of November 14, 2014 between AEP Transmission Company, LLC and the Initial Purchasers.
|
|
|
|
|
4(c)-4
|
Term Credit Agreement, dated as of November 4, 2015 among AEP Transmission Company, LLC and the Initial Lenders.
|
|
|
|
|
5
|
Opinion of Thomas G. Berkemeyer.
|
|
|
|
|
*[10(f)]
|
AEP System Excess Benefit Plan, Amended and Restated as of January 1, 2008, incorporated by reference to Ex 10(1)(1)(A) to the 2008 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 27, 2009.
|
|
|
|
|
*[10(f)(1)]
|
Guaranty by AEP of AEPSC Excess Benefits Plan, incorporated by reference to Ex 10(h)(1)(B) of the 1990 Annual Report on Form 10-K of American Electric Power Company, Inc.
|
|
|
|
|
*[10(g)]
|
AEP System Supplemental Retirement Savings Plan, Amended and Restated as of January 1, 2011 (Non-Qualified), incorporated by reference to Ex 10(1)(2) of the 2010 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 25, 2011.
|
|
|
|
|
*[10(g)(1)]
|
Amendment to AEP System Supplemental Retirement Savings Plan, as Amended and Restated as of January 1, 2011 (Non-Qualified), incorporated by reference to Ex 10(1)(1)(A) of the 2014 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 20, 2015.
|
|
|
|
|
*[10(h)]
|
AEPSC Umbrella Trust for Executives, incorporated by reference to Ex 10(g)(3) of the 1993 Annual Report on Form 10-K of American Electric Power Company, Inc.
|
|
|
|
|
*[10(h)(1)]
|
First Amendment to AEPSC Umbrella Trust for Executives, incorporated by reference to Ex 10(h)(3) of the 2008 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 27, 2009.
|
|
|
|
|
*[10(i)]
|
Employment Agreement dated July 29, 1998 between AEPSC and Robert P. Powers, incorporated by reference to Ex 10(m)(4) of the 2002 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on March 20, 2003.
|
|
|
|
|
*[10(i)(1)]
|
Amendment to Employment Agreement dated December 9, 2008 between AEPSC and Robert P. Powers, incorporated by reference to Ex 10(m)(4)(A) to the 2008 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 27, 2009.
|
|
|
|
|
*[10(j)]
|
AEP System Senior Officer Annual Incentive Compensation Plan amended and restated as of February 28, 2012, incorporated by reference to Ex 10 to the Quarterly Report on Form 10-Q of American Electric Power Company, Inc. for the quarterly period ended June 30, 2012, filed on July 27, 2012.
|
|
|
|
|
*[10(k)]
|
AEP System Survivor Benefit Plan, effective January 27, 1998, incorporated by reference to Ex 10 to the Quarterly Report on Form 10-Q of American Electric Power Company, Inc. for the quarterly period ended September 30, 1998 filed on November 16, 1998.
|
|
|
|
|
*[10(l)(1)]
|
First Amendment to AEP System Survivor Benefit Plan, as amended and restated effective January 31, 2000, incorporated by reference to Ex 10(o)(2) to the 2002 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on March 20, 2003.
|
|
|
|
|
*[10(l)(2)]
|
Second Amendment to AEP System Survivor Benefit Plan, as amended and restated effective January 1, 2008, incorporated by reference to Ex 10(o)(1)(B) to the 2008 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 27, 2009.
|
|
|
|
|
*[10(m)]
|
AEP System Incentive Compensation Deferral Plan Amended and Restated as of January 1, 2008, incorporated by reference to Ex 10(p) to the 2008 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 27, 2009.
|
|
|
|
|
*[10(m)(1)]
|
First Amendment to AEP System Incentive Compensation Deferral Plan as Amended and Restated as of January 1, 2008, incorporated by reference to Ex 10(p)(1)(A) to the 2011 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 28, 2012.
|
|
|
|
|
*[10(m)(2)]
|
Second Amendment to AEP System Incentive Compensation Deferral Plan as Amended and Restated as of January 1, 2008, incorporated by reference to Ex 10(q)(2)(A) to the 2014 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 20, 2015.
|
|
|
|
|
*[10(n)]
|
AEP Change In Control Agreement, as Revised Effective January 1, 2017, incorporated by reference to Ex 10(c) to the Quarterly Report on Form 10-Q of American Electric Power Company, Inc. for the quarterly period ended September 30, 2016, filed on November 2, 2016.
|
|
|
|
|
*[10(o)]
|
Amended and Restated AEP System Long-Term Incentive Plan as of September 21, 2016, incorporated by reference to Ex 10(a) to the Quarterly Report on Form 10-Q of American Electric Power Company, Inc. for the quarterly period ended September 30, 2016, filed on November 2, 2016.
|
|
|
|
|
*[10(o)(1)]
|
Performance Share Award Agreement furnished to participants of the AEP System Long-Term Incentive Plan, as amended, incorporated by reference to Ex 10(t)(1)(A) to the 2011 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 28, 2012.
|
|
|
|
|
*[10(o)(2)]
|
Restricted Stock Unit Agreement furnished to participants of the AEP System Long-Term Incentive Plan Amended and Restated effective January 1, 2013, incorporated by reference to Ex 10(t)(2)(A) to the 2012 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 26, 2013.
|
|
|
|
|
*[10(p)]
|
AEP System Stock Ownership Requirement Plan Amended and Restated effective January 1, 2014, incorporated by reference to Ex 10 to the Quarterly Report on Form 10-Q of American Electric Power Company, Inc. for the quarterly period ended June 30, 2014, filed on July 25, 2014.
|
|
|
|
|
*[10(p)(1)]
|
First Amendment to AEP System Stock Ownership Requirement Plan as Amended and Restated effective January 1, 2014, incorporated by reference to Ex 10(t)(1)(A) to the 2014 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 20, 2015.
|
|
|
|
|
*[10(q)]
|
Central and South West System Special Executive Retirement Plan Amended and Restated effective January 1, 2009, incorporated by reference to Ex 10(v) to the 2008 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 27, 2009.
|
|
|
|
|
*[10(r)]
|
AEP Executive Severance Plan Amended and Restated effective October 24, 2016, incorporated by reference to Ex 10(d) to the Quarterly Report on Form 10-Q of American Electric Power Company, Inc. for the quarterly period ended September 30, 2016, filed on November 2, 2016.
|
|
|
|
|
*[10(s)]
|
Letter Agreement dated November 20, 2012 between AEPSC and Lana Hillebrand, incorporated by reference to Ex 10(s) to the 2013 Annual Report on Form 10-K of American Electric Power Company, Inc. filed on February 25, 2014.
|
|
|
|
|
12
|
AEP Transmission Company, LLC Computation of Ratio of Earnings to Fixed Charges.
|
|
|
|
|
*16
|
American Electric Power Company, Inc. Current Report on Form 8-K, filed July 26, 2016 (the “Current Report”), including the letter from Deloitte & Touche LLP regarding change in certifying accountant.
|
|
|
|
|
16(a)
|
Letter from Deloitte & Touche LLP regarding change in certifying accountant.
|
|
|
|
|
21
|
Schedule of Subsidiaries of AEP Transmission Company, LLC.
|
|
|
|
|
23(a)
|
Consent of Deloitte & Touche LLP.
|
|
|
|
|
23(b)
|
Consent of Thomas G. Berkemeyer, Esq. (included in Exhibit 5).
|
|
|
|
|
25
|
Statement of Eligibility of Trustee on Form T-I with respect to the indenture dated as of November 1, 2016 between AEP Transmission Company, LLC and The Bank of New York Mellon Trust Company, N.A., as Trustee.
|
|
|
|
|
99(a)
|
Form of Letter of Transmittal.
|
|
|
|
|
99(b)
|
Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
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99(c)
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Form of Letter to Clients.
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99(d)
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Form of Notice of Guaranteed Delivery.
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99(e)
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Schedule I - Condensed Financial Information of AEP Transmission Company, LLC.
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Item 22.
Undertakings
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(a)
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The undersigned registrant hereby undertakes:
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(1)
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to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
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i.
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to include any prospectus required by Section 10(a)(3) of the Securities Act;
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ii.
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to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
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iii.
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to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
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(2)
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that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
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(3)
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to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
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(4)
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that, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use; and
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(5)
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that, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
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i.
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any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
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ii.
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any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
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iii.
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the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
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iv.
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any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
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(b)
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Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of any registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of any registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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(c)
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The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first-class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
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(d)
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The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, AEP Transmission Company, LLC has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, hereunto duly authorized, in the City of Columbus and State of Ohio, on the 4th day of April, 2017.
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AEP TRANSMISSION COMPANY, LLC
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Nicholas K. Akins *
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Chairman of the Board and Chief Executive Officer
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Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature
Title
Date
(i)
Principal Executive
Officer
Chairman of the Board and April 4, 2017
Nicholas K. Akins* Chief Executive Officer
(ii)
Principal Financial
Officer:
/s/ Brian X. Tierney
Vice President and April 4, 2017
Brian X. Tierney Chief Financial Officer
(iii)
Principal Accounting
Officer:
/s/ Joseph M. Buonaiuto
Controller and Chief April 4, 2017
Joseph M. Buonaiuto Accounting Officer
(iv)
A Majority of the
Managers:
Nicholas K. Akins* A. Wade Smith*
Lisa M. Barton * Brian X. Tierney*
David M. Feinberg*
*By
/s/ Brian X. Tierney
April 4, 2017
(Brian X. Tierney, Attorney-in-Fact)
_____________________________
EXHIBIT 3(a)
AEP TRANSMISSION COMPANY, LLC
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT
(this “Agreement”) of
AEP TRANSMISSION COMPANY, LLC
(the “Company”), dated as of January 27, 2006, has been entered into by AEP Transmission Holding Company, LLC (the “Member”, which term shall include, as the context may require, additional or substituted members of this limited liability company).
ARTICLE I
FORMATION AND PURPOSE OF THE COMPANY
1.1
Formation
.
The Member hereby organizes the Company as a limited liability company pursuant to the provisions of the Delaware Limited Liability Company Act, 6 Delaware Code Sections 18-101 et. seq., as the same may be amended from time to time (the “Act”). Except as expressly provided herein to the contrary, the rights and obligations of the Member and the administration and termination of the Company shall be governed by the Act.
1.2
Name
.
The name of the company shall be
“AEP Transmission Company, LLC”
or such other name as may be determined by the Board of Managers from time to time in compliance with applicable law; provided that the name shall always contain the words “Limited Liability Company” or the letters “LLC”.
1.3
Purpose and Powers of the Company
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The purpose of the Company shall be to engage in any lawful business permitted by the Act or the laws of any jurisdiction in which the Company may do business.
1.4
Principal Place of Business
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The principal place of business of the Company shall be 1 Riverside Plaza, Columbus, Ohio 43215, and such other places or place as designated by the Board of Managers.
1.5
Registered Agent
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The name and address of the registered agent of the Company for service of process in the State of Delaware shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The Member may from time to time change the registered agent or office by an amendment to the certificate of formation of the Company.
1.6.
Fiscal Year
.
The “Fiscal Year” of the Company shall end on December 31 of each year and shall include any partial fiscal year at the beginning and at the end of the Company’s life.
1.7
Member
.
The name and business address of the initial Member of the Company is set forth in Attachment 1 attached hereto. On any matter that is to be decided by the Member of the Company, the Member may take such action without a meeting, without prior notice and without a vote if a consent in writing, setting forth the action so taken, shall be signed by the Member.
1.8
Filings
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Subject to the provisions and limitations set forth in this Agreement, Heather L. Geiger, Secretary of the Member, or any other officer of the Member (“Authorized Person”), is hereby designated as an authorized person, within the meaning of the Act, to execute, deliver and file, or to cause the execution, delivery and filing of, the certificate of formation of the Company (and any amendments and/or restatements thereof) and any other certificates, notices, statements or other instruments (and any amendments and/or reinstatements thereof) necessary or advisable for the formation, qualification or continuation of existence of the Company in all jurisdictions where such filings are necessary or appropriate for the Company’s conduct of its business. The Authorized Person promptly shall execute and deliver such documents and perform such acts consistent with the terms of this Agreement as may be reasonable or necessary to comply with the requirements of law for the formation, qualification and continuation of existence of a limited liability company under the laws of each jurisdiction in which the Company shall conduct business.
1.9
Term.
The term of the Company shall commence on the date of the filing of the certificate of formation of the Company in accordance with the Act and shall terminate or dissolve in accordance with the Act.
ARTICLE II
CAPITAL CONTRIBUTION
2.1
Capital Contribution
.
The Member shall make an initial capital contribution. The description of which and the federal income tax basis and current fair market value of which are set forth on Attachment 2, attached as part of this Agreement. No additional capital contributions shall be required, but the Member may make one or more additional capital contributions as the Member in its sole discretion may determine. No creditor or other third party having dealings with the Company shall have the right to enforce the right or obligation of any Member to make capital contributions or loans, or pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of and may be enforced solely by, the parties hereto and their respective successors and permitted assigns. None of the rights or obligations of any Member herein set forth to make capital contributions or loans to the Company shall be deemed an asset of the Company for any purpose by any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Company or pledged or encumbered by the Company to secure any debt or other obligation of the Company or any Member.
2.2
Capital Account
.
The Company shall maintain the Capital Account in
accordance with section 1.704-1(b) of the Federal Income Tax Regulations.
ARTICLE III
MANAGERS
3.1
General Powers
.
The property, affairs and business of the Company shall be managed by the Board of Managers, and, except as otherwise expressly provided by law, the Certificate of Formation or this Agreement, all of the powers of the Company shall be vested in such Board of Managers.
3.2
Number of Managers
.
The number of Managers constituting the Board of Managers shall be at least one and no more than ten as determined from time to time by the Board of Managers. The initial Managers of the Company are set forth on Attachment 3 attached hereto.
3.3
Election and Removal of Managers; Quorum.
(a)
Managers shall be elected by the Member.
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(b)
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Managers shall hold their offices until their successors are elected. Any Manager may be removed from office at any time, with or without cause, by the Member.
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(c)
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A majority of the number of Managers elected and serving at the time of any meeting shall constitute a quorum for the transaction of business. The act of a majority of the Managers present at a meeting at which a quorum is present shall be the act of the Board of Managers. Less than a quorum may adjourn any meeting.
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3.4
Meetings of Managers
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Meetings of the Board of Managers shall be held at places within or without the State of Delaware and at times fixed by resolution of the Board of Managers, or upon call of the Chairman of the Board of Managers, if any, or the President. The Secretary or officer performing the Secretary’s duties shall give not less than 24 hours’ notice by letter, telecopy, electronic mail, telegraph or telephone (or in person) of all meetings of the Board of Managers, provided that notice need not be given of regular meetings held at times and places fixed by resolution of the Board of Managers. Meetings may be held at any time without notice if all of the Managers are present, or if those not present waive notice in writing either before or after the meeting. The notice of meetings of the Board of Managers need not state the purpose of the meeting.
3.5
Actions by Consent of Managers
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On any matter that is to be decided by the Board of Managers of the Company, the Board of Managers may take such action without a meeting without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by a majority of the number of Managers entitled to vote at a meeting of the Managers.
ARTICLE IV
OFFICERS
4.1
Officers
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For the purpose of supervising the day-to-day operations of the Company, the Board of Managers shall appoint officers of the Company. The officers of the Company shall be a Chief Executive Officer, a President, a Treasurer, and a Secretary, and such Vice Presidents and other officers or assistant officers as the Board of Managers may form time to time deem necessary and appoint. In addition the Board of Managers may elect a Chairman from among themselves. More than one office may be held by the same person, but only a Manager may serve as Chairman. The initial officers of the Company are set forth on Attachment 4 attached hereto.
4.2
Appointment and Term of Office
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The officers of the Company shall be appointed from time to time by the Board of Managers as it shall determine, and new offices may be created and filled at any meeting of the Board of Managers. Each officer shall hold office until his successor shall have been appointed.
4.3
Resignation
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Any officer or assistant officer may resign at any time by giving written notice to the Board of Managers or the Chairman, if any, or to the President or Secretary of the Company. A resignation shall take effect at the time specified therein, and unless otherwise specified therein, shall become effective upon delivery. The acceptance of such resignation shall not be necessary to make it effective unless so specified in the resignation.
4.4
Removal
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Any officer or assistant officer may be removed by the Board of Managers with or without cause whenever in its judgment the best interests of the company would be served thereby.
4.5
Duties of Officers
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(a)
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Chairman
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The chairman, if any, shall preside at all meetings of the Member and all meetings of the Board of Managers.
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(b)
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Chief Executive Officer.
The Chief Executive Officer (“CEO”) of the Company shall have full responsibility and authority for the management of the operations of the Company, subject to the authority of the Board of Managers, and shall exercise the duties and have the powers usually pertaining to the office held by the CEO of a company. The CEO may sign and execute in the name of the Company, deeds, mortgages, bonds, contracts or other instruments except in cases where the signing and the execution thereof shall be expressly delegated by the Board of Managers or by this Agreement to some other officer or agent of the Company or shall be required by law otherwise to be signed or executed. The CEO may, by instrument in writing, delegate authority to any employee,
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representative, or agent to sign and execute in the name of the Company deeds, mortgages, bonds, contracts or other instruments authorized by the Board of Managers except where the signing and execution of such documents shall be expressly delegated by the Board of Managers to some other officer or agent of the Company or shall be required by law or otherwise to be signed or executed. In addition, the CEO shall perform all duties incident to the office of the CEO and such other duties as from time to time may be assigned to him or her by the Board of Managers.
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(c)
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President
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The President shall have full responsibility and authority for management of the day-to-day operations of the Company, subject to the authority of the Board of Managers and the CEO, and shall exercise the duties and have the powers usually pertaining to the office held by the President of a company. The President may sign and execute in the name of the Company, deeds, mortgages, bonds, contracts or other instruments except in cases where the signing and the execution thereof shall be expressly delegated by the Board of Managers, the CEO, or by this Agreement to some other officer or agent of the Company, or shall be required by law otherwise to be signed or executed. The President may, by instrument in writing, delegate authority to any employee, representative, or agent to sign and execute in the name of the Company deeds, mortgages, bonds, contracts or other instruments authorized by the Board of Managers except where the signing and execution of such documents shall be expressly delegated by the Board of Managers or the CEO to some other officer or agent of the Company or shall be required by law or otherwise to be signed or executed. In addition, the President shall perform all duties incident to the office of the President and such other duties as from time to time may be assigned to him or her by the Board of Managers or the CEO.
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(d)
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Vice Presidents
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Each Vice President, if any, shall have such powers and duties as may from time to time be assigned to him or her by the President or the Board of Managers. Any Vice President may sign and execute in the name of the Company deeds, mortgages, bonds, contracts or other instruments authorized by the Board of Managers, except where the signing and execution of such documents shall be expressly delegated by the Board of Managers or the President to some other officer or agent of the Company or shall be required by law or otherwise to be signed or executed. Each Vice President may, by instrument in writing, delegate authority to any employee, representative, or agent to sign and execute in the name of the Company deeds, mortgages, bonds, contracts or other instruments authorized by the Board of Managers except where the signing and execution of such documents shall be expressly delegated by the Board of Managers or the President to some other officer or agent of
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the Company or shall be required by law or otherwise to be signed or executed.
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(e)
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Treasurer
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The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Company, and shall deposit all monies and securities of the Company in such banks and depositories as shall be designated by the Board of Managers. The Treasurer shall be responsible (i) for maintaining adequate financial accounts and records in accordance with generally accepted accounting practices; (ii) for the preparation of appropriate operating budgets and financial statements; (iii) for the preparation and filing of all tax returns required by law; and (iv) for the performance of all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Managers or the President. The Treasurer may sign and execute in the name of the Company deeds, mortgages, notes, bonds, contracts or other instruments, except in cases where the signing and the execution thereof shall be expressly delegated by the Board of Managers or by this Agreement to some other officer or agent of the Company or shall be required by law or otherwise to be signed or executed.
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(f)
Secretary
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The Secretary shall act as secretary of all meetings of the Board of Managers and the Member. The Secretary shall keep and preserve the minutes of all such meetings in permanent books. The Secretary shall see that all notices required to be given by the Company are duly given and served; shall have charge of the books, records and papers of the Company relating to its organization and management as a Company; shall see that all reports, statements and other documents required by law (except tax returns) are properly filed; and shall in general perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to the Secretary by the Board of Managers or the President.
ARTICLE V
AMENDMENT
5.1
Amendments
.
Amendments to this Agreement may be made in writing by the Company’s Member.
ARTICLE VI
BANK ACCOUNTS.
6.1
Establishing/Closing Bank Accounts
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Any person at the time holding any one of the following positions: Treasurer of the Company, any Assistant Treasurer of the Company, or Chief Financial Officer of American Electric Power Company, Inc. (each an "Authorizing
Officer"), is authorized to: (i) establish one or more domestic or international accounts (including but not limited to, depository, checking, disbursement, custodian, or investment accounts, and other accounts as deemed necessary for business purposes of the Company by such person) ("Account"), in the name of the Company with any bank, trust company, savings and loan institution, brokerage firm or other financial institution which said Authorizing Officer shall from time to time designate as a depository of funds, securities or other property of the Company, for any purpose and on terms and conditions deemed appropriate by such person on behalf of the Company; (ii) change the title by which any account of the Company shall be known; (iii) close accounts of the Company now or hereafter established; and (iv) designate any officer, agent or employee of the Company to do any of the above provided that the said depositories are directed to provide the Authorized Officer with written confirmation of the opening and closing of each Account.
6.2
Assign, Limit And Revoke Authority
.
Any Authorizing Officer is authorized and empowered, for and on behalf of the Company, to assign, limit or revoke any and all authority of any officer, or agent, or employee of the Company, or other person designated by such Authorizing Officer to: (i) sign checks, drafts and orders for the payment of money drawn on the Company's accounts, and all notes of the Company and all acceptances and endorsements of the Company; (ii) execute or initiate electronic fund transfers; (iii) execute or initiate foreign currency exchange transactions; (iv) execute or initiate the investment of short term monies; and (v) initiate requests for information for any Account of the Company. All checks and electronic transfer requests drawn against any Account of this Company in any bank or other financial institution shall be signed manually or by facsimile signature by any officer, employee or person assigned the authority to sign checks in accordance with the "Assign Limit Revoke Authority" stated above. The Treasurer of the Company may approve the use of a corporate logo in place of any manual or facsimile signature on any check, draft, note or acceptance of the Company. Any one of the Authorizing Officers is authorized, by means of a written instrument, to assign, limit or revoke any and all authority of any financial institution to rely upon and honor any manual facsimile signature or corporate logo now or hereafter certified to it on behalf of the Company.
6.3
Duties Of Officers
.
Any one of the Authorizing Officers of the Company is authorized and empowered to do and perform all acts, execute and deliver all agreements, documents, and certificates, and take all other steps as may be necessary or advisable or convenient and proper to carry out the intent of this Article VI of the Agreement. Each bank or other financial institution with which there are deposited from time to time funds of this Company is authorized and requested to accept, honor, and pay without further inquiry and until written notice of the revocation of the authority hereby granted is received by it, all checks and electronic funds transfer requests, drawn against such deposited funds when duly authorized as provided in this Article VI of the Agreement. The authority conferred by this Article VI shall remain in full force and effect until notice of rescission or modification shall be received by the respective bank depositories. A copy of this Agreement may be furnished to all banks in which the Company now has or may hereafter have funds on deposit.
ARTICLE VII
INDEMNIFICATION
7.1
Indemnification.
Unless otherwise prohibited by law, the Company shall indemnify and hold harmless the Managers, Member and officers of the Company and the officers, managers, directors, and employees of the Member, and their respective successors from any claim, loss, expense, liability, action or damage resulting from any act or omission performed by or on behalf of or omitted by such person in their capacity as a Manager, Member or officer of the Company, including, without limitation, reasonable costs and expenses of their attorneys engaged in defense of any such act or omission; provided, however, that such persons shall not be indemnified or held harmless for any act or omission that is in violation of any of the provisions of this Agreement or that constitutes fraud, gross negligence or willful misconduct.
7.2
Expenses
.
To the fullest extent permitted by law, expenses (including legal fees) incurred by any person in defending any claim, demand, action, suit or proceeding with respect to which such person is entitled to indemnification under this Article VII shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of such person, secured by adequate collateral, to repay such amount if it shall be determined that the Indemnity is not entitled to be indemnified as authorized in this Article VII.
7.3
Insurance
.
The Company may purchase and maintain insurance to indemnify it against the whole or any portion of the liability assumed by it in accordance this Article VII and may also procure insurance, in such amounts as the Board of Managers may determine, on behalf of any person who is or was a Manager, officer, employee, or agent of the Company, or is or was serving at the request of the Company as a manager, director, officer, employee, or agent of another company, corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against any liability asserted against or incurred by him or her in any such capacity or arising from his or her status as such, whether or not the Company would have power to indemnify him or her against such liability under the provisions of this Article VII.
IN WITNESS WHEREOF
, this Agreement is executed as of the date first set forth above.
AEP TRANSMISSION HOLDING COMPANY, LLC, the Sole Member
By:
/s/ Carl L. English
Name:
Carl L. English
Title
Vice President
ATTACHMENT 1
MEMBER
AEP Transmission Holding Company, LLC
1 Riverside Plaza
Columbus, Ohio 43215
ATTACHMENT 2
CAPITAL CONTRIBUTIONS
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Member
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Capital Contribution
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AEP Transmission Holding Company, LLC
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$100.00
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1 Riverside Plaza
Columbus, Ohio 43215
ATTACHMENT 3
BOARD OF MANAGERS
Jeffrey D. Cross
Carl L. English
Michael Heyeck
Michael G. Morris
Stephen P. Smith
ATTACHMENT 4
OFFICERS
Michael G. Morris - Chairman of the Board & Chief Executive Officer
Michael Heyeck - President
Carl L. English - Vice President
Mark A. Pyle - Vice President - Tax
Heather L. Geiger - Secretary
Stephen P. Smith - Treasurer
Jeffrey D. Cross - Assistant Secretary
Stephan T. Haynes - Assistant Treasurer
EXHIBIT 3(b)
FIRST AMENDMENT OF LIMITED LIABILITY COMPANY AGREEMENT
OF
AEP TRANSMISSION COMPANY, LLC
This First Amendment of the Limited Liability Company Agreement of AEP TRANSMISSION COMPANY, LLC (the “Company”) is made and entered into as of May 21, 2013 (the “Amendment”), by AEP Transmission Holding Company, LLC (“Member”).
RECITALS
A.
The Member has entered into that certain Limited Liability Company Agreement, dated as of January 27, 2006 (as the same may be amended, modified or supplemented from time to time, the “Agreement”), relating to the governance of the Company.
B.
The Member desires to amend Section 3.3(c) of Article III of the Agreement relating to quorum at meetings of the Board of Managers
NOW, THEREFORE, Section 3.3(c) of Article III of the Agreement is hereby amended, to read in its entirety, as follows:
3.3.(c) The number of Managers necessary to constitute a quorum for the transaction of business shall be any number which may be less than a majority of the board, but no less than one-third of its number, duly assembled at a meeting of such Managers.”
IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the 21st day of May 2013.
AEP Transmission Holding Company, LLC
/s/ Thomas G. Berkemeyer
Thomas G. Berkemeyer
Assistant Secretary
Exhibit 4b
AEP TRANSMISSION Company, LLC
$300,000,000 3.10% Senior Notes, Series D Due 2026
$400,000,000 4.00% Senior Notes, Series E Due 2046
REGISTRATION RIGHTS AGREEMENT
November 21, 2016
Barclays Capital Inc.
745 Seventh Avenue
New York, New York 10019
Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, New York 10010
J.P. Morgan Securities LLC
383 Madison Avenue
New York, New York 10179
Scotia Capital (USA) Inc.
250 Vesey Street
New York, New York 10281
As Representatives of the several Purchasers
listed on Schedule A hereto
Ladies and Gentlemen:
AEP Transmission Company, LLC, a limited liability company organized under the laws of the State of Delaware (the “Company”), proposes to issue and sell to Barclays Capital, Inc. (“Barclays”), Credit Suisse Securities (USA) LLC (“Credit Suisse”), J.P. Morgan Securities LLC (“J.P. Morgan”) and Scotia Capital (USA) Inc. (“Scotia”) and the other several purchasers named in Schedule A to the Purchase Agreement (as defined below) (collectively, the “Initial Purchasers”), for whom Barclays, Credit Suisse, J.P. Morgan and Scotia are acting as representatives, upon the terms set forth in a purchase agreement dated November 16, 2016 (the “Purchase Agreement”), U.S. $300,000,000 principal amount of its Series D Senior Notes, 3.10% due 2026 (the “2026 Notes”) and U.S. $400,000,000 principal amount of its Series E Senior Notes, 4.00% due 2046 (the “2046 Notes”, and together with the 2026 Notes, the “Initial Securities”). The Initial Securities will be issued pursuant to an Indenture, dated as of November 1, 2016, (collectively, the “Supplemental Indenture” and the indenture as so supplemented, the “Indenture”) between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). As an inducement to the Initial Purchasers, the Company agrees with the Initial Purchasers, for the benefit of the holders of the Initial Securities (including, without limitation, the Initial Purchasers), the Exchange Securities (as defined below) and the Private Exchange Securities (as defined below) (collectively the “Holders”), as follows:
1.
Registered Exchange Offer
. The Company shall, at its own cost, prepare and, not later than 180 days after (or if the 180th day is not a business day, the first business day thereafter) the date of original issue of the Initial Securities (the “Issue Date”), file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Exchange Offer Registration Statement”) on an appropriate form under the Securities Act of 1933, as amended (the “Securities Act”), with respect to a proposed offer (the “Registered Exchange Offer”) to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities (the “Exchange Securities”) of the Company issued under the Indenture and identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial Securities and the provisions relating to the matters described in Section 6 hereof) that would be registered under the Securities Act. The Company shall use its commercially reasonable efforts to cause such Exchange Offer Registration Statement to become effective under the Securities Act not later than 270 days (or if the 270th day is not a business day, the first business day thereafter) after the Issue Date of the Initial Securities and shall keep the Registered Exchange Offer open for not less than 20 business days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the “Exchange Offer Registration Period”).
If the Company commences the Registered Exchange Offer, the Company will be entitled to close the Registered Exchange Offer 30 days after the commencement thereof provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities (as defined in Section 6 hereof) electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder’s business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.
The Company acknowledges that, pursuant to current interpretations by the Commission’s staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder that is a broker-dealer electing to exchange Initial Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an “Exchanging Dealer”), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section, and (c) Annex C hereto in the “Plan of Distribution” section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer and (ii) an Initial Purchaser that elects to sell Exchange Securities acquired in exchange for Initial Securities constituting any portion of an unsold allotment is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.
The Company shall use its commercially reasonable efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto, available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the “Private Exchange”) for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and identical in all material respects (including the existence of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States, but excluding provisions relating to the matters described in Section 6 hereof) to the Initial Securities (the “Private Exchange Securities”). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the “Securities”.
In connection with the Registered Exchange Offer, the Company shall:
(a)
mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;
(b)
keep the Registered Exchange Offer open for not less than 20 business days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;
(c)
utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;
(d)
permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and
(e)
otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall:
(x)
accept for exchange all the Initial Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange;
(y)
deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and
(z)
cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter (except as may be provided in the Indenture with respect to votes and matters involving only certain but not all tranches of the Securities).
Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of its business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Initial Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an “affiliate,” as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming
part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
2.
Shelf Registration
. If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within 315 days of the Issue Date, (iii) any Initial Purchaser so requests with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer) notifies the Company in writing during the 20 business days following consummation of the Exchange Offer that it was not eligible to participate in the Registered Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer) that participates in the Registered Exchange Offer, such Holder does not receive freely tradeable Exchange Securities on the date of the exchange, the Company shall take the following actions:
(a)
The Company shall, at its cost, as promptly as practicable, but not later than the later of (i) 180 days (or if the 180th day is not a business day, the first business day thereafter) after such obligation arises and (ii) 270 days (or if the 270th day is not a business day, the first business day thereafter) after the Issue Date of the Initial Securities, file with the Commission and use its commercially reasonable efforts to cause to be declared effective (unless it becomes effective automatically upon filing) a registration statement (the “Shelf Registration Statement” and, together with the Exchange Offer Registration Statement, a “Registration Statement”) on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined in Section 6 hereof) by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the “Shelf Registration”); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.
(b)
The Company shall use its commercially reasonable efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of one year (or for such longer period if extended pursuant to Section 3(j) below) from the Issue Date or such shorter period that will terminate upon the earlier of the date (i) when all the Securities covered by the Shelf Registration Statement have been sold pursuant thereto, (ii) when all the Securities covered by the Registration Statement are
distributed to the public pursuant to Rule 144 under the Securities Act, or any successor rule thereof, are saleable pursuant to Rule 144 under the Securities Act, or any successor rule thereof, or are otherwise no longer restricted securities (as defined in Rule 144 under the Securities Act, or any successor rule thereof) and (iii) when all the Securities covered by the Shelf Registration Statement cease to be outstanding. The Company shall be deemed not to have used its commercially reasonable efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law.
(c)
Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of its respective effective date, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
3.
Registration Procedures
. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:
(a)
The Company shall (i) furnish to each Initial Purchaser, who so requests, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section and in Annex C hereto in the “Plan of Distribution” section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled “Plan of Distribution” which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential “underwriter” status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a “Participating Broker-Dealer”), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include in the prospectus included in the Shelf Registration Statement (or, if permitted by Commission Rule 430B(b), in a prospectus supplement that becomes a part thereof pursuant to
Commission Rule 430B(0) that is delivered to any Holder pursuant to Section 3(d) and (f), the names of the Holders, who propose to sell Securities pursuant to the Shelf Registration Statement, as selling securityholders.
(b)
The Company shall give written notice to the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):
(i)
when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;
(ii)
of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;
(iii)
of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, of the issuance by the Commission of a notification of objection to the use of the form on which the Registration Statement has been filed, and of the happening of any event that causes the Company to become an “ineligible issuer,” as defined in Commission Rule 405;
(iv)
of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and
(v)
of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.
(c)
The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement.
(d)
The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment or supplement thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference). The Company shall not make any offer relating to the Securities that would constitute a “free writing prospectus,” as defined in Commission Rule 405.
(e)
The Company shall deliver to each Exchanging Dealer to any Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Holder requests, all exhibits thereto (including those incorporated by reference).
(f)
The Company shall, during the period that the Shelf Registration Statement is effective, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.
(g)
The Company shall deliver to each Initial Purchaser, who so requests, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.
(h)
Prior to any public offering of the Securities, pursuant to any Registration Statement, the Company shall register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or “blue sky” laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things reasonably necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject or to comply with any other requirements reasonably deemed by the Company to be unduly burdensome.
(i)
The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement.
(j)
Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to and including the date when the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j). During the period during which the Company is required to maintain an effective Shelf Registration Statement pursuant to this Agreement, the Company will prior to the three-year expiration of that Shelf Registration Statement file, and use its commercially reasonable efforts to cause to be declared effective (unless it becomes effective automatically upon filing) within a period that avoids any interruption in the ability of Holders of Securities covered by the expiring Shelf Registration Statement to make registered dispositions, a new registration statement relating to the Securities, which shall be deemed the “Shelf Registration Statement” for purposes of this Agreement.
(k)
Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.
(l)
The Company will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.
(m)
The Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if
any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.
(n)
The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request.
(o)
The Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.
(p)
In the case of any Shelf Registration, the Company shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders of the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section II of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by you and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4 hereof.
(q)
In the case of any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation, the due incorporation and good standing of the Company; the due authorization, execution and delivery of the relevant agreement of the type referred to in Section 3(o) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the applicable Securities; the absence of governmental approvals required to be obtained in connection with the Shelf Registration Statement, the offering and sale of the applicable Securities, or any agreement of the type referred to in Section 3(o) hereof; the compliance as to form of such Shelf Registration Statement and any documents incorporated by reference therein and of the Indenture with the requirements of the Securities Act and the Trust Indenture Act, respectively; as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective
amendment thereto or most recent prospectus supplement thereto that is deemed to establish a new effective date, as the case may be, the absence from such Shelf Registration Statement and the prospectus and any prospectus supplement included therein, as then amended or supplemented and including any documents incorporated by reference therein, of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and as of an applicable time identified by such Holders or managing underwriters, the absence from the prospectus included in the Registration Statement, as amended or supplemented at such applicable time and including any documents incorporated by reference therein, taken together with any other documents identified by such Holders or managing underwriters, of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Shelf Registration Statement to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.
(r)
In the case of the Registered Exchange Offer, if requested by any Initial Purchaser or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to deliver to such Initial Purchaser or such Participating Broker-Dealer a signed opinion in the forms set forth in the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and (ii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Registration Statement to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, meeting the requirements as to the substance thereof as set forth in the Purchase Agreement, with appropriate date changes.
(s)
If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or caused to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied.
(t)
The Company will use its commercially reasonable efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration
Statement to be rated with the applicable rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing underwriters, if any.
(u)
In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Conduct Rules (the “Rules”) of the Financial Industry Regulatory Authority, Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, engaging a “qualified independent underwriter” (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.
(v)
The Company shall use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby.
4.
Registration Expenses
. The Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 1 through 3 hereof, whether or not the Registered Exchange Offer or a Shelf Registration is filed or becomes effective, and, in the event of a Shelf Registration, shall bear or reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the Initial Securities covered thereby to act as counsel for the Holders of the Initial Securities in connection therewith.
5.
Indemnification
. (a) To the extent permitted by law, the Company agrees to indemnify and hold harmless each Holder of Securities, any Participating Broker-Dealer, and the employees, agents, officers and directors and each person, if any, who controls such holder or Participating Broker Dealer within the meaning of Section 15 of the Securities Act, against any and all losses, claims, damages or liabilities, joint or several, to which such Holder, Participating Broker-Dealer or control person, they or any of you or them may become subject under the Act or otherwise, and to reimburse the Holder, Participating Broker-Dealer or control person, they or any of you or them, for any legal or other expenses incurred by you or them in connection with defending any action, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any alleged untrue statement or untrue statement of a material fact contained in a Registration Statement or prospectus or any amendment thereto or in any preliminary prospectus or “issuer free writing prospectus”, as defined in Rule 433 under the Securities Act (“Issuer FWP”) relating to a Shelf Registration, or arise out of or are based upon any alleged omission or
omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any such alleged untrue statement or omission, or untrue statement or omission which was made in any such document in reliance upon and in conformity with information furnished in writing to the Company by the Holder expressly for use therein. Each Holder agrees promptly after its receipt of written notice of the commencement of any action in respect to which indemnity from the Company on account of its agreement contained in this Section 5(a) may be sought by any such Holder or by any person controlling any such Holder, to notify the Company in writing of the commencement thereof, but the omission so to notify the Company of any such action shall not release the Company from any liability which it may have to a Holder or to such controlling person otherwise than on account of the indemnity agreement contained in this Section 5(a). In case any such action shall be brought against a Holder or any such controlling person and a Holder shall notify the Company of the commencement thereof, as above provided, the Company shall be entitled to participate in, and, to the extent that it shall wish, including the selection of counsel (such counsel to be reasonably acceptable to the indemnified party), to direct the defense thereof at its own expense. In case the Company elects to direct such defense and select such counsel (hereinafter, Company's counsel), a Holder or any controlling person shall have the right to employ its own counsel, but, in any such case, the fees and expenses of such counsel shall be at such Holder's or controlling person's expense unless (i) the Company has agreed in writing to pay such fees and expenses or (ii) the named parties to any such action (including any impleaded parties) include both a Holder or any controlling person and the Company and such Holder or any controlling person shall have been advised by its counsel that a conflict of interest between the Company and such Holder or any controlling person may arise (and the Company's counsel shall have concurred in good faith with such advice) and for this reason it is not desirable for the Company's counsel to represent both the indemnifying party and the indemnified party (it being understood, however, that the Company shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys for a Holder or any controlling person (plus any local counsel retained by such Holder or any controlling person in their reasonable judgment), which firm (or firms) shall be designated in writing by such Holder or any controlling person).
(b)
Each Holder, severally and not jointly, agrees, to the extent permitted by law, to indemnify, hold harmless and reimburse the Company, its directors and such of its officers, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, to the same extent and upon the same terms as the indemnity agreement of the Company set forth in Section 5(a) hereof, but only with respect to untrue statements or alleged untrue statements or omissions or alleged omissions made in a Registration Statement or prospectus or any amendment thereto or in any preliminary prospectus or an Issuer FWP relating to a Shelf Registration in reliance upon and in conformity with information furnished in writing to the Company by such Holder expressly for use therein. The Company agrees promptly after the receipt by it of written notice of the commencement of any action in respect to which indemnity from a Holder on account of the agreement contained in this Section 5(b) may be sought by the Company, or by any person controlling the Company, to notify such holder in writing of the commencement thereof, but the Company's omission so to notify such Holder of any
such action shall not release such Holder from any liability which you may have to the Company or to such controlling person otherwise than on account of the indemnity agreement contained in this Section 5(b).
(c)
If recovery is not available or insufficient to hold the indemnified party harmless under Section 5(a) or 5(b) hereof for any reason other than as specified therein, the indemnified party shall be entitled to contribution for any and all losses, claims, damages, liabilities and expenses for which such indemnification is so unavailable or insufficient under this Section 5(c). In determining the amount of contribution to which such indemnified party is entitled, there shall be considered the relative benefits received by such Holder and the Company from the exchange of Securities pursuant to the Registered Exchange Offer that were the subject of the claim of indemnification (taking into account the portion of the proceeds of the offering of the Initial Securities realized by the Company on the one hand and the Initial Purchasers on the other hand), the relative knowledge and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and prevent any statement or omission, and any equitable considerations appropriate under the circumstances. The Company and such Holder agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation (even if the Holders were treated as one entity for such purpose) without reference to the considerations called for in the previous sentence. No Holder or any person controlling such Holder shall be obligated to contribute any amount or amounts hereunder which in the aggregate exceeds the total amount of Initial Securities exchanged by such Holder under this Agreement, less the aggregate amount of any damages which such Holder and its controlling persons have otherwise been required to pay in respect of the same claim or any substantially similar claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. A Holder's obligation to contribute under this Section 5 is in proportion to its purchase obligation and not joint with any other Holder.
(d)
No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 5 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of such indemnified party.
(e)
In no event shall any indemnifying party have any liability or responsibility in respect of the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim effected without its prior written consent.
6.
Additional Interest Under Certain Circumstances
. (a) Additional Interest (the “Additional Interest”) with respect to the Initial Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (iii) below a “Registration Default”):
(i)
If (a) neither the Exchange Offer Registration Statement nor a Shelf Registration Statement (if required) has been filed with the Commission within the applicable time periods specified in Section 1 or Section 2 hereof or (b) neither the Exchange Offer Registration Statement nor a Shelf Registration Statement (if required) has been declared effective by the Commission within the applicable time periods specified in Section 1 or Section 2 hereof;
(ii)
If the Registered Exchange Offer is not consummated on or before the date that is 315 days (or if the 315th day is not a business day, the first business day thereafter) after the Issue Date of the Initial Securities;
(iii)
If after either the Exchange Offer Registration Statement or the Shelf Registration Statement becomes effective (A) such Registration Statement thereafter ceases to be effective; or (B) such Registration Statement or the related prospectus ceases to be usable (except as permitted in paragraph (b)) in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder, or (3) such Registration Statement is a Shelf Registration Statement that has expired before a replacement Shelf Registration Statement has become effective.
Additional Interest shall be payable with respect to the principal amount of the Initial Securities at a rate of 0.25% per annum for the first 90 days from and including the date on which any Registration Default occurs, and such Additional Interest rate shall increase by an additional 0.25% per annum thereafter; provided, however, that the Additional Interest rate on the Initial Securities shall not exceed at any time 0.5% per annum; and provided further that Additional Interest shall cease to accrue on and after the date on which all such Registration Defaults have been cured (which shall not, however, affect the Company’s obligations hereunder to pay Additional Interest that have accrued to such date and that remain unpaid).
(b)
A Registration Default referred to in Section 6(a)(iii)(B) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material
events, with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; provided, however, that in any case if such Registration Default occurs for a continuous period in excess of 30 days, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured.
(c)
Any amounts of Additional Interest due pursuant to clause (i), (ii) or (iii) of Section 6(a) above will be payable in cash on the regular interest payment dates with respect to the Initial Securities and shall be payable to the same persons and in the same manner as regular interest. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Initial Securities, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360. The Company agrees to provide the Trustee prompt written notice of the occurrence or cure of any Registration Default.
(d)
“Transfer Restricted Securities” means each Security until (i) the date on which such Transfer Restricted Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of a Initial Security for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Initial Securities is distributed to the public pursuant to Rule 144 under the Securities Act.
7.
Rules 144 and 144A
. The Company shall use its commercially reasonable efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Initial Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company covenants that it will take such further action as any Holder of Initial Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Initial Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Initial Purchasers upon request. Upon the request of any Holder of Initial Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act.
8.
Underwritten Registrations
. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering (“Managing Underwriters”) will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering, subject to the consent of the Company (which consent shall not be unreasonably withheld).
No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person’s Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.
9.
Miscellaneous
.
(a)
Amendments and Waivers
. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents.
(b)
Notices
. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:
1.
if to a Holder of the Securities, at the most current address given by such Holder to the Company.
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2.
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if to the Initial Purchasers;
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Barclays Capital Inc.
745 Seventh Avenue
New York, NY 10019
Fax No.:
Attention:
Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.:
Attention:
J.P. Morgan Securities LLC
383 Madison Avenue
New York, NY 10179
Fax No.:
Attention:
Scotia Capital (USA) Inc.
250 Vesey Street
New York, NY 10281
Fax No.:
Attention:
with a copy to:
Hunton & Williams LLP
200 Park Avenue
New York, NY 10166
Fax No.: (212) 309-1100
Attention: Peter K. O’Brien
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3.
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if to the Company, at its address as follows:
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AEP Transmission Company, LLC
1 Riverside Plaza
Columbus, Ohio 43215
Fax No.:
Attention:
All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient’s facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery.
(c)
No Inconsistent Agreements
. The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof.
(d)
Successors and Assigns
. This Agreement shall be binding upon the Company and its successors and assigns.
(e)
Counterparts
. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
(f)
Headings
. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(g)
Governing Law
. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
(h)
Severability
. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.
(i)
Securities Held by the Company
. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.
[Signature Pages Follow]
If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among, the several Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
AEP TRANSMISSION COMPANY, LLC
By:
/s/ Lonni L. Dieck
Name: Lonni L. Dieck
Title:
Treasurer
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
BARCLAYS CAPITAL INC.
CREDIT SUISSE SECURITIES (USA) LLC
J.P. MORGAN SECURITIES LLC
SCOTIA CAPITAL (USA) INC.
Acting on behalf of themselves and as
representatives of the several Initial Purchasers
By: BARCLAYS CAPITAL INC.
By:
/s/ Robert Store
Name: Robert Store
Title: Managing Director
By: CREDIT SUISSE SECURITIES (USA) LLC
By:
/s/ Nevin Bhatin
Name: Nevin Bhatin
Title: Director
By: J.P. MORGAN SECURITIES LLC
By:
/s/ Som Bhattacharyya
Name: Som Bhattacharyya
Title: Vice President
By: SCOTIA CAPITAL (USA) INC.
By:
/s/ Paul McKeown
Name: Paul McKeown
Title: Managing Director
ANNEX A
Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account in exchange for Initial Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See “Plan of Distribution.”
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 2011, all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.
1
The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.
1
In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus.
ANNEX D
¨
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:______________________
Address:____________________
________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.
EXHIBIT 4(a)-2
AEP TRANSMISSION COMPANY, LLC
TO
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
AS TRUSTEE.
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF NOVEMBER 21, 2016
$300,000,000 3.10% SENIOR NOTES, SERIES D DUE 2026
$400,000,000 4.00% SENIOR NOTES, SERIES E DUE 2046
Table of Contents*
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Page
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ARTICLE I Additional Definitions
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2
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SECTION 1.01.
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Definitions
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2
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ARTICLE II The Notes
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4
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SECTION 2.01.
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Establishment
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4
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SECTION 2.02.
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Aggregate Principal Amount
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4
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SECTION 2.03.
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Maturity and Interest
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5
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SECTION 2.04.
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Optional Redemption
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5
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SECTION 2.05.
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Security Registrar
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7
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SECTION 2.06.
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Global Securities and Certified Securities
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7
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SECTION 2.07.
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Form of Securities
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9
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SECTION 2.08.
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Transfer and Exchange
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9
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ARTICLE III Covenants
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12
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SECTION 3.01.
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Consolidated Priority Debt
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12
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SECTION 3.02.
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Liens
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12
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SECTION 3.03.
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Additional Information
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12
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ARTICLE IV Miscellaneous Provisions
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13
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SECTION 4.01.
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Recitals by Company
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13
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SECTION 4.02.
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Ratification and Incorporation of Original Indenture
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13
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SECTION 4.03.
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Executed in Counterparts
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13
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SECTION 4.04.
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Legends
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13
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SECTION 4.05.
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New York Law to Govern
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13
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SIGNATURES
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14
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EXHIBIT A-1
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Form of Series D Note
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15
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EXHIBIT A-2
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Form of Series E Note
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27
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EXHIBIT B
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Form of Transfer Certificate
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39
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*
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This Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of its terms and provisions.
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THIS FIRST SUPPLEMENTAL INDENTURE is made as of the 21st day of November, 2016, between AEP TRANSMISSION COMPANY, LLC a limited liability company duly organized and existing under the laws of the state of Delaware (herein called the “Company”), having its principal office at 1 Riverside Plaza, Columbus, Ohio 43215 and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, duly organized and existing under the laws of the United States, having its designated corporate trust office at 2 North LaSalle Street, 7
th
Floor, Chicago, Illinois 60602, as Trustee (herein called the “Trustee”).
W I T N E S S E T H:
WHEREAS, the Company has heretofore entered into an Indenture, dated as of November 1, 2016 (the “Original Indenture”), with the Trustee;
WHEREAS, the Original Indenture is incorporated herein by this reference and the Original Indenture, as supplemented by this First Supplemental Indenture, is herein called the “Indenture”;
WHEREAS, under the Original Indenture, a new series of unsecured notes (the “Senior Notes”) may at any time be established by the Board of Managers of the Company in accordance with the provisions of the Original Indenture and the terms of such series may be described by a supplemental indenture executed by the Company and the Trustee;
WHEREAS, the Company proposes to create under the Indenture a series of Senior Notes to be designated the “3.10% Senior Notes, Series D due 2026” (the “Series D Notes”) and a series of Senior Notes to be designated the “4.00% Senior Notes, Series E due 2046” (the “Series E Notes”; and together with the Series D Notes, the “Notes”), the form and substance of the Notes and the terms, provisions and conditions thereof to be set forth as provided in the Original Indenture and this First Supplemental Indenture;
WHEREAS, the Company and the initial purchasers named therein have entered into that certain Registration Rights Agreement, dated November 21, 2016 (the “Registration Rights Agreement”), providing for (i) the issuance from time to time of Securities issued in exchange for, and in an aggregate principal amount equal to, the Notes (the “Exchange Notes”) containing terms substantially identical to, and evidencing the same indebtedness as, the Notes exchanged therefor (except that such Exchange Notes will be registered under the Securities Act and will not bear any legend to the contrary) and (ii) the payment of any additional amounts of interest that shall become payable in respect of the Notes pursuant to the Registration Rights Agreement as a result of the registration default as described in the Registration Rights Agreement (“Additional Interest”);
WHEREAS, additional Senior Notes of other series hereafter established, except as may be limited in the Original Indenture as at the time supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified; and
WHEREAS, all conditions necessary to authorize the execution and delivery of this First Supplemental Indenture and to make it a valid and binding obligation of the Company have been done or performed.
NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Additional Definitions
SECTION 1.01.
Definitions
.
The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture.
“Additional Interest” shall have the meaning assigned to it in the Registration Rights Agreement.
“Agent Member” shall have the meaning set forth in Section 2.06(a)(iv).
“Applicable Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depository for such Security, Euroclear and Clearstream, in each case to the extent applicable to such transaction and as in effect from time to time.
“Certificated Securities” shall have the meaning set forth in Section 2.06(b).
“Clearstream” means Clearstream Banking, société anonyme, or any successor securities clearing agency.
“Consolidated Priority Debt” means all Priority Debt of the Company and its subsidiaries determined on a consolidated basis eliminating inter-company items.
“Consolidated Tangible Net Assets” means the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the most recent quarterly or annual, as applicable, consolidated balance sheet of the Company and its consolidated subsidiaries, 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 consolidated current liabilities of the Company and its consolidated subsidiaries appearing on such balance sheet.
“Debt” means any indebtedness for borrowed money.
“DTC” means The Depository Trust Company, the initial Depository.
“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear System or any successor securities clearing agency.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Offer Registration Statement” shall have the meaning assigned to it in the Registration Rights Agreement.
“Exchange Notes” shall have the meaning set forth in the Recitals.
“Global Notes” means, collectively, the Rule 144A Global Notes and Regulation S Global Notes.
“Global Securities” means global certificates representing the Notes as described in Section 2.06.
“Holder” means a registered holder of a Note.
“Lien or Liens” means any mortgage, pledge, security interest, or other lien on any utility properties or tangible assets, including, without limitation, the capital stock or comparable equity interest of its subsidiaries, owned on the date hereof or hereafter acquired by the Company or its subsidiaries.
“Original Issue Date” means November 21, 2016.
“Permitted Liens” means:
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•
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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;
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any extensions, renewals or replacements (or successive extensions, renewals or replacements), in whole or in part, of Liens permitted by the foregoing clauses;
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the pledge of any bonds or other securities at any time issued under any of the Secured Debt permitted by the above clauses; and
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the creation or existence of leases (operating or capital) made, or existing on property acquired, in the ordinary course of business.
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“Priority Debt” means, without duplication, any Debt of the Company’s subsidiaries; provided that there shall be excluded from any calculation of Priority Debt, (i) the Debt of any subsidiary owing to the Company or a subsidiary of the Company, and (ii) the Debt of any entity which becomes a subsidiary after the issuance of the Notes and any extension, renewal or refunding thereof, provided that such Debt was not incurred in contemplation of such entity becoming a subsidiary.
“Registration Rights Agreement” means the Registration Rights Agreement, dated as of November 21, 2016 among the Company and the Initial Purchasers named therein, relating to the registration of the Notes under the Securities Act.
“Regulation S” means Regulation S under the Securities Act and any successor regulation thereto.
“Regulation S Global Note” has the meaning set forth in Section 2.06(a)(ii).
“Rule 144” means Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission.
“Rule 144A” means Rule 144A under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission.
“Rule 144A Global Note” has the meaning set forth in Section 2.06(a)(i).
“Secured Debt” means any Debt of the Company or any of its subsidiaries secured by a Lien (other than a Permitted Lien).
“Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor legislation.
“Securities Custodian” means the custodian with respect to a Global Security (as appointed by the Depository), or any successor Person thereto and shall initially be the Trustee.
“Stated Maturity” means (i) for the Series D Notes, December 1, 2026 and (ii) for the Series E Notes, December 1, 2046.
“Temporary Regulation S Global Notes” has the meaning set forth in Section 2.06(a)(ii).
“Transfer Restricted Security” shall have the meaning assigned to it in Section 6 the Registration Rights Agreement.
ARTICLE II
The Notes
SECTION 2.01.
Establishment
.
The Series D Notes shall be designated as the Company’s “3.10% Senior Notes, Series D due 2026” and the Series E Notes shall be designated as the Company’s “4.00% Senior Notes, Series E due 2046”. Each of the Series D Notes and the Series E Notes shall be treated for all purposes under the Indenture as a single class or series of senior notes.
SECTION 2.02.
Aggregate Principal Amount
.
The Trustee shall authenticate and deliver (i) Series D Notes for original issue on the Original Issue Date in the aggregate principal amount of $300,000,000 and (ii) Series E Notes for original issue on the Original Issue Date in the aggregate principal amount of $400,000,000, in each case upon a Company Order for authentication and delivery thereof and satisfaction of Section 2.01 of the Original Indenture. The aggregate principal amount of the Series D Notes shall be initially limited to $300,000,000 and the aggregate principal amount of the Series E Notes shall be initially limited to $400,000,000 and both series shall be subject to Periodic Offerings pursuant to Article Two of the Original Indenture. The Notes need not be issued at the same time and each series may be reopened at any time, without the consent of any Holder, for issuances of additional Series D Notes or Series E Notes. Any such additional Series D Notes or Series E Notes will have the same ranking, interest rate, maturity and other terms as such series initially issued (except the issue date and issue price).
SECTION 2.03.
Maturity and Interest
.
(a)
The (i) Series D Notes shall mature on, and the date on which the principal of the Series D Notes shall be payable (unless earlier redeemed) shall be December 1, 2026 and (ii) Series E Notes shall mature on, and the date on which the principal of the Series E Notes shall be payable (unless earlier redeemed) shall be December 1, 2046;
(b)
The interest rate at which (i) the Series D Notes shall bear interest shall be 3.10% per annum and (ii) the Series E Notes shall bear interest shall be 4.00% per annum; provided, however, that the Additional Interest shall accrue on the Notes under certain circumstances as provided in clause (c) below; interest shall accrue from the date of authentication of the Notes; the Interest Payment Dates on which such interest will be payable shall be June 1 and December 1, and the Regular Record Date for the determination of Holders to whom interest is payable on any such Interest Payment Date shall be the May 15 or November 15 preceding the relevant Interest Payment Date; provided that the first Interest Payment Date shall be June 1, 2017 and interest payable on the Stated Maturity or any redemption date shall be paid to the Person to whom principal shall be paid; each payment of interest shall include interest accrued through the day before the Interest Payment Date;
(c)
Additional Interest, if any, shall accrue on the Transfer Restricted Securities over and above the interest rate set forth herein in accordance with Section 6(a) of the Registration Rights Agreement.
SECTION 2.04.
Optional Redemption
.
(a)
At any time prior to September 1, 2026, the Series D Notes shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon not less than thirty but not more than sixty days’ previous notice given to the registered owners of the Series D Notes at a redemption price equal to the greater of (i) 100% of the principal amount of the Series D Notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Series D Notes being redeemed that would be due if such Series D Notes matured on September 1, 2026 (excluding the portion of any such interest accrued to the date of
redemption) discounted (for purposes of determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basis points, plus, accrued interest thereon to the date of redemption.
(b)
At any time prior to June 1, 2046, the Series E Notes shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon not less than thirty but not more than sixty days’ previous notice given to the registered owners of the Series E Notes at a redemption price equal to the greater of (i) 100% of the principal amount of the Series E Notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Series E Notes being redeemed that would be due if such Series E Notes matured on June 1, 2046 (excluding the portion of any such interest accrued to the date of redemption) discounted (for purposes of determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 20 basis points, plus, accrued interest thereon to the date of redemption.
At any time on or after September 1, 2026, the Series D Notes shall be redeemable at the option of the Company, in whole or in part, at 100% of the principal amount of the Series D Notes being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after June 1, 2046, the Series E Notes shall be redeemable at the option of the Company, in whole or in part, at 100% of the principal amount of the Series E Notes being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption.
“Comparable Treasury Issue,” applicable to each series of the Notes, means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“remaining life”) of the Notes (assuming, for purpose of the Series D Notes, that the Series D Notes matured on September 1, 2026 and, for purpose of the Series E Notes, the Series E Notes matured on June 1, 2046) 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 series of the Notes.
“Comparable Treasury Price,” applicable to each series of the Notes, means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Company obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.
“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer” means a primary U.S. Government securities dealer or dealers selected by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company and notified to the Trustee, 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 Company and the Trustee by such Reference Treasury Dealer at or before 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption, the rate per annum equal to the semiannual 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.
SECTION 2.05.
Security Registrar
.
The Security Register referred to in Section 2.05 of the Original Indenture shall, with respect to the Notes, be kept at the office or agency that the Company may from time to time designate for such purpose (which shall initially be the Corporate Trust Office of the Trustee), and at such other place or places as the Company, with the approval of the Trustee, may hereafter designate.
SECTION 2.06.
Global Securities and Certified Securities
.
General
. The Notes shall be issued only as registered Global Securities, without coupons, in denominations of $2,000 and any integral multiples of $1,000 in excess thereof. The Notes initially will be represented by one or more Rule 144A Global Notes (as defined below) and Regulation S Global Notes (as defined below) (collectively, the “Global Notes”) registered in the name of The Depository Trust Company, as Depository or its nominee, or a successor depository or its nominee.
(a)
Global Securities
.
(i)
Form of Restricted Global Notes
. The Series D Notes offered and sold in reliance on Rule 144A shall be initially represented by one or more Global Notes (collectively, the “Rule 144A Global Series D Notes”) and the Series E Notes offered and sold in reliance on Rule 144A shall be initially represented by one or more Global Notes (collectively, the “Rule 144A Global Series E Notes”, and, together the with the Rule 144A Global Series D Notes, the “Rule 144A Global Notes”) and will be deposited with the Trustee as custodian for the Depository and registered in the name of the Depository or its nominee. The Rule 144A Global Notes (and any notes issued in exchange for the Rule 144A Global Notes, other than Exchange Notes), including beneficial interests in the Rule 144A Global Notes, will be subject to certain restrictions on transfer set forth therein and in this Indenture.
(ii)
Form of Regulation S Global Notes
. The Series D Notes offered and sold in reliance on Regulation S shall be initially represented by one or more temporary Global Notes (collectively, the “Regulation S Temporary Global Series D Notes”) and the Series E Notes offered and sold in reliance on Regulation S
shall be initially represented by one or more temporary Global Notes (collectively, the “Regulation S Temporary Global Series E Notes”, and together with the Regulation S Temporary Global Series D Notes, the “Temporary Regulation S Global Notes”) and will be deposited with the Trustee as custodian for the Depository and registered in the name of the Depository or its nominee. Following the Resale Restriction Termination Date, beneficial interests in the Regulation S Temporary Global Note will be exchanged for beneficial interests in permanent Global Notes (the “Regulation S Permanent Global Notes” and, together with the Regulation S Temporary Global Notes, the “Regulation S Global Notes”). The Regulation S Global Notes (and any notes issued in exchange for the Regulation S Global Notes, other than Exchange Notes), including beneficial interests in the Regulation S Global Notes, will be subject to certain restrictions or transfer set forth therein and in this First Supplemental Indenture.
(iii)
At any time and from time to time after the execution and delivery of this First Supplemental Indenture, the Company may deliver Exchange Notes to be issued in exchange for any series of Rule 144A Global Notes and Regulation S Global Notes, executed by the Company for authentication, together with an Company Order for the authentication and delivery of such Exchange Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Exchange Notes.
The Rule 144A Global Note, the Temporary Regulation S Global Note, the Regulation S Global Note are collectively referred to herein as “Global Securities”. The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.
(iv)
Book-Entry Provisions
. This Section shall apply only to a Global Security deposited with or on behalf of the Depository. The Company shall execute and the Trustee shall, in accordance with this Section 2.06(a)(iv), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depository for such Global Security or Global Securities or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository’s instructions or held by the Trustee as custodian for the Depository.
Members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository or by the Trustee as the custodian of the Depository or under such Global Security, and the Company, the Trustee and any agent of the Company or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Security.
To the extent a notice or other communication to the beneficial owners of the Notes is required under the Indenture, unless and until Certificated Securities shall have been issued to such owners, the Trustee shall give all such notices and communications specified herein to be given to such owners to the Depository, and shall have no obligations to such owners.
(b)
Certificated Securities
. Except as provided in this Section 2.06, owners of beneficial interests in Global Securities shall not be entitled to receive physical delivery of Certificated Securities (as defined below).
Global Securities representing the Notes shall be exchangeable for certificated securities of such series, (“Certificated Securities)” if (i) the Depository (x) notifies the Company that it is unwilling or unable to continue as Depository for the Global Securities or (y) shall no longer be registered or in good standing under the Exchange Act, or other applicable statute or regulation, and a successor Depository for the Global Securities is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition. Upon surrender to the Trustee of the typewritten certificate or certificates representing the Global Securities by the Depository, accompanied by registration instructions, the Trustee shall execute and authenticate the certificates in accordance with the instructions of the Depository. Neither the Security Registrar nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Certificated Securities, the Trustee shall recognize the Holders of the Certificated Securities as Holders. The Certificated Securities shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Company, as evidenced by the execution thereof by the Company, and shall bear the legend set forth on Exhibit A-1 hereto for the Series D Notes and Exhibit A-2 hereto for the Series E Notes unless the Company informs the Trustee that such legend is no longer required.
SECTION 2.07.
Form of Securities
.
The Global Securities and Certificated Securities shall be substantially in the forms attached as Exhibit A-1 and Exhibit A-2 thereto.
SECTION 2.08.
Transfer and Exchange
.
(a)
General
. Subject to Section 2.01, transfers and exchanges of Securities and beneficial interests in a Global Security of the kinds specified in this Section 2.08 shall be made only in accordance with this Section 2.08.
(b)
Transfer and Exchange of Global Securities
.
(i)
If, at any time, whether prior to or after the expiration of the holding period with respect to the Notes set forth in Rule 144(d) under the Securities Act, an owner of a beneficial interest in a Rule 144A Global Note
deposited with the Trustee, as custodian for the Depository, wishes to transfer its interest in such Rule 144A Global Note to a Person who is required or permitted to take delivery thereof in the form of an interest in a Regulation S Global Note, such owner shall, subject to the Applicable Procedures, exchange or cause the exchange of such interest for an equivalent beneficial interest in a Regulation S Global Note as provided in this Section 2.08(b)(i). Upon receipt by the Trustee of (1) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Trustee to credit or cause to be credited a beneficial interest in the Regulation S Global Note in an amount equal to the beneficial interest in the applicable Rule 144A Global Note to be exchanged, (2) a written order given in accordance with the Applicable Procedures containing information regarding the participant account of the Depository and the Euroclear or Clearstream account (if applicable) to be credited with such increase and (3) a certificate substantially in the form of Exhibit B hereto given by the owner of such beneficial interest, the Trustee, as Security Registrar, shall instruct the Depository to reduce or cause to be reduced the aggregate principal amount of the applicable Rule 144A Global Note and to increase or cause to be increased the aggregate principal amount of the applicable Regulation S Global Note by the principal amount of the beneficial interest in the Rule 144A Global Note to be exchanged, to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Regulation S Global Note equal to the reduction in the aggregate principal amount of the applicable Rule 144A Global Note, and to debit, or cause to be debited, from the account of the Person making such exchange or transfer the beneficial interest in the Rule 144A Global Note that is being exchanged or transferred.
(ii)
If, at any time prior to the expiration of one year from the date of the acquisition of the Securities from the Company, an owner of a beneficial interest in a Regulation S Global Note deposited with the Trustee as custodian for the Depository wishes to transfer its interest in such Regulation S Global Note to a Person who is required or permitted to take delivery thereof in the form of an interest in a Rule 144A Global Note, such owner shall, subject to the Applicable Procedures, exchange or cause the exchange of such interest for an equivalent beneficial interest in a Rule 144A Global Note, as provided in this Section 2.08(b)(ii). Upon receipt by the Trustee of (1) written instructions given in accordance with the Applicable Procedures from an Agent Member, directing the Trustee, as Security Registrar, to credit or cause to be credited a beneficial interest in the Rule 144A Global Note equal to the beneficial interest in the Regulation S Global Note to be exchanged; (2) a written order given in accordance with the Applicable Procedures containing information regarding the participant account of the Depository to be credited with such increase; and (3) a certificate substantially in the form of Exhibit B hereto given by the owner of such beneficial interest, the Trustee, as Security Registrar, shall instruct the Depository to reduce or cause to be reduced the aggregate principal amount of such Regulation S Global Note and to increase or cause to be increased the aggregate principal amount of the applicable Rule 144A Global Note by the principal amount of the beneficial interest in the Regulation S Global Note to be exchanged, and the
Trustee, as Security Registrar, shall instruct the Depository, concurrently with such reduction, to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the applicable Rule 144A Global Note equal to the reduction in the aggregate principal amount of such Regulations S Global Note and to debit or cause to be debited from the account of the Person making such transfer the beneficial interest in the Regulation S Global Note that is being transferred.
(iii)
Beneficial interests in a Rule 144A Global Note may be transferred to a Person who takes delivery in the form of an interest in such Rule 144A Global Note without any written certification from the transferor or the transferee, but the transferee will be deemed to make the representations set forth in Exhibit B hereto.
(iv)
Beneficial interests in a Regulation S Global Note may be transferred to a Person who takes delivery in the form of an interest in such Regulation S Global Note without any written certification from the transferor or the transferee; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than a distributor (as defined in Regulation S under the Securities Act)).
(c)
Transfer and Exchange of Global Securities and Certificated Securities
.
(i)
In the event that a Global Security is exchanged for a Certificated Security as provided in this Section 2.08(c), such Certificated Security may be exchanged or transferred for one another, subject to Section 2.05 of the Original Indenture, only in accordance with such procedures as are substantially consistent with the provisions of clauses (b)(i) and (ii) of this Section 2.08 and as may be from time to time reasonably adopted by the Company.
(ii)
Upon receipt by the Trustee of a Certificated Security, duly endorsed or accompanied by appropriate instruments of transfer, the Trustee shall cancel such Certificated Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing of the Depository and the Securities Custodian, the aggregate principal amount of Notes represented by the Rule 144A Global Note or Regulation S Global Note, as applicable, to be increased by the aggregate principal amount of the Certificated Security to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Note or Regulation S Global Note, as applicable, equal to the principal amount of the Certificated Security so canceled. If no Rule 144A Global Notes or Regulation S Global Notes, as applicable, are then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Rule 144A Global Note or Regulation S Global Note, as applicable, in the appropriate principal amount.
(d)
Transfer Restricted Security
. Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act or an effective registration statement under the Securities Act, which shall be certified to the Trustee and Security Registrar in the form attached hereto as Exhibit B upon which each may conclusively rely:
(i)
in the case of any Transfer Restricted Security represented by a Certificated Security, the Security Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Certificated Security that does not bear the Restricted Securities Legends set forth in Exhibits A-1 and A-2 hereto and rescind any restriction on the transfer of such Transfer Restricted Security; and
(ii)
in the case of any Transfer Restricted Security represented by a Global Security, such Transfer Restricted Security shall not be required to bear the Restricted Securities Legends set forth in Exhibits A-1 and A-2 hereto if all other interests in such Global Note have been or are concurrently being sold or transferred pursuant to Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act.
ARTICLE III
Covenants
SECTION 3.01.
Consolidated Priority Debt
.
The Company covenants that so long as any of the Notes are outstanding that it will not permit Consolidated Priority Debt to exceed 10% of Consolidated Tangible Net Assets for a period in excess of five consecutive business days.
SECTION 3.02.
Liens
.
The Company covenants that for so long as any of the Notes are outstanding that it will not create or suffer to exist or permit any of its subsidiaries to create or suffer to exist any Secured Debt, unless, at the same time, the Notes that are outstanding are also secured by such Lien on an equal and ratable basis; provided, however, the foregoing does not limit:
(a)
Permitted Liens; and
(b)
Any other Lien not covered in clause (a) as long as immediately after the creation of such Lien the aggregate principal amount of Secured Debt does not exceed 10% of Consolidated Tangible Net Assets.
SECTION 3.03.
Additional Information
.
For so long as any Notes remain outstanding, the Company will furnish to prospective purchasers of the Notes, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act for compliance with Rule 144A.
ARTICLE IV
Miscellaneous Provisions
SECTION 4.01.
Recitals by Company
.
The recitals in this First Supplemental Indenture are made by the Company only and not by the Trustee and the Trustee assumes no responsibility for their correctness. All of the provisions contained in the Original Indenture in respect of the rights, privileges, protections, indemnities, immunities, powers and duties of the Trustee shall be applicable in respect of the Notes and of this First Supplemental Indenture as fully and with like effect as if set forth herein in full. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof.
SECTION 4.02.
Ratification and Incorporation of Original Indenture
.
As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture and this First Supplemental Indenture shall be read, taken and construed as one and the same instrument.
SECTION 4.03.
Executed in Counterparts
.
This First Supplemental Indenture may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.
SECTION 4.04.
Legends
.
Except as determined by the Company in accordance with applicable law, each Note shall bear the applicable legends relating to restrictions on transfer pursuant to the securities laws in substantially the form set forth on Exhibit A-1 hereto for the Series D Notes and Exhibit A-2 hereto for the Series E Notes.
SECTION 4.05.
New York Law to Govern
.
This First Supplemental Indenture will be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws provisions.
IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by its duly authorized signatories, all as of the day and year first above written.
AEP TRANSMISSION COMPANY, LLC
By:
/s/ Lonni L. Dieck
Name: Lonni L. Dieck
Title: Treasurer
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
By:
/s/ R. Tarnas
Name: R. Tarnas
Title: Vice President
EXHIBIT A-1
FORM OF SERIES D NOTE
[Rule 144A Global Security]
[Regulation S Global Security]
[Certificated Security]
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
THIS GLOBAL SECURITY IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE REGISTRAR MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTIONS 2.04 AND 2.05 OF THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.05 OF THE INDENTURE AND (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.08 OF THE INDENTURE.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), 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.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)), OR (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, ONLY (A) TO AEP TRANSMISSION COMPANY, LLC OR ANY OF ITS SUBSIDIARIES (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN EACH CASE, THE SECURITIES LAWS OF ANY OTHER JURISDICTION, INCLUDING ANY STATE OF THE UNITED STATES, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL SATISFACTORY TO EACH OF THEM AND/OR A CERTIFICATE OF TRANSFER OR EXCHANGE IN THE FORM PRESCRIBED IN THE INDENTURE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
[ERISA Legend]
BY ITS ACQUISITION AND HOLDING OF THIS SECURITY THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED, WARRANTED AND AGREED THAT EITHER (I) IT IS NOT AND WILL NOT BE FOR SO LONG AS IT HOLDS ANY SECURITY (OR INTEREST IN A SECURITY) AN EMPLOYEE BENEFIT PLAN OR ARRANGEMENT SUBJECT TO THE FIDUCIARY RESPONSIBILITY REQUIREMENT OF TITLE I OF U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED (“ERISA”), A “PLAN” OR ARRANGEMENT SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF SUCH EMPLOYEE BENEFIT PLAN OR PLAN’S INVESTMENT IN THE ENTITY, OR A GOVERNMENTAL, NON-U.S., CHURCH OR OTHER PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAWS”), OR (II) THE PURCHASE, HOLDING AND DISPOSITION OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR, IN THE CASE OF A GOVERNMENTAL, NON-U.S., CHURCH OR OTHER PLAN, A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.
[Temporary Regulation S Global Security Legend]
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A REGULATION S PERMANENT GLOBAL SECURITY, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SECURITY SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
[Certificated Securities Legend]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRUSTEE AND SECURITY REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS THE TRUSTEE AND SECURITY REGISTRAR MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
AEP TRANSMISSION COMPANY, LLC
3.10% Senior Notes, Series D due 2026
CUSIP: [#########/144A]
Original Issue Date: November 21, 2016
[#########/Reg. S]
ISIN:
[#########/144A]
[#########/Reg. S]
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Stated Maturity:
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December 1, 2026
Interest Rate:
3.10%
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Principal Amount:
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$XXX,000,000
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AEP TRANSMISSION COMPANY, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (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 [________] or registered assigns, the principal sum of [_____________] DOLLARS ($XXX,000,000) on the Stated Maturity specified above (or upon earlier redemption); and to pay interest on said Principal Amount from the Original Issue Date specified above or from the most recent interest payment date (each such date, an “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 June 1, 2017, at the Interest Rate per annum specified above, until the Principal Amount shall have been paid or duly provided for. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
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 Regular Record Date with respect to such Interest Payment Date, which shall be the May 15 or November 15 (whether or not a Business Day), as the case may be, immediately preceding such Interest Payment Date, provided that interest payable on the Stated Maturity or any redemption date 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 Holder on such Regular Record Date and shall be paid as provided in said Indenture.
If any Interest Payment Date, any redemption date or Stated Maturity is not a Business Day, then payment of the amounts due on this Note on such date will be made on the next succeeding Business Day, and no interest shall accrue on such amounts for the period from and after such Interest Payment Date, redemption date or Stated Maturity, as the case may be, except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, with the same force and effect as if made on such date. The principal of (and premium, if any) and the interest on this Note shall be payable at the office or agency of the Company may from time to time designate for that purpose, 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 Stated Maturity or any redemption date) 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 Register.
This Note is one of a duly authorized series of Senior 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 November 1, 2016 duly executed and delivered between the Company and The Bank of New York Mellon Trust Company, N.A., a national banking association, duly organized and existing under the laws of the United States, 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 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 holder of this Notes. This Note is one of the series of Notes designated on the face hereof as 3.10% Senior Notes, Series D due 2026 initially issued in the aggregate principal amount of $XXX,000,000.
At any time prior to September 1, 2026, this Note shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon not less than thirty but not more than sixty days’ previous notice given to the registered owners of this Note at a redemption price equal to the greater of (i) 100% of the principal amount of this Note being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on this Note being redeemed that would be due if this Note matured on September 1, 2026 (excluding the portion of any such interest accrued to the date of redemption) discounted (for purposes of determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basis points, plus, accrued interest thereon to the date of redemption.
At any time on or after September 1, 2026, this Note shall be redeemable at the option of the Company, in whole or in part, at 100% of the principal amount of this Note being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption.
“Comparable Treasury Issue,” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“remaining life”) of this Note (assuming, for this purpose, that this Note matured on September 1, 2026) 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 this Note.
“Comparable Treasury Price” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Company obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.
“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer” means a primary U.S. Government securities dealer or dealers selected by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company and notified to the Trustee, 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 Company and the Trustee by such Reference Treasury Dealer at or before 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption, the rate per annum equal to the semiannual 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 Company shall not be required to (i) issue, exchange or register the transfer of this Note during a period beginning at the opening of business 15 days before the day of the giving of a notice of redemption of less than all the outstanding Notes of this series and ending at the close of business on the day such notice is given, nor (ii) register the transfer of or exchange of any Notes of this series or portions thereof called for redemption. This Note is exchangeable for Notes in certificated registered form only under certain limited circumstances set forth in the Indenture.
In the event of redemption of this Note in part only, a new Note or Notes of this series, of like tenor, for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender of this Note.
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. This Note will not have a sinking fund.
As described in the supplemental indenture relating to the Notes, so long as this Note is outstanding, the Company is subject to covenants described in Article III of the First Supplemental Indenture.
The Indenture contains provisions permitting the Company and the Trustee, with the consent of the 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 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 Note that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to the Indenture, without the consent of the holder of each Note then outstanding and affected; (ii) reduce the aforesaid percentage of Notes, the Holders of which are required to consent to any such supplemental indenture, or reduce the percentage of Notes, the Holders of which are required to waive any default and its consequences, without the consent of the 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 holder of each Note then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Notes of all series at the time outstanding affected thereby, on behalf of the 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 Holder and upon all future Holders and owners of this Note and of any Note issued in exchange herefor or in place hereof (whether by registration or 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 Register 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 Trustee 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 Note 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 released waived and released.
The Notes of this series are issuable only in registered form without coupons in minimum denominations of $2,000 and in integral multiples of $1,000 in excess 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 a different authorized denomination, as requested by the 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.
This Note will be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws provisions.
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.
AEP TRANSMISSION COMPANY, LLC
By: ___________________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N. A.,
as Trustee
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Date: ____________________
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By: ________________________________________
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Authorized Signatory
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:
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TEN COM-
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as tenants in common
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UNIF GIFT MIN ACT-_______
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Custodian ________
(Cust) (Minor)
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TEN ENT-
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as tenants by the entireties
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under Uniform Gifts to
Minors Act
_________________________
(State)
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JT TEN-
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As joint tenants
with right of
survivorship and
not as tenants in
common
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Additional abbreviations may also be used
though not on the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
___________________ (please insert Social Security or other identifying number of assignee)
_____________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP
CODE OF ASSIGNEE
_____________________________________________________________________________________
_____________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and appointing
_____________________________________________________________________________________
agent to transfer said Note on the books of the Company, with full power of substitution in the premises.
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Dated: ____________________
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_______________________________________________________
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_______________________________________________________
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.
In connection with any transfer of any of the Note evidenced by this certificate, the undersigned confirms that such Note is being:
CHECK ONE BOX BELOW
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(1)
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¨
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exchanged for the undersigned’s own account without transfer; or
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(2)
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¨
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transferred to a person whom the undersigned reasonably believes to be a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933 who is purchasing this Note for such buyer’s own account or the account of a “qualified institutional buyer” in a transaction meeting the requirements of Rule 144A under the Securities Act of 1933 and any applicable securities laws of any state of the United States or any other jurisdiction; or
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(3)
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¨
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exchanged or transferred pursuant to and in compliance with Rule 903 or 904 of Regulation S under the Securities Act of 1933; or
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(4)
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¨
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transferred to the Company or an “affiliate” (as defined in Rule 144 under the Securities Act) of the Company; or; or
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(5)
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¨
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transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.
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Unless one of the boxes is checked, the Trustee will refuse to register any Note evidenced by this certificate in the name of any person other than the registered Holder thereof;
provided
,
however
, that if box (3), (4) or (5) is checked, the Company may require, prior to registering any such transfer of this Note, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided
,
further
, that if box (2) is checked, the transferee must also certify that it is a qualified institutional buyer as defined in Rule 144A.
________________________________________
Signature
_______________________________________
SIGNATURE GUARANTEE
Date:___________________
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
________________________________
SIGNATURE GUARANTEE
Date:___________________
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
NOTICE: To be executed by an executive officer.
EXHIBIT A-2
FORM OF SERIES E NOTE
[Rule 144A Global Security]
[Regulation S Global Security]
[Certificated Security]
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
THIS GLOBAL SECURITY IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE REGISTRAR MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTIONS 2.04 AND 2.05 OF THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.05 OF THE INDENTURE AND (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.08 OF THE INDENTURE.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), 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.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)), OR (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, ONLY (A) TO AEP TRANSMISSION COMPANY, LLC OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN EACH CASE, THE SECURITIES LAWS OF ANY OTHER JURISDICTION, INCLUDING ANY STATE OF THE UNITED STATES, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL SATISFACTORY TO EACH OF THEM AND/OR A CERTIFICATE OF TRANSFER OR EXCHANGE IN THE FORM PRESCRIBED IN THE INDENTURE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
[ERISA Legend]
BY ITS ACQUISITION AND HOLDING OF THIS SECURITY THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED, WARRANTED AND AGREED THAT EITHER (I) IT IS NOT AND WILL NOT BE FOR SO LONG AS IT HOLDS ANY SECURITY (OR INTEREST IN A SECURITY) AN EMPLOYEE BENEFIT PLAN OR ARRANGEMENT SUBJECT TO THE FIDUCIARY RESPONSIBILITY REQUIREMENT OF TITLE I OF U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED (“ERISA”), A “PLAN” OR ARRANGEMENT SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF SUCH EMPLOYEE BENEFIT PLAN OR PLAN’S INVESTMENT IN THE ENTITY, OR A GOVERNMENTAL, NON-U.S., CHURCH OR OTHER PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAWS”), OR (II) THE PURCHASE, HOLDING AND DISPOSITION OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR, IN THE CASE OF A GOVERNMENTAL, NON-U.S., CHURCH OR OTHER PLAN, A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.
[Temporary Regulation S Global Security Legend]
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A REGULATION S PERMANENT GLOBAL SECURITY, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SECURITY SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
[Certificated Securities Legend]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRUSTEE AND SECURITY REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS THE TRUSTEE AND SECURITY REGISTRAR MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
AEP TRANSMISSION COMPANY, LLC
4.00% Senior Notes, Series E due 2046
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CUSIP: [#########/144A]
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Original Issue Date: November 21, 2016
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[#########/Reg. S]
ISIN:
[#########/144A]
[########/Reg. S]
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Stated Maturity:
|
December 1, 2046
Interest Rate:
4.00%
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Principal Amount:
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$XXX,000,000
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AEP TRANSMISSION COMPANY, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (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 [________] or registered assigns, the principal sum of [___________] MILLION DOLLARS ($XXX,000,000) on the Stated Maturity specified above (or upon earlier redemption); and to pay interest on said Principal Amount from the Original Issue Date specified above or from the most recent interest payment date (each such date, an “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 June 1, 2017, at the Interest Rate per annum specified above, until the Principal Amount shall have been paid or duly provided for. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
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 Regular Record Date with respect to such Interest Payment Date, which shall be the May 15 or November 15 (whether or not a Business Day), as the case may be, immediately preceding such Interest Payment Date, provided that interest payable on the Stated Maturity or any redemption date 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 Holder on such Regular Record Date and shall be paid as provided in said Indenture.
If any Interest Payment Date, any redemption date or Stated Maturity is not a Business Day, then payment of the amounts due on this Note on such date will be made on the next succeeding Business Day, and no interest shall accrue on such amounts for the period from and after such Interest Payment Date, redemption date or Stated Maturity, as the case may be, except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, with the same force and effect as if made on
such date. The principal of (and premium, if any) and the interest on this Note shall be payable at the office or agency of the Company may from time to time designate for that purpose, 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 Stated Maturity or any redemption date) 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 Register.
This Note is one of a duly authorized series of Senior 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 November 1, 2016 duly executed and delivered between the Company and The Bank of New York Mellon Trust Company, N.A., a national banking association, duly organized and existing under the laws of the United States, 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 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 holder of this Note. This Note is one of the series of Notes designated on the face hereof as 4.00% Senior Notes, Series E due 2046 initially issued in the aggregate principal amount of $XXX,000,000.
At any time prior to June 1, 2046, this Note shall be redeemable at the option of the Company, in whole at any time or in part, from time to time, upon not less than thirty but not more than sixty days’ previous notice given to the registered owners of this Note at a redemption price equal to the greater of (i) 100% of the principal amount of this Note being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the this Note being redeemed that would be due if this Note matured on June 1, 2046 (excluding the portion of any such interest accrued to the date of redemption) discounted (for purposes of determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 20 basis points, plus, accrued interest thereon to the date of redemption.
At any time on or after June 1, 2046, this Note shall be redeemable at the option of the Company, in whole or in part, at 100% of the principal amount of this Note being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption.
“Comparable Treasury Issue,” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“remaining life”) of this Note (assuming, for this purpose, that this Note matured on June 1, 2046) 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 this Note.
“Comparable Treasury Price,” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (2) if the Company obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.
“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer” means a primary U.S. Government securities dealer or dealers selected by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company and notified to the Trustee, 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 Company and the Trustee by such Reference Treasury Dealer at or before 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption, the rate per annum equal to the semiannual 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 Company shall not be required to (i) issue, exchange or register the transfer of this Note during a period beginning at the opening of business 15 days before the day of the giving of a notice of redemption of less than all the outstanding Notes of this series and ending at the close of business on the day such notice is given, nor (ii) register the transfer of or exchange of any Notes of this series or portions thereof called for redemption. This Note is exchangeable for Notes in certificated registered form only under certain limited circumstances set forth in the Indenture.
In the event of redemption of this Note in part only, a new Note or Notes of this series, of like tenor, for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender of this Note.
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. This Note will not have a sinking fund.
As described in the supplemental indenture relating to the Notes, so long as this Note is outstanding, the Company is subject to covenants described in Article III of the First Supplemental Indenture.
The Indenture contains provisions permitting the Company and the Trustee, with the consent of the 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 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 Note that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to the Indenture, without the consent of the Holder of each Note then outstanding and affected; (ii) reduce the aforesaid percentage of Notes, the Holders of which are required to consent to any such supplemental indenture, or reduce the percentage of Notes, the Holders of which are required to waive any default and its consequences, without the consent of the 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 Holder of each Note then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Notes of all series at the time outstanding affected thereby, on behalf of the 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 Holder and upon all future Holders and owners of this Note and of any Note issued in exchange herefor or in place hereof (whether by registration or 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 Register 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 Trustee 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 Note 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 released waived and released.
The Notes of this series are issuable only in registered form without coupons in minimum denominations of $2,000 and any integral multiples of $1,000 in excess 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 a different authorized denomination, as requested by the 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.
This Note will be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws provisions.
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.
AEP TRANSMISSION COMPANY, LLC
By: ______________________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N. A.,
as Trustee
By: ______________________________________
Authorized Signatory
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:
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TEN COM-
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as tenants in common
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UNIF GIFT MIN ACT-_______
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Custodian ________
(Cust) (Minor)
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TEN ENT-
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as tenants by the entireties
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under Uniform Gifts to
Minors Act
_________________________
(State)
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JT TEN-
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As joint tenants
with right of
survivorship and
not as tenants in
common
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Additional abbreviations may also be used
though not on the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
___________________ (please insert Social Security or other identifying number of assignee)
_____________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP
CODE OF ASSIGNEE
_____________________________________________________________________________________
_____________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and appointing
_____________________________________________________________________________________
agent to transfer said Note on the books of the Company, with full power of substitution in the premises.
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Dated: ____________________
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_______________________________________________________
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_______________________________________________________
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.
In connection with any transfer of the Note evidenced by this certificate, the undersigned confirms that such Note is being:
CHECK ONE BOX BELOW
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(1)
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¨
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exchanged for the undersigned’s own account without transfer; or
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(2)
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¨
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transferred to a person whom the undersigned reasonably believes to be a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933 who is purchasing this Note for such buyer’s own account or the account of a “qualified institutional buyer” in a transaction meeting the requirements of Rule 144A under the Securities Act of 1933 and any applicable securities laws of any state of the United States or any other jurisdiction; or
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(3)
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¨
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exchanged or transferred pursuant to and in compliance with Rule 903 or 904 of Regulation S under the Securities Act of 1933; or
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(4)
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¨
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transferred to the Company or an “affiliate” (as defined in Rule 144 under the Securities Act) of the Company; or; or
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(5)
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¨
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transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.
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Unless one of the boxes is checked, the Trustee will refuse to register any of this Note evidenced by this certificate in the name of any person other than the registered Holder thereof;
provided
,
however
, that if box (3), (4) or (5) is checked, the Company may require, prior to registering any such transfer of this Note, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided
,
further
, that if box (2) is checked, the transferee must also certify that it is a qualified institutional buyer as defined in Rule 144A.
________________________________________
Signature
________________________________________
SIGNATURE GUARANTEE
Date:___________________
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
________________________________________
SIGNATURE GUARANTEE
Date:___________________
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
NOTICE: To be executed by an executive officer.
SCHEDULE A
The initial aggregate principal amount of the Note evidenced by the Certificate to which this Schedule is attached is $___________. The notations on the following table evidence decreases and increases in the aggregate principal amount of the Note evidenced by such Certificate.
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Decrease in Principal Amount of the Note
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Increase in Principal
Amount of the Note
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Principal Amount of the
Note Remaining After
Such Decrease or Increase
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Notation by
Security Registrar
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EXHIBIT B
FORM OF TRANSFER CERTIFICATE
In connection with any transfer of any of the Series [D/E] Notes evidenced by this certificate, the undersigned confirms that such Series [D/E] Notes are being:
CHECK ONE BOX BELOW
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(1)
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¨
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exchanged for the undersigned’s own account without transfer; or
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(2)
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¨
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transferred to a person whom the undersigned reasonably believes to be a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933 who is purchasing such Series D Notes for such buyer’s own account or the account of a “qualified institutional buyer” in a transaction meeting the requirements of Rule 144A under the Securities Act of 1933 and any applicable securities laws of any state of the United States or any other jurisdiction; or
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(3)
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¨
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exchanged or transferred pursuant to and in compliance with Rule 903 or 904 of Regulation S under the Securities Act of 1933; or
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(4)
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¨
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transferred to the Company or an “affiliate” (as defined in Rule 144 under the Securities Act) of the Company; or; or
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(5)
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¨
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transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.
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Unless one of the boxes is checked, the Trustee will refuse to register any of the Series [D/E] Notes evidenced by this certificate in the name of any person other than the registered Holder thereof;
provided
,
however
, that if box (3) or (4) is checked, the Company may require, prior to registering any such transfer of the Series [D/E] Notes, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided
,
further
, that if box (2) is checked, the transferee must also certify that it is a qualified institutional buyer as defined in Rule 144A.
__________________________________________
Signature
Date:_______________
__________________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Series [D/E] Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
Date:_______________
__________________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
NOTICE: To be executed by an executive officer.
AEP TRANSMISSION COMPANY, LLC
AND
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
AS TRUSTEE
____________________
INDENTURE
Dated as of November 1, 2016
____________________
CROSS-REFERENCE TABLE
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Section of Trust Indenture Act of 1939, as amended
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Section of Indenture
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310(a)
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7.09
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310(b)
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7.08
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7.10
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310(c)
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Inapplicable
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311(a)
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7.13
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311(b)
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7.13
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311(c)
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Inapplicable
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312(a)
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5.01
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5.02(a)
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312(b)
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5.02(c)
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5.02(d)
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312(c)
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5.02(e)
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313(a)
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5.04(a)
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313(b)
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5.04(b)
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313(c)
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5.04(a)
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5.04(b)
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313(d)
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5.04(c)
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314(a)
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5.03
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314(b)
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Inapplicable
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314(c)
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13.06(a)
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314(d)
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Inapplicable
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314(e)
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13.06(b)
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314(f)
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Inapplicable
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315(a)
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7.01(a)
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7.02
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315(b)
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6.07
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315(c)
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7.01(a)
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315(d)
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7.01(b)
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315(e)
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6.08
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316(a)
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6.06
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8.04
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316(b)
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6.04
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316(c)
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8.01
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317(a)
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6.02
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317(b)
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4.03
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318(a)
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13.08
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TABLE OF CONTENTS
This Table of Contents does not constitute part of the Indenture and should not have any bearing upon the interpretation of any of its terms or provisions
RECITALS:
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Page
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Purpose of Indenture
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1
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Compliance with legal requirements
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1
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Purpose of and consideration for Indenture
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1
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ARTICLE ONE - DEFINITIONS
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SECTION 1.01
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DEFINITIONS
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2
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ARTICLE TWO - ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES
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SECTION 2.01
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Designation, terms, amount, authentication
and delivery of Securities
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8
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SECTION 2.02
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Form of Security and Trustee’s certificate
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9
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SECTION 2.03
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Date and denominations of Securities,
and provisions for payment of principal,
premium and interest
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10
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SECTION 2.04
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Execution of Securities
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11
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SECTION 2.05
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Exchange of Securities
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12
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SECTION 2.06
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Temporary Securities
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14
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SECTION 2.07
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Mutilated, destroyed, lost or
stolen Securities
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14
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SECTION 2.08
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Cancellation of surrendered Securities
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15
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SECTION 2.09
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Provisions of Indenture and Securities
for sole benefit of parties and
Securityholders
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15
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SECTION 2.10
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Appointment of Authenticating Agent
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15
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SECTION 2.11
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Global Security
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16
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SECTION 2.12
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Payment in Proper Currency
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17
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SECTION 2.13
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Identification of Securities
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17
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ARTICLE THREE - REDEMPTION OF SECURITIES AND
SINKING FUND PROVISIONS
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SECTION 3.01
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Redemption of Securities
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18
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SECTION 3.02
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Notice of redemption
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18
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SECTION 3.03
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When Securities called for
redemption become due and payable
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19
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SECTION 3.04
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Sinking Fund for Securities
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19
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SECTION 3.05
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Satisfaction of Securities Fund
Payments with Securities
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20
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SECTION 3.06
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Redemption of Securities for
Sinking Fund
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20
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ARTICLE FOUR - PARTICULAR COVENANTS OF THE COMPANY
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SECTION 4.01
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Payment of principal (and premium
if any) and interest on Securities
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20
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SECTION 4.02
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Maintenance of office or agency for
payment of Securities, designation of
office or agency for payment,
registration, transfer and exchange
of Securities
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20
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SECTION 4.03
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Duties of paying agent
|
21
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|
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|
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SECTION 4.04
|
|
|
|
Appointment to fill vacancy in
office of Trustee
|
22
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|
|
|
|
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|
SECTION 4.05
|
|
|
|
Restriction on consolidation,
merger or sale
|
22
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|
|
|
|
|
ARTICLE FIVE - SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
|
|
|
|
|
|
|
SECTION 5.01
|
|
|
|
Company to furnish Trustee information
as to names and addresses of
Securityholders
|
22
|
|
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|
|
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|
SECTION 5.02
|
|
|
|
Trustee to preserve information
as to names and addresses of
Securityholders received by it
in capacity of paying agent
|
22
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|
|
|
|
|
|
SECTION 5.03
|
|
|
|
Annual and other reports to be filled
by Company with Trustee
|
23
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|
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|
|
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|
SECTION 5.04
|
|
|
|
Trustee to transmit annual report
to Securityholders
|
24
|
|
|
|
|
|
|
ARTICLE SIX - REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS ON EVENT OF DEFAULT
|
|
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|
|
|
|
SECTION 6.01
|
|
|
|
Events of default defined
|
24
|
|
|
|
|
|
|
SECTION 6.02
|
|
|
|
|
|
|
|
|
|
|
Covenant of Company to pay to
Trustee whole amount due on
Securities on default in payment
of interest or principal (and
premium, if any
|
26
|
|
|
|
|
|
|
SECTION 6.03
|
|
|
|
Application of monies collected by Trustee
|
28
|
|
|
|
|
|
|
SECTION 6.04
|
|
|
|
Limitation on suits by holders of Securities
|
28
|
|
|
|
|
|
|
SECTION 6.05
|
|
|
|
Remedies Cumulative
|
29
|
|
|
|
|
|
|
SECTION 6.06
|
|
|
|
Rights of holders of majority in
principal amount of Securities to
direct trustee and to waive defaults
|
29
|
|
|
|
|
|
|
SECTION 6.07
|
|
|
|
Trustee to give notice of defaults
known to it, but may withhold in
certain circumstances
|
29
|
|
|
|
|
|
|
SECTION 6.08
|
|
|
|
Requirements of an undertaking to pay
costs in certain suits under Indenture
or against Trustee
|
30
|
|
|
|
|
|
|
SECTION 6.09
|
|
|
|
Trustee's rights and remedies upon default
|
30
|
|
|
|
|
|
|
ARTICLE SEVEN - CONCERNING THE TRUSTEE
|
|
|
|
|
|
|
SECTION 7.01
|
|
|
|
Upon Event of Default occurring and
continuing, Trustee shall exercise powers
vested in it, and use same degree of
care and skill in their exercise, as
prudent individual will use
|
30
|
|
|
|
|
|
|
SECTION 7.02
|
|
|
|
Trustee may rely on documents believed
genuine and properly signed or presented
|
32
|
|
|
|
|
|
|
|
|
|
SECTION 7.03
|
|
|
|
Trustee not liable for recitals in
Indenture or in Securities
|
33
|
|
|
|
|
|
|
SECTION 7.04
|
|
|
|
Trustee, paying agent or
Registrar may own Security
|
33
|
|
|
|
|
|
|
SECTION 7.05
|
|
|
|
Monies received by Trustee to be held
in Trust without interest
|
34
|
|
|
|
|
|
|
SECTION 7.06
|
|
|
|
Trustee entitled to compensation,
reimbursement and indemnity
|
34
|
|
|
|
|
|
|
SECTION 7.07
|
|
|
|
Right of Trustee to rely on certificate
of officers of Company where no other
evidence specifically prescribed
|
34
|
|
|
|
|
|
|
SECTION 7.08
|
|
|
|
Trustee acquiring conflicting interest
to eliminate conflict or resign
|
35
|
|
|
|
|
|
|
SECTION 7.09
|
|
|
|
Requirements for eligibility of
trustee
|
35
|
|
|
|
|
|
|
SECTION 7.10
|
|
|
|
Resignation of Trustee and
appointment of successor
|
35
|
|
|
|
|
|
|
SECTION 7.11
|
|
|
|
Acceptance by successor Trustee
|
36
|
|
|
|
|
|
|
SECTION 7.12
|
|
|
|
Successor to Trustee by merger, consolidation
of succession to business
|
37
|
|
|
|
|
|
|
SECTION 7.13
|
|
|
|
Limitations on rights of Trustee as a
creditor to obtain payment of certain
claims
|
38
|
|
|
|
|
|
|
|
|
ARTICLE EIGHT - CONCERNING THE SECURITYHOLDERS
|
|
|
|
|
|
|
SECTION 8.01
|
|
|
|
Evidence of action by Securityholders
|
38
|
|
|
|
|
|
SECTION 8.02
|
|
|
|
Proof of execution of instruments and of
holding of Securities
|
39
|
|
|
|
|
|
SECTION 8.03
|
|
|
|
Who may be deemed owners of Securities
|
39
|
|
|
|
|
|
SECTION 8.04
|
|
|
|
Securities owned by Company or controlled
or controlling companies disregarded for
certain purposes
|
39
|
|
|
|
|
|
SECTION 8.05
|
|
|
|
Instruments executed by Securityholders
bind future holders
|
39
|
|
|
|
|
|
ARTICLE NINE - SUPPLEMENTAL INDENTURES
|
|
|
|
|
|
|
SECTION 9.01
|
|
|
|
Purposes for which supplemental indenture
may be entered into without consent of
Securityholders
|
40
|
|
|
|
|
|
SECTION 9.02
|
|
|
|
Modification of Indenture with consent
of Securityholders
|
42
|
|
|
|
|
|
SECTION 9.03
|
|
|
|
Effect of supplemental indentures
|
43
|
|
|
|
|
|
SECTION 9.04
|
|
|
|
Securities may bear notation of changes
by supplemental indentures
|
43
|
|
|
|
|
|
SECTION 9.05
|
|
|
|
Opinion of Counsel
|
43
|
|
|
|
|
|
ARTICLE TEN - CONSOLIDATION, MERGER AND SALE
|
|
|
|
|
|
|
SECTION 10.01
|
|
|
|
Consolidations or mergers of Company
and sales or conveyances of property
of Company permitted
|
44
|
|
|
|
|
|
|
|
SECTION 10.02
|
|
|
|
Rights and duties of successor company
|
44
|
|
|
|
|
|
SECTION 10.03
|
|
|
|
Opinion of Counsel
|
45
|
|
|
|
|
|
ARTICLE ELEVEN - DEFEASANCE AND CONDITIONS TO DEFEASANCE;
UNCLAIMED MONIES
|
|
|
|
|
|
|
SECTION 11.01
|
|
|
|
Defeasance and conditions to defeasance
|
45
|
|
|
|
|
|
SECTION 11.02
|
|
|
|
Application by Trustee of funds deposited
for payment of Securities
|
46
|
|
|
|
|
|
SECTION 11.03
|
|
|
|
Repayment of monies held by paying agent
|
46
|
|
|
|
|
|
SECTION 11.04
|
|
|
|
Repayment of monies held by Trustee
|
46
|
|
|
|
|
|
SECTION 11.05
|
|
|
|
Delivery of Officer’s Certificate
and Opinion of Counsel
|
47
|
|
|
|
|
|
ARTICLE TWELVE - IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
|
|
|
|
|
|
|
SECTION 12.01
|
|
|
|
Incorporators, Stockholders, officers and
directors of Company exempt from individual
liability
|
47
|
|
|
|
|
|
ARTICLE THIRTEEN - MISCELLANEOUS PROVISIONS
|
|
|
|
|
|
|
SECTION 13.01
|
|
|
|
Successors and assigns of Company
bound by Indenture
|
47
|
|
|
|
|
|
SECTION 13.02
|
|
|
|
Acts of board, committee or officer
of successor company valid
|
47
|
|
|
|
|
|
SECTION 13.03
|
|
|
|
Surrender of powers by Company
|
48
|
|
|
|
|
|
|
|
SECTION 13.04
|
|
|
|
Required notices or demands may by
served by mail
|
48
|
|
|
|
|
|
SECTION 13.05
|
|
|
|
Indenture and Securities to be construed
in accordance with laws of the State
of New York
|
48
|
|
|
|
|
|
SECTION 13.06
|
|
|
|
Officers’ Certificate and Opinion of
Counsel to be furnished upon applications
or demands by company
|
48
|
|
|
|
|
|
SECTION 13.07
|
|
|
|
Payments due on non-Business Days
|
49
|
|
|
|
|
|
SECTION 13.08
|
|
|
|
Provisions required by Trust Indenture
Act of 1939 to control
|
49
|
|
|
|
|
|
SECTION 13.09
|
|
|
|
Indenture may be executed in counterparts
|
49
|
|
|
|
|
|
SECTION 13.10
|
|
|
|
Separability of Indenture provisions
|
49
|
|
|
|
|
|
SECTION 13.11
|
|
|
|
Assignment by Company to subsidiary
|
49
|
|
|
|
|
|
SECTION 13.12
|
|
|
|
Headings
|
49
|
|
|
|
|
|
SECTION 13.13
|
|
|
|
Securities in Foreign Currencies
|
49
|
|
|
|
|
|
SECTION 13.14
|
|
|
|
Waiver of Jury Trial
|
50
|
|
|
|
|
|
SECTION 13.15
|
|
|
|
Forum Clause
|
50
|
|
|
|
|
|
SECTION 13.16
|
|
|
|
Force Majeure Clause
|
50
|
|
|
|
|
|
SECTION 13.17
|
|
|
|
Tax Compliance
|
50
|
|
|
|
|
|
|
|
|
ACCEPTANCE OF TRUST BY TRUSTEE
|
52
|
|
|
|
|
|
|
TESTIMONIUM
|
52
|
|
|
|
|
|
|
SIGNATURES AND SEALS
|
52
|
|
|
|
|
|
|
ACKNOWLEDGEMENTS
|
52
|
|
THIS INDENTURE, dated as of the 1
st
day of November, 2016, between AEP TRANSMISSION COMPANY, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (hereinafter sometimes referred to as the “Company”), and The Bank of New York Mellon Trust Company, N.A., a national banking association organized under the laws of the United States, as trustee (hereinafter sometimes referred to as the “Trustee”):
WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of unsecured promissory notes or other evidences of indebtedness (hereinafter referred to as the “Securities”), in an unlimited aggregate principal amount to be issued from time to time in one or more series as in this Indenture provided, as registered Securities without coupons, to be authenticated by the certificate of the Trustee, and which will rank pari passu with all other unsecured and unsubordinated debt of the Company;
WHEREAS, to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered, the Company has duly authorized the execution of this Indenture;
WHEREAS, the Securities and the certificate of authentication to be borne by the Securities (the “Certificate of Authentication”) are to be substantially in such forms as may be approved by a Company Order (as defined below), or set forth in this Indenture or in any indenture supplemental to this Indenture;
AND WHEREAS, all acts and things necessary to make the Securities issued pursuant hereto, when executed by the Company and authenticated and delivered by the Trustee as in this Indenture provided, the valid, binding and legal obligations of the Company, and to constitute these presents a valid indenture and agreement according to its terms, have been done and performed or will be done and performed prior to the issuance of such Securities, and the execution of this Indenture has been and the issuance hereunder of the Securities has been or will be prior to issuance in all respects duly authorized, and the Company, in the exercise of the legal right and power in it vested, executes this Indenture and proposes to make, execute, issue and deliver the Securities;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Securities are and are to be authenticated, issued and delivered, and in consideration of the premises, of the purchase and acceptance of the Securities by the holders thereof and of the sum of one dollar ($1.00) to it duly paid by the Trustee at the execution of these presents, the receipt whereof is hereby acknowledged, the Company covenants and agrees with the Trustee, for the equal and proportionate benefit (subject to the provisions of this Indenture) of the respective holders from time to time of the Securities, without any discrimination, preference or priority of any one Security over any other by reason of priority in the time of issue, sale or negotiation thereof, or otherwise, except as provided herein, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. The terms defined in this Section (except as in this Indenture otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture, any Company Order, any Board Resolution, and any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture which are defined in the Trust Indenture Act of 1939, as amended, or which are by reference in such Act defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of the execution of this instrument.
Affiliate:
The term “Affiliate” of the Company shall mean any company at least a majority of whose outstanding voting stock shall at the time be owned by the Company, or by one or more direct or indirect subsidiaries of or by the Company and one or more direct or indirect subsidiaries of the Company. For the purposes only of this definition of the term “Affiliate”, the term “voting stock”, as applied to the stock of any company, shall mean stock of any class or classes having ordinary voting power for the election of a majority of the directors of such company, other than stock having such power only by reason of the occurrence of a contingency.
Authenticating Agent:
The term “Authenticating Agent” shall mean an authenticating agent with respect to all or any of the series of Securities, as the case may be, appointed with respect to all or any series of the Securities, as the case may be, by the Trustee pursuant to Section 2.10.
Authorized Officer:
The term “Authorized Officer” shall mean the Chairman of the Board, the President, any Vice President, the Treasurer, any Assistant Treasurer or any other officer or agent of the Company duly authorized by the Board of Managers to act in respect of matters relating to this Indenture.
Board of Managers or Board:
The term “Board of Managers” or “Board” shall mean the Board of Managers of the Company, or any duly authorized committee of such Board.
Board Resolution:
The term “Board Resolution” shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Managers and to be in full force and effect on the date of such certification.
Business Day:
The term “Business Day”, with respect to any Security, shall mean any day that (a) in the Place of Payment (or in any of the Places of Payment, if more than one) in which amounts are payable as specified in the form of such Security and (b) in the city in which the Trustee’s designated corporate trust office is located, is not a day on which banking institutions are authorized or required by law or regulation to close.
Certificate:
The term “Certificate” shall mean a certificate signed by an Authorized Officer. The Certificate need not comply with the provisions of Section 13.06.
Commission:
The term “Commission” shall mean the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body, if any, performing such duties on such date.
Company:
The term “Company” shall mean AEP Transmission Company, LLC, a limited liability company duly organized and existing under the laws of Delaware, and, subject to the provisions of Article Ten, shall also include its successors and assigns.
Company Order:
The term “Company Order” shall mean a written order signed in the name of the Company by an Authorized Officer and the Secretary or an Assistant Secretary of the Company, pursuant to a Board Resolution establishing a series of Securities.
Corporate Trust Office:
The term “Corporate Trust Office” shall mean the designated office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of the execution of this Indenture is located at 2 North LaSalle Street, 7
th
Floor, Chicago, Illinois 60602, Attention: Corporate Trust Administration, or such other address as the Trustee may designate from time to time by notice to the Securityholders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Securityholders and the Company).
Default:
The term “Default” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
Depository:
The term “Depository” shall mean, with respect to Securities of any series, for which the Company shall determine that such Securities will be issued as a Global Security, The Depository Trust Company, New York, New York, another clearing agency, or any successor registered as a clearing agency under the Exchange Act or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to either Section 2.01 or 2.11.
Discount Security:
The term “Discount Security” means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 6.01(b).
Dollar:
The term “Dollar” or “$” means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts.
Eligible Obligations:
The term “Eligible Obligations” means (a) with respect to Securities denominated in Dollars, Governmental Obligations; or (b) with respect to Securities denominated in a currency other than Dollars or in a composite currency, such other obligations or instruments as shall be specified with respect to such Securities, as contemplated by Section 2.01.
Event of Default:
The term “Event of Default” with respect to Securities of a particular series shall mean any event specified in Section 6.01, continued for the period of time, if any, therein designated.
Global Security:
The term “Global Security” shall mean, with respect to any series of Securities, a Security executed by the Company and authenticated and delivered by the Trustee to the Depository or pursuant to the Depository’s instruction, all in accordance with the Indenture, which shall be registered in the name of the Depository or its nominee.
Governmental Authority:
The term “Governmental Authority” means the government of the United States or of any State or Territory thereof or of the District of Columbia or of any county, municipality or other political subdivision of any of the foregoing, or any department, agency, authority or other instrumentality of any of the foregoing.
Governmental Obligations:
The term “Governmental Obligations” shall mean securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such Governmental Obligation or a specific payment of principal of or interest on any such Governmental Obligation held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by such custodian in respect of the Governmental Obligation or the specific payment of principal of or interest on the Governmental Obligation evidenced by such depository receipt.
Indenture:
The term “Indenture” shall mean this instrument as originally executed, or, if amended or supplemented as herein provided, as so amended or supplemented, and shall include the terms of a particular series of Securities established as contemplated by Section 2.01.
Instructions:
The term “Instructions” shall mean instructions acceptable to the Trustee issued pursuant to a Company Order in connection with a Periodic Offering and signed by an Authorized Officer. Instructions need not comply with the provisions of Section 13.06.
Interest:
The term “interest” when used with respect to non-interest bearing Securities shall mean interest payable after maturity (whether at stated maturity, upon acceleration or redemption or otherwise) or after the date, if any, on which the Company becomes obligated to acquire a Security, whether by purchase or otherwise.
Interest Payment Date:
The term “Interest Payment Date” when used with respect to any installment of interest on a Security of a particular series shall mean the date specified in such Security or in a Board Resolution, Company Order or an indenture supplemental hereto with respect to such series as the fixed date on which an installment of interest with respect to Securities of that series is due and payable.
Officers’ Certificate:
The term “Officers’ Certificate” shall mean a certificate signed by an Authorized Officer and by the Secretary or Assistant Secretary of the Company. Each such certificate shall include the statements provided for in Section 13.06, if and to the extent required by the provisions thereof.
Opinion of Counsel:
The term “Opinion of Counsel” shall mean an opinion in writing signed by legal counsel, who may be an employee of or counsel for the Company. Each such opinion shall include the statements provided for in Section 13.06, if and to the extent required by the provisions thereof.
Outstanding:
The term “outstanding”, when used with reference to Securities of any series, shall, subject to the provisions of Section 8.04, mean, as of any particular time, all Securities of that series theretofore authenticated and delivered by the Trustee under this Indenture, except (a) Securities theretofore canceled by the Trustee or any paying agent, or delivered to the Trustee or any paying agent for cancellation or which have previously been canceled; (b) Securities or portions thereof for the payment or redemption of which monies or Eligible Obligations in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own paying agent); provided, however, that if such Securities or portions of such Securities are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article Three provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities in lieu of or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.07. The principal amount of a Discount Security that shall be deemed to be Outstanding for purposes of this Indenture shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof.
Periodic Offering:
The term “Periodic Offering” means an offering of Securities of a series from time to time, during which any or all of the specific terms of the Securities, including without limitation the rate or rates of interest, if any, thereon, the maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities.
Person:
The term “person” means any individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization or any Governmental Authority.
Place of Payment:
The term “Place of Payment” shall mean the place or places where the principal of and interest, if any, on the Securities of any series are payable as specified in accordance with Section 2.01.
Predecessor Security:
The term “Predecessor Security” of any particular Security shall mean every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and,
for the purposes of this definition, any Security authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Security.
Responsible Officer:
The term “Responsible Officer” when used with respect to the Trustee shall mean any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, senior associate, associate, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.
Security or Securities:
The term “Security” or “Securities” shall mean any Security or Securities, as the case may be, authenticated and delivered under this Indenture.
Securityholder:
The term “Securityholder”, “holder of Securities” or “registered holder” shall mean the person or persons in whose name or names a particular Security shall be registered on the books of the Company kept for that purpose in accordance with the terms of this Indenture.
Series:
The term “series” means a series of Securities established pursuant to this Indenture and includes, if the context so requires, each Tranche thereof.
Tranche:
The term “Tranche” means Securities which (a) are of the same series and (b) have identical terms except as to principal amount and/or date of issuance.
Trustee:
The term “Trustee” shall mean The Bank of New York Mellon Trust Company, N.A., and, subject to the provisions of Article Seven, shall also include its successors and assigns, and, if at any time there is more than one person acting in such capacity hereunder, “Trustee” shall mean each such person. The term “Trustee” as used with respect to a particular series of the Securities shall mean the trustee with respect to that series.
Trust Indenture Act:
The term “Trust Indenture Act”, subject to the provisions of Sections 9.01, 9.02, and 10.01, shall mean the Trust Indenture Act of 1939, as amended and in effect at the date of execution of this Indenture.
United States:
The term “United States” means the United States of America, its Territories, its possessions and other areas subject to its political jurisdiction.
ARTICLE TWO
ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES
SECTION 2.01. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued from time to time in one or more series and in one or more Tranches thereof. Each series shall be authorized by a Company Order or Orders or one or more indentures supplemental hereto, which shall specify whether the Securities of such series shall be subject to a Periodic Offering. The Company Order or Orders or supplemental indenture and, in the case of a Periodic Offering, Instructions or other procedures acceptable to the Trustee specified in such Company Order or Orders, shall establish the terms of the series, which may include the following: (i) any limitations on the aggregate principal amount of the Securities to be authenticated and delivered under this Indenture as part of such series (except for Securities authenticated and delivered upon registration of transfer of, in exchange for or in lieu of other Securities of that series); (ii) the stated maturity or maturities of such series; (iii) the date or dates from which interest shall accrue, the Interest Payment Dates on which such interest will be payable or the manner of determination of such Interest Payment Dates and the record date for the determination of holders to whom interest is payable on any such Interest Payment Date; (iv) the interest rate or rates (which may be fixed or variable), or method of calculation of such rate or rates, for such series; (v) the terms, if any, regarding the redemption, purchase or repayment of such series (whether at the option of the Company or a holder of the Securities of such series and whether pursuant to a sinking fund or analogous provisions, including payments made in cash in anticipation of future sinking fund obligations), including redemption, purchase or repayment date or dates of such series, if any, and the price or prices and other terms and conditions applicable to such redemption, purchase or repayment (including any premium); (vi) whether or not the Securities of such series shall be issued in whole or in part in the form of a Global Security and, if so, the Depositary for such Global Security and the related procedures with respect to transfer and exchange of such Global Security; (vii) the designation of such series; (viii) the form of the Securities of such series; (ix) the maximum annual interest rate, if any, of the Securities permitted for such series; (x) whether the Securities of such series shall be subject to Periodic Offering; (xi) the currency or currencies, including composite currencies, in which payment of the principal of (and premium, if any) and interest on the Securities of such series shall be payable, if other than Dollars; (xii) any other information necessary to complete the Securities of such series; (xiii) the establishment of any office or agency pursuant to Section 4.02 hereof and any other place or places which the principal of and interest, if any, on Securities of that series shall be payable; (xiv) if other than denominations of $1,000 or any integral multiple thereof, the denominations in which the Securities of the series shall be issuable; (xv) the obligations or instruments, if any, which shall be considered to be Eligible Obligations in respect
of the Securities of such series denominated in a currency other than Dollars or in a composite currency; (xvi) whether or not the Securities of such series shall be issued as Discount Securities and the terms thereof, including the portion of the principal amount thereof which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.01(b); (xvii) if the principal of and premium, if any, or interest, if any, on such Securities are to be payable, at the election of the Company or the holder thereof, in coin or currency, including composite currencies, other than that in which the Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election shall be made; (xviii) if the amount of payment of principal of and premium, if any, or interest, if any, on such Securities may be determined with reference to an index, formula or other method, or based on a coin or currency other than that in which the Securities are stated to be payable, the manner in which such amount shall be determined; (xix) whether the provisions of Section 4.05 and Article Ten (or portions thereof) shall apply to the Securities of a series; and (xx) any other terms of such series not inconsistent with this Indenture.
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to any such Company Order or in any indentures supplemental hereto.
If any of the terms of the series are established by action taken pursuant to a Company Order, a copy of an appropriate record of the applicable Board Resolution shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order setting forth the terms of that series.
SECTION 2.02. The Securities of any series shall be substantially of the tenor and purport (i) as set forth in one or more indentures supplemental hereto or as provided in a Company Order, or (ii) with respect to any Tranche of Securities of a series subject to Periodic Offering, to the extent permitted by any of the documents referred to in clause (i) above, in Instructions, or by other procedures acceptable to the Trustee specified in such Company Order or Orders, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which Securities of that series may be listed or of the Depository, or to conform to usage.
The Trustee’s Certificate of Authentication shall be in substantially the following form:
“This is one of the Securities of the series designated in accordance with, and referred to in, the within-mentioned Indenture.
Dated: _____________
The Bank of New York Mellon Trust Company, N.A.,
as Trustee
By:___________________________
Authorized Signatory
SECTION 2.03. The Securities shall be issuable as registered Securities and in the denominations of $1,000 or any integral multiple thereof, subject to Sections 2.01(xi) and (xiv). The Securities of a particular series shall bear interest payable on the dates and at the rate or rates specified with respect to that series. Except as otherwise specified as contemplated by Section 2.01, the principal of and the interest on the Securities of any series, as well as any premium thereon in case of redemption thereof prior to maturity, shall be payable in Dollars at the office or agency of the Company maintained for that purpose. Each Security shall be dated the date of its authentication.
The interest installment on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date for Securities of that series shall be paid to the person in whose name said Security (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment, except that interest payable on redemption or maturity shall be payable as set forth in the Company Order or indenture supplemental hereto establishing the terms of such series of Securities. Except as otherwise specified as contemplated by Section 2.01, interest on Securities will be computed on the basis of a 360-day year of twelve 30-day months.
Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date for Securities of the same series (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered holder on the relevant regular record date by virtue of having been such holder; and such Defaulted Interest shall be paid by the Company, at its election, as provided in clause (1) or clause (2) below:
(i)
The Company may make payment of any Defaulted Interest on Securities to the persons in whose names such Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner: the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Securityholder at his or her address as it appears in the Security Register
(as hereinafter defined), not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names such Securities (or their respective Predecessor Securities) are registered on such special record date and shall be no longer payable pursuant to the following clause (2).
(ii)
The Company may make payment of any Defaulted Interest on any Securities in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
Unless otherwise set forth in a Company Order or one or more indentures supplemental hereto establishing the terms of any series of Securities pursuant to Section 2.01 hereof, the term “regular record date” as used in this Section with respect to a series of Securities with respect to any Interest Payment Date for such series shall mean either the fifteenth day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.01 hereof shall occur, if such Interest Payment Date is the first day of a month, or the last day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.01 hereof shall occur, if such Interest Payment Date is the fifteenth day of a month, whether or not such date is a Business Day.
Subject to the foregoing provisions of this Section, each Security of a series delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security of such series shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.04. The Securities shall, subject to the provisions of Section 2.06, be printed on steel engraved borders or fully or partially engraved, or legibly typed, as the proper officer of the Company may determine, and shall be signed on behalf of the Company by an Authorized Officer. The signature of such Authorized Officer upon the Securities may be in the form of a facsimile signature of a present or any future Authorized Officer and may be imprinted or otherwise reproduced on the Securities and for that purpose the Company may use the facsimile signature of any person who shall have been an Authorized Officer, notwithstanding the fact that at the time the Securities shall be authenticated and delivered or disposed of such person shall have ceased to be an Authorized Officer.
Only such Securities as shall bear thereon a Certificate of Authentication substantially in the form established for such Securities, executed manually by an authorized signatory of the Trustee, or by any Authenticating Agent with respect to such Securities, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate executed by the Trustee, or by any Authenticating Agent appointed by the Trustee with respect to such Securities, upon any Security executed by the Company shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder and that the registered holder thereof is entitled to the benefits of this Indenture.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with an indenture supplemental hereto or a Company Order for the authentication and delivery of such Securities and the Trustee, in accordance with such supplemental indenture or Company Order, shall authenticate and deliver such Securities; provided, however, that in the case of Securities offered in a Periodic Offering, the Trustee shall authenticate and deliver such Securities from time to time in accordance with Instructions or such other procedures acceptable to the Trustee as may be specified by or pursuant to such supplemental indenture or Company Order delivered to the Trustee prior to the time of the first authentication of Securities of such series.
In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall receive and (subject to Section 7.01) shall be fully protected in relying upon, (i) an Opinion of Counsel and (ii) an Officers’ Certificate, each stating that the form and terms thereof have been established in conformity with the provisions of this Indenture; provided, however, that, with respect to Securities of a series subject to a Periodic Offering, the Trustee shall be entitled to receive such Opinion of Counsel and Officers’ Certificate only once at or prior to the time of the first authentication of Securities of such series and that, in such opinion or certificate, the opinion or certificate described above may state that when the terms of such Securities, or each Tranche thereof, shall have been established pursuant to a Company Order or Orders or pursuant to such procedures acceptable to the Trustee, as may be specified by a Company Order, such terms will have been established in conformity with the provisions of this Indenture. Each Opinion of Counsel and Officers’ Certificate delivered pursuant to this Section 2.04 shall include all statements prescribed in Section 13.06(b). Such Opinion of Counsel shall also be to the effect that when such Securities have been executed by the Company and authenticated by the Trustee in accordance with the provisions of this Indenture and delivered to and duly paid for by the purchasers thereof, they will be valid and legally binding obligations of the Company, enforceable in accordance with their terms (subject to customary exceptions) and will be entitled to the benefits of this Indenture.
With respect to Securities of a series subject to a Periodic Offering, the Trustee may conclusively rely, as to the authorization by the Company of any of such Securities, the forms and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Company Order, Opinion of Counsel, Officers’ Certificate and other documents delivered pursuant to Sections 2.01 and this Section, as applicable, at or prior to the time of the first authentication of Securities of such series unless and until such Company Order, Opinion of Counsel, Officers’ Certificate or other documents have been superseded or revoked or expire by their terms.
The Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee’s own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.
SECTION 2.05. (a) Securities of any series may be exchanged upon presentation thereof at the office or agency of the Company designated for such purpose, for other Securities of such series of authorized denominations, and for a like aggregate principal amount, upon payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, all as provided in this Section. In respect of any Securities so surrendered for exchange, the Company shall execute, the Trustee shall authenticate and such office or agency shall deliver in exchange therefor the Security or Securities of the same series which the Securityholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously outstanding.
(b)
The Company shall keep, or cause to be kept, at its office or agency designated for such purpose in the Borough of Manhattan, the City and State of New York, or such other location designated by the Company a register or registers (herein referred to as the “Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall register the Securities and the transfers of Securities as in this Article provided and which at all reasonable times shall be open for inspection by the Trustee. The registrar for the purpose of registering Securities and transfer of Securities as herein provided shall be appointed as authorized by Board Resolution or Company Order (the “Security Registrar”).
Upon surrender for transfer of any Security at the office or agency of the Company designated for such purpose in the Borough of Manhattan, the City and State of New York, or other location as aforesaid, the Company shall execute, the Trustee shall authenticate and such office or agency shall deliver in the name of the transferee or transferees a new Security or Securities of the same series as the Security presented for a like aggregate principal amount.
All Securities presented or surrendered for exchange or registration of transfer, as provided in this Section, shall be accompanied (if so required by the Company or the Security Registrar) by a written instrument or instruments of transfer, in form satisfactory to the Company or the Security Registrar, duly executed by the registered holder or by his duly authorized attorney in writing.
(c)
Except as provided in the first paragraph of Section 2.07, no service charge shall be made for any exchange or registration of transfer of Securities, or issue of new Securities in case of partial redemption of any series, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, other than exchanges pursuant to Section 2.06, Section 3.03(b) and Section 9.04 not involving any transfer.
(d)
The Company shall neither be required (i) to issue, exchange or register the transfer of any Securities during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of less than all the outstanding Securities of the same series and ending at the close of business on the day of such mailing, nor (ii) to register the transfer of or exchange of any Securities of any series or portions thereof called for redemption or as to which the holder thereof has exercised its right, if any, to require the Company to repurchase such Security in whole or in part, except that portion of such Security not required to be repurchased. The provisions of this Section 2.05 are, with respect to any Global Security, subject to Section 2.11 hereof.
(e)
The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security [(including any transfers between or among Depository participants or beneficial owners of interests in any Global Security)] other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
SECTION 2.06. Pending the preparation of definitive Securities of any series, the Company may execute, and the Trustee shall authenticate and deliver, temporary Securities (printed, lithographed or typewritten) of any authorized denomination, and substantially in the form of the definitive Securities in lieu of which they are issued, but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. Every temporary Security of any series shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities of such series in accordance with Section 2.04. Without unnecessary delay the Company will execute and will furnish definitive Securities of such series and thereupon any or all temporary Securities of such series may be surrendered in exchange therefor (without charge to the holders thereof), at the office or agency of the Company designated for the purpose, and the Trustee shall authenticate and such office or agency shall deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series, unless the Company advises the Trustee to the effect that definitive Securities need not be executed and furnished until further notice from the Company. Until so exchanged, the temporary Securities of such series shall be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered hereunder.
SECTION 2.07. In case any temporary or definitive Security shall become mutilated or be destroyed, lost or stolen, the Company (subject to the next succeeding sentence) shall execute, and upon its request the Trustee (subject as aforesaid) shall authenticate and deliver, a new Security of the same series bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen. In every case the applicant for a substituted Security shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or theft of the applicant’s Security and of the ownership thereof. The Trustee may authenticate any such substituted Security and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substituted Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security which has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Security) if the applicant for such payment shall furnish to the Company and to the Trustee such security or indemnity as they may require to save them harmless, and, in case of
destruction, loss or theft, evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of such Security and of the ownership thereof.
Every Security issued pursuant to the provisions of this Section in substitution for any Security which is mutilated, destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series duly issued hereunder. All Securities shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities, and shall preclude (to the extent lawful) any and all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.
SECTION 2.08. All Securities surrendered for the purpose of payment, redemption, exchange or registration of transfer, or for credit against a sinking fund, shall, if surrendered to the Company or any paying agent, be delivered to the Trustee for cancellation, or, if surrendered to the Trustee, shall be canceled by it, and no Securities shall be issued in lieu thereof except as expressly required or permitted by any of the provisions of this Indenture. On request of the Company, the Trustee shall deliver to the Company canceled Securities held by the Trustee. In the absence of such request the Trustee may dispose of canceled Securities in accordance with its standard procedures. If the Company shall otherwise acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation.
SECTION 2.09. Nothing in this Indenture or in the Securities, express or implied, shall give or be construed to give to any person, firm or corporation, other than the parties hereto and the holders of the Securities, any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition or provision herein contained; all such covenants, conditions and provisions being for the sole benefit of the parties hereto and of the holders of the Securities.
SECTION 2.10. So long as any of the Securities of any series remain outstanding there may be an Authenticating Agent for any or all such series of Securities which the Trustee shall have the right to appoint. Said Authenticating Agent shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon exchange, transfer or partial redemption thereof, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. All references in this Indenture to the authentication of Securities by the Trustee shall be deemed to include authentication by an Authenticating Agent for such series except for authentication upon original issuance or pursuant to Section 2.07 hereof. Each Authenticating Agent shall be acceptable to the Company and shall be a corporation which has a combined capital and surplus, as most recently reported or determined by it, sufficient under the laws of any jurisdiction under which it is organized or in which it is doing business to conduct a trust business, and which is otherwise authorized under such laws to conduct such business and is subject to supervision or examination by Federal or State authorities. If at any time any
Authenticating Agent shall cease to be eligible in accordance with these provisions it shall resign immediately.
Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time (and upon request by the Company shall) terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon resignation, termination or cessation of eligibility of any Authenticating Agent, the Trustee may appoint an eligible successor Authenticating Agent acceptable to the Company. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder as if originally named as an Authenticating Agent pursuant hereto. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section.
SECTION 2.11. (a) If the Company shall establish pursuant to Section 2.01 that the Securities of a particular series are to be issued as a Global Security, then the Company shall execute and the Trustee shall, in accordance with Section 2.04, authenticate and deliver, a Global Security which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, all of the Outstanding Securities of such series, (ii) shall be registered in the name of the Depository or its nominee, (iii) shall be authenticated and delivered by the Trustee to the Depository or pursuant to the Depository’s instruction and (iv) shall bear a legend substantially to the following effect: “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.”
(b)
Notwithstanding the provisions of Section 2.05, the Global Security of a series may be transferred, in whole but not in part and in the manner provided in Section 2.05, only to another nominee of the Depository for such series, or to a successor Depository for such series selected or approved by the Company or to a nominee of such successor Depository.
(c)
If at any time the Depository for a series of Securities notifies the Company that it is unwilling or unable to continue as Depository for such series or if at any time the Depository for such series shall no longer be registered or in good standing under the Exchange Act, or other applicable statute or regulation and a successor Depository for such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, this Section 2.11 shall no longer be applicable to the Securities of such series and the Company will execute, and subject to Section 2.05, the Trustee will authenticate and deliver Securities of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security of such series in exchange for such Global Security. In addition, the Company may at any time determine that the Securities of any series shall no longer be represented by a Global Security and that the provisions of this Section 2.11 shall no longer apply to the Securities of such series. In such event the Company will execute, and subject to Section 2.05, the Trustee, upon receipt of an Officers’ Certificate evidencing such determination by the Company, will authenticate and deliver Securities of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security of such series in exchange for such Global
Security. Upon the exchange of the Global Security for such Securities in definitive registered form without coupons, in authorized denominations, the Global Security shall be canceled by the Trustee. Such Securities in definitive registered form issued in exchange for the Global Security pursuant to this Section 2.11(c) shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Security Registrar. The Trustee shall deliver such Securities to the Depository for delivery to the persons in whose names such Securities are so registered.
(d)
Neither the Trustee nor any agent shall have any responsibility for any actions taken or not taken by the Depository. None of the Company, the Trustee, any paying agent, any Security registrar or any other agent of the Company or any agent of the Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company, the Trustee, any paying agent, any Security registrar and any other agent of the Company and any agent of the Trustee shall be entitled to deal with the Depository, and any nominee thereof, that is the holder of any such Global Security for all purposes of this Indenture relating to such Global Security (including the payment of principal, premium, if any, and interest and the giving of instructions or directions by or to the owner or holder of a beneficial ownership interest in such Global Security) as the sole holder of such Global Security and shall have no obligations to the beneficial owners thereof. None of the Company, the Trustee, any paying agent, any Security registrar or any other agent of the Company or any agent of the Trustee shall have any responsibility or liability for any acts or omissions of any such Depository with respect to such Global Security, for the records of any such Depository, including records in respect of beneficial ownership interests in respect of any such Global Security, for any transactions between such Depository and any participant in such Depository or between or among any such Depository, any such participant and/or any holder or owner of a beneficial interest in such Global Security or for any transfers of beneficial interests in any such Global Security. Notwithstanding the foregoing, with respect to any Global Security, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by the Depository, as a holder with respect to such Global Security, or impair, as between such Depository and owners of beneficial interests in such Global Security, the operation of customary practices governing the exercise of the rights of such Depository as a holder of such Global Security.
SECTION 2.12. In the case of the Securities of any series denominated in any currency other than Dollars or in a composite currency (the “Required Currency”), except as otherwise specified with respect to such Securities as contemplated by Section 2.01, the obligation of the Company to make any payment of the principal thereof, or the premium or interest thereon, shall not be discharged or satisfied by any tender by the Company, in any currency other than the Required Currency, except to the extent that such tender shall result in the applicable paying agent timely holding the full amount of the Required Currency then due and payable.
SECTION 2.13. The Company in issuing Securities may use “CUSIP” numbers (if then generally in use) and, if so used, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to holders of Securities; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the
Securities or contained in any notice of redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any change in the CUSIP numbers.
ARTILE THREE
REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS
SECTION 3.01. The Company may redeem the Securities of any series issued hereunder on and after the dates and in accordance with the terms established for such series pursuant to Section 2.01 hereof.
SECTION 3.02. (a) If the Company elects to redeem any Securities of any series pursuant to the Article Three, at least 30 days prior to the redemption date (unless a shorter notice shall be agreed to in writing by the Trustee) but not more than 60 days before the redemption date, the Company shall notify the Trustee in writing of the Securities of any series to be redeemed, the redemption date and the principal amount of such Securities to be redeemed and the redemption price, and deliver to the Trustee, no later than two Business Days prior to the redemption date, an Officers’ Certificate stating that such redemption will comply with the conditions contained in this Article Three. Notice given to the Trustee pursuant to this Section 3.02 may, at the Company’s discretion, be subject to the satisfaction of one or more conditions precedent. In case the Company shall desire to exercise such right to redeem all or, as the case may be, a portion of the Securities of any series in accordance with the right reserved so to do, it shall give notice of such redemption to holders of the Securities of such series to be redeemed by mailing, first class postage prepaid, a notice of such redemption not less than 30 days and not more than 60 days before the date fixed for redemption of that series to such holders at their last addresses as they shall appear upon the Security Register, provided that if Securities of any series to be redeemed are represented by Global Securities, such notice of redemption shall be given in accordance with the procedures of the Depository. Any notice which is sent in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the registered holder receives the notice. In any case, failure duly to give such notice to the holder of any Security of any series designated for redemption in whole or in part, or any defect in the notice, shall not affect the validity of the proceedings for the redemption of any other Securities of such series or any other series. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption or subject to compliance with certain conditions provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers’ Certificate evidencing compliance with any such restriction or condition.
Unless otherwise so provided as to a particular series of Securities, if at the time of sending of any notice of redemption the Company shall not have deposited with the paying agent an amount in cash sufficient to redeem all of the Securities called for redemption, including accrued interest to the date fixed for redemption, such notice shall state that it is subject to the receipt of redemption moneys by the paying agent on or before the date fixed for redemption (unless such redemption is mandatory) and such notice shall be of no effect unless such moneys are so received on or before such date.
Each such notice of redemption shall identify the Securities to be redeemed (including CUSIP numbers, if any), specify the date fixed for redemption and the redemption price at which Securities of that series are to be redeemed, and shall state that payment of the redemption price of such Securities to be redeemed will be made at the office or agency of the Company, upon presentation and surrender of such Securities, that interest accrued to the date fixed for redemption will be paid as specified in said notice, that from and after said date interest will cease to accrue and that the redemption is for a sinking fund, if such is the case. In case any Security is to be redeemed in part only, the notice which relates to such Security shall state the portion of the principal amount thereof to be redeemed.
(b)
If less than all the Securities of a series are to be redeemed, the Securities to be redeemed shall be selected in any manner that the Trustee shall deem appropriate and fair, which may include by lot, provided, any Securities held through a Depository shall be selected in accordance with such Depository’s applicable procedures. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof.
The Company may, if and whenever it shall so elect, by delivery of instructions signed on its behalf by an Authorized Officer delivered at least 10 days prior to the date a notice of redemption is to be given, instruct the Trustee or any paying agent to give notice of redemption in the manner set forth in this Section, such notice to be in the name of the Company. In any case in which notice of redemption is to be given by the Trustee or any such paying agent, the Company shall deliver or cause to be delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such Security Register, transfer books or other records, or suitable copies or extracts therefrom, sufficient to enable the Trustee or such paying agent to give any notice by mail that may be required under the provisions of this Section.
SECTION 3.03. (a) If the giving of notice of redemption shall have been completed as above provided, the Securities or portions of Securities of the series to be redeemed specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with, subject to the Company Order or supplemental indenture hereto establishing the terms of such series of Securities, interest accrued to the date fixed for redemption and interest on such Securities or portions of Securities shall cease to accrue on and after the date fixed for redemption, unless the Company shall default in the payment of such redemption price and accrued interest with respect to any such Security or portion thereof. On presentation and surrender of such Securities on or after the date fixed for redemption at the place of payment specified in the notice, said Securities shall be paid and redeemed at the applicable redemption price for such series, together with, subject to the Company Order or supplemental indenture hereto establishing the terms of such series of Securities, interest accrued thereon to the date fixed for redemption.
(b)
Upon presentation of any Security of such series which is to be redeemed in part only, the Company shall execute and the Trustee shall authenticate and the office or agency where the Security is presented shall deliver to the holder thereof, at the expense of the Company, a new Security or Securities of the same series, of authorized denominations in principal amount equal to the unredeemed portion of the Security so presented.
SECTION 3.04. The provisions of this Section 3.04 and Sections 3.05 and 3.06 shall be applicable to any sinking fund for the retirement of Securities of a series, except as otherwise specified as contemplated by Section 2.01 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a “mandatory sinking fund payment”, and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an “optional sinking fund payment”. If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 3.05. Each sinking fund payment shall be applied to the redemption of Securities of such series as provided for by the terms of Securities of such series.
SECTION 3.05. The Company (i) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (ii) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any mandatory sinking fund payment; provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the redemption price specified in such Securities for redemption through operation of the mandatory sinking fund and the amount of such mandatory sinking fund payment shall be reduced accordingly.
SECTION 3.06. Not less than 45 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers’ Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 3.05 and the basis for such credit and will, together with such Officers’ Certificate, deliver to the Trustee any Securities to be so delivered. The Securities to be redeemed upon such sinking fund payment date shall be selected in the manner specified in Section 3.02 and the Company shall cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.02, except that the notice of redemption shall also state that the Securities of such series are being redeemed by operation of the sinking fund and the sinking fund payment date. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 3.03.
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
The Company covenants and agrees for each series of the Securities as follows:
SECTION 4.01. The Company will duly and punctually pay or cause to be paid the principal of (and premium, if any) and interest on the Securities of that series at the time and place and in the manner provided herein and established with respect to such Securities.
SECTION 4.02. So long as any series of the Securities remain outstanding, the Company agrees to maintain an office or agency with respect to each such series, which shall be in the
Borough of Manhattan, the City and State of New York or at such other location or locations as may be designated as provided in this Section 4.02, where (i) Securities of that series may be presented for payment, (ii) Securities of that series may be presented as hereinabove authorized for registration of transfer and exchange, and (iii) notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be given or served, such designation to continue with respect to such office or agency until the Company shall, by written notice signed by an Authorized Officer and delivered to the Trustee, designate some other office or agency for such purposes or any of them. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, notices and demands. The Trustee will initially act as paying agent for the Securities.
The Company may also from time to time, by written notice signed by an Authorized Officer and delivered to the Trustee, designate one or more other offices or agencies for the foregoing purposes within or outside the Borough of Manhattan, City of New York, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligations to maintain an office or agency in the Borough of Manhattan, City of New York for the foregoing purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such other office or agency.
SECTION 4.03 (a) If the Company shall appoint one or more paying agents for all or any series of the Securities, other than the Trustee, the Company will cause each such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section:
i.
that it will hold all sums held by it as such agent for the payment of the principal of (and premium, if any) or interest on the Securities of that series (whether such sums have been paid to it by the Company or by any other obligor of such Securities) in trust for the benefit of the persons entitled thereto;
ii.
that it will give the Trustee notice of any failure by the Company (or by any other obligor of such Securities) to make any payment of the principal of (and premium, if any) or interest on the Securities of that series when the same shall be due and payable;
iii.
that it will, at any time during the continuance of any failure referred to in the preceding paragraph (a)(2) above, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent; and
iv.
that it will perform all other duties of paying agent as set forth in this Indenture.
(b)
If the Company shall act as its own paying agent with respect to any series of the Securities, it will on or before each due date of the principal of (and premium, if any) or interest on Securities of that series, set aside, segregate and hold in trust for the benefit of the persons
entitled thereto a sum sufficient to pay such principal (and premium, if any) or interest so becoming due on Securities of that series until such sums shall be paid to such persons or otherwise disposed of as herein provided and will promptly notify the Trustee of such action, or any failure (by it or any other obligor on such Securities) to take such action. Whenever the Company shall have one or more paying agents for any series of Securities, it will, prior to each due date of the principal of (and premium, if any) or interest on any Securities of that series, deposit with the paying agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the persons entitled to such principal, premium or interest, and (unless such paying agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.
(c)
Anything in this Section to the contrary notwithstanding, (i) the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 11.04, and (ii) the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums held in trust by the Company or such paying agent, such sums to be held by the Trustee upon the same terms and conditions as those upon which such sums were held by the Company or such paying agent; and, upon such payment by any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such money.
SECTION 4.04. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 4.05. Unless a Company Order or supplemental indenture establishing the series of Securities provides otherwise, the Company will not, while any of the Securities remain outstanding, consolidate with, or merge into, or merge into itself, or sell or convey all or substantially all of its property to any other Person unless the provisions of Article Ten hereof are complied with.
ARTICLE FIVE
SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE
SECTION 5.01. The Company will furnish or cause to be furnished to the Trustee (a) on each regular record date (as defined in Section 2.03) for the Securities of each Tranche of a series a list, in such form as the Trustee may reasonably require, of the names and addresses of the holders of such Tranche of Securities as of such regular record date, provided, that the Company shall not be obligated to furnish or cause to be furnished such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustee by the Company and (b) at such other times as the Trustee may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, no such list need be furnished for any series for which the Trustee shall be the Security Registrar.
SECTION 5.02. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Securities contained in the most recent list furnished to it as provided in Section 5.01 and as to the names and addresses of holders of Securities received by the Trustee in its capacity as Security Registrar (if acting in such capacity).
(b)
The Trustee may destroy any list furnished to it as provided in Section 5.01 upon receipt of a new list so furnished.
(c)
The rights of holders of Securities to communicate with other holders of Securities with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act of 1939.
(d)
Each and every holder of the Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any paying agent nor any Security Registrar shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Securities in accordance with the provisions of subsection (c) of this Section, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of transmitting any material pursuant to a request made under said subsection (c).
SECTION 5.03. (a) The Company covenants and agrees to file with the Trustee,
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(1)
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within 15 days after the Company is required to file the same with the Commission, a copy of the annual reports and of the information, documents and other reports (or a copy of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and, unless the Commission shall not accept such information, documents or reports, the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act, in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations, and;
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(2)
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within 120 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its subsidiaries, as at the end of such year, and consolidated statements of income, changes in members’ capital and cash flows of the Company and its subsidiaries, for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with generally accepted accounting principles as in effect from time to time in the United States of America, and accompanied by an opinion thereon of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in
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all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with generally accepted accounting principles as in effect from time to time in the United States of America, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances;
provided
that the Company’s compliance with Section 5.03(a)(1) above shall be deemed to satisfy the requirements of this Section 5.03(a)(2).
(b)
The Company covenants and agrees to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations.
(c)
The Company covenants and agrees to furnish to the Trustee, on or before May 15 in each calendar year in which any of the Securities are outstanding, or on or before such other day in each calendar year as the Company and the Trustee may from time to time agree upon, a Certificate, from its principal executive officer, principal financial officer or principal accounting officer, as to compliance with all conditions and covenants under this Indenture. For purposes of this subsection (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture.
(d)
Delivery of such information, documents or reports to the Trustee pursuant to Section 5.03(a) or 5.03(b) is for informational purposes only and the Trustee’s receipt thereof shall not constitute actual or constructive notice of any information contained therein or determinable from information contained therein, including, in the case of Section 5.03(b), the Company’s compliance with any of the covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).
SECTION 5.04. (a)
The Trustee shall transmit to holders of Securities such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313 (a) of the Trust Indenture Act, the Trustee shall, within sixty days after each May 15 following the date of the initial issuance of Securities under this Indenture deliver to holders of Securities a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a).
(c)
A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with the Company, with each stock exchange upon which any Securities are listed (if so listed) and also with the Commission. The Company agrees to promptly notify the Trustee when any Securities become listed on any stock exchange and of any delisting thereof.
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 6.01. (a)
Whenever used herein with respect to Securities of a particular series, “Event of Default” means any one or more of the following events which has occurred and is continuing:
i.
default in the payment of any installment of interest upon any of the Securities of that series, as and when the same shall become due and payable, and continuance of such default for a period of 30 days;
ii.
default in the payment of the principal of (or premium, if any, on) any of the Securities of that series as and when the same shall become due and payable whether at maturity, upon redemption, pursuant to any sinking fund obligation, by declaration or otherwise, and continuance of such default for a period of 3 Business Days;
iii.
failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company with respect to that series contained in such Securities or otherwise established with respect to that series of Securities pursuant to Section 2.01 hereof or contained in this Indenture (other than a covenant or agreement which has been expressly included in this Indenture solely for the benefit of one or more series of Securities other than such series) for a period of 90 days after the date on which written notice of such failure, requiring the same to be remedied and stating that such notice is a “Notice of Default” hereunder, shall have been given to the Company by the Trustee, by registered or certified mail, or to the Company and the Trustee by the holders of at least 33% in principal amount of the Securities of that series at the time outstanding;
iv.
a decree or order by a court having jurisdiction in the premises shall have been entered adjudging the Company as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation or reorganization of the Company under the Federal Bankruptcy Code or any other similar applicable Federal or State law, and such decree or order shall have continued unvacated and unstayed for a period of 90 consecutive days; or an involuntary case shall be commenced under such Code in respect of the Company and shall continue undismissed for a period of 90 consecutive days or an order for relief in such case shall have been entered; or a decree or order of a court having jurisdiction in the premises shall have been entered for the appointment on the ground of insolvency or bankruptcy of a receiver or custodian or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or for the winding up or liquidation of its affairs, and such decree or order shall have remained in force unvacated and unstayed for a period of 90 consecutive days;
v.
the Company shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking liquidation or reorganization under the Federal Bankruptcy Code or any other similar applicable Federal or State law, or shall consent to
the filing of any such petition, or shall consent to the appointment on the ground of insolvency or bankruptcy of a receiver or custodian or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property, or shall make an assignment for the benefit of creditors; or
vi.
the occurrence of any other Event of Default with respect to Securities of such series, as contemplated by Section 2.01 hereof.
(b)
The Company shall file with the Trustee written notice of the occurrence of any Event of Default within five Business Days of the Company’s becoming aware of any such Event of Default setting forth the details of such Event of Default and the action which the Company proposes to take with respect thereto. In each and every such case, unless the principal of all the Securities of that series shall have already become due and payable, either the Trustee or the holders of not less than 33% in aggregate principal amount of the Securities of that series then outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by such Securityholders), may declare the principal (or, if any of such Securities are Discount Securities, such portion of the principal amount thereof as may be specified by their terms as contemplated by Section 2.01) of all the Securities of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything contained in this Indenture or in the Securities of that series or established with respect to that series pursuant to Section 2.01 hereof to the contrary notwithstanding.
(c)
Section 6.01(b), however, is subject to the condition that if, at any time after the principal of the Securities of that series shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of that series and the principal of (and premium, if any, on) any and all Securities of that series which shall have become due otherwise than by acceleration (with interest upon such principal and premium, if any, and, to the extent that such payment is enforceable under applicable law, upon overdue installments of interest, at the rate per annum expressed in the Securities of that series to the date of such payment or deposit) and the amount payable to the Trustee under Section 7.06, and any and all defaults under the Indenture, other than the nonpayment of principal on Securities of that series which shall not have become due by their terms, shall have been remedied or waived as provided in Section 6.06, then and in every such case the holders of a majority in aggregate principal amount of the Securities of that series then outstanding, by written notice to the Company and to the Trustee, may rescind and annul such declaration and its consequences with respect to that series of Securities; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon.
(d)
In case the Trustee has been directed by the Securityholders and has proceeded to enforce any right with respect to Securities of that series under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceedings had been taken.
SECTION 6.02. (a) The Company covenants that in case an Event of Default described in subsection 6.01(a)(1) or (a)(2) shall have occurred and be continuing, upon demand of the Trustee or the holders of not less than 33% in aggregate principal amount of the Securities of that series then outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by such Securityholders), the Company will pay to the Trustee, for the benefit of the holders of the Securities of that series, the whole amount that then shall have become due and payable on all such Securities for principal (and premium, if any) or interest, or both, as the case may be, with interest upon the overdue principal (and premium, if any) and (to the extent that payment of such interest is enforceable under applicable law and without duplication of any other amounts paid by the Company in respect thereof) upon overdue installments of interest at the rate per annum expressed in the Securities of that series; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and the amount payable to the Trustee under Section 7.06.
(b)
In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon the Securities of that series and collect in the manner provided by law out of the property of the Company or other obligor upon the Securities of that series wherever situated the monies adjudged or decreed to be payable.
(c)
In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement, composition or other judicial proceedings affecting the Company, any other obligor on such Securities, or the creditors or property of either, the Trustee shall have power to intervene in such proceedings and take any action therein that may be permitted by the court and shall (except as may be otherwise provided by law) be entitled to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Trustee and of the holders of Securities of such series allowed for the entire amount due and payable by the Company or such other obligor under this Indenture at the date of institution of such proceedings and for any additional amount which may become due and payable by the Company or such other obligor after such date, and to collect and receive any monies or other property payable or deliverable on any such claim, and to distribute the same after the deduction of the amount payable to the Trustee under Section 7.06; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the holders of Securities of such series to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to such Securityholders, to pay to the Trustee any amount due it under Section 7.06.
(d)
All rights of action and of asserting claims under this Indenture, or under any of the terms established with respect to Securities of that series, may be enforced by the Trustee without the possession of any of such Securities, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for payment to the Trustee of any amounts due under Section 7.06, be for the ratable benefit of the holders of the Securities of such series.
In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in the Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of that series or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.
SECTION 6.03. Any monies collected by the Trustee pursuant to Section 6.02 with respect to a particular series of Securities shall be applied in the order following, at the date or dates fixed by the Trustee and, in case of the distribution of such monies on account of principal (or premium, if any) or interest, upon presentation of the several Securities of that series, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid:
FIRST:
To the payment of costs and expenses of collection and of all amounts payable to the Trustee under Section 7.06;
SECOND:
To the payment of the amounts then due and unpaid upon Securities of such series for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively; and
THIRD:
To the Company.
SECTION 6.04. No holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof with respect to Securities of such series specifying such Event of Default, as hereinbefore provided, and unless also the holders of not less than 33% in aggregate principal amount of the Securities of such series then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as trustee hereunder and shall have offered to the Trustee such indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have failed to institute any such action, suit or proceeding; it being understood and intended, and being expressly covenanted by the taker and holder of every Security of such series with every other such taker and holder and the Trustee, that no one or more holders of Securities of such series shall have any right in any manner whatsoever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any
other of such Securities, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Securities of such series. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provisions of this Indenture, however, the right of any holder of any Security to receive payment of the principal of (and premium, if any) and interest on such Security, as therein provided, on or after the respective due dates expressed in such Security (or in the case of redemption, on the redemption date), or to institute suit for the enforcement of any such payment on or after such respective dates or redemption date, shall not be impaired or affected without the consent of such holder.
SECTION 6.05. (a) All powers and remedies given by this Article to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any others thereof or of any other powers and remedies available to the Trustee or the holders of the Securities, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to such Securities.
(b)
No delay or omission of the Trustee or of any holder of any of the Securities to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 6.04, every power and remedy given by this Article or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders.
SECTION 6.06. The holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding, determined in accordance with Section 8.04, shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to such series; provided, however, that such direction shall not be in conflict with any rule of law or with this Indenture or unduly prejudicial to the rights of holders of Securities of any other series at the time outstanding determined in accordance with Section 8.04 not parties thereto. Subject to the provisions of Section 7.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed might involve the Trustee in personal liability. The holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding affected thereby, determined in accordance with Section 8.04, may on behalf of the holders of all of the Securities of such series waive any past default in the performance of any of the covenants contained herein or established pursuant to Section 2.01 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 Securities of that series as and when the same shall become due by the terms of such Securities otherwise than by acceleration (unless such default has been cured and a sum sufficient to pay all matured installments of interest and principal otherwise than by acceleration and any premium has been deposited with the Trustee
(in accordance with Section 6.01(c))) or a call for redemption of Securities of that series. Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the holders of the Securities of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
SECTION 6.07. The Trustee shall, within 90 days after the occurrence of a default with respect to a particular series, transmit by mail, first class postage prepaid, to the holders of Securities of that series, as their names and addresses appear upon the Security Register, notice of all defaults with respect to that series known to the Trustee, unless such defaults shall have been cured or waived before the giving of such notice (the term “defaults” for the purposes of this Section being hereby defined to be the events specified in subsections (1), (2), (3), (4), (5), (6) and (7) of Section 6.01(a), not including any periods of grace provided for therein and irrespective of the giving of notice provided for by subsection (4) of Section 6.01(a)); provided, that, except in the case of default in the payment of the principal of (or premium, if any) or interest on any of the Securities of that series or in the payment of any sinking or analogous fund installment established with respect to that series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers, of the Trustee in good faith determine that the withholding of such notice is in the interests of the holders of Securities of that series; provided further, that in the case of any default of the character specified in Section 6.01(a)(4) with respect to Securities of such series no such notice to the holders of the Securities of that series shall be given until at least 30 days after the occurrence thereof.
The Trustee shall not be deemed to have knowledge of any default, except (i) a default under subsection (a)(1), (a)(2) or (a)(3) of Section 6.01 as long as the Trustee is acting as paying agent for such series of Securities or (ii) any default as to which the Trustee shall have received written notice to a Responsible Officer charged with the administration of this Indenture at its Corporate Trust Office.
SECTION 6.08. All parties to this Indenture agree, and each holder of any Securities by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding more than 10% in aggregate principal amount of the outstanding Securities of any series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security of such series, on or after the respective due dates expressed in such Security or established pursuant to this Indenture.
SECTION 6.09. No delay or omission of the Trustee or of any holder of any Securities to exercise any right or remedy occurring upon an Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every
right and remedy given by this Article Six or by law to the Trustee or to any holder of any Securities may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the holders of Securities, as the case may be.
ARTICLE SEVEN
CONCERNING THE TRUSTEE
SECTION 7.01. (a) The Trustee, prior to the occurrence of an Event of Default with respect to Securities of a series and after the curing of all Events of Default with respect to Securities of that series which may have occurred, shall undertake to perform with respect to Securities of such series such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee. In case an Event of Default with respect to Securities of a series has occurred (which has not been cured or waived), the Trustee shall exercise with respect to Securities of that series such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.
(b)
No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i)
prior to the occurrence of an Event of Default with respect to Securities of a series and after the curing or waiving of all such Events of Default with respect to that series which may have occurred:
(1)
the duties and obligations of the Trustee shall with respect to Securities of such series be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable with respect to Securities of such series except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2)
in the absence of bad faith on the part of the Trustee, the Trustee may with respect to Securities of such series conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein);
(ii)
the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii)
the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the Securities of any series at the time outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Securities of that series; and
(iv)
none of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur or risk personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Trustee reasonably believes that the repayment of such funds or liability is not reasonably assured to it under the terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it.
(c)
Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee, or any other capacity the Trustee may serve hereunder, shall be subject to the provisions of this Section 7.01.
SECTION 7.02. Except as otherwise provided in Section 7.01:
(a)
The Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, demand, approval, bond, security or other paper or document believed by it (i) to be genuine and (ii) to have been signed or presented by the proper party or parties;
(b)
Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Board Resolution or an Officers’ Certificate (unless other evidence in respect thereof is specifically prescribed herein);
(c)
The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted hereunder in good faith and in reliance thereon;
(d)
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby;
(e)
The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;
(f)
The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, direction, order, demand, approval, bond, security, or other papers or documents, unless
requested in writing so to do by the holders of not less than a majority in principal amount of the outstanding Securities of the particular series affected thereby (determined as provided in Section 8.04); provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition precedent to so proceeding. The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand. Notwithstanding the foregoing, the Trustee, in its direction, may make such further inquiry or investigation into such facts or matters as it may see fit. In making any investigation required or authorized by this subparagraph, the Trustee shall be entitled to examine books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation;
(g)
The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;
(h)
The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty;
(i)
In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action;
(j)
The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture;
(k)
The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder; and
(l)
The Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.
SECTION 7.03. (a) The recitals contained herein and in the Securities (other than the Certificate of Authentication on the Securities) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same.
(b)
The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities.
(c)
The Trustee shall not be accountable for the use or application by the Company of any of the Securities or of the proceeds of such Securities, or for the use or application of any monies paid over by the Trustee in accordance with any provision of this Indenture or established pursuant to Section 2.01, or for the use or application of any monies received by any paying agent other than the Trustee.
SECTION 7.04. The Trustee or any paying agent or Security Registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, paying agent or Security Registrar.
SECTION 7.05. Subject to the provisions of Section 11.04, all monies received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any monies received by it hereunder except such as it may agree in writing with the Company to pay thereon.
SECTION 7.06. (a) The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as the Company and the Trustee shall from time to time agree in writing (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee, and the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the reasonable expenses and disbursements of its counsel and agents and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence, willful misconduct or bad faith. The Company also covenants to indemnify the Trustee and any predecessor Trustee (and their officers, agents, directors and employees) for, and to hold them harmless against, any loss, damages, claims, liability or expense, including taxes (other than taxes based upon, measured by or determined by the income of the Trustee), incurred without negligence, willful misconduct or bad faith on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust or trusts hereunder, including the reasonable costs and expenses of defending itself against any claim (whether asserted by the Company, or any holder of Securities or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, or in connection with enforcing the provisions of this Section.
(b)
The obligations of the Company under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Securities.
(c)
Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default, the expenses (including reasonable charges and expenses of its counsel) and compensation for its
services are intended to constitute expenses of administration under applicable federal or state bankruptcy, insolvency or similar law.
(d)
The provisions of this Section 7.06 shall survive the satisfaction and discharge of this Indenture or the appointment of a successor trustee.
SECTION 7.07. Except as otherwise provided in Section 7.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting to take any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee and such certificate, in the absence of bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture upon the faith thereof.
SECTION 7.08. If the Trustee has acquired or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 7.09. There shall at all times be a Trustee with respect to the Securities issued hereunder which shall at all times be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or other person permitted to act as trustee by the Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million dollars, and subject to supervision or examination by Federal, State, Territorial, or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Company may not, nor may any person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 7.10.
SECTION 7.10. (a)
The Trustee or any successor hereafter appointed, may at any time resign with respect to the Securities of one or more series by giving 30 days’ written notice thereof to the Company and by transmitting notice of resignation by mail, first class postage prepaid, to the Securityholders of such series, as their names and addresses appear upon the Security Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee with respect to Securities of such series by written instrument, in duplicate, executed by order of the Board of Managers, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may, at the expense of the Company, petition
any court of competent jurisdiction for the appointment of a successor trustee with respect to Securities of such series, or any Securityholder of that series who has been a bona fide holder of a Security or Securities for at least six months may, subject to the provisions of Section 6.08, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.
(b)
In case at any time any of the following shall occur:
i.
the Trustee shall fail to comply with the provisions of Section 7.08 after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Security or Securities for at least six months; or
ii.
The Trustee shall cease to be eligible in accordance with the provisions of Section 7.09 and shall fail to resign after written request therefor by the Company or by any such Securityholder; or
iii.
the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Company, upon 30 days’ written notice to the Trustee, may remove the Trustee with respect to all Securities and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Managers, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 6.08, unless, with respect to subsection (b)(1) above, the Trustee’s duty to resign is stayed as provided in Section 310(b) of the Trust Indenture Act, any Securityholder who has been a bona fide holder of a Security or Securities for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.
(c)
The holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding may at any time, upon 30 days’ written notice to the Trustee and the Company, remove the Trustee with respect to such series and appoint a successor trustee.
(d)
Any resignation or removal of the Trustee and appointment of a successor trustee with respect to the Securities of a series pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.11.
(e)
Any successor trustee appointed pursuant to this Section may be appointed with respect to the Securities of one or more series or all of such series, and at any time there shall be only one Trustee with respect to the Securities of any particular series.
SECTION 7.11. (a) In case of the appointment hereunder of a successor trustee with respect to all Securities, every such successor trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor trustee all the rights, powers, and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring Trustee hereunder, subject to any prior lien provided for in Section 7.06(b).
(b)
In case of the appointment hereunder of a successor trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates, (2) shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust, that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee and that no Trustee shall be responsible for any act or failure to act on the part of any other Trustee hereunder; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein, such retiring Trustee shall with respect to the Securities of that or those series to which the appointment of such successor trustee relates have no further responsibility for the exercise of rights and powers or for the performance of the duties and obligations vested in the Trustee under this Indenture, and each such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates; but, on request of the Company or any successor trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor trustee, to the extent contemplated by such supplemental indenture, the property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor trustee relates.
(c)
Upon request of any such successor trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be.
(d)
No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified under the Trust Indenture Act and eligible under this Article.
(e)
Upon acceptance of appointment by a successor trustee as provided in this Section, the Company shall transmit notice of the succession of such trustee hereunder by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Security Register. If the Company fails to transmit such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be transmitted at the expense of the Company.
SECTION 7.12. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be qualified under the provisions of the Trust Indenture Act and eligible under the provisions of Section 7.09, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.
SECTION 7.13. If and when the Trustee shall become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding collection of claims against the Company (or any other obligor upon the Securities).
ARTICLE EIGHT
CONCERNING THE SECURITYHOLDERS
SECTION 8.01. Whenever in this Indenture it is provided that the holders of a majority or specified percentage in aggregate principal amount of the Securities of a particular series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the holders of such majority or specified percentage of that series have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by such holders of Securities of that series in person or by agent or proxy appointed in writing.
If the Company shall solicit from the Securityholders of any series any request, demand, authorization, direction, notice, consent, waiver or other action, the Company may, at its option, as evidenced by an Officers’ Certificate, fix in advance a record date for such series for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action may be given before or after the record date, but only the Securityholders
of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of outstanding Securities of that series have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the outstanding Securities of that series shall be computed as of the record date; provided that no such authorization, agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.
In determining whether the holders of the requisite aggregate principal amount of Securities of a particular series have concurred in any direction, consent or waiver under this Indenture, the principal amount of a Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 6.01.
SECTION 8.02. Subject to the provisions of Section 7.01, proof of the execution of any instrument by a Securityholder (such proof will not require notarization) or his agent or proxy and proof of the holding by any person of any of the Securities shall be sufficient if made in the following manner:
(a)
The fact and date of the execution by any such person of any instrument may be proved in any reasonable manner acceptable to the Trustee.
(b)
The ownership of Securities shall be proved by the Security Register of such Securities or by a certificate of the Security Registrar thereof.
(c)
The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary.
SECTION 8.03. Prior to the due presentment for registration of transfer of any Security, the Company, the Trustee, any paying agent and any Security Registrar may deem and treat the person in whose name such Security shall be registered upon the books of the Company as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal of and premium, if any, and (subject to Section 2.03) interest on such Security 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.
SECTION 8.04. In determining whether the holders of the requisite aggregate principal amount of Securities of a particular series have concurred in any direction, consent or waiver under this Indenture, Securities of that series which are owned by the Company or any other obligor on the Securities of that series or by any person directly or indirectly controlling or controlled by or under common control with the Company or any other obligor on the Securities of that series shall be disregarded and deemed not to be outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected
in relying on any such direction, consent or waiver, only Securities of such series which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section, if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not a person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee.
SECTION 8.05. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the holders of the majority or percentage in aggregate principal amount of the Securities of a particular series specified in this Indenture in connection with such action, any holder of a Security of that series which is shown by the evidence to be included in the Securities the holders of which have consented to such action may, by filing written notice with the Trustee, and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the holder of any Security shall be conclusive and binding upon such holder and upon all future holders and owners of such Security, and of any Security issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Security. Any action taken by the holders of the majority or percentage in aggregate principal amount of the Securities of a particular series specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the holders of all the Securities of that series.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. In addition to any supplemental indenture otherwise authorized by this Indenture, the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect), without the consent of the Securityholders, for one or more of the following purposes:
(a)
to evidence the succession of another person to the Company, and the assumption by any such successor of the covenants of the Company contained herein or otherwise established with respect to the Securities; or
(b)
to add to the covenants of the Company such further covenants, restrictions, conditions or provisions for the protection of the holders of the Securities of all or any series, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions, conditions or provisions a default or an Event of Default with respect to such series permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, however, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit
the remedies available to the Trustee upon such default or may limit the right of the holders of a majority in aggregate principal amount of the Securities of such series to waive such default; or
(c)
to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture as shall not be inconsistent with the provisions of this Indenture and shall not adversely affect the interests of the holders of the Securities of any series; or
(d)
to change or eliminate any of the provisions of this Indenture or to add any new provision to this Indenture; provided, however, that such change, elimination or addition shall become effective only when there is no Security outstanding of any series created prior to the execution of such supplemental indenture that is entitled to the benefit of such provisions; or
(e)
to establish the form or terms of Securities of any series as permitted by Section 2.01; or
(f)
to add any additional Events of Default with respect to all or any series of outstanding Securities; or
(g)
to provide collateral security for the Securities; or
(h)
to provide for the authentication and delivery of bearer securities and coupons appertaining thereto representing interest, if any, thereon and for the procedures for the registration, exchange and replacement thereof and for the giving of notice to, and the solicitation of the vote or consent of, the holders thereof, and for any other matters incidental thereto; or
(i)
to evidence and provide for the acceptance of appointment hereunder by a separate or successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Article Seven; or
(j)
to change any place or places where (1) the principal of and premium, if any, and interest, if any, on all or any series of Securities shall be payable, (2) all or any series of Securities may be surrendered for registration of transfer, (3) all or any series of Securities may be surrendered for exchange and (4) notices and demands to or upon the Company in respect of all or any series of Securities and this Indenture may be served; provided, however, that any such place shall be located in New York, New York or be the principal office of the Company; or
(k)
to provide for the payment by the Company of additional amounts in respect of certain taxes imposed on certain holders and for the treatment of such additional amounts as interest and for all matters incidental thereto; or
(l)
to provide for the issuance of Securities denominated in a currency other than Dollars or in a composite currency and for all matters incidental thereto.
Without limiting the generality of the foregoing, if the Trust Indenture Act as in effect at the date of the execution and delivery of this Indenture or at any time thereafter shall be amended and
(i)
if any such amendment shall require one or more changes to any provisions hereof or the inclusion herein of any additional provisions, or shall by operation of law be deemed to effect such changes or incorporate such provisions by reference or otherwise, this Indenture shall be deemed to have been amended so as to conform to such amendment to the Trust Indenture Act, and the Company and the Trustee may, without the consent of any Securityholders, enter into a supplemental indenture hereto to effect or evidence such changes or additional provisions; or
(ii)
if any such amendment shall permit one or more changes to, or the elimination of, any provisions hereof which, at the date of the execution and delivery hereof or at any time thereafter, are required by the Trust Indenture Act to be contained herein, this Indenture shall be deemed to have been amended to effect such changes or elimination, and the Company and the Trustee may, without the consent of any Securityholders, enter into a supplemental indenture hereto to effect such changes or elimination; or
(iii)
if, by reason of any such amendment, one or more provisions which, at the date of the execution and delivery hereof or at any time thereafter, are required by the Trust Indenture Act to be contained herein shall be deemed to be incorporated herein by reference or otherwise, or otherwise made applicable hereto, and shall no longer be required to be contained herein, the Company and the Trustee may, without the consent of any Securityholders, enter into a supplemental indenture hereto to effect the elimination of such provisions.
The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. With the consent (evidenced as provided in Section 8.01) of the holders of not less than a majority in aggregate principal amount of the Securities of each series affected by such supplemental indenture or indentures at the time outstanding, the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the holders of the Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall (i) extend the
fixed maturity of any Securities 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 Section 6.01, without the consent of the holders of each Security then outstanding and affected, (ii) reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, or reduce the percentage of Securities, the holders of which are required to waive any default and its consequences, without the consent of the holder of each Security then outstanding and affected thereby, or (iii) modify any provision of Section 6.01(c) (except to increase the percentage of principal amount of securities required to rescind and annul any declaration of amounts due and payable under the Securities) without the consent of the holders of each Security then outstanding and affected thereby.
Upon the request of the Company, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders required to consent thereto as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.
A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities, or that modifies the rights of holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the holders of Securities of any other series.
It shall not be necessary for the consent of the Securityholders of any series affected thereby under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Company shall transmit by mail, first class postage prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to the Securityholders of all series affected thereby as their names and addresses appear upon the Security Register. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Upon the execution of any supplemental indenture pursuant to the provisions of this Article or of Section 10.01, this Indenture shall, with respect to such series, be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Securities of the series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Securities of any series, affected by a supplemental indenture, authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this Article, Article Two or Article Seven or of Section 10.01, may bear a notation in form approved by the Company, provided such form meets the requirements of any exchange upon which such series may be listed, as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of that series so modified as to conform, in the opinion of the Board of Managers, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Securities of that series then outstanding.
SECTION 9.05. The Trustee, subject to the provisions of Section 7.01, shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article is authorized or permitted by, and conforms to, the terms of this Article and that it is proper for the Trustee under the provisions of this Article to join in the execution thereof.
ARTICLE TEN
CONSOLIDATION, MERGER AND SALE
SECTION 10.01. Unless a Company Order or supplemental indenture establishing a series of Securities provides otherwise, nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Company with or into any other corporation or corporations (whether or not affiliated with the Company), or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other disposition of all or substantially all of the property of the Company or its successor or successors as an entirety, or substantially as an entirety, to any other corporation (whether or not affiliated with the Company or its successor or successors) authorized to acquire and operate the same; provided, however, the Company hereby covenants and agrees that, upon any such consolidation, merger, sale, conveyance, transfer or other disposition, the due and punctual payment of the principal of (premium, if any) and interest on all of the Securities of all series in accordance with the terms of each series, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of this Indenture with respect to each series or established with respect to such series pursuant to Section 2.01 to be kept or performed by the Company, shall be expressly assumed, by supplemental indenture (which shall conform to the provisions of the Trust Indenture Act as then in effect) satisfactory in form to the Trustee executed and delivered to the Trustee by the entity formed by such consolidation, or into which the Company shall have been merged, or by the entity which shall have acquired such property.
SECTION 10.02. Unless a Company Order or supplemental indenture establishing a series of Securities provides otherwise:
(a) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and premium, if any, and interest on all of the Securities of
all series outstanding and the due and punctual performance of all of the covenants and conditions of this Indenture or established with respect to each series of the Securities pursuant to Section 2.01 to be kept or performed by the Company with respect to each series, such successor corporation shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the party of the first part, and thereupon (provided, that in the case of a lease, the term of the lease is at least as long as the longest maturity of any Securities outstanding at such time) the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of the Company or any other predecessor obligor on the Securities, any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor company, instead of the Company, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the predecessor Company to the Trustee for authentication, and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.
(b)
In case of any such consolidation, merger, sale, conveyance, transfer or other disposition such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate.
(c)
Nothing contained in this Indenture or in any of the Securities shall prevent the Company from merging into itself or acquiring by purchase or otherwise all or any part of the property of any other corporation (whether or not affiliated with the Company).
SECTION 10.03. The Trustee, subject to the provisions of Section 7.01, shall be entitled to receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other disposition, and any such assumption, comply with the provisions of this Article.
ARTICLE ELEVEN
DEFEASANCE AND CONDITIONS TO DEFEASANCE; UNCLAIMED MONIES
SECTION 11.01. Securities of a series may be defeased in accordance with their terms and, unless the Company Order or supplemental indenture establishing the series otherwise provides, in accordance with this Article.
The Company at any time may terminate as to a series all of its obligations for such series under this Indenture (“legal defeasance option”). The Company at any time may terminate as to a series its obligations, if any, under any restrictive covenant which may be applicable to a particular series (“covenant defeasance option”). However, in the case of the legal defeasance option, the Company’s obligations in Sections 2.05, 2.07, 4.02, 7.06, 7.10 and 11.04 shall
survive until the Securities of the series are no longer outstanding; thereafter the Company’s obligations in Sections 7.06, 7.10 and 11.04 shall survive.
The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, a series may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, a series may not be accelerated by reference to any restrictive covenant which may be applicable to a particular series so defeased under the terms of the series.
The Trustee, upon request of and at the cost and expense of the Company, shall, subject to compliance with Section 13.06, acknowledge in writing the discharge of those obligations that the Company terminates, in the opinion of a nationally recognized firm of independent certified public accountants as certified to the Trustee;
The Company may exercise as to a series its legal defeasance option or its covenant defeasance option if:
(i)
The Company irrevocably deposits in trust with the Trustee or another trustee (x) money in an amount which shall be sufficient; or (y) Eligible Obligations the principal of and the interest on which when due, without regard to reinvestment thereof, will provide moneys, which, together with the money, if any, deposited or held by the Trustee or such other trustee, shall be sufficient; or (z) a combination of money and Eligible Obligations which shall be sufficient, to pay the principal of and premium, if any, and interest, if any, due and to become due on such Securities on or prior to maturity;
(ii)
the Company delivers to the Trustee a Certificate to the effect that the requirements set forth in clause (1) above have been satisfied;
(iii)
immediately after the deposit no Default exists; and
(iv)
the Company delivers to the Trustee an Opinion of Counsel to the effect that holders of the series will not recognize income, gain or loss for Federal income tax purposes as a result of the defeasance but will realize income, gain or loss on the Securities, including payments of interest thereon, in the same amounts and in the same manner and at the same time as would have been the case if such defeasance had not occurred and which, in the case of legal defeasance, shall be (x) accompanied by a ruling of the Internal Revenue Service issued to the Company or (y) based on a change in law or regulation occurring after the date hereof; and
(v)
the deposit specified in paragraph (1) above shall not result in the Company, the Trustee or the trust created in connection with such defeasance being deemed an “investment company” under the Investment Company Act of 1940, as amended.
In the event the Company exercises its option to effect a covenant defeasance with respect to the Securities of any series as described above and the Securities of that series are thereafter declared due and payable because of the occurrence of any Event of Default other than the Event of Default caused by failing to comply with the covenants which are defeased, the
amount of money and securities on deposit with the Trustee may not be sufficient to pay amounts due on the Securities of that series at the time of the acceleration resulting from such Event of Default. However, the Company shall remain liable for such payments.
SECTION 11.02. All monies or Eligible Obligations deposited with the Trustee pursuant to Section 11.01 shall be held in trust and shall be available for payment as due, either directly or through any paying agent (including the Company acting as its own paying agent), to the holders of the particular series of Securities for the payment or redemption of which such monies or Eligible Obligations have been deposited with the Trustee.
SECTION 11.03. In connection with the satisfaction and discharge of this Indenture all monies or Eligible Obligations then held by any paying agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such monies or Eligible Obligations.
SECTION 11.04. Any monies or Eligible Obligations deposited with any paying agent or the Trustee, or then held by the Company, in trust for payment of principal of or premium or interest on the Securities of a particular series that are not applied but remain unclaimed by the holders of such Securities for at least two years after the date upon which the principal of (and premium, if any) or interest on such Securities shall have respectively become due and payable, upon the written request of the Company and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, shall be repaid to the Company on May 31 of each year or (if then held by the Company) shall be discharged from such trust; and thereupon the paying agent and the Trustee shall be released from all further liability with respect to such monies or Eligible Obligations, and the holder of any of the Securities entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Company for the payment thereof.
SECTION 11.05. In connection with any satisfaction and discharge of this Indenture pursuant to this Article Eleven, the Company shall deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel to the effect that all conditions precedent in this Indenture provided for relating to such satisfaction and discharge have been complied with.
ARTICLE TWELVE
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
SECTION 12.01. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, past, present or future as such, of the Company or of any predecessor or successor corporation, either directly or through the Company or any such 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; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is
or shall be incurred by, the incorporators, stockholders, officers or directors as such, of the Company or of any predecessor or successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Securities.
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
SECTION 13.01. All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 13.02. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the corresponding board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company.
SECTION 13.03. The Company by instrument in writing executed by authority of two-thirds of its Board of Managers and delivered to the Trustee may surrender any of the powers reserved to the Company under this Indenture and thereupon such power so surrendered shall terminate both as to the Company and as to any successor corporation.
SECTION 13.04. Except as otherwise expressly provided herein any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Securities to or on the Company may be given or served by being deposited first class postage prepaid in a post office letter box addressed (until another address is filed in writing by the Company with the Trustee), as follows: AEP Transmission Company, LLC c/o American Electric Power Service Corporation, 1 Riverside Plaza, Columbus, Ohio 43215, Attention: Lonni L. Dieck, Treasurer. Any notice, election, request or demand by the Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the Trustee.
The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, pdf, facsimile transmission or other similar unsecured electronic methods, provided, however, that the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the
Company elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Company agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.
SECTION 13.05. This Indenture and each Security shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State.
SECTION 13.06. (a) Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.
(b)
Each Certificate, Officers’ Certificate or Opinion of Counsel provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant in this Indenture (other than the certificate provided pursuant to Section 5.03(d) of this Indenture) shall include (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.
SECTION 13.07. Except as provided pursuant to Section 2.01 pursuant to a Company Order, or established in one or more indentures supplemental to this Indenture, in any case where the date of maturity of principal or an Interest Payment Date of any Security or the date of redemption, purchase or repayment of any Security shall not be a Business Day then payment of interest or principal (and premium, if any) may be made on the next succeeding Business Day with the same force and effect as if made on the nominal date of maturity or redemption, and no interest shall accrue for the period after such nominal date.
SECTION 13.08. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by the Trust Indenture Act, such imposed duties shall control.
SECTION 13.09. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.
SECTION 13.10. In case any one or more of the provisions contained in this Indenture or in the Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of such Securities, but this Indenture and such Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.
SETION 13.11. The Company will have the right at all times to assign any of its rights or obligations under the Indenture to a direct or indirect wholly owned subsidiary of the Company; provided that, in the event of any such assignment, the Company will remain liable for all such obligations. Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties thereto.
SECTION 13.12. The Article and Section Headings in this Indenture and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 13.13. Whenever this Indenture provides for any action by, or the determination of any rights of, holders of Securities of any series in which not all of such Securities are denominated in the same currency, in the absence of any provision to the contrary in the form of Security of any particular series, any amount in respect of any Security denominated in a currency other than Dollars shall be treated for any such action or determination of rights as that amount of Dollars that could be obtained for such amount on such reasonable basis of exchange and as of the record date with respect to Securities of such series (if any) for such action or determination of rights (or, if there shall be no applicable record date, such other date reasonably proximate to the date of such action or determination of rights) as the Company may specify in a written notice to the Trustee.
SECTION 13.14. EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.
SECTION 13.15. The Company agrees that any suit, action or proceeding against the Company brought by any holder of Securities or the Trustee arising out of or based upon this Indenture or the Securities may be instituted in any state or Federal court in the Borough of Manhattan, New York, New York, and any appellate court from any thereof, and the Company irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding. The Company irrevocably waives, to the fullest extent permitted by law, any objection to any suit, action or proceeding that may be brought in connection with this Indenture or any Security, including such actions, suits or proceedings relation to securities laws of the United States of America or any state thereof, in such courts whether on the grounds of venue,
residence or domicile or on the ground that any such suit, action or proceeding has been brought in an inconvenient forum. The Company agrees that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the Company and may be enforced in any court to the jurisdiction of which the Issuer is subject by a suit upon such judgment.
SECTION 13.16. In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
SECTION 13.17. In order to assist the Trustee with its compliance with Section 1471 through 1474 of the U. S. Internal Revenue Code and the rules and regulations thereunder (as in effect from time to time, collectively, the “Applicable Law”) the Company agrees (i) to provide the Trustee and any other paying agent reasonably available information collected and stored in the Company’s ordinary course of business regarding holders of the Securities (solely in their capacity as such) and which is necessary for the Trustee’s and any paying agent’s determination of whether it has tax related obligations under Applicable Law and (ii) that the Trustee and any paying agent shall be entitled to make any withholding or deduction from payments under the Indenture, as supplemented, and the Securities to the extent necessary to comply with Applicable Law for which the Trustee and any paying agent shall not have any liability. Nothing in the immediately preceding sentence shall be construed as obligating the Company to make any “gross up” payment or similar reimbursement in connection with a payment in respect of which amounts are so withheld or deducted.
The Bank of New York Mellon Trust Company, N.A., as Trustee, hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written.
AEP TRANSMISSION COMPANY, LLC
By:
/s/ Lonni L. Dieck
Name: Lonni L. Dieck
Title: Treasurer
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By:
/s/ R. Tarnas
Name: R. Tarnas
Title: Vice President
Exhibit 4(a)-5
Exhibit 2
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
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AEP TRANSMISSION COMPANY, LLC
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4.00% Senior Notes, Series G due 2046
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CUSIP: ________________
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Original Issue Date: June __, 2017
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Stated Maturity:
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December 1, 2046
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Interest Rate: 4.00%
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Principal Amount:
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$400,000,000
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Redeemable:
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Yes X
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No
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In Whole:
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Yes X
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No
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In Part:
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Yes X
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No
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AEP TRANSMISSION COMPANY, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (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 from the Original Issue Date specified above or from the most recent interest payment date (each such date, an “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, 2017, at the Interest Rate per annum specified above, until the Principal Amount shall have been paid or duly provided for. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
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 Regular Record Date with respect to such Interest Payment Date, which shall be the May 15 or November 15 (whether or not a Business Day), as the case may be, immediately preceding such Interest Payment Date, provided that interest payable on the Stated
Maturity or any redemption date 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 Holder on such Regular Record Date and shall be paid as provided in said Indenture.
If any Interest Payment Date, any redemption date or Stated Maturity is not a Business Day, then payment of the amounts due on this Note on such date will be made on the next succeeding Business Day, and no interest shall accrue on such amounts for the period from and after such Interest Payment Date, redemption date or Stated Maturity, as the case may be, except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, with the same force and effect as if made on such date. The principal of (and premium, if any) and the interest on this Note shall be payable at the office or agency of the Company may from time to time designate for that purpose, 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 Stated Maturity or any redemption date) 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 Register.
This Note is one of a duly authorized series of Senior 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 November 1, 2016 duly executed and delivered between the Company and The Bank of New York Mellon Trust Company, N.A., a national banking association, duly organized and existing under the laws of the United States, 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 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 holder of this Notes. This Note is one of the series of Notes designated on the face hereof as 4.00% Senior Notes, Series G due 2046 initially issued in the aggregate principal amount of $400,000,000.
At any time prior to June 1, 2046, this Note shall be redeemable at the option of the Company, in whole at any time or in part, from time to time, upon not less than thirty but not more than sixty days’ previous notice given to the registered owners of this Note at a redemption price equal to the greater of (i) 100% of the principal amount of this Note being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on this Note being redeemed that would be due if this Note matured on June 1, 2046 (excluding the portion of any such interest accrued to the date of redemption) discounted (for purposes of determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 20 basis points, plus, accrued interest thereon to the date of redemption.
At any time on or after June 1, 2046, this Note shall be redeemable at the option of the Company, in whole or in part, at 100% of the principal amount of this Note being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption.
“Comparable Treasury Issue,” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“remaining life”) of this Note (assuming, for this purpose, that this Note matured on June 1, 2046) 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 this Note.
“Comparable Treasury Price,” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Company obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.
“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer” means a primary U.S. Government securities dealer or dealers selected by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company and notified to the Trustee, 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 Company and the Trustee by such Reference Treasury Dealer at or before 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption, the rate per annum equal to the semiannual 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 Company shall not be required to (i) issue, exchange or register the transfer of this Note during a period beginning at the opening of business 15 days before the day of the giving of a notice of redemption of less than all the outstanding Notes of this series and ending at the close of business on the day such notice is given, nor (ii) register the transfer of or exchange of any Notes of this series or portions thereof called for redemption. This Note is exchangeable for Notes in certificated registered form only under certain limited circumstances set forth in the Indenture.
In the event of redemption of this Note in part only, a new Note or Notes of this series, of like tenor, for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender of this Note.
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. This Note will not have a sinking fund.
As described in the Company Order and Officers’ Certificate relating to the Notes, so long as this Note is outstanding, the Company is subject to restrictive covenants set forth therein.
The Indenture contains provisions permitting the Company and the Trustee, with the consent of the 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 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 Note that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to the Indenture, without the consent of the holder of each Note then outstanding and affected; (ii) reduce the aforesaid percentage of Notes, the Holders of which are required to consent to any such supplemental indenture, or reduce the percentage of Notes, the Holders of which are required to waive any default and its consequences, without the consent of the 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 holder of each Note then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Notes of all series at the time outstanding affected thereby, on behalf of the 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 Holder and upon all future Holders and owners of this Note and of any Note issued in exchange herefor or in place hereof (whether by registration or 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 Register 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 Trustee 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 Note 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 released waived and released.
The Notes of this series are issuable only in registered form without coupons in minimum denominations of $2,000 and in integral multiples of $1,000 in excess 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 a different authorized denomination, as requested by the 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.
This Note will be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws provisions.
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.
AEP TRANSMISSION COMPANY, LLC
By: ______________________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
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THE BANK OF NEW YORK MELLON TRUST
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COMPANY, N. A.,
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as Trustee
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Date:____________________
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By:_____________________________________
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Authorized Signatory
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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:________________________
_________________________
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NOTICE:
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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”).
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Exhibit 4(a)-3
June __, 2017
Company Order and Officers’ Certificate
3.10% Senior Notes, Series F, due 2026
4.00% Senior Notes, Series G, due 2046
The Bank of New York Mellon Trust Company, N.A., as Trustee
2 North LaSalle Street
Suite 1020
Chicago, Illinois 60602
Ladies and Gentlemen:
Pursuant to Article Two of the Indenture, dated as of November 1, 2016 (as it may be amended or supplemented, the “Indenture”), from AEP Transmission Company, LLC (the “Company”) to The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), and the Board Resolutions dated September 23, 2016, copies of which, certified by the Secretary or an Assistant Secretary of the Company, have been delivered under Section 2.01 of the Indenture and have not been rescinded,
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1.
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The Company’s 3.10% Senior Notes, Series F, due 2026 (the “Series F Notes”) and 4.00% Senior Notes, Series G, due 2046 (the “Series G Notes”) are hereby established. The Series F Notes and the Series G Notes are collectively referred to herein as the “Notes”. The Notes shall be in substantially the forms attached hereto as Exhibits 1 and 2.
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2.
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The terms and characteristics of the Notes shall be as follows (the numbered clauses set forth below corresponding 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):
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(i)
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the aggregate principal amount of Notes which may be authenticated and delivered under the Indenture initially shall be limited to $300,000,000 for the Series F Notes and $400,000,000 for the Series G Notes, except as contemplated in Section 2.01(i) of the Indenture and except that such principal amount may be increased from time to time; all Series F Notes and all Series G Notes need not be issued at the same time and each such series may be reopened at any time, without the consent of any security holder, for issuance of additional Notes, which Notes will have the same interest rate, maturity and other terms as those initially issued;
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(ii)
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the date on which the principal of the Series F Notes shall be payable shall be
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December 1, 2026 and the date on which the principal of the Series G Notes shall be payable shall be December 1, 2046;
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(iii)
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interest shall accrue from the date of authentication of the Notes; the Interest Payment Dates on which such interest will be payable shall be June 1 and December 1, and the Regular Record Date for the determination of holders to whom interest is payable on any such Interest Payment Date shall be the May 15 or November 15 preceding the relevant Interest Payment Date; provided that the first Interest Payment Date shall be December 1, 2017 and interest payable on the Stated Maturity Date or any Redemption Date shall be paid to the Person to whom principal shall be paid;
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(iv)
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the interest rate at which the Series F Notes shall bear interest shall be 3.10% per annum and the interest rate at which the Series G Notes shall bear interest shall be 4.00% per annum;
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(v)
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Optional Redemption.
(a)At any time prior to September 1, 2026, the Series F Notes shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon not less than thirty but not more than sixty days’ previous notice given to the registered owners of the Series F Notes at a redemption price equal to the greater of (i) 100% of the principal amount of the Series F Notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Series F Notes being redeemed that would be due if such Series F Notes matured on September 1, 2026 (excluding the portion of any such interest accrued to the date of redemption) discounted (for purposes of determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basis points, plus, accrued interest thereon to the date of redemption.
(b)At any time prior to June 1, 2046, the Series G Notes shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon not less than thirty but not more than sixty days’ previous notice given to the registered owners of the Series G Notes at a redemption price equal to the greater of (i) 100% of the principal amount of the Series G Notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Series G Notes being redeemed that would be due if such Series G Notes matured on June 1, 2046 (excluding the portion of any such interest accrued to the date of redemption) discounted (for purposes of determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 20 basis points, plus, accrued interest thereon to the date of redemption.
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At any time on or after September 1, 2026, the Series F Notes shall be redeemable at the option of the Company, in whole or in part, at 100% of the principal amount of the Series F Notes being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after June 1, 2046, the Series G Notes shall be redeemable at the option of the Company, in whole or in part, at 100% of the principal amount of the Series G Notes being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption.
“Comparable Treasury Issue,” applicable to each series of the Notes, means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“remaining life”) of the Notes (assuming, for purpose of the Series F Notes, that the Series F Notes matured on September 1, 2026 and, for purpose of the Series G Notes, the Series G Notes matured on June 1, 2046) 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 series of the Notes.
“Comparable Treasury Price,” applicable to each series of the Notes, means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Company obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.
“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer” means a primary U.S. Government securities dealer or dealers selected by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company and notified to the Trustee, 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 Company and the Trustee by such Reference Treasury Dealer at or before 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption, the rate per annum equal to the semiannual 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.
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(vi)
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(a) the Notes shall be issued in the form of Global Notes; (b) the Depositary for such Global Notes 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 forms of Note attached hereto;
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(vii)
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the title of the Series F Notes shall be “3.10% Senior Notes, Series F, due 2026” and the title of the Series G Notes shall be “4.00% Senior Notes, Series G, due 2046”
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(viii)
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the forms of the Notes shall be as set forth in Paragraph 1, above;
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(ix)
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not applicable;
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(x)
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the Notes shall not be subject to a Periodic Offering;
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(xi)
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not applicable;
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(xii)
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not applicable;
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(xiii)
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the Company will pay the principal of the Notes and any premium and interest payable at redemption, if any, or at maturity in immediately available funds at the office of The Bank of New York Mellon Trust Company, N.A., 101 Barclay Street, 8
th
Floor, New York, NY 10286;
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(xiv)
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the Notes shall be issuable in denominations of $2,000 and any integral multiples of $1,000 in excess thereof.;
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(xv)
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not applicable;
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(xvi)
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the Notes shall not be issued as Discount Securities;
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(xvii)
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not applicable;
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(xviii)
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not applicable;
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(xix)
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the provisions of Section 4.05 and Article Ten of the Indenture shall apply to the Notes, and
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(xx)
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Restrictive Covenants:
Consolidated Priority Debt.
The Company covenants that so long as any of the Notes are outstanding that it will not permit Consolidated Priority Debt to exceed 10% of Consolidated Tangible Net Assets for a period in excess of five consecutive
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business days.
Limitation on Liens.
The Company covenants that for so long as any of the Notes are outstanding that it will not create or suffer to exist or permit any of its subsidiaries to create or suffer to exist any Secured Debt, unless, at the same time, the Notes that are outstanding are also secured by such Lien on an equal and ratable basis; provided, however, the foregoing does not limit:
a) Permitted Liens; and
b) Any other Lien not covered in clause (a) as long as immediately after the creation of such Lien the aggregate principal amount of Secured Debt does not exceed 10% of Consolidated Tangible Net Assets.
Definitions:
“Consolidated Priority Debt” means all Priority Debt of the Company and its subsidiaries determined on a consolidated basis eliminating inter-company items.
“Consolidated Tangible Net Assets” means the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the most recent quarterly or annual, as applicable, consolidated balance sheet of the Company and its consolidated subsidiaries, 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 consolidated current liabilities of the Company and its consolidated subsidiaries appearing on such balance sheet.
“Debt” means any indebtedness for borrowed money.
“Lien or Liens” means any mortgage, pledge, security interest, or other lien on any utility properties or tangible assets, including, without limitation, the capital stock or comparable equity interest of its subsidiaries, owned on the date hereof or hereafter acquired by the Company or its subsidiaries.
“Permitted Liens” means:
- 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
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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;
- any extensions, renewals or replacements (or successive extensions, renewals or replacements), in whole or in part, of Liens permitted by the foregoing clauses;
- the pledge of any bonds or other securities at any time issued under any of the Secured Debt permitted by the above clauses; and
- the creation or existence of leases (operating or capital) made, or existing on property acquired, in the ordinary course of business.
“Priority Debt” means, without duplication, any Debt of the Company’s subsidiaries; provided that there shall be excluded from any calculation of Priority Debt, (i) the Debt of any subsidiary owing to the Company or a subsidiary of the Company, and (ii) the Debt of any entity which becomes a subsidiary after the issuance of the Notes and any extension, renewal or refunding thereof, provided that such Debt was not incurred in contemplation of such entity becoming a subsidiary.
“Secured Debt” means any Debt of the Company or any of its subsidiaries secured by a Lien (other than a Permitted Lien).
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3.
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You are hereby requested to authenticate $300,000,000 aggregate principal amount of 3.10% Senior Notes, Series F, due 2026 and $400,000,000 aggregate principal amount of 4.00% Senior Notes, Series G, due 2046, executed by the Company and delivered to you concurrently with this Company Order and Officers’ Certificate, in the manner provided by the Indenture.
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4.
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You are hereby requested to hold the Notes as custodian for DTC in accordance with the Blanket Issuer Letter of Representations dated November 14, 2016, from the Company to DTC.
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5.
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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.
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6.
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The undersigned Lonni M. Dieck and Thomas G. Berkemeyer, the Treasurer and Assistant Secretary, respectively, of the Company do hereby certify that:
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(i)
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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;
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(ii)
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we have read the Board Resolutions of the Company and the Opinion of Counsel referred to above;
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(iii)
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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 certificate;
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(iv)
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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
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(v)
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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.
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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.
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.
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Very truly yours,
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AEP TRANSMISSION COMPANY, LLC
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By:
______________________________________
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Lonni M. Dieck
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Treasurer
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And:
______________________________________
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Thomas G. Berkemeyer
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Assistant Secretary
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Acknowledged by Trustee:
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THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
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By:
______________________________________
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Exhibit 4(a)-4
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
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AEP TRANSMISSION COMPANY, LLC
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3.10% Senior Notes, Series F due 2026
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CUSIP: ________________
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Original Issue Date: June __, 2017
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Stated Maturity:
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December 1, 2026
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Interest Rate: 3.10%
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Principal Amount:
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$300,000,000
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Redeemable:
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Yes X
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No
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In Whole:
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Yes X
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No
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In Part:
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Yes X
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No
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AEP TRANSMISSION COMPANY, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (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 from the Original Issue Date specified above or from the most recent interest payment date (each such date, an “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, 2017, at the Interest Rate per annum specified above, until the Principal Amount shall have been paid or duly provided for. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
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 Regular Record Date with respect to such Interest Payment Date, which shall be the May 15 or November 15 (whether or not a Business Day), as the case may be, immediately preceding such Interest Payment Date, provided that interest payable on the Stated
Maturity or any redemption date 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 Holder on such Regular Record Date and shall be paid as provided in said Indenture.
If any Interest Payment Date, any redemption date or Stated Maturity is not a Business Day, then payment of the amounts due on this Note on such date will be made on the next succeeding Business Day, and no interest shall accrue on such amounts for the period from and after such Interest Payment Date, redemption date or Stated Maturity, as the case may be, except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, with the same force and effect as if made on such date. The principal of (and premium, if any) and the interest on this Note shall be payable at the office or agency of the Company may from time to time designate for that purpose, 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 Stated Maturity or any redemption date) 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 Register.
This Note is one of a duly authorized series of Senior 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 November 1, 2016 duly executed and delivered between the Company and The Bank of New York Mellon Trust Company, N.A., a national banking association, duly organized and existing under the laws of the United States, 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 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 holder of this Notes. This Note is one of the series of Notes designated on the face hereof as 3.10% Senior Notes, Series F due 2026 initially issued in the aggregate principal amount of $300,000,000.
At any time prior to September 1, 2026, this Note shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon not less than thirty but not more than sixty days’ previous notice given to the registered owners of this Note at a redemption price equal to the greater of (i) 100% of the principal amount of this Note being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on this Note being redeemed that would be due if this Note matured on September 1, 2026 (excluding the portion of any such interest accrued to the date of redemption) discounted (for purposes of determining present value) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basis points, plus, accrued interest thereon to the date of redemption.
At any time on or after September 1, 2026, this Note shall be redeemable at the option of the Company, in whole or in part, at 100% of the principal amount of this Note being redeemed, plus accrued and unpaid interest thereon to but excluding the date of redemption.
“Comparable Treasury Issue,” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“remaining life”) of this Note (assuming, for this purpose, that this Note matured on September 1, 2026) 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 this Note.
“Comparable Treasury Price” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Company obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.
“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer” means a primary U.S. Government securities dealer or dealers selected by the Company and notified by the Company to the Trustee.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company and notified to the Trustee, 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 Company and the Trustee by such Reference Treasury Dealer at or before 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption, the rate per annum equal to the semiannual 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 Company shall not be required to (i) issue, exchange or register the transfer of this Note during a period beginning at the opening of business 15 days before the day of the giving of a notice of redemption of less than all the outstanding Notes of this series and ending at the close of business on the day such notice is given, nor (ii) register the transfer of or exchange of any Notes of this series or portions thereof called for redemption. This Note is exchangeable for Notes in certificated registered form only under certain limited circumstances set forth in the Indenture.
In the event of redemption of this Note in part only, a new Note or Notes of this series, of like tenor, for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender of this Note.
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. This Note will not have a sinking fund.
As described in the Company Order and Officers’ Certificate relating to the Notes, so long as this Note is outstanding, the Company is subject to restrictive covenants set forth therein.
The Indenture contains provisions permitting the Company and the Trustee, with the consent of the 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 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 Note that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to the Indenture, without the consent of the holder of each Note then outstanding and affected; (ii) reduce the aforesaid percentage of Notes, the Holders of which are required to consent to any such supplemental indenture, or reduce the percentage of Notes, the Holders of which are required to waive any default and its consequences, without the consent of the 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 holder of each Note then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Notes of all series at the time outstanding affected thereby, on behalf of the 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 Holder and upon all future Holders and owners of this Note and of any Note issued in exchange herefor or in place hereof (whether by registration or 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 Register 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 Trustee 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 Note 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 released waived and released.
The Notes of this series are issuable only in registered form without coupons in minimum denominations of $2,000 and in integral multiples of $1,000 in excess 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 a different authorized denomination, as requested by the 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.
This Note will be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws provisions.
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.
AEP TRANSMISSION COMPANY, LLC
By: ______________________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N. A.,
as Trustee
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Date:____________________
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By:_______________________________
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Authorized Signatory
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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:________________________
_________________________
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NOTICE:
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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”).
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Exhibit 4(c)-3
Execution Copy
Supplement to Note Purchase Agreement
(this “
Supplement
”)
AEP Transmission Company, LLC
1 Riverside Plaza
Columbus, Ohio 43215
U.S.$85,000,000 2.68% Series C, Tranche A Senior Notes due November 14, 2019
U.S.$50,000,000 3.18% Series C, Tranche B Senior Notes due November 14, 2021
U.S.$95,000,000 3.56% Series C, Tranche C Senior Notes due November 14, 2024
U.S.$50,000,000 3.66% Series C, Tranche D Senior Notes due March 16, 2025
U.S.$40,000,000 3.76% Series C, Tranche E Senior Notes due June 15, 2025
U.S.$55,000,000 3.81% Series C, Tranche F Senior Notes due November 14, 2029
U.S.$60,000,000 4.01% Series C, Tranche G Senior Notes due June 15, 2030
U.S.$25,000,000 4.05% Series C, Tranche H Senior Notes due November 14, 2034
U.S.$40,000,000 4.53% Series C, Tranche I Senior Notes due November 14, 2044
As of November 14, 2014
To Each of the Purchasers
Named in the Supplemental
Purchaser Schedule Attached Hereto
Ladies and Gentlemen:
Reference is made to that certain Note Purchase Agreement, dated as of October 18, 2012 between AEP Transmission Company, LLC, a Delaware limited liability company, and each of the Initial Purchasers named in the Initial Purchaser Schedule attached thereto (as it may be amended or supplemented from time to time, the
“Agreement”
). Terms used but not defined herein shall have the respective meanings set forth in the Agreement.
As contemplated in
Section 2.2
of the Agreement, the Company agrees with you as follows:
A.
Subsequent Series of Notes.
The Company has authorized and will create a Subsequent Series of Notes to be called the
“Series C Notes.”
Said Series C Notes will consist of (a) U.S. $85,000,000 aggregate principal amount of 2.68% Senior Notes, Series C, Tranche A, due November 14, 2019 (the “
Series C Tranche A Notes
”), (b) U.S. $50,000,000 aggregate principal amount of 3.18% Senior Notes, Series C, Tranche B, due November 14, 2021 (the “
Series C Tranche B Notes
”), (c) U.S. $95,000,000 aggregate principal amount of 3.56% Senior Notes, Series C, Tranche C, due November 14, 2024 (the “
Series C Tranche C Notes
”), (d) U.S. $50,000,000 aggregate principal amount of 3.66% Senior Notes, Series C, Tranche D, due March 16, 2025 (the “
Series C Tranche D Notes
”); (e) U.S. $40,000,000 aggregate principal amount of 3.76% Senior Notes, Series C, Tranche E, due June 15, 2025 (the “
Series C Tranche E Notes
”); (f) U.S. $55,000,000 aggregate principal amount of 3.81% Senior Notes, Series C, Tranche F, due November 14, 2029 (the “
Series C Tranche F Notes
”); (g) U.S. $60,000,000 aggregate
principal amount of 4.01% Senior Notes, Series C, Tranche G, due June 15, 2030 (the “
Series C Tranche G Notes
”); (h) U.S. $25,000,000 aggregate principal amount of 4.05% Senior Notes, Series C, Tranche H, due November 14, 2034 (the “
Series C Tranche H Notes
”); (i) U.S. $40,000,000 aggregate principal amount of 4.53% Senior Notes, Series C, Tranche I, due November 14, 2044 (the “
Series C Tranche I Notes
”; the Series C Tranche A Notes, the Series C Tranche B Notes, the Series C Tranche C Notes, the Series C Tranche D Notes, the Series C Tranche E Notes, the Series C Tranche F Notes, the Series C Tranche G Notes, the Series C Tranche H Notes and the Series C Tranche I Notes are hereinafter collectively referred to as the “
Series C Notes
”, such term to include any such notes issued in substitution therefor pursuant to
Section 13
of the Agreement). The Series C Tranche A Notes, the Series C Tranche B Notes, the Series C Tranche C Notes, the Series C Tranche D Notes, the Series C Tranche E Notes, the Series C Tranche F Notes, the Series C Tranche G Notes, the Series C Tranche H Notes and the Series C Tranche I Notes shall be substantially in the form set out in Exhibit 1-A, 1-B, 1-C, 1-D, 1-E, 1-F, 1-G, 1-H and 1-I to this Supplement, respectively, with such changes therefrom, if any, as may be approved by you and the Company.
B.
Purchase and Sale of Series C Notes.
The Company hereby agrees to sell to each Supplemental Purchaser set forth on the Supplemental Purchaser Schedule attached hereto (collectively, the
“Series C Purchasers”
) and, subject to the terms and conditions in the Agreement and herein set forth, each Series C Purchaser agrees to purchase from the Company, at a Series C Closing provided for in
Section C
to this Supplement, Series C Notes in the principal amount and in the tranche set opposite each Series C Purchaser’s name in the Supplemental Purchaser Schedule at the purchase price of 100% of the principal amount thereof. The obligations of the Series C Purchasers hereunder are several and not joint obligations, and no Series C Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Series C Purchaser hereunder.
C.
Execution Date; Series C Closings.
The execution and delivery of this Supplement will be made at the offices of Winston & Strawn LLP, 200 Park Avenue, New York, New York 10166 on November 14, 2014 (the “
Series C Execution Date
”).
The sale and purchase of the Series C Notes to be purchased by each Series C Purchaser shall occur at the offices of Winston & Strawn LLP, 200 Park Avenue, New York, New York 10166 at 10:00 a.m. New York City Time, at no more than three closings (individually, a “
Series C
Closing
” and, collectively, the “
Series C
Closings
”). The first Series C Closing, at which Series C Closing the Series C Tranche A Notes, the Series C Tranche B Notes, the Series C Tranche C Notes, the Series C Tranche F Notes, the Series C Tranche H Notes and the Series C Tranche I Notes are, subject to this
Section C
and
Section D
to this Supplement, to be purchased, shall be held on November 14, 2014 (the
“First Series C Closing”
); the second Series C Closing, at which Series C Closing the Series C Tranche D Notes are, subject to this
Section C
and
Section D
to this Supplement, to be purchased, shall be held on March 16, 2015 (the
“Second Series C
Closing”
), and the third Series C Closing, at which Series C Closing the Series C Tranche E Notes and Series C Tranche G Notes are, subject to this
Section C
and
Section D
, to be purchased, shall be held on June 15, 2015 (the
“Third Series C Closing”
). At each Series C Closing, the Company will deliver to each Series C Purchaser the Series C Notes of the tranche to be purchased by such Series C Purchaser at such Series C Closing in the form of
a single Series C Note of such tranche (or such greater number of Series C Notes in denominations of at least $100,000 as such Series C Purchaser may request) dated the date of such Series C Closing and registered in such Series C Purchaser’s name (or in the name of its nominee), against payment by such Series C Purchaser of the purchase price thereof by transfer of immediately available funds for credit to the Company’s account on the date of such Series C Closing (which account shall be specified in a notice to each such Series C Purchaser at least three Business Days prior to each Series C Closing).
If at such Series C Closings the Company shall fail to tender such Series C Notes to any Series C Purchaser as provided above in this
Section
C
, or any of the conditions specified in
Section
D
to this Supplement shall not have been fulfilled to such Series C Purchaser’s satisfaction, such Series C Purchaser shall, at its election, be relieved of all further obligations under this Supplement and the Agreement, without thereby waiving any rights such Series C Purchaser may have by reason of such failure or such nonfulfillment.
D.
Conditions to Series C Closings.
The obligation of each Series C Purchaser to execute and deliver this Supplement on the Series C Execution Date is subject to the representations and warranties of the Company in
Section 5
of the Agreement, as supplemented, amended or superseded by the representations and warranties set forth in
Exhibit A
hereto, being correct when made on the Series C Execution Date. The obligations of each Series C Purchaser to purchase and pay for the Series C Notes to be purchased by such Series C Purchaser hereunder at a Series C Closing is subject to the satisfaction, on or before the date of such Series C Closing, of the conditions set forth in
Section 4
of the Agreement, provided that the reference to Chapman and Cutler LLP in
Section 4.4(c)
of the Agreement shall be deemed to be a reference to Winston & Strawn LLP, and to the following additional conditions:
(a)
Except as supplemented, amended or superseded by the representations and warranties set forth in
Exhibit A
hereto, each of the representations and warranties of the Company set forth in
Section 5
of the Agreement shall be correct as of the date of each Series C Closing and the Company shall have delivered to such Series C Purchaser an Officer’s Certificate, dated the date of such Series C Closing, certifying that such condition has been fulfilled.
(b)
Contemporaneously with each Series C Closing, the Company shall sell to each Series C Purchaser, and each Series C Purchaser shall purchase, the Series C Notes to be purchased by such Series C Purchaser on the date of such Series C Closing as specified in the
Supplemental Purchaser Schedule.
E.
Prepayments
. The Series C Notes shall be subject to prepayment only (a) pursuant to the required prepayments, if any, specified in clause (x) below; and (b) pursuant to the optional prepayments specified in clause (y) below.
(x)
Maturity. As provided therein, the entire unpaid principal amount of each tranche of the Series C Notes shall be due and payable on the stated maturity date thereof.
(y)
Optional and Contingent Prepayments. As provided in
Section 8.2
of the Agreement.
F.
Purchaser Representations
. Each Series C Purchaser represents and warrants that the representations and warranties set forth in
Section 6
of the Agreement are true and correct on the Series C Execution Date with respect to the purchase of the Series C Notes by such Series C Purchaser with the same force and effect as if each reference to “Series A Notes” set forth therein was modified to refer to the “Series C Notes” and each reference to “Initial Purchaser” set forth therein was modified to refer to the “Series C Purchaser”.
G.
Definition of “Priority Debt”
The definition of the term “Priority Debt” as set forth in Schedule B to the Agreement is deemed to be supplemented and modified to read in its entirety as follows:
“Priority Debt”
means, without duplication, (a) any Debt of the Company or a Subsidiary secured by a Lien created or incurred within the limitations of
Section 10.3(d)
and (b) any Debt of the Company’s Subsidiaries;
provided
that there shall be excluded from any calculation of Priority Debt, (i) the Debt of any Subsidiary owing to the Company or a Wholly‑owned Significant Subsidiary of the Company, and (ii) the Debt of any Person which becomes a Subsidiary after the date of the First Initial Closing and any extension, renewal or refunding thereof;
provided
that such Debt was not incurred in contemplation of such Person becoming a Subsidiary.
H.
Series C Notes Issued under and Pursuant to Agreement.
Except as otherwise specifically provided above (and expressly permitted by the Agreement), all of the provisions of the Agreement are incorporated by reference herein and shall apply to the Series C Notes as if expressly set forth in this Supplement. Accordingly, the Series C Notes shall be deemed to be issued under, to be subject to and to have the benefit of all of the terms and provisions of the Agreement as the same may from time to time be amended and supplemented in the manner provided therein.
[Signature Page Follows]
The execution hereof by the Series C Purchasers shall constitute a contract among the Company and the Series C Purchasers for the uses and purposes hereinabove set forth. By their acceptance hereof, each of the Series C Purchasers shall also be deemed to have accepted and agreed to the terms and provisions of the Agreement, as in effect on the date hereof.
AEP Transmission Company, LLC
By:
/s/ Renee V. Hawkins
Name: Renee V. Hawkins
Title: Assistant Treasurer
Schedule A
(to Supplement)
This Supplement is hereby accepted and agreed as of the date hereof:
State Farm Life Insurance Company
State Farm Life and Accident Assurance Company
By:
/s/ Julie Hoyer
Name: Julie Hoyer
Title: Senior Investment Advisr
Allianz Life Insurance Company of North America
By:
/s/ Brian F. Landry
Name: Brian F. Landry
Title: Assistant Treasurer
Connecticut General Life Insurance Company
Life Insurance Company of North America
Cigna Health and Life Insurance Company
By: Cigna Invesments, Inc., authorized agent
By:
/s/ Robert W. Eccles
Name: Robert W. Eccles
Title: Senior Managing Partner
The Northwestern Mutual Life Insurance Company
The Northwestern Mutual Life Insurance Company for its Group Annuity Separate Account
By:
/s/ Howard Stern
Name: Howard Stern
Title: Authorized Representative
First MetLife Investors Insurance Company
MetLife Insurance Company of Connecticut
By Metropolitan Life Insurance Company, its Investment Manager
By:
/s/ John A. Wills
Name: John A. Wills
Title: Managing Director
Hartford Fire Insurance Company
Hartford Life and Accident Insurance Company
By: Hartford Investment Management Company Its Agent and Attorney-in-Fact
By:
/s/ Kenneth Day
Name: Kenneth Day
Title: Vice President
Massachusetts Mutual Life Insurance Compay
CM Life Insurance Company
Banner Life Insurance Company
By: Babson Capital Management LLC as Investment Advisor
By:
/s/ Thomas P. Shea
Name: Thomas P. Shea
Title: Managing Director
Great-West Life & Annuity Insurance Company
By:
/s/ Ward Argust
Name: Ward Argust
Title: Manager, Investments
Ensign Peak Advisors, Inc.
By: /s/ Matthew D. Dall
Name: Matthew D. Dall
Title: Head of Credit Research
Trivent Financial for Lutherans
By:
/s/ William J. Hochmuth
Name: William J. Hochmuth
Title: Director
Principal Life Insurance Company
RGA Reinsurance Company
By: Principal Global Investors, LLC
By:
/s/ Adrienne L. McFarland
Name: Adrienne L. McFarland
Title: Counsel
Riversource Life Insurance Company
Riversource Life Insurance Co. of New York
By:
/s/ Thomas W. Murphy
Name: Thomas W. Murphy
Title: Vice President-Investments
Jackson National Life Insurance Company
By:
/s/ Luke Stifflear
Name: Luke Stifflear
Title: Sr. Managing Director
Western-Southern Life Assurance Company
By:
/s/ James J. Vance
Name: James J. Vance
Title: Vice President
United of Omaha Life Insurance Company
Mutual of Omaha Insurance Company
By:
/s/ Justin P. Kavan
Name: Justin P. Kavan
Title: Vice President
Life Insurance Company of the Southwest
By:
/s/ Chris P. Gudmastad
Name: Chris P. Gudmastad
Title: Asst. Vice President
American Equity Investment Life Insurance Company
By:
/s/ Jeffrey A. Fossell
Name: Jeffrey A. Fossell
Title: Authorized Signatory
Cobank, ACB
By:
/s/ Jennifer Daurio
Name: Jennifer Daurio
Title: Vice President
American Family Life Insurance Company
By:
/s/ David L. Voge
Name: David L. Voge
Title: Portfolio Manager
Louisiana Medical Mutual Insurance Company
The Pharmacists Insurance Company
Pharmacists Mutual Insurance Company
By: Prime Advisors, Inc., its Attorney-in-Fact
By:
/s/ Scott Sell
Name: Scott Sell
Title: Vice President
Information Relating to Series C Purchasers
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Name and Address of Series C Purchaser
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Principal
Amount and
Tranche of Series
C Notes to Be
Purchased
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[Name of Series C Purchaser]
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$[__________]
(Tranche [A];
No. C-[A]-[1])
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(1)
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All payments by wire transfer of
immediately available funds to:
with sufficient information to identify the
source and application of such funds.
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(2)
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All notices of payments and written
confirmations of such wire transfers:
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(3)
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All other communications:
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Exhibit A
Supplemental Representations
The Company represents and warrants to each Series C Purchaser that except as hereinafter set forth in this
Exhibit A
, each of the representations and warranties set forth in
Section 5
of the Agreement is true and correct as of the date hereof with respect to the Series C Notes with the same force and effect as if each reference to “Series A Notes” set forth therein was modified to refer to the “Series C Notes” and each reference to “this Agreement” therein was modified to refer to the Agreement as supplemented by this Supplement. The Section references hereinafter set forth correspond to the similar sections of the Agreement which are supplemented hereby:
1.
Section 5.3 of the Agreement is deemed to be supplemented and modified to read in its entirety as follows:
“The Company, through its agents, Barclays Capital Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, has delivered to each Purchaser a copy of a Private Placement Memorandum, dated October 2014 (the “
Memorandum
”), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries. This Agreement, the Memorandum and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby and identified in
Schedule 5.3
, and the financial statements listed in
Schedule 5.5
(this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements delivered to each Purchaser prior to October 24, 2014 being referred to, collectively, as the
“Disclosure Documents”
), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made;
provided,
that no representation is hereby made with respect to the projections contained therein other than that such projections are based on information that the Company believes to be accurate and were calculated in a manner that the Company believes to be reasonable. Since December 31, 2013, there has been no change in the financial condition, operations, business or properties of the Company except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company that would reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.”
2.
Section 5.12(b) of the Agreement is deemed to be modified so that each reference to the date “January 1, 2012” is deleted and replaced with a reference to the date “January 1, 2014”.
3.
Section 5.15(a) of the Agreement is deemed to be supplemented and modified to read in its entirety as follows:
“(a)
Schedule 5.15
sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of November 12, 2014 (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and Guaranty thereof, if any), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary, the outstanding principal amount of which exceeds $1,000,000, and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment.
Annex A
to be attached hereto on the date of the Second Series C Closing will correctly describe all outstanding Debt and any Liens securing such Debt of the Company and its Subsidiaries as of the date which is two Business Days prior to the date of the Second Series C Closing. Since the First Series C Closing, there shall have been no Material increase in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries listed on
Schedule 5.15
(other than the inclusion of the Series C Tranche A Notes, the Series C Tranche B Notes, the Series C Tranche C Notes, the Series C Tranche F Notes, the Series C Tranche H Notes and the Series C Tranche I Notes).
Annex B
to be attached hereto on the date of the Third Series C Closing will correctly describe all outstanding Debt and any Liens securing such Debt of the Company and its Subsidiaries as of the date which is two Business Days prior to the date of the Third Series C Closing. Since the Second Series C Closing, there shall have been no Material increase in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries listed on
Schedule 5.15
(other than the inclusion of the Series C Tranche D Notes).”
4.
Each of Schedules 5.3, 5.4, 5.5, 5.12 and 5.15 to the Agreement is deemed to be replaced by Schedules 5.3, 5.4, 5.5, 5.12 and 5.15 to this Supplement, as applicable.
5.
Each of Annexes A and B to the Agreement is deemed to be replaced by Annexes A and B to this Supplement, as applicable.
Exhibit 1-A
[Form of Series C, Tranche A Note]
AEP Transmission Company, LLC
2.68% Senior Note,
Series C, Tranche A, due November 14, 2019
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No. [_______]
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[Date]
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$[__________]
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PPN 00114* AM5
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars (or so much thereof as shall not have been prepaid) on November 14, 2019 (the “
Maturity Date
”) with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of 2.68% per annum from the date hereof, payable semiannually, on the 14
th
day of May and November in each year, commencing with the May 14
th
or November 14
th
next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 4.68% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series C Notes”
) issued pursuant to the Supplement to Note Purchase Agreement dated as of November 14, 2014 to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By__________________________________
Title:________________________________
Exhibit 1-B
[Form of Series C, Tranche B Note]
AEP Transmission Company, LLC
3.18% Senior Note,
Series C, Tranche B, due November 14, 2021
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No. [_______]
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[Date]
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$[__________]
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PPN 00114* AN3
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars (or so much thereof as shall not have been prepaid) on November 14, 2021 (the “
Maturity Date
”) with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of 3.18% per annum from the date hereof, payable semiannually, on the 14
th
day of May and November in each year, commencing with the May 14
th
or November 14
th
next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 5.18% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series C Notes”
) issued pursuant to the Supplement to Note Purchase Agreement dated as of November 14, 2014 to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By_________________________________
Title:_______________________________
Exhibit 1-C
[Form of Series C, Tranche C Note]
AEP Transmission Company, LLC
3.56% Senior Note,
Series C, Tranche C, due November 14, 2024
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No. [_______]
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[Date]
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$[__________]
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PPN 00114* AP8
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars (or so much thereof as shall not have been prepaid) on November 14, 2024 (the “
Maturity Date
”) with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of 3.56% per annum from the date hereof, payable semiannually, on the 14
th
day of May and November in each year, commencing with the May 14
th
or November 14
th
next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 5.56% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series C Notes”
) issued pursuant to the Supplement to Note Purchase Agreement dated as of November 14, 2014 to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By______________________________
Title:____________________________
Exhibit 1-D
[Form of Series C, Tranche D Note]
AEP Transmission Company, LLC
3.66% Senior Note,
Series C, Tranche D, due March 16, 2025
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No. [_______]
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[Date]
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$[__________]
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PPN 00114* AQ6
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars (or so much thereof as shall not have been prepaid) on March 16, 2025 (the “
Maturity Date
”) with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of 3.66% per annum from the date hereof, payable semiannually, on the 16
th
day of March and September in each year, commencing with the March 16
th
or September 16
th
next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 5.66% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series C Notes”
) issued pursuant to the Supplement to Note Purchase Agreement dated as of November 14, 2014 to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By_________________________________
Title:_______________________________
Exhibit 1-E
[Form of Series C, Tranche E Note]
AEP Transmission Company, LLC
3.76% Senior Note,
Series C, Tranche E, due June 15, 2025
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No. [_______]
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[Date]
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$[__________]
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PPN 00114* AR4
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars (or so much thereof as shall not have been prepaid) on June 15, 2025 (the “
Maturity Date
”) with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of 3.76% per annum from the date hereof, payable semiannually, on the 15
th
day of June and December in each year, commencing with the June 15
th
or December 15
th
next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 5.76% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series C Notes”
) issued pursuant to the Supplement to Note Purchase Agreement dated as of November 14, 2014 to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By_____________________________
Title:___________________________
Exhibit 1-F
[Form of Series C, Tranche F Note]
AEP Transmission Company, LLC
3.81% Senior Note,
Series C, Tranche F, due November 14, 2029
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No. [_______]
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[Date]
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$[__________]
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PPN 00114* AS2
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars (or so much thereof as shall not have been prepaid) on November 14, 2029 (the “
Maturity Date
”) with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of 3.81% per annum from the date hereof, payable semiannually, on the 14
th
day of May and November in each year, commencing with the May 14
th
or November 14
th
next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 5.81% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series C Notes”
) issued pursuant to the Supplement to Note Purchase Agreement dated as of November 14, 2014 to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By______________________________
Title:____________________________
Exhibit 1-G
[Form of Series C, Tranche G Note]
AEP Transmission Company, LLC
4.01% Senior Note,
Series C, Tranche G, due June 15, 2030
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No. [_______]
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[Date]
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$[__________]
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PPN 00114* AT0
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars (or so much thereof as shall not have been prepaid) on June 15, 2030 (the “
Maturity Date
”) with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of 4.01% per annum from the date hereof, payable semiannually, on the 15
th
day of June and December in each year, commencing with the June 15
th
or December 15
th
next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.01% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series C Notes”
) issued pursuant to the Supplement to Note Purchase Agreement dated as of November 14, 2014 to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By________________________________
Title:______________________________
Exhibit 1-H
[Form of Series C, Tranche H Note]
AEP Transmission Company, LLC
4.05% Senior Note,
Series C, Tranche H, due November 14, 2034
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No. [_______]
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[Date]
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$[__________]
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PPN 00114* AU7
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars (or so much thereof as shall not have been prepaid) on November 14, 2034 (the “
Maturity Date
”) with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of 4.05% per annum from the date hereof, payable semiannually, on the 14
th
day of May and November in each year, commencing with the May 14
th
or November 14
th
next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.05% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series C Notes”
) issued pursuant to the Supplement to Note Purchase Agreement dated as of November 14, 2014 to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By________________________________
Title:______________________________
Exhibit 1-I
[Form of Series C, Tranche I Note]
AEP Transmission Company, LLC
4.53% Senior Note,
Series C, Tranche I, due November 14, 2044
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No. [_______]
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[Date]
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$[__________]
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PPN 00114* AV5
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars (or so much thereof as shall not have been prepaid) on November 14, 2044 (the “
Maturity Date
”) with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of 4.53% per annum from the date hereof, payable semiannually, on the 14
th
day of May and November in each year, commencing with the May 14
th
or November 14
th
next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.53% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series C Notes”
) issued pursuant to the Supplement to Note Purchase Agreement dated as of November 14, 2014 to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By________________________________
Title:______________________________
Schedule 5.3
(to Supplement)
Disclosure Materials
U.S. Private Placement Investor Presentation dated October 2014
Schedule 5.4
(to Supplement)
Subsidiaries of the Company and Ownership of Subsidiary Stock
List of Subsidiary Companies
: each 100% owned
AEP Appalachian Transmission Company, Inc.
AEP Indiana Michigan Transmission Company, Inc.
AEP Kentucky Transmission Company, Inc.
AEP Ohio Transmission Company, Inc.
AEP Oklahoma Transmission Company, Inc.
AEP Southwestern Transmission Company, Inc.
AEP West Virginia Transmission Company, Inc.
Schedule 5.5
(to Supplement)
Financial Statements
AEP Transmission Company and Subsidiaries 2012 Annual Report Audited Consolidated Financial Statements
AEP Transmission Company and Subsidiaries 2013 Annual Report Audited Consolidated Financial Statements
AEP Transmission Company and Subsidiaries 2014 First Quarter and Second Quarter Reports Unaudited Consolidated Financial Statements
Schedule 5.12
(to Supplement)
ERISA Matters
January 1, 2014 Defined Benefit Adjusted Funding Target Attainment Percentage
For the American Electric Power System Retirement Plan, which is a pension plan within the meaning of section 3(2) of ERISA (other than a Multiemployer Plan) that is subject to the funding requirements of section 302 of ERISA or section 412 of the Code, the adjusted funding target attainment percentage as of January 1, 2014, as most recently certified by the Plan’s actuary on the basis of the actuarial assumptions specified for funding purposes in such Plan’s actuarial valuation report for the plan year beginning January 1, 2014, is 110.21%.
Schedule 5.15
(to Supplement)
5.15(a)
Short-term debt
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Short-Term Debt (all affiliate borrowings):
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AEP Transmission Company, LLC
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$83,494,731.14
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AEP Ohio Transmission Company, Inc.
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$13,718,007.14
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AEP Indiana Michigan Transmission Company, Inc.
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$48,092,218.95
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AEP Oklahoma Transmission Company, Inc.
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$19,664,228.55
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AEP Appalachian Transmission Company, Inc.
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$995,806.07
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AEP Kentucky Transmission Company, Inc.
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$3,854,011.13
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AEP Southwestern Transmission Company, Inc.
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$915,191.74
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AEP West Virginia Transmission Company, Inc.
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$69,656,547.66
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AEP Ohio Transmission Company, Inc (as obligor) $50,000,000 Daily Variable Rate Note, due to AEP Transmission Company, LLC (as obligee) on July 7, 2015
AEP Ohio Transmission Company, Inc (as obligor) $15,000,000 Daily Variable Rate Note, due to AEP Transmission Company, LLC (as obligee) on July 21, 2015
AEP Ohio Transmission Company, Inc (as obligor) $30,000,000 Daily Variable Rate Note, due to AEP Transmission Company, LLC (as obligee) on November 14, 2014
Long-term debt
AEP Transmission Company, LLC (as obligor)
AEP Transmission Company, LLC $104,000,000 3.30% Senior Notes, Series A, Tranche A due October 18, 2022
AEP Transmission Company, LLC $85,000,000 4.00% Senior Notes, Series A, Tranche B due October 18, 2032
AEP Transmission Company, LLC $61,000,000 4.73% Senior Notes, Series A, Tranche C due October 18, 2042
AEP Transmission Company, LLC $75,000,000 4.78% Senior Notes, Series A, Tranche D due December 14, 2042
AEP Transmission Company, LLC $25,000,000 4.83% Senior Notes, Series A, Tranche E due March 18, 2043
AEP Transmission Company, LLC $50,000,000 2.73% Senior Notes, Series B, Tranche A due November 7, 2018
Schedule 5.15
(to Supplement)
AEP Transmission Company, LLC $60,000,000 4.05% Senior Notes, Series B, Tranche B due November 7, 2023
AEP Transmission Company, LLC $60,000,000 4.38% Senior Notes, Series B, Tranche C due November 7, 2028
AEP Transmission Company, LLC $100,000,000 5.32% Senior Notes, Series B, Tranche D due November 7, 2043
AEP Transmission Company, LLC $30,000,000 5.42% Senior Notes, Series B, Tranche E due April 30, 2044
AEP Transmission Company, LLC $100,000,000 5.52% Senior Notes, Series B, Tranche F due October 30, 2044
AEP Ohio Transmission Company, Inc.(as obligor) and AEP Transmission Company, LLC (as obligee):
AEP Ohio Transmission Company, Inc. $83,200,000 3.30% Senior Notes, Series A, Tranche A due October 18, 2022
AEP Ohio Transmission Company, Inc. $68,000,000 4.00% Senior Notes, Series A, Tranche B due October 18, 2032
AEP Ohio Transmission Company, Inc. $48,800,000 4.73% Senior Notes, Series A, Tranche C due October 18, 2042
AEP Ohio Transmission Company, Inc. $10,000,000 4.83% Senior Notes, Series A, Tranche E due March 18, 2043
AEP Ohio Transmission Company, Inc. $31,500,000 2.73% Senior Notes, Series B, Tranche A due November 7, 2018
AEP Ohio Transmission Company, Inc. $37,800,000 4.05% Senior Notes, Series B, Tranche B due November 7, 2023
AEP Ohio Transmission Company, Inc. $37,800,000 4.38% Senior Notes, Series B, Tranche C due November 7, 2028
AEP Ohio Transmission Company, Inc. $63,000,000 5.32% Senior Notes, Series B, Tranche D due November 7, 2043
AEP Ohio Transmission Company, Inc. $18,900,000 5.42% Senior Notes, Series B, Tranche E due April 30, 2044
Schedule 5.15
(to Supplement)
AEP Ohio Transmission Company, Inc. $43,000,000 5.52% Senior Notes, Series B, Tranche F due October 30, 2044
AEP Indiana Michigan Transmission Company, Inc.(as obligor) and AEP Transmission Company, LLC (as obligee):
AEP Indiana Michigan Transmission Company, Inc. $20,800,000 3.30% Senior Notes, Series A, Tranche A due October 18, 2022
AEP Indiana Michigan Transmission Company, Inc. $17,000,000 4.00% Senior Notes, Series A, Tranche B due October 18, 2032
AEP Indiana Michigan Transmission Company, Inc. $12,200,000 4.73% Senior Notes, Series A, Tranche C due October 18, 2042
AEP Indiana Michigan Transmission Company, Inc. $7,500,000 4.83% Senior Notes, Series A, Tranche E due March 18, 2043
AEP Indiana Michigan Transmission Company, Inc. $9,250,000 2.73% Senior Notes, Series B, Tranche A due November 7, 2018
AEP Indiana Michigan Transmission Company, Inc. $11,100,000 4.05% Senior Notes, Series B, Tranche B due November 7, 2023
AEP Indiana Michigan Transmission Company, Inc. $11,100,000 4.38% Senior Notes, Series B, Tranche C due November 7, 2028
AEP Indiana Michigan Transmission Company, Inc. $18,500,000 5.32% Senior Notes, Series B, Tranche D due November 7, 2043
AEP Indiana Michigan Transmission Company, Inc. $5,550,000 5.42% Senior Notes, Series B, Tranche E due April 30, 2044
AEP Indiana Michigan Transmission Company, Inc. $17,000,000 5.52% Senior Notes, Series B, Tranche F due October 30, 2044
AEP Oklahoma Transmission Company, Inc.(as obligor) and AEP Transmission Company, LLC (as obligee):
AEP Oklahoma Transmission Company, Inc. $75,000,000 4.78% Senior Notes, Series A, Tranche D due December 14, 2042
Schedule 5.15
(to Supplement)
AEP Oklahoma Transmission Company, Inc. $7,500,000 4.83% Senior Notes, Series A, Tranche E due March 18, 2043
AEP Oklahoma Transmission Company, Inc. $9,250,000 2.73% Senior Notes, Series B, Tranche A due November 7, 2018
AEP Oklahoma Transmission Company, Inc. $11,100,000 4.05% Senior Notes, Series B, Tranche B due November 7, 2023
AEP Oklahoma Transmission Company, Inc. $11,100,000 4.38% Senior Notes, Series B, Tranche C due November 7, 2028
AEP Oklahoma Transmission Company, Inc. $18,500,000 5.32% Senior Notes, Series B, Tranche D due November 7, 2043
AEP Oklahoma Transmission Company, Inc. $5,550,000 5.42% Senior Notes, Series B, Tranche E due April 30, 2044
AEP Oklahoma Transmission Company, Inc. $5,000,000 5.52% Senior Notes, Series B, Tranche F due October 30, 2044
AEP West Virginia Transmission Company, Inc.(as obligor) and AEP Transmission Company, LLC (as obligee):
AEP West Virginia Transmission Company, Inc. $35,000,000 5.52% Senior Notes, Series B, Tranche F due October 30, 2044
5.15(b)
None.
5.15(c)
None.
Annex A
(to Supplement)
Existing Debt as of the Second Series C Closing
Annex B
(to Supplement)
Existing Debt as of the Third Series C Closing
Exhibit 4(c)-4
NY:1756840.7
Execution Copy
CUSIP NUMBER 00114LAA4
U.S. $300,000,000
TERM CREDIT AGREEMENT
Dated as of November 4, 2015
among
AEP TRANSMISSION COMPANY, LLC
as the Borrower
THE LENDERS NAMED HEREIN
as Initial Lenders
and
MIZUHO BANK, LTD.
as Administrative Agent
MIZUHO BANK, LTD.
THE BANK OF NOVA SCOTIA
Joint Lead Arrangers and Joint Bookrunners
THE BANK OF NOVA SCOTIA
Syndication Agent
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TABLE OF CONTENTS
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Page
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Article I DEFINITIONS AND ACCOUNTING TERMS
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1
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Section 1.01. Certain Defined Terms.
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1
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Section 1.02. Computation of Time Periods.
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17
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Section 1.03. Accounting Terms.
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17
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Section 1.04. Other Interpretive Provisions.
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17
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Article II AMOUNTS AND TERMS OF THE ADVANCES
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17
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Section 2.01. The Advances.
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17
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Section 2.02. Making the Advances.
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18
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Section 2.03. Fees.
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19
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Section 2.04. Repayment of Advances.
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19
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Section 2.05. Evidence of Indebtedness.
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19
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Section 2.06. Interest on Advances.
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20
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Section 2.07. Interest Rate Determination.
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21
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Section 2.08. Optional Conversion of Advances.
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21
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Section 2.09. Prepayments of Advances.
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22
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Section 2.10. Increased Costs.
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22
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Section 2.11. Illegality.
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23
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Section 2.12. Payments and Computations.
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24
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Section 2.13. Taxes.
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25
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Section 2.14. Sharing of Payments, Etc.
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28
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Section 2.15. Mitigation Obligations; Replacement of Lenders.
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29
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Article III CONDITIONS PRECEDENT
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30
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Section 3.01. Conditions Precedent to Effectiveness of this Agreement and Initial Advance.
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30
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Section 3.02. Conditions Precedent to the Advance on the Second Borrowing Date.
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32
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Article IV REPRESENTATIONS AND WARRANTIES
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32
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Section 4.01. Representations and Warranties of the Borrower.
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32
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Article V COVENANTS OF THE Borrower
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35
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Section 5.01. Affirmative Covenants.
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35
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Section 5.02. Negative Covenants.
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38
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Section 5.03. Financial Covenant.
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41
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Article VI reserved
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41
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Article VII EVENTS OF DEFAULT
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41
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Section 7.01. Events of Default.
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41
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Article VIII THE ADMINISTRATIVE AGENT
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44
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Section 8.01. Authorization and Action.
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44
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Section 8.02. Agent’s Reliance, Etc.
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44
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Section 8.03. Mizuho and its Affiliates.
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45
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Section 8.04. Lender Credit Decision.
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45
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Section 8.05. Indemnification.
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45
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Section 8.06. Successor Agent.
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46
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Article IX MISCELLANEOUS
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46
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Section 9.01. Amendments, Etc.
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46
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Section 9.02. Notices, Etc.
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47
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Section 9.03. No Waiver; Remedies.
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48
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Section 9.04. Costs and Expenses.
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49
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Section 9.05. Right of Set-off.
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50
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Section 9.06. Binding Effect.
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51
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Section 9.07. Assignments and Participations.
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51
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Section 9.08. Confidentiality.
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55
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Section 9.09. Governing Law.
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56
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Section 9.10. Severability; Survival.
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56
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Section 9.11. Execution in Counterparts.
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56
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Section 9.12. Jurisdiction, Etc.
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57
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Section 9.13. Waiver of Jury Trial.
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57
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Section 9.14. USA Patriot Act.
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58
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Section 9.15. No Fiduciary Duty.
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58
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Section 9.16. Defaulting Lenders.
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58
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EXHIBITS AND SCHEDULES
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EXHIBIT A
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Form of Notice of Borrowing
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EXHIBIT B
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Form of Assignment and Assumption
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EXHIBIT C
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Form of Opinion of Counsel for the Borrower
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EXHIBIT D-1
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Form of U.S. Tax Compliance Certificate (For Foreign Lenders That AreNot Partnerships For U.S. Federal Income Tax Purposes)
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EXHIBIT D-2
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Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
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EXHIBIT D-3
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Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
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EXHIBIT D-4
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Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
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SCHEDULE I
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Schedule of Initial Lenders
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SCHEDULE 4.01(m)
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Schedule of Subsidiaries and Significant Subsidiaries
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TERM CREDIT AGREEMENT
TERM CREDIT AGREEMENT, dated as of November 4, 2015 (this “
Agreement
”), among AEP Transmission Company, LLC, a Delaware limited liability company (“
AEPTC
” or the “
Borrower
”), the banks, financial institutions and other institutional lenders listed on the signatures pages hereof (the “
Initial Lenders
”) and MIZUHO BANK, LTD. (“
Mizuho
”), as administrative agent (in such capacity, and together with its successors appointed pursuant to the terms of this Agreement, the “
Administrative Agent
”) for the Lenders (as hereinafter defined).
PRELIMINARY STATEMENT:
The Borrower has requested that the Lenders agree, on the terms and conditions set forth herein, to provide the Borrower a $300,000,000 term loan credit facility to be used for repayment of short term debt and capital expenditures, with the remainder to be used for general corporate purposes. The Lenders have indicated their willingness to provide such a facility on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms.
As used in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“
Administrative Agent
” has the meaning specified in the recital of parties to this Agreement.
“
Administrative Questionnaire
” means an administrative questionnaire in a form supplied by the Administrative Agent.
“
Advance
” means an advance by a Lender to the Borrower as part of a Borrowing on the Closing Date or the Second Borrowing Date and refers to a Base Rate Advance or a Eurodollar Rate Advance.
“
AEP
” means American Electric Power Company, Inc., a New York corporation.
“
Affiliate
” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.
“
Agent Parties
” has the meaning specified in Section 9.02(c).
“
Agent’s Account
” means the account of the Administrative Agent maintained by the Administrative Agent with Mizuho Bank, Ltd. New York Branch at its office located at 1251 Avenue of the Americas New York, NY 10020, ABA Number: 026 004 307, Account Name: LAU ISA, Account No. H79-740-222205, Reference: AEP Transmission Company, LLC, or such other account of the Administrative Agent as the Administrative Agent may from time to time designate in a written notice to the Lenders and the Borrower.
“
Anti-Corruption Laws
” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery, money laundering or corruption.
“
Applicable Law
” means (i) all applicable common law and principles of equity and (ii) all applicable provisions of all (A) constitutions, statutes, rules, regulations and orders of governmental bodies, (B) Governmental Approvals and (C) orders, decisions, judgments and decrees of all courts (whether at law or in equity or admiralty) and arbitrators.
“
Applicable Lending Office
” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of a Base Rate Advance and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
“
Applicable Margin
” means, with respect to any Base Rate Advance and any Eurodollar Rate Advance, the rate per annum for such Type of Advance set forth below:
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Applicable Margin
for Eurodollar
Rate
Advances
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Applicable Margin
for Base Rate
Advances
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0.850%
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0.000%
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provided
, that the Applicable Margins set forth above shall be increased upon the occurrence and during the continuance of any Event of Default, by 2.00% per annum.
“
Approvals
” means the approvals of FERC.
“
Approved Fund
” means any Fund that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.
“
Assignment and Assumption
” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.07), and accepted by the Administrative Agent, in substantially the form of Exhibit B hereto or any other form approved by the Administrative Agent.
“
Bankruptcy Event
” means, with respect to any Person, such Person becomes the subject of a proceeding under any Debtor Relief Law, or has had a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets (including the Federal Deposit Insurance Corporation or any other Governmental Authority acting in a similar capacity) appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment;
provided
that, a Bankruptcy Event shall not result solely by virtue of any ownership interest, or acquisition of any equity interest, in such Person by a Governmental Authority so long as such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirm obligations under any agreement in which it commits to extend credit.
“
Base Rate
” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of the following rates then in effect:
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(i)
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the rate of interest quoted in the print edition of
The Wall Street Journal
, Money Rates Section as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks), as in effect from time to time;
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(ii)
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1/2 of 1% per annum above the Federal Funds Rate; and
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(iii)
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the rate of interest per annum equal to the Eurodollar Rate (together with any amounts payable under Section 2.06(c)) as determined on such day (or if such day is not a Business Day, on the next preceding Business Day) that would be applicable to a Eurodollar Rate Advance having an Interest Period of one month, plus 1%.
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“
Base Rate Advance
” means an Advance that bears interest as provided in Section 2.06(a).
“
Borrower
” has the meaning specified in the recital of parties to this Agreement.
“
Borrowing
” means the borrowing by the Borrower consisting of the Advances on the Closing Date or the borrowing by the Borrower consisting of the Advances on the Second Borrowing Date pursuant to Section 2.02.
“
Business Day
” means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, a day on which dealings are carried out in the London interbank market.
“
Change in Law
” means the occurrence, after the date of this Agreement, of any of the following: (i) the adoption or taking effect of any law, rule, regulation or treaty, (ii) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority;
provided
that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, implemented, adopted or issued.
“
Closing Date
” means November 4, 2015.
“
Commitment
” means, for each Lender, the obligation of such Lender to make Advances to the Borrower in an aggregate amount no greater than the amount set forth on Schedule I hereto.
“
Commitment Percentage
” means, as to any Lender as of any date of determination, the percentage describing such Lender’s pro rata share of the Commitments set forth on Schedule I hereto;
provided
that in the case of Section 9.16 when a Defaulting Lender shall exist, “
Commitment Percentage
” means the percentage of the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment.
“
Commitments
” means the aggregate of the Lenders’ Commitments hereunder.
“
Communications
” has the meaning specified in Section 9.02(b).
“
Confidential Information
” means information that the Borrower furnishes to the Administrative Agent, the Joint Lead Arrangers or any Lender in a writing designated at the time of delivery as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Administrative Agent, the Joint Lead Arrangers or such Lender from a source other than the Borrower.
“
Connection Income Taxes
” means Other Connection Taxes that are imposed on or measured by overall gross receipts or income, or net income (however denominated) or that are franchise Taxes, privilege Taxes, license Taxes or branch profits Taxes.
“
Consolidated Capital
” means, at any date of determination, the sum of (i) Consolidated Debt of the Borrower and (ii) the consolidated equity of all classes of membership interests or other equity (whether common, preferred, mandatorily convertible preferred or preference) of the Borrower and its Consolidated Subsidiaries, in each case determined in accordance with GAAP, but including Equity-Preferred Securities issued by the Borrower and its Consolidated Subsidiaries and excluding the
funded pension and other postretirement benefit plans, net of tax, and components of accumulated other comprehensive income (loss) of the Borrower and its Consolidated Subsidiaries.
“
Consolidated Debt
” of the Borrower means the total principal amount of all Debt described in clauses (i) through (v) of the definition of Debt and Guaranties of such Debt of the Borrower and its Consolidated Subsidiaries;
provided
that Guaranties of Debt included in the total principal amount of Consolidated Debt shall not be added to such total principal amount, excluding, however, any Debt of the Borrower to a Subsidiary of the Borrower and any Debt of such Subsidiary of the Borrower to the Borrower.
“
Consolidated Priority Debt
” of the Borrower means all Priority Debt of the Borrower and its Subsidiaries determined on a consolidated basis eliminating inter-company items.
“
Consolidated Subsidiary
” means, with respect to any Person at any time, any Subsidiary or other Person the accounts of which would be consolidated with those of such first Person in its consolidated financial statements in accordance with GAAP.
“
Consolidated Tangible Net Assets
” means, on any date of determination and with respect to the Borrower at any time, the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries most recently delivered to the Lenders pursuant to Section 5.01(i) as of such date of determination, 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 consolidated current liabilities of such Person and its Consolidated Subsidiaries appearing on such balance sheet.
“
Convert
”, “
Conversion
” and “
Converted
” each refers to a conversion of Advances of one Type into Advances of the other Type, or the selection of a new, or the renewal of the same, Interest Period for Eurodollar Rate Advances, pursuant to Section 2.07, 2.08 or 2.11.
“
Credit Party
” means the Administrative Agent or any Lender.
“
Debt
” of any Person means, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 60 days incurred in the ordinary course of such Person’s business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all obligations of such Person as lessee under leases that have been, in accordance with GAAP, recorded as capital leases, (v) all obligations of such Person in respect of reimbursement agreements with respect to acceptances, letters of credit (other than trade letters of credit) or similar extensions of credit, (vi) all Guaranties and (vii) all reasonably quantifiable obligations under indemnities or under support or capital contribution
agreements, and other reasonably quantifiable obligations (contingent or otherwise) to purchase or otherwise to assure a creditor against loss in respect of, or to assure an obligee against loss in respect of, all Debt of others referred to in clauses (i) through (vi) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss.
“
Debtor Relief Laws
” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.
“
Default
” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.
“
Defaulting Lender
” means, subject to Section 9.16(b), any Lender that (i) has failed to (A) fund all or any portion of its Advances within two Business Days of the date such Advances were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default, shall be specifically identified in such writing) has not been satisfied, or (B) pay to any Credit Party any other amount required to be paid by it hereunder within two Business Days of the date when due, (ii) has notified the Borrower or any Credit Party in writing that it does not intend to comply with its funding obligations hereunder or generally under other agreements in which it commits to extend credit, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund an Advance hereunder and states that such position is based on such Lender’s good faith determination that a condition precedent to funding (which condition precedent, together with any applicable Default, shall be specifically identified in such writing or public statement) cannot be satisfied), (iii) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (
provided
that, such Lender shall cease to be a Defaulting Lender pursuant to this clause (iii) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (iv) has become the subject of a Bankruptcy Event. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (i) through (iv) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting
Lender (subject to Section 9.16(b)) upon delivery of written notice of such determination to the Borrower and each Lender.
“
Disclosure Documents
” means AEPTCo’s Audited Annual Report for the fiscal year ended December 31, 2014, and Quarterly Reports for the fiscal quarters ended March 31, 2015 and June 30, 2015.
“
Dollars
” and the symbol “$” mean lawful currency of the United States of America.
“
Domestic Lending Office
” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” on such Lender’s Administrative Questionnaire or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.
“
Eligible Assignee
” means any Person that meets the requirements to be an assignee under Section 9.07(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 9.07(b)(iii)).
“
Environmental Action
” means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation, (i) by any Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (ii) by any Governmental Authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.
“
Environmental Law
” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.
“
Environmental Permit
” means any permit, approval, identification number, license or other authorization required under any Environmental Law.
“
Equity-Preferred Securities
” means (i) debt or preferred securities that are mandatorily convertible or mandatorily exchangeable into common shares of the Borrower and (ii) any other securities, however denominated, including but not limited to hybrid capital and trust originated preferred securities, (A) issued by the Borrower or any Consolidated Subsidiary of the Borrower, (B) that are not subject to mandatory redemption or the underlying securities, if any, of which are not subject to mandatory redemption, (C) that are perpetual or mature no less than 30 years from the date of issuance, (D) the indebtedness issued in connection with which, including any guaranty,
is subordinate in right of payment to the unsecured and unsubordinated indebtedness of the issuer of such indebtedness or guaranty, and (E) the terms of which permit the deferral of the payment of interest or distributions thereon to a date occurring after the Maturity Date.
“
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.
“
ERISA Affiliate
” means, with respect to any Person, each trade or business (whether or not incorporated) that is considered to be a single employer with such entity within the meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code.
“
ERISA Event
” means (i) the termination of or withdrawal from any Plan by the Borrower or any of its ERISA Affiliates, (ii) the failure by the Borrower or any of its ERISA Affiliates to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Plan or (iii) the failure by the Borrower or any of its Subsidiaries to comply with Applicable Law with respect to any Foreign Plan.
“
Eurocurrency Liabilities
” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.
“
Eurodollar Lending Office
” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” on such Lender’s Administrative Questionnaire or in the Assignment and Assumption pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.
“
Eurodollar Rate
” means, for any Interest Period for each Eurodollar Rate Advance, the London interbank offered rate (rounded upward to the nearest 1/16
th
of 1%) as administered by ICE Benchmark Administration Limited (or any other Person that takes over the administration of such rate) for deposits in immediately available funds in Dollars for a period equal in length to such Interest Period as displayed on page LIBOR01 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute Reuters page or screen that displays such rate, or on the appropriate page or screen of such other comparable information service that publishes such rate from time to time as selected by the Administrative Agent in its discretion) (in each case, the “
Screen Rate
”) at approximately 11:00 A.M. (London time) two Business Days before the first day of such Interest Period,
provided
, that if the Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement, and
provided, further
, if the Screen Rate shall not be available at such time for such Interest Period (an “
Impacted Interest Period
”), the Eurodollar Rate for such Advance shall be the Interpolated Rate,
provided
, that if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“
Eurodollar Rate Advance
” means an Advance that bears interest as provided in Section 2.06(b).
“
Eurodollar Rate Reserve Percentage
” of any Lender for any Interest Period for each Eurodollar Rate Advance means the reserve percentage applicable to such Lender during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) then applicable to such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period.
“
Event of Default
” has the meaning specified in Section 7.01.
“
Exchange Act
” has the meaning specified in Section 7.01(f).
“
Excluded Taxes
” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by overall gross receipts or income, or net income (however denominated), franchise Taxes, privilege Taxes, license Taxes or branch profits Taxes, in each case, (A) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (B) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (A) such Lender acquires such interest in the Advance or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.15(b)) or (B) such Lender changes its Applicable Lending Office, except in each case to the extent that, pursuant to Section 2.13, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Applicable Lending Office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 2.13(g) and (iv) any U.S. federal withholding Taxes imposed under FATCA.
“
FATCA
” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, and any intergovernmental agreement entered into in connection with such sections of the Internal Revenue Code and any legislation, law, regulation or practice enacted or promulgated pursuant to such intergovernmental agreement.
“
Federal Funds Rate
” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
“
FERC
” means the Federal Energy Regulatory Commission.
“
Foreign Lender
” means a Lender that is not a U.S. Person.
“
Foreign Plan
” has the meaning specified in Section 4.01(i).
“
Fund
” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of its activities.
“
GAAP
” has the meaning specified in Section 1.03.
“
Governmental Approval
” means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.
“
Governmental Authority
” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“
Guaranty
” of any Person means any obligation, contingent or otherwise, of such Person (i) to pay any Debt of any other Person or (ii) incurred in connection with the issuance by a third person of a Guaranty of Debt of any other Person (whether such obligation arises by agreement to reimburse or indemnify such third Person or otherwise).
“
Hazardous Materials
” means (i) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (ii) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.
“
Impacted Interest Period
” has the meaning specified for such term in the definition herein of “Eurodollar Rate.”
“
Indemnified Party
” has the meaning specified in Section 9.04(b).
“
Indemnified Taxes
” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (ii) to the extent not otherwise described in (i), Other Taxes.
“
Initial Lenders
” has the meaning specified in the recital of parties to this Agreement.
“
Interest Period
” means, for each Eurodollar Rate Advance, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to Eurodollar Rate Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months (or any period specified by the Borrower that is shorter than one month, if all Lenders agree), as the Borrower may, upon notice received by the Administrative Agent not later than 11:00 A.M. on the third Business Day prior to the first day of such Interest Period, select;
provided, however,
that:
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(i)
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the Borrower may not select any Interest Period that ends after the Maturity Date;
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(ii)
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whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day,
provided, however,
that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and
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(iii)
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whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.
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“
Internal Revenue Code
” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.
“
Interpolated Rate
” means, at any time, for any Interest Period, the rate per annum (rounded upward to the nearest 1/16
th
of 1%) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (i) the Screen Rate for the longest period for which the Screen Rate is available for the Eurodollar Rate Advance that is shorter than the Impacted Interest Period; and (ii) the Screen Rate for the
shortest period for which the Screen Rate is available for the Eurodollar Rate Advance that is longer than the Impacted Interest Period, in each case, at such time.
“
IRS
” means the United States Internal Revenue Service.
“
Joint Lead Arranger
” means each of Mizuho and The Bank of Nova Scotia in their respective capacities as joint lead arrangers and joint bookrunners of the Facility.
“
Lenders
” means, at any time, collectively, (i) the Initial Lenders (other than any such Initial Lenders that have previously assigned all of their respective Advances and Commitments to other Persons in accordance with Section 9.07(b) at such time), and (ii) any other Persons that have become Lenders holding Advances and/or Commitments at such time in accordance with Section 9.07(b).
“
Lien
” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.
“
LLC Agreement
” means the Limited Liability Company Agreement of the Company in effect from time to time.
“
Loan Documents
” means, collectively, (i) the Commitment Letter, dated as of October 21, 2015, among the Borrower and the Joint Lead Arrangers, (ii) the Mizuho Fee Letter, (iii) the fee letter dated as of October 21, 2015, between the Borrower and The Bank of Nova Scotia, (iv) this Agreement and (v) each promissory note issued pursuant to Section 2.05(d), in each case, as any of the foregoing may be amended, supplemented or modified from time to time.
“
Margin Regulations
” means Regulations T, U and X of the Board of Governors of the Federal Reserve System, as in effect from time to time.
“
Margin Stock
” has the meaning specified in the Margin Regulations.
“
Material Adverse Change
” means, with respect to the Borrower, any material adverse change (i) in the business, condition (financial or otherwise) or operations of the Borrower and its Subsidiaries, taken as a whole, or (ii) that is reasonably likely to affect the legality, validity or enforceability of this Agreement against the Borrower or the ability of the Borrower to perform its obligations under this Agreement.
“
Material Adverse Effect
” means, with respect to the Borrower, a material adverse effect (i) on the business, condition (financial or otherwise) or operations of the Borrower and its Subsidiaries, taken as a whole, or (ii) that is reasonably likely to affect the legality, validity or enforceability of this Agreement against the Borrower or the ability of the Borrower to perform its obligations under this Agreement.
“
Maturity Date
” means the earlier to occur of (i) November 4, 2017, and (ii) the date of declaration of all outstanding Advances to be due and payable (or automatically
becoming due and payable) and termination of any unused Commitments (or automatically becoming terminated) pursuant to Section 7.01.
“
Mizuho
” has the meaning specified in the recital of parties to this Agreement.
“
Mizuho Fee Letter
” means the Mizuho Fee Letter, dated as of October 21, 2015, between the Borrower and Mizuho.
“
Moody’s
” means Moody’s Investors Service, Inc.
“
Multiemployer Plan
” has the meaning specified in Section 4.01(i).
“
Non-Consenting Lender
” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all or all affected Lenders in accordance with the terms of Section 9.01 and (ii) has been approved by the Required Lenders.
“
Non-Defaulting Lender
” means, at any time, each Lender that is not a Defaulting Lender at such time.
“
Notice of Borrowing
” means the duly completed notice of borrowing in substantially the form of Exhibit A hereto.
“
Other Connection Taxes
” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Advance, Commitment or Loan Document).
“
Other Taxes
” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.15(b)).
“
Participant
” has the meaning specified in Section 9.07(d).
“
Participant Register
” has the meaning specified in Section 9.07(d).
“
Patriot Act
” has the meaning specified in Section 9.14.
“
Permitted Liens
” means, as to the Borrower, such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (i) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(g) hereof; (ii) Liens imposed by law,
such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens, and other similar Liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings; (iii) Liens incurred or deposits made to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (iv) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes; (v) any judgment Lien, unless an Event of Default under Section 7.01(g) shall have occurred and be continuing; (vi) any Lien on any asset of any Person existing at the time such Person is merged or consolidated with or into the Borrower or any Significant Subsidiary thereof and not created in contemplation of such event; (vii) deposits made in the ordinary course of business to secure the performance of bids, trade contracts (other than for Debt), operating leases and surety bonds; (viii) Liens upon or in any real property or equipment acquired, constructed, improved or held by the Borrower or any Subsidiary thereof in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property); and (ix) extensions, renewals or replacements of any Lien described in clause (iii), (vi), (vii) or (viii) for the same or a lesser amount,
provided, however,
that no such Lien shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or replaced; and (x) any other Lien not covered by the foregoing exceptions as long as immediately after the creation of such Lien the aggregate principal amount of Debt secured by all Liens created or assumed under this clause (x) does not exceed 10% of Consolidated Tangible Net Assets of the Borrower.
“
Person
” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.
“
Plan
” has the meaning specified in Section 4.01(i).
“
Platform
” has the meaning specified in Section 9.02(b).
“
Priority Debt
” means, without duplication, (a) any Debt of the Borrower or a Subsidiary secured by a Permitted Lien and (b) any Debt of the Borrower’s Subsidiaries;
provided
that there shall be excluded from any calculation of Priority Debt, (i) the Debt of any Subsidiary owing to the Borrower or a Wholly‑owned Significant Subsidiary of the Borrower, and (ii) the Debt of any Person which becomes a Subsidiary after the date hereof and any extension, renewal or refunding thereof;
provided
that such Debt was not incurred in contemplation of such Person becoming a Subsidiary.
“
Recipient
” means (i) the Administrative Agent and (ii) any Lender, as applicable.
“
Register
” has the meaning specified in Section 9.07(c).
“
Related Parties
” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.
“
Required Lenders
” means at any time Lenders having Advances and Commitments representing more than 50% of the sum of the then aggregate unpaid principal amount of the Advances owing to Lenders and Commitments in effect at such time. Subject to Section 9.01, the unpaid principal amount of the Advances owing to any Defaulting Lender and the Commitments of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.
“
S&P
” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.
“
Sanctioned Country
” means, at any time of determination, a country or territory that is the subject or target of any Sanctions.
“
Sanctioned Person
” means, at any time of determination, (i) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union, any EU member state or Her Majesty’s Treasury of the United Kingdom, (ii) any Person operating, organized or resident in a Sanctioned Country, (iii) any Person owned or controlled by or acting on behalf of any such Person described in the preceding clause (i) or (ii), or (iv) any Person with which, to the Borrower’s actual knowledge, any Lender is prohibited under Sanctions relevant to it from dealing or engaging in transactions. For purposes of the foregoing, control of a Person shall be deemed to include where a Sanctioned Person (A) owns or has power to vote 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of the Person or other individuals performing similar functions for the Person, or (B) has the power to direct or cause the direction of the management and policies of the Person, whether by ownership of equity interests, contracts or otherwise.
“
Sanctions
” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (i) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or by the U.S. Department of State, or (ii) the United Nations Security Council, the European Union, any EU member state or Her Majesty’s Treasury of the United Kingdom.
“
Screen Rate
” has the meaning specified in the definition of “Eurodollar Rate”.
“
SEC”
means the United States Securities and Exchange Commission.
“
Second Borrowing Date
” means December 15, 2015.
“
Senior Debt
” means all Debt of the Company which is not expressed to be subordinate or junior in rank to any Debt of the Company.
“
Significant Subsidiary
” means, at any time, any Subsidiary of the Borrower that constituted a “significant subsidiary” of the Borrower (as such term is defined in Regulation S-X of the SEC as in effect on the date hereof (17 C.F.R. Part 210)) as of the last day of the most recent fiscal year for which financial statements have been delivered pursuant to Section 5.01(i)(ii) (or, prior to the first delivery of any such financial statements, as of June 30, 2015);
provided
,
however
, that “total assets” as used in Regulation S-X shall not include securitization transition assets, phase-in cost assets or similar assets on the balance sheet of any Subsidiary resulting from the issuance of transition bonds or other asset-backed securities of a similar nature.
“
Subsidiary
” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (i) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (ii) the interest in the capital or profits of such limited liability company, partnership or joint venture or (iii) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.
“
Taxes
” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“
Type
” refers to the distinction between Advances bearing interest at the Base Rate and Advances bearing interest at the Eurodollar Rate.
“
U.S. Person
” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.
“
U.S. Tax Compliance Certificate
” has the meaning specified in Section 2.13(g)(ii)(B)(iii).
“
Voting Stock
” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or Persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.
“
Wholly-owned Significant Subsidiary
” means, at any time, any Significant Subsidiary one hundred percent (100%) of all of the Equity Interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company’s other Wholly-owned Significant Subsidiaries at such time.
“
Wholly-owned Subsidiary
” means, at any time, any Subsidiary one hundred percent (100%) of all of the Equity Interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company’s other Wholly-owned Subsidiaries at such time.
“
Withholding Agent
” means the Borrower and the Administrative Agent.
SECTION 1.02. Computation of Time Periods.
In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.
SECTION 1.03. Accounting Terms.
All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(f) (“
GAAP
”).
SECTION 1.04. Other Interpretive Provisions.
As used herein, except as otherwise specified herein, (i) references to any Person include its successors and assigns and, in the case of any Governmental Authority, any Person succeeding to its functions and capacities; (ii) references to any Applicable Law include amendments, supplements and successors thereto; (iii) references to specific sections, articles, annexes, schedules and exhibits are to this Agreement; (iv) words importing any gender include the other gender; (v) the singular includes the plural and the plural includes the singular; (vi) the words “including”, “include” and “includes” shall be deemed to be followed by the words “without limitation”; (vii) captions and headings are for ease of reference only and shall not affect the construction hereof; and (viii) references to any time of day shall be to New York City time unless otherwise specified.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances.
Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower on the Closing Date and on the Second Borrowing Date, in an aggregate amount not to exceed such Lender’s Commitment. Each Lender’s Commitment shall automatically terminate (a) on the Second Borrowing Date upon the funding by such Lender of the requested Advances and (b) otherwise, at 5:00 P.M. on the Second Borrowing Date, in each case without further action on the part of any party to this Agreement. No other Advances may be requested or shall be made on any date other than the Closing Date and the Second Borrowing Date, and no principal amounts prepaid in respect of the Advances may be reborrowed at any time.
SECTION 2.02. Making the Advances.
(a)
Each Advance comprising a Borrowing on the Closing Date or the Second Borrowing Date shall be in an aggregate amount not less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof. Each Borrowing shall be made pursuant to a Notice of Borrowing, given not later than 11:00 A.M. on the third Business Day prior to the Closing Date or the Second Borrowing Date, as applicable, in the case of a Borrowing consisting of Eurodollar Rate Advances, or not later than 9:30 A.M. on the Closing Date or the Second Borrowing Date, as applicable, in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to the Administrative Agent, which shall give to each Lender prompt written notice thereof. Such Notice of Borrowing shall be by telephone, confirmed immediately in writing, or fax in substantially the form of Exhibit A hereto, specifying therein the requested (i) Types of Advances comprising such Borrowing, (ii) aggregate amount of such Borrowing, and (iii) if such Borrowing is comprised of Eurodollar Rate Advances, the initial Interest Period for each such Advance. For the avoidance of doubt, the Borrower may request in the Notice of Borrowing multiple Advances of different Types, and/or multiple Eurodollar Rate Advances with different initial Interest Periods, as part of such Borrowing, subject to Section 2.02(b). Each Lender shall, before 12:00 noon on the Closing Date or the Second Borrowing Date, as applicable, make available for the account of its Applicable Lending Office to the Administrative Agent at the Agent’s Account, in same day funds, such Lender’s ratable portion of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will promptly make such funds available to the Borrower in such manner as the Borrower shall have specified in the Notice of Borrowing and as shall be reasonably acceptable to the Administrative Agent.
(b)
Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.07(b), 2.07(e) or 2.11, and (ii) there shall be not more than five (5) separate Eurodollar Rate Advances with different Interest Periods at any one time outstanding.
(c)
Each Notice of Borrowing shall be irrevocable and binding on the Borrower. If such Borrowing is comprised of any Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to borrow the Advances on the Closing Date or the Second Borrowing Date, as applicable, or to fulfill, on or before the Closing Date or the Second Borrowing Date, as applicable, the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advances to be made by such Lender on the Closing Date or the Second Borrowing Date, as applicable, when such Advances, as a result of such failure, are not made on such date.
(d)
Unless the Administrative Agent shall have received notice by courier or fax from a Lender prior to the Closing Date or the Second Borrowing Date, as applicable, or, in the case of a Base Rate Advance, prior to the time of such Borrowing, that such Lender will not make available to the Administrative Agent such Lender’s Advances as part of such Borrowing to be made on the Closing Date or the Second Borrowing Date, as applicable, the Administrative
Agent may assume that such Lender has made such portion available to the Administrative Agent on the Closing Date or the Second Borrowing Date, as applicable, in accordance with subsection (a) of this Section 2.02, and the Administrative Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have made such Advances available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Advances as part of such Borrowing for purposes of this Agreement.
(e)
The failure of any Lender to make any Advance to be made by it as part of a Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make any of its Advances on the Closing Date or the Second Borrowing Date, as applicable, but no Lender shall be responsible for the failure of any other Lender to make the Advances to be made by such other Lender on the Closing Date.
SECTION 2.03. Fees.
The Borrower shall pay to (a) Mizuho the fees set forth in the Mizuho Fee Letter and (b) The Bank of Nova Scotia the fees set forth in that certain fee letter dated as of October 21, 2015 between the Borrower and The Bank of Nova Scotia.
SECTION 2.04. Repayment of Advances.
The Borrower shall repay to the Administrative Agent for the account of each Lender on the Maturity Date the aggregate principal amount of all Advances owing by the Borrower to such Lender then outstanding.
SECTION 2.05. Evidence of Indebtedness.
(a)
Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Lender resulting from each Advance made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.
(b)
The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Advance made hereunder, the Type of each Advance made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from or on behalf of the Borrower and each Lender’s share thereof.
(c)
The entries made in the accounts maintained pursuant to subsections (a) and (b) of this Section 2.05 shall, to the extent permitted by Applicable Law, be prima facie evidence of the
existence and amounts of the obligations therein recorded;
provided
,
however
, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Advances and interest thereon in accordance with their terms.
(d)
Any Lender may request that any Advances made by it be evidenced by one or more promissory notes. In such event, the Borrower shall prepare, execute and deliver to such Lender one or more promissory notes payable to such Lender (or, if requested by such Lender, to such Lender and its assignees) and in a form approved by the Administrative Agent. Thereafter, the Advances evidenced by such promissory notes and interest thereon shall at all times (including after assignment pursuant to Section 9.07) be represented by one or more promissory notes in such form payable to the payee named therein.
SECTION 2.06. Interest on Advances.
The Borrower shall pay interest on the unpaid principal amount of each Advance from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:
(a)
Base Rate Advances
. During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the Base Rate plus (y) the Applicable Margin for Base Rate Advances in effect from time to time, payable in arrears (i) quarterly on the last day of each March, June, September and December during such periods, (ii) on the date such Base Rate Advance shall be Converted or paid in full and (iii) on the Maturity Date.
(b)
Eurodollar Rate Advances
. During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Advance plus (y) the Applicable Margin for Eurodollar Rate Advances in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full.
(c)
Additional Interest on Eurodollar Rate Advances
. The Borrower shall pay to each Lender, so long as such Lender shall be required under regulations of the Board of Governors of the Federal Reserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal amount of each Eurodollar Rate Advance of such Lender, from the date of such Advance until such principal amount is paid in full, at an interest rate
per annum
equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100%
minus
the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Advance. Such additional interest shall be determined by such Lender and notified to the Borrower through the Administrative Agent.
SECTION 2.07. Interest Rate Determination.
(a)
The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.06(a) or (b), and, if applicable, the rate for the purpose of determining the applicable interest rate under Section 2.06(c).
(b)
If, with respect to any Eurodollar Rate Advances, (i) the Required Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, or (ii) the Administrative Agent determines that adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon (A) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (B) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.
(c)
If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Administrative Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances.
(d)
On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such Advances shall automatically Convert into Base Rate Advances.
(e)
Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended.
SECTION 2.08. Optional Conversion of Advances.
The Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 12:00 noon on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and 2.11, Convert all or any part of Advances of one Type into Advances of the other Type or of the same Type but having a new Interest Period;
provided
,
however
, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Advances shall result in more separate Eurodollar Rate Advances than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is into
Eurodollar Rate Advances, the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower.
SECTION 2.09. Prepayments of Advances.
(a)
Optional Prepayments of Advances
. The Borrower may, upon at least two Business Days’ notice, in the case of Eurodollar Rate Advances, and upon notice not later than 11:00 A.M. on the date of prepayment, in the case of Base Rate Advances, to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and, if such notice is given, the Borrower shall prepay the outstanding principal amount of the Advances, in whole or ratably in part, in an amount equal to such prepayment amount together with accrued interest to the date of such prepayment on the principal amount prepaid;
provided
,
however
, that (x) each partial prepayment shall be in a minimum amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 9.04(c).
(b)
Mandatory Prepayments of Advances
. If AEP shall cease to own, directly or indirectly, all of the membership interests of the Borrower, (i) the Borrower shall prepay all Advances, unpaid interest and other amounts owing by the Borrower under this Agreement, with all such amounts being due and payable in full immediately upon the occurrence of such change in ownership of such Voting Stock and (ii) all remaining unused Commitments shall automatically and permanently terminate immediately upon the occurrence of such change in ownership of such Voting Stock.
SECTION 2.10. Increased Costs.
(a)
Increased Costs Generally
. If any Change in Law shall:
(i)
impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate Reserve Percentage, in the case of Eurodollar Rate Advances);
(ii)
subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii)
impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Advances made by such Lender or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, Converting to, continuing or maintaining any Advance or of maintaining its obligation to make any such Advance, or to increase the cost to such Lender or such other Recipient or to reduce the amount of any sum received or receivable by such Lender or other
Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or other Recipient, the Borrower will pay to such Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
(b)
Capital Requirements
. If any Lender determines that any Change in Law affecting such Lender or any Applicable Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Advances made by such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
(c)
Certificates for Reimbursement
. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower, shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten days after receipt thereof.
(d)
Delay in Requests
. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation;
provided
that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs incurred or reductions suffered more than six months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).
SECTION 2.11. Illegality.
If due to any Change in Law it shall become unlawful or impossible for any Credit Party (or its Eurodollar Lending Office) to make, maintain or fund its Eurodollar Rate Advances, and such Credit Party shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Credit Parties and the Borrower, whereupon, until such Credit Party notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Credit Party to make Eurodollar Rate Advances, or to Convert outstanding Advances into Eurodollar Rate Advances, shall be suspended. Before giving any notice to the Administrative Agent pursuant to this Section 2.11, such Credit Party shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions applicable to such Credit Party) to designate a different Eurodollar Lending Office if such designation would avoid the need for giving such notice and would not, in the judgment of such Credit Party, be otherwise disadvantageous to such Credit Party. If such
notice is given, each Eurodollar Rate Advance of such Credit Party then outstanding shall be Converted to a Base Rate Advance either (i) on the last day of the then current Interest Period applicable to such Eurodollar Rate Advance if such Credit Party may lawfully continue to maintain and fund such Advance to such day or (ii) immediately if such Credit Party shall determine that it may not lawfully continue to maintain and fund such Advance to such day.
SECTION 2.12. Payments and Computations.
(a)
The Borrower shall make each payment to be made by it hereunder not later than 1:00 P.M. on the day when due in Dollars to the Administrative Agent at the Agent’s Account in same day funds without condition or deduction for any counterclaim, defense, recoupment or setoff. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest ratably (other than amounts payable pursuant to Section 2.06(c), 2.10, 2.13, 9.04(c) or 9.16) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 9.07(c), from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.
(b)
The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder, after any applicable grace period, to charge from time to time against any or all of the Borrower’s accounts with such Lender any amount so due.
(c)
All computations of interest based on the rate referred to in clause (i) of the definition of the “Base Rate” contained in Section 1.01 shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.
(d)
Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest;
provided, however,
that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month or on a date after the Maturity Date, such payment shall be made on the next preceding Business Day.
(e)
Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to a Lender hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such
payment in full to the Administrative Agent on such date, and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.13. Taxes.
(a)
Defined Terms
. For purposes of this Section 2.13, the term “Applicable Law” includes FATCA.
(b)
Payments Free of Taxes
. Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.13) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(c)
Payment of Other Taxes by the Borrower
. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(d)
Indemnification by the Borrower
. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.13) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(e)
Indemnification by the Lenders
. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.07(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the
Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this subsection (e).
(f)
Evidence of Payments
. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.13, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(g)
Status of Lenders
. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.13(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii)
Without limiting the generality of the foregoing,
(A)
any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(i)
in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(ii)
executed copies of IRS Form W-8ECI;
(iii)
in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially in the form of Exhibit D-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “
U.S. Tax Compliance Certificate
”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E; or
(iv)
to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-2 or Exhibit D-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable;
provided
that, if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-4 on behalf of each such direct and indirect partner;
(C)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D)
if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall
deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(h)
Treatment of Certain Refunds
. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.13 (including by the payment of additional amounts pursuant to this Section 2.13), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.13 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(i)
Survival
. Each party’s obligations under this Section 2.13 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
SECTION 2.14. Sharing of Payments, Etc.
(a)
If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances owing to it (other than pursuant to Section 2.06(c), 2.10, 2.13, 9.04(c) or 9.16 or in respect of Eurodollar Rate Advances Converted into Base Rate Advances pursuant to Section 2.11) by the Borrower in excess of its
ratable share of payments on account of the Advances to the Borrower obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in such Advances owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them;
provided
,
however
, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.14 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.
(b)
If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(d) or 8.05, then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the Administrative Agent to satisfy such Lender’s obligations to it or them under such Section until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.
SECTION 2.15. Mitigation Obligations; Replacement of Lenders.
(a)
Designation of a Different Lending Office
. If any Lender delivers a notice pursuant to Section 2.11, requests compensation under Section 2.10, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.13, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different Applicable Lending Office or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.10 or 2.13, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b)
Replacement of Lenders
. If any Lender delivers a notice pursuant to Section 2.11, requests compensation under Section 2.10, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.13 and, in each case, such Lender has declined or is unable to designate a different Applicable Lending Office in accordance with Section 2.15(a), or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 9.07), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.10 or 2.13) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if such Lender accepts such assignment);
provided
that:
i.
the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 9.07(b)(iv);
ii.
such Lender shall have received payment of an amount equal to the outstanding principal of its Advances, together with all applicable accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 9.04(c)) from the assignee (to the extent of such outstanding principal amounts and accrued interest and fees) or the Borrower (in the case of all other amounts);
iii.
in the case of any such assignment resulting from a claim for compensation under Section 2.10 or payments required to be made pursuant to Section 2.13, such assignment will result in a reduction in such compensation or payments thereafter;
iv.
no Default shall have occurred and be continuing;
v.
such assignment does not conflict with Applicable Law; and
vi.
in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to Effectiveness of this Agreement and Initial Advance.
The effectiveness of this Agreement and the obligation of each Lender to make the initial Advance to be made by it hereunder shall be subject to the satisfaction of the following conditions precedent:
(a)
The Administrative Agent shall have received on or before the Closing Date the following, each dated such day, in form and substance reasonably satisfactory to the Administrative Agent in sufficient copies for each Lender:
(i)
Certified copies of the resolutions of the board of directors of the Borrower approving this Agreement, and of all documents evidencing other necessary corporate action and Governmental Approvals, if any, with respect to this Agreement.
(ii)
A certificate of the Secretary or Assistant Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the other documents to be delivered by the Borrower hereunder.
(iii)
A favorable opinion of counsel for the Borrower (which may be an attorney of American Electric Power Service Corporation), substantially in the form of Exhibit C hereto and as to such other matters as any Lender through the Administrative Agent may reasonably request.
(b)
On the Closing Date, the following statements shall be true and the Administrative Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated such date, stating that:
(i)
The representations and warranties of the Borrower contained in Section 4.01 are true and correct in all material respects on and as of the Closing Date, before and after giving effect to the Borrowing on the Closing Date and to the application of the proceeds therefrom, and
(ii)
No event has occurred and is continuing, or would result from the Borrowing on the Closing Date or from the application of the proceeds therefrom, that constitutes a Default.
(c)
The Borrower shall have paid all fees and expenses of the Administrative Agent, the Joint Lead Arrangers and the Lenders then due and payable in accordance with the terms of the Loan Documents (including the fees and expenses of counsel to the Administrative Agent to the extent then due and payable).
(d)
The Administrative Agent shall have received counterparts of this Agreement, executed and delivered by the Borrower and the Lenders.
(e)
The Administrative Agent shall have received all promissory notes (if any) requested by the Lenders pursuant to Section 2.05(d), duly completed and executed by the Borrower and payable to such Lenders.
(f)
The Administrative Agent shall have received the duly completed Notice of Borrowing as provided in Section 2.02(a).
(g)
The Administrative Agent shall have received copies of the Disclosure Documents.
(h)
The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Patriot Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders prior to the Closing Date.
(i)
The Administrative Agent shall have received copies or other evidence of such other approvals and such other opinions or documents as may be reasonably requested by the Administrative Agent or by any Lender through the Administrative Agent.
SECTION 3.02. Conditions Precedent to the Advance on the Second Borrowing Date.
The obligation of each Lender to make the Advance to be made by it hereunder on the Second Borrowing Date shall be subject to the satisfaction of the conditions precedent on the date of such Borrowing:
(a)
The following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance by the Borrower of the proceeds of any Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing such statements are true):
(i)
The representations and warranties of the Borrower contained in Section 4.01 (other than the representation and warranty in Section 4.01(e) and the representation and warranty set forth in the last sentence of Section 4.01(f)) are true and correct in all material respects on and as of the date of such Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and
(ii)
No event has occurred and is continuing or would result from such Borrowing or from the application of the proceeds therefrom, that constitutes a Default.
(b)
The Administrative Agent shall have received the duly completed Notice of Borrowing as provided in Section 2.02(a) and copies or other evidence of such other approvals and such other opinions or documents as may be reasonably requested by the Administrative Agent or by any Lender through the Administrative Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a)
The Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized, and each Significant Subsidiary of the Borrower is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is formed or otherwise organized.
(b)
The execution, delivery and performance by the Borrower of each Loan Document to which it is, or is to become a party, and the consummation of the transactions contemplated hereby, are within the Borrower’s limited liability company powers, have been duly authorized by all necessary action, and do not contravene (i) the Borrower’s certificate of formation or limited liability company agreement, (ii) law binding or affecting the Borrower or (iii) any contractual restriction binding on or affecting the Borrower or any of its properties.
(c)
Each Loan Document to which it is, or is to become, a party has been duly executed and delivered by the Borrower. This Agreement is, and, upon execution and delivery thereof, each other Loan Document will be the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights in general, and except as the availability of the remedy of specific performance is subject to general principles of equity (regardless of whether such remedy is sought in a proceeding in equity or at law) and subject to requirements of reasonableness, good faith and fair dealing.
(d)
No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required for the due execution, delivery and performance by the Borrower of any Loan Document to which it is, or is to become, a party other than with respect to the Borrower such Approvals, if any, that have been duly issued and are in full force and effect and not subject to review or appeal.
(e)
There is no pending or threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Borrower or any of its Significant Subsidiaries before any Governmental Authority or arbitrator that is reasonably likely to have a Material Adverse Effect, except as disclosed in the Disclosure Documents.
(f)
The consolidated balance sheets of the Borrower and its Consolidated Subsidiaries as at December 31, 2014 and June 30, 2015 and the related consolidated statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for the fiscal periods then ended (accompanied by, in the case of such financial statements for the fiscal year ended December 31, 2014, an opinion of Deloitte & Touche LLP, an independent registered public accounting firm), copies of each of which have been furnished to each Lender, fairly present (subject, in the case of such financial statements for the fiscal quarter ended June 30, 2015, to year-end adjustments) the consolidated financial condition of the Borrower and its Consolidated Subsidiaries as at such dates and the consolidated results of the operations of the Borrower and its Consolidated Subsidiaries for the fiscal periods ended on such dates, all in accordance with generally accepted accounting principles consistently applied. Since December 31, 2014, there has been no Material Adverse Change as to the Borrower.
(g)
No written statement, information, report, financial statement, exhibit or schedule furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the syndication or negotiation of this Agreement or included herein or delivered pursuant hereto contained, contains, or will contain any material misstatement of fact or intentionally omitted, omits, or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are, or will be made, not misleading.
(h)
Except as disclosed in the Disclosure Documents, the Borrower and each Significant Subsidiary of the Borrower is in material compliance with all laws (including ERISA and Environmental Laws) rules, regulations and orders of any Governmental Authority applicable to it.
(i)
No failure to satisfy the minimum funding standard applicable to a Plan for a plan year (as described in Section 302 of ERISA and Section 412 of the Internal Revenue Code) that could reasonably be expected to have a Material Adverse Effect, whether or not waived, has occurred with respect to any Plan. The Borrower has not incurred, and does not presently expect to incur, any withdrawal liability under Title IV of ERISA with respect to any Multiemployer Plan that could reasonably be expected to have a Material Adverse Effect. The Borrower and each of its ERISA Affiliates have complied in all material respects with ERISA and the Internal Revenue Code. The Borrower and each of its Subsidiaries have complied in all material respects with foreign law applicable to its Foreign Plans, if any. As used herein, the term “
Plan
” means an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is and has been established or maintained, or to which contributions are or have been made or should be made according to the terms of the plan, by the Borrower or any of its ERISA Affiliates. The term “
Multiemployer Plan
” means any Plan which is a “multiemployer plan” (as such term is defined in Section 4001(a)(3) of ERISA). The term “
Foreign Plan
” means any pension, profit-sharing, deferred compensation, or other employee benefit plan, program or arrangement maintained by any Subsidiary outside of the United States primarily for the benefit of individuals, substantially all of whom are non-residents of the United States.
(j)
The Borrower and its Subsidiaries have filed or caused to be filed all material Federal, state and local tax returns that are required to be filed by them, and have paid or caused to be paid all material taxes shown to be due and payable on such returns or on any assessments received by them (to the extent that such taxes and assessments have become due and payable) other than those taxes contested in good faith and for which adequate reserves have been established in accordance with GAAP.
(k)
The Borrower is not engaged in the business of extending credit for the purpose of buying or carrying Margin Stock, and no proceeds of any Advance will be used to buy or carry any Margin Stock or to extend credit to others for the purpose of buying or carrying any Margin Stock. Not more than 25% of the assets of the Borrower and its Significant Subsidiaries that are subject to the restrictions of Section 5.02(a), (c) or (d) constitute Margin Stock.
(l)
Neither the Borrower nor any of its Significant Subsidiaries is an “investment company,” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of the Advances the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated hereby will violate any provision of such Act or any rule, regulation or order of the SEC thereunder.
(m)
All Subsidiaries and Significant Subsidiaries of the Borrower as of the date hereof are listed on Schedule 4.01(m) hereto under the name of the Borrower.
(n)
The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective directors and officers and, to the knowledge of the Borrower, its employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower, any Subsidiary or any of
their respective directors or officers, or (b) to the knowledge of the Borrower, any employee or agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.
None of any Borrowing or any use of proceeds thereof or other transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants.
So long as any Advance or any other amount payable hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will:
(a)
Preservation of Existence, Etc.
Preserve and maintain, and cause each Significant Subsidiary of the Borrower to preserve and maintain, its corporate, partnership or limited liability company (as the case may be) existence and all material rights (charter and statutory) and franchises;
provided
,
however
, that the Borrower and any Significant Subsidiary thereof may consummate any merger or consolidation permitted under Section 5.02(a); and
provided
further
that neither the Borrower nor any Significant Subsidiary thereof shall be required to preserve any right or franchise if the board of directors of the Borrower or such Significant Subsidiary, as the case may be, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower or such Significant Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Borrower or such Significant Subsidiary, as the case may be, or to the Lenders; and
provided
further,
that no Significant Subsidiary of the Borrower shall be required to preserve and maintain its corporate, partnership or limited liability company existence if the loss thereof is not disadvantageous in any material respect to the Borrower or to the Lenders.
(b)
Compliance with Laws, Etc.
Comply, and cause each Significant Subsidiary of the Borrower to comply, in all material respects, with Applicable Law, with such compliance to include, without limitation, compliance with ERISA and Environmental Laws.
(c)
Performance and Compliance with Other Agreements
. Perform and comply, and cause each Significant Subsidiary of the Borrower to perform and comply, with the provisions of each indenture, credit agreement, contract or other agreement by which it is bound, the non-performance or non-compliance with which would result in a Material Adverse Change.
(d)
Inspection Rights
. At any reasonable time and from time to time, permit the Administrative Agent or any Lender or any agents or representatives thereof to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any Significant Subsidiary of the Borrower and to discuss the affairs, finances and accounts of the Borrower and any Significant Subsidiary of the Borrower with any of their officers or directors and with their independent certified public accountants.
(e)
Maintenance of Properties, Etc.
Maintain and preserve, and cause each Significant Subsidiary of the Borrower to maintain and preserve, all of its properties that are used or useful
in the conduct of its business in good working order and condition, ordinary wear and tear excepted.
(f)
Maintenance of Insurance
. Maintain, and cause each Significant Subsidiary of the Borrower to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties;
provided
,
however
, that the Borrower and each Significant Subsidiary thereof may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties and to the extent consistent with prudent business practice.
(g)
Payment of Taxes, Etc.
Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all material lawful claims that, if unpaid, might by law become a Lien upon its property;
provided
,
however
, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which adequate reserves are being maintained in accordance with GAAP, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors.
(h)
Keeping of Books
. Keep, and cause each Significant Subsidiary of the Borrower to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Significant Subsidiary in accordance with GAAP.
(i)
Reporting Requirements
. Furnish to the Lenders:
(i)
as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, (A) a copy of the Borrower’s Quarterly Report for such quarter, which shall contain a consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such quarter and consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as having been prepared in accordance with generally accepted accounting principles, and (B) a certificate of the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as to compliance with the terms of this Agreement and (1) certifying that there have been no Subsidiaries that have become Significant Subsidiaries of the Borrower at any time during such period, or any Subsidiaries that have ceased to be Significant Subsidiaries of the Borrower at any time during such period, in each case except as expressly identified in such certificate, and (2) setting forth in reasonable detail the calculations necessary to demonstrate compliance with Sections 5.02(k) and 5.03,
provided
that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination
of compliance with Sections 5.02(k) and 5.03, a statement of reconciliation conforming such financial statements to GAAP in effect on the date hereof;
(ii)
as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, (A) a copy of the Borrower’s Annual Report for such year, which shall contain a copy of the annual audit report for such year for the Borrower and its Subsidiaries, containing a consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year and consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, in each case accompanied by an opinion by Deloitte & Touche LLP or another independent registered public accounting firm acceptable to the Required Lenders, and consolidating statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, and (B) a certificate of the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as to compliance with the terms of this Agreement and (1) certifying that there have been no Subsidiaries that have become Significant Subsidiaries of the Borrower at any time during such period, or any Subsidiaries that have ceased to be Significant Subsidiaries of the Borrower at any time during such period, in each case except as expressly identified in such certificate, and (2) setting forth in reasonable detail the calculations necessary to demonstrate compliance with Sections 5.02(k) and 5.03,
provided
that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Sections 5.02(k) and 5.03, a statement of reconciliation conforming such financial statements to GAAP in effect on the date hereof;
(iii)
as soon as possible and in any event within five days after the chief financial officer or treasurer of the Borrower obtains knowledge of the occurrence of any Defaults continuing on the date of such statement, a statement of the chief financial officer or treasurer of the Borrower setting forth details of such Defaults and the action that the Borrower has taken and proposes to take with respect thereto;
(iv)
promptly after the commencement thereof, notice of all actions and proceedings before any Governmental Authority or arbitrator affecting the Borrower or any Significant Subsidiary of the Borrower of the type described in Section 4.01(e); and
(v)
such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request.
Notwithstanding the foregoing, the information required to be delivered pursuant to clauses (i) and (ii) shall be deemed to have been delivered if such information shall be available on the website of the SEC at http://www.sec.gov (or any successor website) or on the Borrower’s website;
provided
that the compliance certificates required under clauses (i) and (ii) shall be delivered in the manner specified in Section 9.02(b).
(j)
Compliance with Anti-Corruption Laws and Sanctions
. Maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries
and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.
SECTION 5.02. Negative Covenants.
So long as any Advance or any other amount payable hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower agrees that it will not:
(a)
Mergers, Etc.
(i)
Consolidate with or be a party to a merger with any other Person or permit any Significant Subsidiary of the Borrower to do so, or sell, lease or otherwise dispose of all or substantially all of its assets or permit any Significant Subsidiary of the Borrower to do so;
provided
that:
A.
any Significant Subsidiary may merge or consolidate with or into the Borrower or any Wholly‑owned Subsidiary so long as in (i) any merger or consolidation involving the Borrower, the Borrower shall be the surviving or continuing corporation and (ii) in any merger or consolidation involving a Wholly‑owned Significant Subsidiary (and not the Borrower), the Wholly‑owned Significant Subsidiary shall be the surviving or continuing corporation or limited liability company;
B.
the Borrower may consolidate or merge with or into any other Person if (i) the corporation or limited liability company which results from such consolidation or merger (the “
Surviving Person
”) is organized under the laws of any state of the United States or the District of Columbia or Canada or a Province of Canada, (ii) the due and punctual payment of principal of, or interest on, the outstanding Advances or any fees or other amounts payable to each Lender hereunder, and the due and punctual performance and observation of all of the covenants in this Agreement to be performed or observed by the Borrower are expressly assumed in writing by the Surviving Person and the Surviving Person shall furnish to the Lenders and the Administrative Agent an opinion of counsel satisfactory to the Required Lenders to the effect that the instrument of assumption has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of the Surviving Person enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles, and (iii) at the time of such consolidation or merger and immediately after giving effect thereto, no Default or Event of Default would exist;
C.
the Borrower may sell or otherwise dispose of all or substantially all of its assets to any Person for consideration which represents the fair market value of such assets (as determined in good faith by the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower) at the time of
such sale or other disposition if (i) the acquiring Person (the “
Acquiring Person
”) is a corporation or limited liability company organized under the laws of any state of the United States or the District of Columbia or Canada or a Province of Canada, (ii) the due and punctual payment of principal of, or interest on, the outstanding Advances or any fees or other amounts payable to each Lender hereunder, and the due and punctual performance and observance of all of the covenants in this Agreement to be performed or observed by the Borrower are expressly assumed in writing by the Acquiring Person and the Acquiring Person shall furnish to the Lenders and the Administrative Agent an opinion of counsel satisfactory to the Required Lenders to the effect that the instrument of assumption has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of such Acquiring Person enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles, and (iii) at the time of such sale or disposition and immediately after giving effect thereto, no Default or Event of Default would exist; and
D.
any such Surviving Person or Acquiring Person has long-term senior unsecured debt ratings issued (and confirmed after giving effect to such merger) by S&P or Moody’s of at least BBB- and Baa3, respectively (or if no such ratings have been issued, commercial paper ratings issued (and confirmed after giving effect to such merger) by S&P and Moody’s of at least A-3 and P-3, respectively).
(b)
Stock of Significant Subsidiaries.
Sell, lease, transfer or otherwise dispose of equity interests in any Significant Subsidiary of the Borrower if such Significant Subsidiary would cease to be a Subsidiary of the Borrower as a result of such sale, lease, transfer or disposition.
(c)
Sales, Etc. of Assets
. Sell, lease, transfer, abandon or otherwise dispose of, or permit any Significant Subsidiary of the Borrower to sell, lease, transfer, abandon or otherwise dispose of, assets (except assets sold in the ordinary course of business for fair market value
)
;
provided
that the foregoing restrictions do not apply to:
(i)
the sale, lease, transfer or other disposition of assets of a Significant Subsidiary to the Borrower or a Wholly‑owned Significant Subsidiary; or
(ii)
the sale of assets for cash or other property to a Person or Persons other than an Affiliate if all of the following conditions are met:
A.
such assets (valued at net book value) do not, together with all other assets of the Borrower and its Significant Subsidiaries previously disposed of during the twelve‑month period then ending (other than in the ordinary course of business), exceed 15% of Consolidated Tangible Net Assets determined as of the end of the immediately preceding fiscal year;
B.
in the opinion of the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower, the sale is for fair value and is in the best interests of the Borrower; and
C.
immediately before and immediately after the consummation of the transaction and after giving effect thereto, no Default or Event of Default would exist;
provided, however,
that for purposes of the foregoing calculation, there shall not be included any assets the proceeds of which were or are applied within 12 months of the date of sale of such assets to either (A) the acquisition of assets useful and intended to be used in the operation of the business of the Borrower and its Significant Subsidiaries and having a fair market value (as determined in good faith by the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower) at least equal to that of the assets so disposed of or (B) the prepayment at any applicable prepayment premium, on a
pro rata
basis, of Senior Debt of the Borrower.
(d)
Liens, Etc.
Create or suffer to exist, or permit any Significant Subsidiary of the Borrower to create or suffer to exist, any Lien on or with respect to any of its properties, including, without limitation, on or with respect to equity interests in any Subsidiary of the Borrower, whether now owned or hereafter acquired, or assign, or permit any Significant Subsidiary of the Borrower to assign, any right to receive income (other than in connection with the sale of accounts receivable by the Borrower), other than (i) Permitted Liens, (ii) the Liens existing on the date hereof and (iii) the replacement, extension or renewal of any Lien permitted by clause (ii) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby.
(e)
Restrictive Agreements
. Enter into, or permit any Significant Subsidiary of the Borrower to enter into, any agreement after the date hereof, or amend, supplement or otherwise modify any agreement existing on the date hereof, that imposes any restriction on the ability of any Significant Subsidiary of the Borrower to make payments, directly or indirectly, to its shareholders by way of dividends, advances, repayment of loans or intercompany charges, expenses and accruals or other returns on investments that is more restrictive than any such restriction applicable to such Significant Subsidiary on the date hereof;
provided
,
however
, that any Significant Subsidiary of the Borrower may agree to a financial covenant limiting its ratio of Consolidated Debt to Consolidated Capital to no more than 0.675 to 1.000.
(f)
ERISA
. (i) Terminate or withdraw from, or permit any of its ERISA Affiliates to terminate or withdraw from, any Plan with respect to which the Borrower or any of its ERISA Affiliates may have any liability by reason of such termination or withdrawal, if such termination or withdrawal could have a Material Adverse Effect, (ii) incur a full or partial withdrawal, or permit any ERISA Affiliate to incur a full or partial withdrawal, from any Multiemployer Plan with respect to which the Borrower or any of its ERISA Affiliates may have any liability by reason of such withdrawal, if such withdrawal could have a Material Adverse Effect, (iii) otherwise fail, or permit any of its ERISA Affiliates to fail, to comply in all material respects with ERISA or the related provisions of the Internal Revenue Code if such noncompliances,
singly or in the aggregate, could have a Material Adverse Effect, or (iv) fail, or permit any of its Subsidiaries to fail, to comply with Applicable Law with respect to any Foreign Plan if such noncompliances, singly or in the aggregate, could have a Material Adverse Effect.
(g)
Margin Stock
. Use the proceeds of any Borrowing to buy or carry Margin Stock.
(h)
No Violation of Anti-Corruption Laws or Sanctions
. Request any Borrowing, or use or permit any of its Subsidiaries or its or their respective directors, officers, employees and agents to use, directly or, to the actual knowledge of the Borrower or any of its Subsidiaries, indirectly, any proceeds of any Borrowing (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
(i)
Line of Business
. Not engage and not permit any Subsidiary to engage in any business if, as a result, the general nature of the business in which the Borrower and its Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the business of owning and operating transmission-only electric utilities.
(j)
LLC Agreement
. Not amend or modify the LLC Agreement in any manner that could reasonably be expected to result in a Material Adverse Effect.
(k)
Limitations on Consolidated Priority Debt.
Permit Consolidated Priority Debt to exceed 10% of Consolidated Tangible Net Assets.
SECTION 5.03. Financial Covenant.
So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will maintain a ratio of Consolidated Debt to Consolidated Capital, as of the last day of each March, June, September and December, of not greater than 0.675 to 1.000.
ARTICLE VI
RESERVED
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default.
If any of the following events shall occur and be continuing with respect to the Borrower (as to the Borrower, an “
Event of Default
”):
(a)
The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable, or shall fail to pay any interest on any Advance or make any other payment of fees or other amounts payable under this Agreement within five days after such other amounts become due and payable; or
(b)
Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or
(c)
(i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(a), 5.01(i)(iii) or 5.02 (other than Section 5.02(f)), or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Loan Document if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or
(d)
(i) The Borrower or any Significant Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt outstanding in a principal or notional amount of at least $50,000,000 beyond any period of grace provided with respect thereto, or (ii) any other event shall occur or condition shall exist under any agreement or instrument relating to Debt of the Borrower (but excluding Debt outstanding hereunder) or any Significant Subsidiary of the Borrower outstanding in a principal or notional amount of at least $50,000,000 in the aggregate if the effect of such event or condition is to accelerate or require early termination of the maturity or tenor of such Debt, or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), terminated, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity or the original tenor thereof; or
(e)
The Borrower or any Significant Subsidiary of the Borrower shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any Significant Subsidiary of the Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower or any Significant Subsidiary of the Borrower shall take any corporate, partnership or limited liability company action to authorize any of the actions set forth above in this subsection (e); or
(f)
(i) Any entity, person (within the meaning of Section 14(d) of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”)) or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) that as of the date hereof was beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of less than 30% of the Voting Stock of AEP shall acquire a beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Exchange Act), directly or indirectly, of Voting Stock of AEP (or other securities convertible
into such Voting Stock) representing 30% or more of the combined voting power of all Voting Stock of AEP; or (ii) during any period of up to 24 consecutive months, commencing after the date hereof, individuals who at the beginning of such 24-month period were directors of AEP shall cease for any reason to constitute a majority of the board of directors of AEP,
provided
that any person becoming a director subsequent to the date hereof, whose election, or nomination for election by AEP’s shareholders, was approved by a vote of at least a majority of the directors of the board of directors of AEP as comprised as of the date hereof shall be, for purposes of this provision, considered as though such person were a member of the board as of the date hereof; or (iii) AEP shall fail to own directly or indirectly 100% of the Voting Stock of the Borrower; or
(g)
Any judgment or order for the payment of money in excess of $50,000,000 in the case of the Borrower or any Significant Subsidiary of the Borrower to the extent not paid or insured shall be rendered against the Borrower or any Significant Subsidiary of the Borrower and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or
(h)
The LLC Agreement shall cease to be in full force and effect for any reason whatsoever, including, without limitation, a determination by any Governmental Authority that the LLC Agreement is invalid, void or unenforceable or any party to the LLC Agreement shall contest or deny in writing the validity or enforceability of any of its obligations under such LLC Agreement and any such event, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect; or
(i)
(i) The termination of or withdrawal from the United Mine Workers’ of America 1974 Pension Trust by the Borrower or any of its ERISA Affiliates shall have occurred and the liability of the Borrower and its ERISA Affiliates related to such termination or withdrawal exceeds $75,000,000 in the aggregate; or (ii) any other ERISA Event shall have occurred and the liability of the Borrower and its ERISA Affiliates related to such ERISA Event exceeds $50,000,000;
then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances to the Borrower to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the outstanding Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon such outstanding Advances, all such interest and all such amounts shall become and be forthwith due and payable by the Borrower, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower;
provided
,
however
, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower or any Significant Subsidiary of the Borrower under the Bankruptcy Code of the United States of America, (A) the obligation of each Lender to make Advances to the Borrower shall automatically be terminated and (B) the outstanding Advances, all interest thereon and all other amounts payable under this Agreement shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01. Authorization and Action.
Each Lender hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters expressly provided for in this Agreement as being subject to the discretion of the Administrative Agent, such matters shall be subject to the sole discretion of the Administrative Agent, its directors, officers, agents and employees. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the outstanding Advances), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders;
provided
,
however
, that the Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to this Agreement or Applicable Law. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement.
SECTION 8.02. Agent’s Reliance, Etc.
Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the generality of the foregoing, the Administrative Agent: (i) may treat each Lender recorded in the Register as the owner of the Commitment recorded for such Lender in the Register until the Administrative Agent receives and accepts an Assignment and Assumption entered into by such Lender, as assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07 and except as provided otherwise in Section 9.16; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of any Lender or to inspect the property (including the books and records) of any Lender; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, this Agreement or any other instrument or document furnished pursuant thereto; (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by fax) believed by it to be genuine and signed or sent by the proper party or parties; and (vii) shall not have any fiduciary duty to any other Lender.
SECTION 8.03. Mizuho and its Affiliates.
With respect to its Commitments and the Advances made by it, Mizuho shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Mizuho in its individual capacity. Mizuho and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, any Lender, any of its Subsidiaries and any Person who may do business with or own securities of any Lender or any such Subsidiary, all as if Mizuho were not the Administrative Agent and without any duty to account therefor to the Lenders.
SECTION 8.04. Lender Credit Decision.
Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.
SECTION 8.05. Indemnification.
Each Lender severally agrees to indemnify the Administrative Agent (to the extent not promptly reimbursed by the Borrower and without limiting the Borrower’ obligation to do so) from and against such Lender’s ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement;
provided
,
however
, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and reasonable expenses of counsel) payable by the Borrower under Section 9.04, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower after request therefor and without limiting the Borrower’s obligation to do so. For purposes of this Section 8.05, the Lenders’ respective ratable shares of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Advances outstanding at such time and owing to the respective Lenders and (ii) the aggregate unused portions of their respective Commitments at such time. In the event that any Lender shall have failed to make any Advance as required hereunder, such Lender’s Commitment shall be considered to be unused for purposes of this Section 8.05 to the extent of the amount of such Advance. The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its ratable share of any amount
required to be paid by the Lender to the Administrative Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Administrative Agent for such other Lender’s ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 8.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder.
SECTION 8.06. Successor Agent.
The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent to the Administrative Agent that has resigned. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then such retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a Lender or an Affiliate of a Lender that is commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Agent, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc.
Subject to Section 9.16(a)(i), no amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders and the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given;
provided, however
, that no amendment, waiver or consent shall (a) unless in writing and signed by all the Lenders (other than, in the case of the following clauses (i) through (v), any Defaulting Lender), do any of the following: (i) amend Section 3.01 or waive any of the conditions specified therein, (ii) increase the aggregate amount of the Commitments, (iii) change the definition of Required Lenders or the percentage of the Commitments or of the aggregate unpaid principal amount of the outstanding Advances, or the number or percentage of the Lenders, that shall be required for the Lenders or any of them to take any action hereunder or (iv) amend or waive this Section 9.01 or any provision of this Agreement that requires pro rata treatment of the Lenders; or (b) unless in writing and signed by each Lender that is directly affected thereby, do any of the following: (1) increase the amount or extend the termination date of such Lender’s Commitment, or subject such Lender to any
additional obligations, (2) reduce the principal of, or interest on, or rate of interest applicable to, the outstanding Advances of such Lender or any fees or other amounts payable to such Lender hereunder, or (3) postpone any date fixed for any payment of principal of, or interest on, the outstanding Advances or any fees or other amounts payable to such Lender hereunder; and
provided
further
that (x) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement, and (y) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent and the Required Lenders, amend or waive Section 9.16. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower, the Required Lenders and the Administrative Agent if (i) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate (but such Lender shall continue to be entitled to the benefits of Sections 2.10, 2.13 and 9.04) upon the effectiveness of such amendment and (ii) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal outstanding amount of and interest accrued on each Advance made by it, and all other amounts owing to it or accrued for its account under this Agreement and is released from its obligations hereunder.
SECTION 9.02. Notices, Etc.
(a)
The Borrower hereby agrees that any notice that is required to be delivered to it hereunder shall be delivered to the Borrower as set forth in this Section 9.02. All notices and other communications provided for hereunder shall be in writing (including fax) and mailed, faxed or delivered, if to the Borrower, to it in care of AEP at its address at 1 Riverside Plaza, Columbus, Ohio 43215, Attention: Treasurer (fax: 614-716-2807; telephone: 614-716-2885; email: jsloat@aep.com), with a copy to the General Counsel (fax: 614-716-3440; telephone: 614-716-2929); if to any Initial Lender, at its Domestic Lending Office specified in its Administrative Questionnaire; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Assumption pursuant to which it became a Lender; if to the Administrative Agent, at its address at Mizuho Bank, Ltd. New York Branch, Harborside Financial Center, 1800 Plaza Ten, Jersey City, New Jersey 07311-4098, Attn: Berta Cabarello (fax: 201-626-9137; telephone: 201-626-9137; email: lau_agent@mizuhocbus.com); or, as to the Borrower or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Administrative Agent. All such notices and communications shall be effective when delivered or received at the appropriate address or number to the attention of the appropriate individual or department, except that notices and communications to the Administrative Agent pursuant to Article II, III or VII shall not be effective until received by the Administrative Agent. Delivery by fax of an executed counterpart of any amendment or waiver of any provision of this Agreement or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof.
(b)
The Borrower and each Lender hereby agrees that the Administrative Agent may make any information required to be delivered under Section 5.01(i)(i), (ii), (iv) and (v) (the “
Communications
”) available to the Lenders by posting the Communications on SyndTrak or a
substantially similar electronic transmission systems (the “
Platform
”). The Borrower and each Lender hereby acknowledges that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution.
(c)
THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES (COLLECTIVELY, “
AGENT PARTIES
”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents. Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees (i) to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address.
Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.
SECTION 9.03. No Waiver; Remedies.
No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
SECTION 9.04. Costs and Expenses.
(a)
The Borrower agrees to pay promptly upon demand all reasonable out-of-pocket costs and expenses of the Administrative Agent and the Joint Lead Arrangers in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement and the other documents to be delivered hereunder, including, without limitation, (i) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (ii) the reasonable fees and expenses of counsel for the Administrative Agent and the Joint Lead Arrangers with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement. The Borrower further agrees to pay promptly upon demand all costs and expenses of the Administrative Agent and the Lenders, if any (including, without limitation, counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Administrative Agent and the Lenders in connection with the enforcement of rights under this Section 9.04(a).
(b)
The Borrower agrees to indemnify and hold harmless each Lender, the Joint Lead Arrangers and the Administrative Agent and each of their respective Related Parties (each, an “
Indemnified Party
”) from and against any and all claims, damages, losses and liabilities, joint or several, to which any such Indemnified Party may become subject, in each case arising out of or in connection with or relating to (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances (ii) any error or omission in connection with posting of the data required to be delivered pursuant to Section 5.01(i)(i), (ii) or (iv) on the website of the SEC or any successor website or (iii) the actual or alleged presence of Hazardous Materials on any property of the Borrower or any of its Subsidiaries or any Environmental Action relating in any way to the Borrower or any of its Subsidiaries, and to reimburse any Indemnified Party for any and all reasonable expenses (including, without limitation, reasonable fees and expenses of counsel) as they are incurred in connection with the investigation of or preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by or on behalf of the Borrower or any of its Affiliates and whether or not any of the transactions contemplated hereby are consummated or this Agreement is terminated, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees not to assert, and hereby waives, any claim
against any Indemnified Party on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances.
(c)
If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.04, 2.07(d), 2.10 or 2.12, acceleration of the maturity of the outstanding Advances pursuant to Section 7.01, the assignment of any such Advance pursuant to Section 2.15(b) or for any other reason (in the case of any such payment or Conversion), the Borrower shall, promptly upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (other than loss of Applicable Margin), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance.
(d)
Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.10 and 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder.
(e)
The Borrower agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Borrower or its security holders or creditors related to or arising out of or in connection with this Agreement, the Advances or the use or proposed use of the proceeds thereof, any of the transactions contemplated by any of the foregoing or in the loan documentation or the performance by an Indemnified Party of any of the foregoing (including the use by unintended recipients of any information or other materials distributed through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents) except to the extent that any loss, claim, damage, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.
(f)
In the event that an Indemnified Party is requested or required to appear as a witness in any action brought by or on behalf of or against the Borrower or any of its Affiliates in which such Indemnified Party is not named as a defendant, the Borrower agrees to reimburse such Indemnified Party for all reasonable expenses incurred by it in connection with such Indemnified Party’s appearing and preparing to appear as such a witness, including, without limitation, the fees and disbursements of its legal counsel.
SECTION 9.05. Right of Set-off.
Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 7.01 to authorize the Administrative Agent to declare the outstanding Advances due and payable pursuant to the provisions of Section 7.01, each Credit Party and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Credit Party or such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement held by such Credit Party, whether or not such Credit Party shall have made any demand under this Agreement and although such obligations may be unmatured;
provided
that, in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 9.16 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the obligations of the Borrower owing to such Defaulting Lender as to which it exercised such right of setoff. Each Credit Party agrees promptly to notify the Borrower after any such set-off and application,
provided
that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Credit Party and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Credit Party and its Affiliates may have.
SECTION 9.06. Binding Effect.
This Agreement shall become effective upon satisfaction of the conditions precedent specified in Section 3.01 and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of all of the Lenders. None of the Joint Lead Arrangers nor any Person designated as a “Syndication Agent” with respect to this Agreement shall have any duties under this Agreement.
SECTION 9.07. Assignments and Participations.
(a)
Successors and Assigns of Lenders Generally
. Except as otherwise expressly provided herein, the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender. No Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b)
Assignments by Lenders
. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Advances at the time owing to it);
provided
that any such assignment shall be subject to the following conditions:
(i)
Minimum Amounts
.
(A)
in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Advances at the time owing to it or contemporaneous assignments to related Approved Funds (determined after giving effect to such assignments) that equal at least the amount specified in subsection (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B)
in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Advances outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Advances of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if the “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $10,000,000, or an integral multiple of $1,000,000 in excess thereof, unless each of the Administrative Agent and, so long as no Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).
(ii)
Proportionate Amounts
. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Advances or the Commitment assigned.
(iii)
Required Consents
. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A)
the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) a Default has occurred and is continuing (with respect to the Borrower) at the time of such assignment, or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;
provided
that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof; and
(B)
the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender.
(iv)
Assignment and Assumption
. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500 (to be paid by the assigning Lender, or, in the case of an assignment pursuant to Section 2.15(b), the Borrower);
provided
that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.
The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v)
No Assignment to Certain Persons
. No such assignment shall be made to (A) the Borrower or any of the Borrower’s Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or a Subsidiary thereof.
(vi)
No Assignment to Natural Persons
. No such assignment shall be made to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).
(vii)
Certain Additional Payments
. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent and each Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Advances and Commitments in accordance with its Commitment Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this subsection, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.10, 2.13 and 9.04 with respect to facts and circumstances occurring prior to the effective date of such assignment;
provided
, that except to the extent otherwise expressly agreed in writing by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c)
Register
. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Assumption delivered to it and a register in which it shall record the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Advances owing to, each Lender pursuant to the terms hereof from time to time (the “
Register
”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d)
Participations
. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person, or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “
Participant
”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advances owing to it);
provided
that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 8.05 with respect to any payments made by such Lender to its Participant(s).
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided
that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clauses (ii), (iii) or (iv) of the first sentence of Section 9.01 that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.10, 2.13, 9.04(b) and 9.04(c) (subject to the requirements and limitations therein, including the requirements under Section 2.13(g) (it being understood that the documentation required under Section 2.13(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section;
provided
that such Participant (A) agrees to be subject to the provisions of Section 2.15(b) as if it were an assignee under subsection (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.10
or 2.13, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of
Section 2.15(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.05
as though it were a Lender;
provided
that such Participant agrees to be subject to Section 2.14 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Commitments, Advances or other obligations under the Loan Documents (the “
Participant Register
”);
provided
that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Advances or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitments, Advances or other obligations are in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e)
Certain Pledges
. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banking authority;
provided
that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.08. Confidentiality.
Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Confidential Information, except that Confidential Information may be disclosed (a) to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential); (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any state, federal or foreign authority or examiner regulating banks, banking or other financial institutions and any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by Applicable Law or by any subpoena or similar legal process; (d) to any other party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder or (iii) any credit insurance provider relating to the Borrower and its obligations; (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower, its Subsidiaries or this Agreement or (ii) the CUSIP Service Bureau or any similar agency in connection with the
issuance and monitoring of CUSIP numbers with respect to this Agreement; (h) with the consent of the Borrower; or (i) to the extent such Confidential Information (x) becomes publicly available other than as a result of a breach of this Section, or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent and the Lenders in connection with the administration of this Agreement, the other Loan Documents and the Commitments. Any Person required to maintain the confidentiality of Confidential Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such Person would accord to its own confidential information.
SECTION 9.09. Governing Law.
This Agreement AND EACH OTHER LOAN DOCUMENT shall be governed by, and construed in accordance with, the law of the State of New York.
SECTION 9.1. Severability; Survival.
(a)
In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired hereby.
(b)
All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Advances, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Advance or any fee or any other amount payable under this Agreement is outstanding and unpaid or the Commitments have not terminated. The provisions of Sections 2.10, 2.13, 2.14(b) and 9.04 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Advances, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.11. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart of a signature page to this Agreement by fax shall be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.12. Jurisdiction, Etc.
(a)
Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, the County of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.
(b)
Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court REFERRED TO IN SECTION 9.12(A). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
SECTION 9.13. Waiver of Jury Trial.
THE BORROWER, the Administrative Agent and each Lender hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of the Administrative Agent, THE BORROWER or any Lender in the negotiation, administration, performance or enforcement thereof.
SECTION 9.14. USA Patriot Act.
Each of the Lenders and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law as of October 26, 2001)) (as amended, restated, modified or otherwise supplemented from time to time, the “
Patriot Act
”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.
SECTION 9.15. No Fiduciary Duty.
Each of the Administrative Agent, each Joint Lead Arranger, each Lender and each of their respective Affiliates and their officers, directors, controlling persons, employees, agents and advisors (collectively, solely for purposes of this Section 9.15, the “
Lenders
”) may have economic interests that conflict with those of the Borrower. The Borrower agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between the Lenders and the Borrower, its stockholders or its Affiliates. The Borrower acknowledges and agrees that (i) the transactions contemplated by the Loan Documents are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrower, on the other, (ii) in connection therewith and with the process leading to such transaction each of the Lenders is acting solely as a principal and not the agent or fiduciary of the Borrower, its management, stockholders, creditors or any other person, (iii) no Lender has assumed an advisory or fiduciary responsibility in favor of the Borrower with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether any Lender or any of its Affiliates has advised or is currently advising the Borrower on other matters) or any other obligation to the Borrower except the obligations expressly set forth in the Loan Documents and (iv) the Borrower has consulted its own legal and financial advisors to the extent it deemed appropriate. The Borrower further acknowledges and agrees that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower agrees that it will not claim, and hereby waives and releases any claim to the fullest extent permitted by law, that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with such transactions or the process leading thereto.
SECTION 9.16. Defaulting Lenders.
(a)
Defaulting Lender Adjustments
. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:
(i)
Waivers and Amendments
. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and in Section 9.01.
(ii)
Defaulting Lender Waterfall
. Any payment of principal, interest or other amounts received by the Administrative Agent for the account of such Defaulting Lender
(whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.05 shall be applied at such time or times as may be determined by the Administrative Agent as follows:
first
, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder;
second
, as the Borrower may request (so long as no Default exists), to the funding of any Advance in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent;
third
, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement;
fourth
, so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; and
fifth
, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction;
provided
that, if such payment is a payment of the principal amount of any Advances in respect of which such Defaulting Lender has not fully funded its appropriate share on the Closing Date, such payment shall be applied solely to pay the Advances of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Advances of such Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 9.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(b)
Defaulting Lender Cure
. If the Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Lender will, to the extent applicable, purchase at par that portion of outstanding Advances of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Advances to be held pro rata by the Lenders in accordance with their Commitment Percentages (determined as if such Lender is no longer a Defaulting Lender), whereupon such Lender will cease to be a Defaulting Lender;
provided
that no adjustments will be made retroactively with respect to payments made by or on behalf of the Borrower while such Lender was a Defaulting Lender; and
provided
,
further
, that except to the extent otherwise expressly agreed in writing by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.
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AEP TRANSMISSION COMPANY, LLC
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as the Borrower
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By
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/s/ Julia A. Sloat
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Julia A. Sloat
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Vice President and Treasurer
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MIZUHO BANK, LTD.
as Administrative Agent and as Lender
By _____________________________
Name:
Title:
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The Bank of Nova Scotia
as Lender
By ______________________
Name:
Title:
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[___________________]
as Lender
By _______________________
Name:
Title:
EXHIBIT A
(to the Term Credit Agreement)
FORM OF NOTICE OF BORROWING
Mizuho Bank, Ltd. as Administrative Agent
for the Lenders party
to the Credit Agreement
referred to below
Attention: Bank Loan Syndications
[Date]
Ladies and Gentlemen:
The undersigned, AEP Transmission Company, LLC , refers to the Term Credit Agreement, dated as of November 4, 2015 (as amended or modified from time to time, the “
Credit Agreement
,” the terms defined therein being used herein as therein defined), among the undersigned, as the Borrower, certain Lenders party thereto and Mizuho Bank, Ltd., as Administrative Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to the Borrowing as required by Section 2.02(a) of the Credit Agreement:
(i)
The Borrowing is requested for ______________, 2015.
(ii)
The Types of Advances comprising the Borrowing are [Base Rate Advances][Eurodollar Rate Advances].
(iii)
The aggregate amount of the Borrowing is $___________________.
[(iv)
With respect to any Eurodollar Rate Advances, the respective amount and initial Interest Period for each Eurodollar Rate Advance is as follows:
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Loan Amount
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Initial Interest Period
1
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]
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1
Interest Period to be one, two, three or six month(s) or such other period of less than one month agreed to by all Lenders.
The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date hereof:
(A)
the representations and warranties of the Borrower contained in Section 4.01 of the Credit Agreement are true and correct in all material respects on and as of the date hereof, before and after giving effect to the Borrowing and to the application of the proceeds therefrom, as though made on the date hereof; and
(B)
no event has occurred and is continuing, or would result from the Borrowing or from the application of the proceeds therefrom, that constitutes a Default.
Very truly yours,
AEP Transmission Company, LLC
By_______________________________
Name:
Title:
A-2
EXHIBIT B
(to the Term Credit Agreement)
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “
Assignment and Assumption
”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]
1
Assignor identified in item 1 below ([the][each, an] “
Assignor
”) and [the][each]
2
Assignee identified in item 2 below ([the][each, an] “
Assignee
”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]
3
hereunder are several and not joint.]
4
Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “
Credit Agreement
”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the Credit Agreement, and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “
Assigned Interest
”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.
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1
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For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.
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2
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For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.
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4
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Include bracketed language if there are either multiple Assignors or multiple Assignees.
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1.
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Assignor[s]:
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2.
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Assignee[s]:
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[Assignee is an [Affiliate][Approved Fund] of [
identify Lender
]
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3.
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Borrower(s):
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AEP Transmission Company, LLC
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4.
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Administrative Agent:
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Mizuho Bank, Ltd., as the Administrative Agent under the
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Credit Agreement
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5.
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Credit Agreement:
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The $300,000,000 Term Credit Agreement dated as of
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November 4, 2015 among AEP Transmission Company,
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LLC , as the Borrower, the Lenders parties thereto and
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Mizuho Bank, Ltd., as Administrative Agent
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6.
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Assigned Interest[s]:
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Assignor[s]
5
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Assignee[s]
6
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Aggregate Amount
of
Commitment/
Advances for all
Lenders
7
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Amount of
Commitment/Advances
Assigned
8
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Percentage
Assigned of
Commitment/
Advances
8
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CUSIP
Number
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$
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$
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%
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$
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$
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%
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$
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$
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%
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[7.
Trade Date:
______________]
9
[Page break]
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5
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List each Assignor, as appropriate.
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6
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List each Assignee, as appropriate.
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7
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Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
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8
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Set forth, to at least 9 decimals, as a percentage of the Commitment/Advances of all Lenders thereunder.
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9
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To be completed if the Assignor and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.
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Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR[S]
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[NAME OF ASSIGNOR]
By:______________________________
Title:
[NAME OF ASSIGNOR]
By:______________________________
Title:
ASSIGNEE[S]
11
[NAME OF ASSIGNEE]
By:______________________________
Title:
[NAME OF ASSIGNEE]
By:______________________________
Title:
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Add additional signature blocks as needed.
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11
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Add additional signature blocks as needed.
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B-3
[Consented to and]
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Accepted:
MIZUHO BANK, LTD., as
Administrative Agent
By:________________________________
Title:
[Consented to:
AEP TRANSMISSION COMPANY, LLC
By:
Title:]
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12
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To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.
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13
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To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.
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B-4
ANNEX 1
$300,000,000 Term Credit Agreement dated as of November 4, 2015 among AEP Transmission Company, LLC , as the Borrower, the Lenders parties thereto and Mizuho Bank, Ltd., as Administrative Agent.
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
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1.
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Representations and Warranties
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1.1.
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Assignor[s]
. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
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1.2.
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Assignee[s]
. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 9.07 of the Credit Agreement (subject to such consents, if any, as may be required thereunder), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to clauses (i) and (ii) of Section 5.01(i) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed
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appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender and (c) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto.
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2.
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Payments
. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignee whether such amounts have accrued prior to, on or after the Effective Date. The Assignor[s] and the Assignee[s] shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee.
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3.
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General Provisions
. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by fax shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.
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B-A1-2
EXHIBIT C
(to the Term Credit Agreement)
FORM OF OPINION OF COUNSEL FOR THE BORROWER
To each of the Lenders
party to the Term Credit Agreement referred to below
and to Mizuho Bank, Ltd., as Administrative Agent thereunder
November 4, 2015
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(a)(iii) of the Term Credit Agreement, dated as of November 4, 2015 (the “
Credit Agreement
”) among AEP Transmission Company, LLC (the “
Borrower
”), as the Borrower, the Initial Lenders named therein, and Mizuho Bank, Ltd., as Administrative Agent. Terms defined in the Credit Agreement are used herein as therein defined.
I am an Associate General Counsel for American Electric Power Service Corporation, an affiliate of the Borrower, and have acted as counsel to the Borrower in connection with the preparation, execution and delivery of the Credit Agreement. I am generally familiar with the Borrower’s limited liability company history, properties, operations and charter (including amendments, restatements and supplements thereto).
In connection with this opinion, I, or attorneys over whom I exercise supervision, have examined:
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(1)
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The Credit Agreement.
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(2)
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Each promissory note to be issued under Section 2.05(d) of the Credit Agreement as of the date hereof (the “
Notes
”).
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(3)
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The documents furnished by the Borrower pursuant to Article III of the Credit Agreement.
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(4)
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The certificate of formation of the Borrower and all amendments thereto.
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(5)
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The limited liability company agreement of the Borrower and all amendments thereto.
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(6)
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Certificates of the Secretary of State or equivalent officer of the state in which the Borrower is formed, dated as of a recent date, attesting to the continued existence and good standing of the Borrower formed in that State.
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In addition, I, or attorneys over whom I exercise supervision, have examined the originals, or copies certified to my satisfaction, of such other limited liability company records of the Borrower, certificates of public officials and of officers of the Borrower, and agreements, instruments and other documents, as I have deemed necessary as a basis for the opinions expressed below.
In my examination, I, or attorneys over whom I exercise supervision, have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. In making our examination of documents and instruments executed or to be executed by persons other than the Borrower, I, or attorneys over whom I exercise supervision, have assumed that each such other person had the requisite power and authority to enter into and perform fully its obligations thereunder, the due authorization by each such other person for the execution, delivery and performance thereof and the due execution and delivery thereof by or on behalf of such person of each such document and instrument. In the case of any such person that is not a natural person, I, or attorneys over whom I exercise supervision, have also assumed, insofar as it is relevant to the opinions set forth below, that each such other person is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was created and is duly qualified and in good standing in each other jurisdiction where the failure to be so qualified could reasonably be expected to have a material effect upon its ability to execute, deliver and/or perform its obligations under any such document or instrument. I, or attorneys over whom I exercise supervision, have further assumed that each document, instrument, agreement, record and certificate reviewed by us for purposes of rendering the opinions expressed below has not been amended by any oral agreement, conduct or course of dealing between the parties thereto.
As to questions of fact material to the opinions expressed herein, I have relied upon certificates and representations of officers of the Borrower (including but not limited to those contained in the Credit Agreement and certificates delivered upon the execution and delivery of the Credit Agreement) and of appropriate public officials, without independent verification of such matters except as otherwise described herein.
Whenever my opinions herein with respect to the existence or absence of facts are stated to be to my knowledge or awareness, it is intended to signify that no information has come to my attention or the attention of other counsel working under my direction in connection with the preparation of this opinion letter that would give me or them actual knowledge of the existence or absence of such facts. However, except to the extent expressly set forth herein, neither I nor they have undertaken any independent investigation to determine the existence or absence of such facts, and no inference as to my or their knowledge of the existence or absence of such facts should be assumed.
I am a member of the Bar of the States of New York and Ohio and do not purport to be expert on the laws of any jurisdiction other than the laws of the States of New York and Ohio and the Federal laws of the United States, and, for purposes of this opinion only, the limited liability company law of the State of Delaware. My opinions expressed below are limited to the law of
C-2
the States of New York and Ohio and the Federal law of the United States, and, for purposes of this opinion only, the limited liability company law of the State of Delaware.
Based upon the foregoing and upon such investigation as I have deemed necessary, and subject to the limitations, qualifications and assumptions set forth herein, I am of the following opinion:
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1.
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The Borrower (a) is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) has the limited liability company power and authority, and the legal right, to own and operate its property, to lease the property which it operates as lessee and to conduct the business in which it is currently engaged and in which it proposes to be engaged after the date hereof; (c) is duly qualified as a foreign limited liability company and is in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except any such jurisdiction where the failure to so qualify could not, in the aggregate, reasonably be expected to result in a Material Adverse Change; (d) owns or possesses all material licenses and permits necessary for the operation by it of its business as currently conducted; and (e) is in compliance with all Requirements of Law, except as disclosed in the Disclosure Documents or to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. The term “Requirements of Law” means the laws of the State of Delaware, laws of the State of New York and the laws, rules and regulations of the United States of America (including, without limitation, ERISA and Environmental Laws) and orders of any governmental authority applicable to the Borrower.
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2.
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The Borrower has the limited liability company power and authority, and the legal right, to execute and deliver the Credit Agreement and the Notes and to perform under, the Credit Agreement and the Notes, and to borrow under the Credit Agreement. The Borrower has taken all necessary limited liability company action to authorize the execution, delivery and performance of the Credit Agreement and the Notes and the incurrence of Advances on the terms and conditions of the Credit Agreement, and each of the Credit Agreement and the Notes has been duly executed and delivered by the Borrower. Each of the Credit Agreement and the Notes constitutes the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms.
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3.
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The execution, delivery and performance of the Credit Agreement and the Advances made thereunder will not violate any Requirements of Law, the Borrower’s certificate of formation or limited liability company agreement, or any material contractual restriction binding on or affecting the Borrower or any of its properties.
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4.
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No approval or authorization or other action by, and notice to or filing with, any governmental agency or regulatory body or other third person is required in
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C-3
connection with the due execution and delivery of the Credit Agreement and the Notes and the performance, validity or enforceability of the Credit Agreement and the Notes, other than with respect to the Borrower such Approvals, if any, that have been duly issued and are in full force and effect.
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5.
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Except as described in Section 4.01(e) of the Credit Agreement, no action, suit, investigation, litigation, or proceeding, including, without limitation, any Environmental Action, affecting the Borrower or any of its Significant Subsidiaries before any court, government agency or arbitrator is pending or, to my knowledge, threatened, that is reasonably likely to have a Material Adverse Effect.
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6.
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Neither the Borrower nor any of its Significant Subsidiaries is an “investment company”, or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of any Advances, the application of the proceeds or repayment thereof by the Borrower nor the consummation of the other transactions contemplated by the Credit Agreement will violate any provision of such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder.
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7.
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In any action or proceeding arising out of or relating to the Credit Agreement in any court of the State of Delaware or in any Federal court sitting in the State of Delaware, such court would recognize and give effect to the provisions of Section 9.09 of the Credit Agreement, wherein the parties thereto agree that the Credit Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. However, if a court of the State of Delaware or a Federal court sitting in the State of Delaware were to hold that the Credit Agreement is governed by, and to be construed in accordance with, the laws of the State of Delaware, the Credit Agreement would be, under the State of Delaware, the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms.
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The opinion set forth above in the last sentence of paragraph 2 and paragraph 7 above is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor’s rights generally and to general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law.)
I express no opinion as to (i) Section 9.05 of the Credit Agreement; (ii) the effect of the law of any jurisdiction (other than the State of Delaware) wherein any Lender may be located which limits the rates of interest which may be charged or collected by such Lender; and (iii) whether a Federal or state court outside of the States of New York or Delaware would give effect to the choice of New York law provided for in the Credit Agreement.
C-4
This opinion has been rendered solely for your benefit in connection with the Credit Agreement and the transactions contemplated thereby and may not be used, circulated, quoted, relied upon or otherwise referred to by any other Person (other than your respective counsel, auditors and any regulatory agency having jurisdiction over you or as otherwise required pursuant to legal process or other requirements of law) for any other purpose without my prior written consent; provided that any Person that becomes a Lender after the date hereof may rely on the opinions expressed in this opinion letter as though addressed to such Person. I undertake no responsibility to update or supplement this opinion in response to changes in law or future events or circumstances.
Very truly yours,
Thomas G. Berkemeyer
Counsel for AEP Transmission Company, LLC
C-5
EXHIBIT D-1
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships
For U.S. Federal Income Tax Purposes)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Term Credit Agreement, dated as of November 4, 2015 (as amended, supplemented or otherwise modified from time to time, the “
Credit Agreement
”), among AEP Transmission Company, LLC (the “
Borrower
”), the Lenders named therein and Mizuho Bank, Ltd., as the administrative agent (the “
Administrative Agent
”) for the Lenders.
Pursuant to the provisions of Section 2.13 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Advance(s) and Commitment (as well as any promissory note(s) evidencing such Advance(s) and Commitment) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W‑8BEN‑E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Administrative Agent and the Borrower, and (2) the undersigned shall have at all times furnished the Administrative Agent and the Borrower with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF LENDER]
By:________________
Name:
Title:
Date: ________ __, 20[ ]
EXHIBIT D-2
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships
For U.S. Federal Income Tax Purposes)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Term Credit Agreement, dated as of November 4, 2015 (as amended, supplemented or otherwise modified from time to time, the “
Credit Agreement
”), among AEP Transmission Company, LLC (the “
Borrower
”), the Lenders named therein and Mizuho Bank, Ltd., as the administrative agent for the Lenders.
Pursuant to the provisions of Section 2.13 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W‑8BEN‑E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By:________________
Name:
Title:
Date: ________ __, 20[ ]
EXHIBIT D-3
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships
For U.S. Federal Income Tax Purposes)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Term Credit Agreement, dated as of November 4, 2015 (as amended, supplemented or otherwise modified from time to time, the “
Credit Agreement
”), among AEP Transmission Company, LLC (the “
Borrower
”), the Lenders named therein and Mizuho Bank, Ltd., as the administrative agent for the Lenders.
Pursuant to the provisions of Section 2.13 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W‑8BEN‑E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W‑8BEN‑E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By:________________
Name:
Title:
Date: ________ __, 20[ ]
D-3-2
EXHIBIT D-4
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships
For U.S. Federal Income Tax Purposes)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Term Credit Agreement, dated as of November 4, 2015 (as amended, supplemented or otherwise modified from time to time, the “
Credit Agreement
”), among AEP Transmission Company, LLC (the “
Borrower
”), the Lenders named therein and Mizuho Bank, Ltd., as the administrative agent (the “
Administrative Agent
”) for the Lenders.
Pursuant to the provisions of Section 2.13 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Advance(s) and Commitment (as well as any promissory note(s) evidencing such Advance(s) and Commitment) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Advance(s) and Commitment (as well as any promissory note(s) evidencing such Advance(s) and Commitment), (iii) with respect to the extension of credit pursuant to the Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.
The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W‑8BEN‑E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W‑8BEN‑E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Administrative Agent and the Borrower, and (2) the undersigned shall have at all times furnished the Administrative Agent and the Borrower with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF LENDER]
By:________________
Name:
Title:
Date: ________ __, 20[ ]
D-4-2
Schedule I
Schedule of Initial Lenders
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Lender Name
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Commitment
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Mizuho Bank, Ltd.
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$50,000,000
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The Bank of Nova Scotia
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$50,000,000
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Bank of America, N.A.
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$50,000,000
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Barclays Bank PLC
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$50,000,000
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Royal Bank of Canada
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$50,000,000
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SunTrust Bank
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$50,000,000
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Total
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$300,000,000.00
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Schedule 4.01(m)
Subsidiaries
AEP Transmission Company, LLC
AEP Appalachian Transmission Company, Inc.
AEP Indiana Michigan Transmission Company, Inc.
AEP Kentucky Transmission Company, Inc.
AEP Ohio Transmission Company, Inc.
AEP Oklahoma Transmission Company, Inc.
AEP Southwestern Transmission Company, Inc.
AEP West Virginia Transmission Company, Inc.
Significant Subsidiaries
AEP Transmission Company, LLC
AEP Indiana Michigan Transmission Company, Inc.
AEP Ohio Transmission Company, Inc.
AEP Oklahoma Transmission Company, Inc.
Exhibit 4(c)-2
Supplement to Note Purchase Agreement
(this “
Supplement
”)
AEP Transmission Company, LLC
1 Riverside Plaza
Columbus, Ohio 43215
As of November 7, 2013
To Each of the Purchasers
Named in the Supplemental
Purchaser Schedule Attached Hereto
Ladies and Gentlemen:
Reference is made to that certain Note Purchase Agreement, dated as of October 18, 2012 between AEP Transmission Company, LLC, a Delaware limited liability company, and each of the Initial Purchasers named in the Initial Purchaser Schedule attached thereto (the
“Agreement”
). Terms used but not defined herein shall have the respective meanings set forth in the Agreement.
As contemplated in
Section 2.2
of the Agreement, the Company agrees with you as follows:
A.
Subsequent Series of Notes.
The Company has authorized and will create a Subsequent Series of Notes to be called the
“Series B Notes.”
Said Series B Notes will consist of (a) U.S. $50,000,000 aggregate principal amount of 2.73% Senior Notes, Series B, Tranche A, due November 7, 2018 (the “
Series B Tranche A Notes
”), (b) U.S. $60,000,000 aggregate principal amount of 4.05% Senior Notes, Series B, Tranche B, due November 7, 2023 (the “
Series B Tranche B Notes
”), (c) U.S. $60,000,000 aggregate principal amount of 4.38% Senior Notes, Series B, Tranche C, due November 7, 2028 (the “
Series B Tranche C Notes
”), (d) U.S. $100,000,000 aggregate principal amount of 5.32% Senior Notes, Series B, Tranche D, due November 7, 2043 (the “
Series B Tranche D Notes
”); (e) U.S. $30,000,000 aggregate principal amount of 5.42% Senior Notes, Series B, Tranche E, due April 30, 2044 (the “
Series B Tranche E Notes
”), and (f) U.S. $100,000,000 aggregate principal amount of 5.52% Senior Notes, Series B, Tranche F, due October 30, 2044 (the “
Series B Tranche F Notes
”; the Series B Tranche A Notes, the Series B Tranche B Notes, the Series B Tranche C Notes, the Series B Tranche D Notes, the Series B Tranche E Notes and the Series B Tranche F Notes are hereinafter collectively referred to as the “
Series B Notes
”, such term to include any such notes issued in substitution therefor pursuant to
Section 13
of the Agreement). The Series B Tranche A Notes, the Series B Tranche B Notes, the Series B Tranche C Notes, the Series B Tranche D Notes, the Series B Tranche E Notes and the Series B Tranche F Notes shall be substantially in the form set out in Exhibit 1-A, 1-B, 1-C, 1-D, 1-E and 1-F to this Supplement, respectively, with such changes therefrom, if any, as may be approved by you and the Company.
B.
Purchase and Sale of Series B Notes.
The Company hereby agrees to sell to each Supplemental Purchaser set forth on the Supplemental Purchaser Schedule attached hereto (collectively, the
“Series B Purchasers”
) and, subject to the terms and conditions in the Agreement and herein set forth, each Series B Purchaser agrees to purchase from the Company, at a Series B Closing provided for in
Section C
to this Supplement, Series B Notes in the principal amount and in the tranche set opposite each Series B Purchaser’s name in the Supplemental Purchaser Schedule at the purchase price of 100% of the principal amount thereof. The obligations of the Series B Purchasers hereunder are several and not joint obligations, and no Series B Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Series B Purchaser hereunder.
C.
Execution Date; Series B Closings.
The execution and delivery of this Supplement will be made at the offices of Winston & Strawn LLP, 200 Park Avenue, New York, New York 10166 on November 7, 2013 (the “
Series B Execution Date
”).
The sale and purchase of the Series B Notes to be purchased by each Series B Purchaser shall occur at the offices of Winston & Strawn LLP, 200 Park Avenue, New York, New York 10166 at 10:00 a.m. Eastern Standard Time, at no more than three closings (individually, a “
Series B
Closing
” and, collectively, the “
Series B
Closings
”). The first Series B Closing, at which Series B Closing the Series B Tranche A Notes, the Series B Tranche B Notes the Series B Tranche C Notes and the Series B Tranche D Notes are, subject to this
Section C
and
Section D
to this Supplement, to be purchased, shall be held on November 7, 2013 (the
“First Series B Closing”
); the second Series B Closing, at which Series B Closing the Series B Tranche E Notes are, subject to this
Section C
and
Section D
to this Supplement, to be purchased, shall be held on April 30, 2014 (the
“Second Series B
Closing”
), and the third Series B Closing, at which Series B Closing the Series B Tranche F Notes are, subject to this
Section C
and
Section D
, to be purchased, shall be held on October 30, 2014 (the
“Third Series B Closing”
). At each Series B Closing, the Company will deliver to each Series B Purchaser the Series B Notes of the tranche to be purchased by such Series B Purchaser at such Series B Closing in the form of a single Series B Note of such tranche (or such greater number of Series B Notes in denominations of at least $100,000 as such Series B Purchaser may request) dated the date of such Series B Closing and registered in such Series B Purchaser’s name (or in the name of its nominee), against payment by such Series B Purchaser of the purchase price thereof by transfer of immediately available funds for credit to the Company’s account on the date of such Series B Closing (which account shall be specified in a notice to each such Series B Purchaser at least three Business Days prior to each Series B Closing).
If at such Series B Closings the Company shall fail to tender such Series B Notes to any Series B Purchaser as provided above in this
Section
C
, or any of the conditions specified in
Section
D
to this Supplement shall not have been fulfilled to such Series B Purchaser’s satisfaction, such Series B Purchaser shall, at its election, be relieved of all further obligations under this Supplement and the Agreement, without thereby waiving any rights such Series B Purchaser may have by reason of such failure or such nonfulfillment.
D.
Conditions to Series B Closings.
The obligation of each Series B Purchaser to execute and deliver this Supplement on the Series B Execution Date is subject to the representations and warranties of the Company in
Section 5
of the Agreement, as supplemented,
amended or superseded by the representations and warranties set forth in
Exhibit A
hereto, being correct when made on the Series B Execution Date. The obligations of each Series B Purchaser to purchase and pay for the Series B Notes to be purchased by such Series B Purchaser hereunder at a Series B Closing is subject to the satisfaction, on or before the date of such Series B Closing, of the conditions set forth in
Section 4
of the Agreement, provided that the reference to Chapman and Cutler LLP in
Section 4.4(c)
of the Agreement shall be deemed to be a reference to Winston & Strawn LLP, and to the following additional conditions:
(a)
Except as supplemented, amended or superseded by the representations and warranties set forth in
Exhibit A
hereto, each of the representations and warranties of the Company set forth in
Section 5
of the Agreement shall be correct as of the date of each Series B Closing and the Company shall have delivered to such Series B Purchaser an Officer’s Certificate, dated the date of such Series B Closing, certifying that such condition has been fulfilled.
(b)
Contemporaneously with each Series B Closing, the Company shall sell to each Series B Purchaser, and each Series B Purchaser shall purchase, the Series B Notes to be purchased by such Series B Purchaser on the date of such Series B Closing as specified in the
Supplemental Purchaser Schedule.
E.
Prepayments
. The Series B Notes shall be subject to prepayment only (a) pursuant to the required prepayments, if any, specified in clause (x) below; and (b) pursuant to the optional prepayments specified in clause (y) below.
(x)
Maturity. As provided therein, the entire unpaid principal amount of each tranche of the Series B Notes shall be due and payable on the stated maturity date thereof.
(y)
Optional and Contingent Prepayments. As provided in
Section 8.2
of the Agreement.
F.
Purchaser Representations
. Each Series B Purchaser represents and warrants that the representations and warranties set forth in
Section 6
of the Agreement are true and correct on the Series B Execution Date with respect to the purchase of the Series B Notes by such Series B Purchaser with the same force and effect as if each reference to “Series A Notes” set forth therein was modified to refer the “Series B Notes” and each reference to “Initial Purchaser” set forth therein was modified to refer the “Series B Purchaser”.
G.
Definition of “Priority Debt”.
The definition of the term “Priority Debt” as set forth in Schedule B to the Agreement is deemed to be supplemented and modified to read in its entirety as follows:
“Priority Debt”
means, without duplication, (a) any Debt of the Company or a Subsidiary secured by a Lien created or incurred within the limitations of
Section 10.3(d)
and (b) any Debt of the Company’s Subsidiaries;
provided
that there shall be excluded from any calculation of Priority Debt, (i) the Debt of any Subsidiary owing to the Company or a Wholly‑owned Significant Subsidiary of the Company, and (ii) the Debt of
any Person which becomes a Subsidiary after the date of the First Initial Closing and any extension, renewal or refunding thereof;
provided
that such Debt was not incurred in contemplation of such Person becoming a Subsidiary.
H.
Series B Notes Issued under and Pursuant to Agreement.
Except as otherwise specifically provided above (and expressly permitted by the Agreement), all of the provisions of the Agreement are incorporated by reference herein and shall apply to the Series B Notes as if expressly set forth in this Supplement. Accordingly, the Series B Notes shall be deemed to be issued under, to be subject to and to have the benefit of all of the terms and provisions of the Agreement as the same may from time to time be amended and supplemented in the manner provided therein.
[Signature Page Follows]
The execution hereof by the Series B Purchasers shall constitute a contract among the Company and the Series B Purchasers for the uses and purposes hereinabove set forth. By their acceptance hereof, each of the Series B Purchasers shall also be deemed to have accepted and agreed to the terms and provisions of the Agreement, as in effect on the date hereof.
AEP Transmission Company, LLC
By:
/s/ Renee V. Hawkins
Name: Renee V. Hawkins
Title: Assistant Treasurer
Schedule A
(to Supplement)
This Supplement is hereby accepted and agreed as of the date hereof:
MetLife Insurance Company of Connecticut
MetLife Investors USA Insurance Company
By Metropolitan Life Insurance Company, its Investment Manager
By:
/s/ John A. Tanyeri
Name: John A. Tanyeri
Title: Managing Director
MetLife Alico Life Insurance K.K.
by Metropolitan Investment Management, LLC, its Investment Manager
By:
/s/ John A. Tanyeri
Name: John A. Tanyeri
Title: Managing Director
Cobank, ACB
By:
/s/ Josh Batchelder
Name: Josh Batchelder
Title: Regional Vice President
Hartford Fire Insurance Company
Hartford Accident and Indemnity Company
By: Hartford Investment Management Company Its Agent and Attorney-in-Fact
By:
/s/ Dawn Crunden
Name: Dawn Crunden
Title: Senior Vice President
The Walt Disney Company Retirement Plan Master Trust
By: Hartford Investment Management Company Its Investment Manager
By:
/s/ Dawn Crunden
Name: Dawn Crunden
Title: Senior Vice President
Penn Mutual Life Insurance Company
Principal Life Insurance Company
By: Principal Global Investors, LLC
By:
/s/ Alan R. Kress
Name: Alan R. Kress
Title: Counsel
Physicians Insurance A Mutual Company
Federated Rural Electric Insurance Exchange
By: Prime Advsiors, its Attorney-in-Fact
By:
/s/ Scott Sell
Name: Scott Sell
Title: Vice President
The Northwestern Mutual Life Insurance Company
Northwestern Long Term Care Insurance Company
By:
/s/ David A. Barras
Name: David A. Barras
Title: Authorized Representative
The Guardian Life Insurance Company of America
The Guardian Life Insurance & Annuity Company, Inc.
By:
/s/ Barry Scheinholtz
Name: Barry Scheinholtz
Title: Senior Director, Private Placements
Assurity Life Insurance Company
By:
/s/ Victor Weber
Name: Victor Weber
Title: Senior Director-Investments
Teachers Insurance and Annuity Association of America
By:
/s/ Joseph R. Conley, Jr.
Name: Joseph R. Conley, Jr.
Title: Director
Companion Life Insurance Company
United of Omaha Life Insurance Company
Mutual of Omaha Insurance Company
By:
/s/ Justin P. Kavan
Name: Justin P. Kavan
Title: Vice President
ING Life Insurance and Annuity Company
ING USA Annuity and Life Insurance Company
Reliastar Life Insurance Company
Reliastar Life Insurance Company of New York
Security Life of Denver Insurance Company
By:
/s/ Paul Aronson
Name: Paul Aronson
Title: Senior Vice President
Pacific Life Insurance Company
By:
/s/ Diane W. Dales
Name: Diane W. Dales
Title: Vice President
Connecticut General Life Insurance Company
By: Cigna Invesments, Inc., authorized agent
By:
/s/ Robert W. Eccles
Name: Robert W. Eccles
Title: Senior Managing Partner
Massachusetts Mutual Life Insurance Compay
Massmutual Asia Limited
By: Babson Capital Management LLC as Investment Advisor
By:
/s/ Emeka O. Onukwugha
Name: Emeka O. Onukwugha
Title: Managing Director
John Hancock Life Insurance Company (U.S.A.)
John Hancock Life & Health Insurance Company
John Hancock Life Insurance Company of New York
By:
/s/ Pradeep Killmasetty
Name: Pradeep Killmasetty
Title: Authorized Signatory
Information Relating to Series B Purchasers
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Name and Address of Series B Purchaser
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Principal
Amount and
Tranche of Series
B Notes to Be
Purchased
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[Name of Series B Purchaser]
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$[__________]
(Tranche [A];
No. B-[A]-[1])
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(1)
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All payments by wire transfer of
immediately available funds to:
with sufficient information to identify the
source and application of such funds.
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(2)
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All notices of payments and written
confirmations of such wire transfers:
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(3)
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All other communications:
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Exhibit A
Supplemental Representations
The Company represents and warrants to each Series B Purchaser that except as hereinafter set forth in this
Exhibit A
, each of the representations and warranties set forth in
Section 5
of the Agreement is true and correct as of the date hereof with respect to the Series B Notes with the same force and effect as if each reference to “Series A Notes” set forth therein was modified to refer to the “Series B Notes” and each reference to “this Agreement” therein was modified to refer to the Agreement as supplemented by this Supplement. The Section references hereinafter set forth correspond to the similar sections of the Agreement which are supplemented hereby:
1.
Section 5.3 of the Agreement is deemed to be supplemented and modified to read in its entirety as follows:
“The Company, through its agents, Barclays Capital Inc. and Credit Suisse Securities (USA) LLC, has delivered to each Purchaser a copy of a Private Placement Memorandum, dated October 2013 (the “
Memorandum
”), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries. This Agreement, the Memorandum and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby and identified in
Schedule 5.3
, and the financial statements listed in
Schedule 5.5
(this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements delivered to each Purchaser prior to October 17, 2013 being referred to, collectively, as the
“Disclosure Documents”
), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made;
provided,
that no representation is hereby made with respect to the projections contained therein other than that such projections are based on information that the Company believes to be accurate and were calculated in a manner that the Company believes to be reasonable. Since [December 31, 2012], there has been no change in the financial condition, operations, business or properties of the Company except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company that would reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.”
2.
Section 5.12(b) of the Agreement is deemed to be modified so that each reference to the date “January 1, 2012” is deleted and replaced with a reference to the date “January 1, 2013”.
3.
Section 5.15(a) of the Agreement is deemed to be supplemented and modified to read in its entirety as follows:
“(a)
Schedule 5.15
sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of November 5, 2013 (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and Guaranty thereof, if any), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary, the outstanding principal amount of which exceeds $1,000,000, and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment.
Annex A
to be attached hereto on the date of the Second Series B Closing will correctly describe all outstanding Debt and any Liens securing such Debt of the Company and its Subsidiaries as of the date of the Second Series B Closing. Since the First Series B Closing, there shall have been no Material increase in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries listed on
Schedule 5.15
(other than the inclusion of the Series B Tranche A Notes, the Series B Tranche B Notes, the Series B Tranche C Notes and the Series B Tranche D Notes).
Annex B
to be attached hereto on the date of the Third Series B Closing will correctly describe all outstanding Debt and any Liens securing such Debt of the Company and its Subsidiaries as of the date of the Third Series B Closing. Since the Second Series B Closing, there shall have been no Material increase in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries listed on
Schedule 5.15
(other than the inclusion of the Series B Tranche E Notes).”
4.
Each of Schedules 5.3, 5.4, 5.5, 5.12 and 5.15 to the Agreement is deemed to be replaced by Schedules 5.3, 5.4, 5.5, 5.12 and 5.15 to this Supplement, as applicable.
5.
Each of Annexes A and B to the Agreement is deemed to be replaced by Annexes A and B to this Supplement, as applicable.
Schedule 5.3
(to Supplement)
Disclosure Materials
U.S. Private Placement Investor Road Show Presentation dated October 2013
Schedule 5.4
(to Supplement)
Subsidiaries of the Company and Ownership of Subsidiary Stock
List of Subsidiary Companies
: each 100% owned
AEP Appalachian Transmission Company, Inc.
AEP Indiana Michigan Transmission Company, Inc.
AEP Kentucky Transmission Company, Inc.
AEP Ohio Transmission Company, Inc.
AEP Oklahoma Transmission Company, Inc.
AEP Southwestern Transmission Company, Inc.
AEP West Virginia Transmission Company, Inc.
Schedule 5.5
(to Supplement)
Financial Statements
AEP Transmission Company and Subsidiaries 2011 Annual Report Unaudited Consolidated Financial Statements
AEP Transmission Company and Subsidiaries 2012 Annual Report Audited Consolidated Financial Statements
AEP Transmission Company and Subsidiaries 2013 First Quarter and Second Quarter Reports Unaudited Consolidated Financial Statements
Schedule 5.12
(to Supplement)
ERISA Matters
January 1, 2013 Defined Benefit Adjusted Funding Target Attainment Percentage
For the American Electric Power System Retirement Plan, which is a pension plan within the meaning of section 3(2) of ERISA (other than a Multiemployer Plan) that is subject to the funding requirements of section 302 of ERISA or section 412 of the Code, the adjusted funding target attainment percentage as of January 1, 2013, as most recently certified by the Plan’s actuary on the basis of the actuarial assumptions specified for funding purposes in such Plan’s actuarial valuation report for the plan year beginning January 1, 2013, is 116.77%.
Schedule 5.15
(to Supplement)
Existing Debt
5.15(a)
Short-term debt
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Short-Term Debt (all affiliate borrowings):
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AEP Transmission Company, LLC
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$
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100,631,103.23
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AEP Ohio Transmission Company, Inc.
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$
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57,427,314.7
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AEP Indiana Michigan Transmission Company, Inc.
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$
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50,140,288.67
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AEP Oklahoma Transmission Company, Inc.
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$
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42,991,928.01
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AEP Appalachian Transmission Company, Inc.
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$
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8,721,204.22
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AEP Kentucky Transmission Company, Inc.
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$
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214,808.41
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AEP Southwestern Transmission Company, Inc.
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$
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953,179.31
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AEP West Virginia Transmission Company, Inc.
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$
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4,865,175.94
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AEP Ohio Transmission Company, Inc (as obligor) $100,000,000 Daily Variable Rate Notes, Series A, due to AEP Transmission Company, LLC (as obligee) on May 16, 2014
Long-term debt
AEP Transmission Company, LLC (as obligor)
AEP Transmission Company, LLC $104,000,000 3.30% Senior Notes, Series A, Tranche A due October 18, 2022
AEP Transmission Company, LLC $85,000,000 4.00% Senior Notes, Series A, Tranche B due October 18, 2032
AEP Transmission Company, LLC $61,000,000 4.73% Senior Notes, Series A, Tranche C due October 18, 2042
AEP Transmission Company, LLC $75,000,000 4.78% Senior Notes, Series A, Tranche D due December 14, 2042
AEP Transmission Company, LLC $25,000,000 4.83% Senior Notes, Series A, Tranche E due March 18, 2043
AEP Ohio Transmission Company, Inc.(as obligor) and AEP Transmission Company, LLC (as obligee):
Schedule 5.15
(to Supplement)
AEP Ohio Transmission Company, Inc. $83,200,000 3.30% Senior Notes, Series A, Tranche A due October 18, 2022
AEP Ohio Transmission Company, Inc. $68,000,000 4.00% Senior Notes, Series A, Tranche B due October 18, 2032
AEP Ohio Transmission Company, Inc. $48,800,000 4.73% Senior Notes, Series A, Tranche C due October 18, 2042
AEP Ohio Transmission Company, Inc. $10,000,000 4.83% Senior Notes, Series A, Tranche E due March 18, 2043
AEP Indiana Michigan Transmission Company, Inc.(as obligor) and AEP Transmission Company, LLC (as obligee):
AEP Indiana Michigan Transmission Company, Inc. $20,800,000 3.30% Senior Notes, Series A, Tranche A due October 18, 2022
AEP Indiana Michigan Transmission Company, Inc. $17,000,000 4.00% Senior Notes, Series A, Tranche B due October 18, 2032
AEP Indiana Michigan Transmission Company, Inc. $12,200,000 4.73% Senior Notes, Series A, Tranche C due October 18, 2042
AEP Indiana Michigan Transmission Company, Inc. $7,500,000 4.83% Senior Notes, Series A, Tranche E due March 18, 2043
AEP Oklahoma Transmission Company, Inc. (as obligor) and AEP Transmission Company, LLC (as obligee):
AEP Oklahoma Transmission Company, Inc. $75,000,000 4.78% Senior Notes, Series A, Tranche D due December 14, 2042
AEP Oklahoma Transmission Company, Inc. $7,500,000 4.83% Senior Notes, Series A, Tranche E due March 18, 2043
Annex A
(to Supplement)
Existing Debt as of the Second Series B Closing
Annex B
(to Supplement)
Existing Debt as of the Third Series B Closing
Exhibit 4c-1
NY:1657347.1
Execution Version
AEP Transmission Company, LLC
$350,000,000
U.S. $104,000,000 3.30% Senior Notes, Series A, Tranche A, due October 18, 2022
U.S. $85,000,000 4.00% Senior Notes, Series A, Tranche B, due October 18, 2032
U.S. $61,000,000 4.73% Senior Notes, Series A, Tranche C, due October 18, 2042
U.S. $75,000,000 4.78% Senior Notes, Series A, Tranche D, due December 14, 2042
U.S. $25,000,000 4.83% Senior Notes, Series A, Tranche E, due March 18, 2043
______________
Note Purchase Agreement
_____________
Dated as of October 18, 2012
Table of Contents
(Not a part of the Agreement)
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Section
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Heading
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Page
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Section 1.
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Authorization of Notes
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1
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Section 1.1.
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Series A Notes
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1
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Section 1.2.
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Subsequent Series
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1
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Section 2.
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Sale and Purchase of Notes; Subsequent Sales
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2
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Section 2.1.
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Initial Sale of Series A Notes
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2
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Section 2.2.
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Subsequent Sales
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2
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Section 3.
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Execution Date; Initial Closings
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3
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Section 4.
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Conditions to Closing
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4
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Section 4.1.
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Representations and Warranties
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4
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Section 4.2.
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Performance; No Default
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4
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Section 4.3.
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Compliance Certificates
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4
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Section 4.4.
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Opinions of Counsel
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4
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Section 4.5.
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Purchase Permitted by Applicable Law, Etc.
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5
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Section 4.6.
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Sale of Other Notes
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5
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Section 4.7.
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Payment of Special Counsel Fees
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5
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Section 4.8.
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Private Placement Number
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5
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Section 4.9.
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Changes in Legal Structure
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5
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Section 4.10.
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Funding Instructions
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5
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Section 4.11.
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Company Regulatory Approvals
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5
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Section 4.12.
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Proceedings and Documents
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6
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Section 5.
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Representations and Warranties of the Company
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6
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Section 5.1.
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Organization; Power and Authority
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6
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Section 5.2.
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Authorization, Etc.
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6
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Section 5.3.
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Disclosure
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6
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Section 5.4.
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Subsidiaries
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7
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Section 5.5.
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Financial Statements; Material Liabilities
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8
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Section 5.6.
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Compliance with Laws, Other Instruments, Etc.
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8
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Section 5.7.
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Governmental Authorizations, Etc.
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8
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Section 5.8.
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Litigation; Observance of Agreements, Statutes and Orders
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8
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Section 5.9.
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Taxes
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9
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Section 5.10.
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Title to Property; Leases
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9
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Section 5.11.
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Licenses, Permits, Etc.
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9
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Section 5.12.
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Compliance with ERISA
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9
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Section 5.13.
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Private Offering by the Company
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10
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Section 5.14.
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Use of Proceeds; Margin Regulations
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10
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Section 5.15.
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Existing Debt; Future Liens
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11
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Section 5.16.
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Foreign Assets Control Regulations, Etc.
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11
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Section 5.17.
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Status under Certain Statutes
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12
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Section 5.18.
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Notes Rank Pari Passu
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13
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Section 5.19.
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Environmental Matters
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13
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Section 6.
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Representations of the Purchasers
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13
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Section 6.1.
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Purchase for Investment
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13
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Section 6.2.
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Source of Funds
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14
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Section 7.
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Information as to the Company
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16
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Section 7.1.
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Financial and Business Information
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16
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Section 7.2.
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Officer’s Certificate
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18
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Section 7.3.
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Visitation
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18
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Section 8.
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Payment and Prepayment of the Notes
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19
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Section 8.1.
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Maturity
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19
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Section 8.2.
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Optional Prepayments with Make‑Whole Amount
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19
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Section 8.3.
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[Reserved]
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19
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Section 8.4.
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Allocation of Partial Prepayments
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19
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Section 8.5.
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Maturity; Surrender, Etc.
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19
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Section 8.6.
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Purchase of Notes
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20
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Section 8.7.
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Make‑Whole Amount
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20
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Section 9.
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Affirmative Covenants
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22
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Section 9.1.
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Compliance with Law
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22
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Section 9.2.
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Insurance
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22
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Section 9.3.
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Maintenance of Properties
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22
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Section 9.4.
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Payment of Taxes and Claims
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22
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Section 9.5.
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Legal Existence, Etc.
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23
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Section 9.6.
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Notes to Rank Pari Passu
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23
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Section 9.7.
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Books and Records
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23
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Section 9.8.
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Intercompany Notes
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23
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Section 10.
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Negative Covenants
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23
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Section 10.1.
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Leverage Ratio
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23
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Section 10.2.
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Limitations on Consolidated Priority Debt
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23
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Section 10.3.
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Limitation on Liens
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24
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Section 10.4.
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Restricted Payments
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24
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Section 10.5.
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Mergers, Consolidations, Etc.
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25
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Section 10.6.
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Sale of Assets
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26
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Section 10.7.
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Restrictive Agreements
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27
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Section 10.8.
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Transactions with Affiliates
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27
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Section 10.9.
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Line of Business
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28
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Section 10.10.
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LLC Agreement
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28
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Section 10.11.
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Terrorism Sanctions Regulations
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28
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Section 11.
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Events of Default
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28
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Section 12.
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Remedies on Default, Etc.
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31
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Section 12.1.
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Acceleration
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31
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Section 12.2.
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Other Remedies
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31
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Section 12.3.
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Rescission
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32
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Section 12.4.
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No Waivers or Election of Remedies, Expenses, Etc.
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32
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Section 13.
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Registration; Exchange; Substitution of Notes
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32
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Section 13.1.
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Registration of Notes
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32
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Section 13.2.
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Transfer and Exchange of Notes
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32
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Section 13.3.
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Replacement of Notes
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33
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Section 14.
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Payments on Notes
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33
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Section 14.1.
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Place of Payment
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33
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Section 14.2.
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Home Office Payment
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34
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Section 15.
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Expenses, Etc.
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34
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Section 15.1.
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Transaction Expenses
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34
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Section 15.2.
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Survival
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35
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Section 16.
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Survival of Representations and Warranties; Entire
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Agreement
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35
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Section 17.
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Amendment and Waiver
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35
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Section 17.1.
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Requirements
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35
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Section 17.2.
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Solicitation of Holders of Notes
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37
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Section 17.3.
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Binding Effect, Etc.
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37
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Section 17.4.
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Notes Held by Company, Etc.
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38
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Section 18.
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Notices
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38
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Section 19.
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Reproduction of Documents
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38
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Section 20.
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Confidential Information
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39
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Section 21.
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Substitution of Purchaser
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40
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Section 22.
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Miscellaneous
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40
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Section 22.1.
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Successors and Assigns
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40
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Section 22.2.
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Payments Due on Non‑Business Days
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40
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Section 22.3.
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Accounting Terms
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40
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Section 22.4.
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Severability
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40
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Section 22.5.
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Construction, Etc.
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41
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Section 22.6.
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Counterparts
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41
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Section 22.7.
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Governing Law
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41
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Section 22.8.
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Jurisdiction and Process; Waiver of Jury Trial
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41
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Signature
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43
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Schedule A
|
-
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Information Relating to Initial Purchasers
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Schedule B
|
-
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Defined Terms
|
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Schedule 5.3
|
-
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Disclosure Materials
|
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Schedule 5.4
|
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Subsidiaries of the Company and Ownership of Subsidiary Stock
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Schedule 5.5
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Financial Statements
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Schedule 5.12
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ERISA Matters
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Schedule 5.15
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Existing Debt
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Annex A
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Existing Debt as of the Second Initial Closing
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Annex B
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Existing Debt as of the Third Initial Closing
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Exhibit 1‑A
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Form of 3.30% Senior Notes, Series A, Tranche A, due October 18, 2022
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Exhibit 1‑B
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Form of 4.00% Senior Notes, Series A, Tranche B, due October 18, 2032
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Exhibit 1‑C
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Form of 4.73% Senior Notes, Series A, Tranche C, due October 18, 2042
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Exhibit 1‑D
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Form of 4.78% Senior Notes, Series A, Tranche D, due December 14, 2042
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Exhibit 1‑E
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Form of 4.83% Senior Notes, Series A, Tranche E, due March 18, 2043
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Exhibit 1.2
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Form of Supplemental Note
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Exhibit 2.2
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Form of Supplemental Note Purchase Agreement
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Exhibit 4.4(a)
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Form of Opinion of Counsel for the Company
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Exhibit 4.4(b)
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Form of Opinion of Special Counsel for the Purchasers
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AEP Transmission Company, LLC
1 Riverside Plaza
Columbus, Ohio 43215
U.S. $104,000,000 3.30% Senior Notes, Series A, Tranche A, due October 18, 2022
U.S. $85,000,000 4.00% Senior Notes, Series A, Tranche B, due October 18, 2032
U.S. $61,000,000 4.73% Senior Notes, Series A, Tranche C, due October 18, 2042
U.S. $75,000,000 4.78% Senior Notes, Series A, Tranche D, due December 14, 2042
U.S. $25,000,000 4.83% Senior Notes, Series A, Tranche E, due March 18, 2043
Dated as of October 18, 2012
To Each of the Purchasers Listed in
Schedule A Hereto:
Ladies and Gentlemen:
AEP Transmission Company, LLC, a Delaware limited liability company (the
“Company”
), agrees with each of the purchasers whose names appear at the end hereof (each, an
“Initial Purchaser”
and, collectively, the
“Initial Purchasers”
) as follows:
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Section 1.
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Authorization of Notes.
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Section 1.1.
Series A Notes
. The Company will authorize the issue and sale of (a) U.S. $104,000,000 aggregate principal amount of its 3.30% Senior Notes, Series A, Tranche A, due October 18, 2022 (the
“Tranche A Notes”
), (b) U.S. $85,000,000 aggregate principal amount of its 4.00% Senior Notes, Series A, Tranche B, due October 18, 2032 (the
“Tranche B Notes”
), (c) U.S. $61,000,000 aggregate principal amount of its 4.73% Senior Notes, Series A, Tranche C, due October 18, 2042 (the
“Tranche C Notes”
), (d) U.S. $75,000,000 aggregate principal amount of its 4.78% Senior Notes, Series A, Tranche D, due December 14, 2042 (the
“Tranche D Notes”
) and (e) U.S. $25,000,000 aggregate principal amount of its 4.83% Senior Notes, Series A, Tranche E, due March 18, 2043 (the
“Tranche E Notes”
; the Tranche A Notes, the Tranche B Notes, the Tranche C Notes, the Tranche D Notes and the Tranche E Notes are hereinafter collectively referred to as the
“Series A Notes,”
such term to include any such notes issued in substitution therefor pursuant to
Section 13
). The Series A Notes shall be substantially in the form set out in
Exhibit 1‑A
,
Exhibit 1‑B, Exhibit 1‑C
,
Exhibit 1‑D
, and
Exhibit 1‑E
respectively. Certain capitalized and other terms used in this Agreement are defined in
Schedule B
; and references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement; references to “Sections” are, unless otherwise specified, references to Sections of this Agreement.
Section 1.2.
Subsequent Series
. Subsequent Series of promissory notes (collectively, the
“Supplemental Notes”
) may be issued pursuant to Supplemental Note Purchase Agreements as provided in
Section 2.2
and (a) shall: (i) be sequentially identified as “Series B Notes”, “Series C Notes”, “Series D Notes”
et seq.
(which such series may consist of more than one
different and separate tranches (each, a
“tranche”
) that may differ with respect to outstanding principal amounts, maturity dates, interest rates and premiums, if any, and price and terms of redemption or payment prior to maturity), (ii) be in the aggregate principal amount, (iii) be dated the date of issuance, (iv) bear interest from such date at the rate per annum to be determined as of such date, (v) bear interest on overdue principal (including any overdue optional prepayment of principal) and premium, if any, and, to the extent permitted by law, on any overdue installment of interest at the stated rate
plus
an additional amount, and (vi) be subject to required and optional prepayments, if any, (vii) be expressed to mature on the stated maturity date, all as set forth in the Supplemental Note Purchase Agreement relating thereto, (b) shall constitute Senior Debt of the Company and shall rank
pari passu
with all other outstanding Notes, and (c) shall otherwise be substantially in the form attached hereto as
Exhibit 1.2
;
provided,
no Supplemental Notes shall be issued if at the time of issuance thereof and after giving effect to the application of proceeds therefore, any Default or Event of Default shall have occurred and be continuing. The Series A Notes and the Supplemental Notes are herein sometimes collectively referred to as the
“Notes.”
As used herein, the term
“Notes”
shall include, without limitation, each Note delivered pursuant to this Agreement and any Supplemental Note Purchase Agreement at an Initial Closing and/or at any Supplemental Closing and each Note delivered in substitution or exchange for any such Note pursuant hereto. Each Supplemental Note shall be subject to the terms and covenants of this Agreement and may be subject to any additional covenants as set forth in the Supplemental Note Purchase Agreement pursuant to which such Supplemental Note has been issued.
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Section 2.
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Sale and Purchase of Notes
;
Subsequent Sales
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Section 2.1.
Initial Sale of Series A Notes.
Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Initial Purchaser and each Initial Purchaser will purchase from the Company, at an Initial Closing provided for in
Section 3
, Series A Notes in the principal amount and in the tranche specified opposite such Initial Purchaser’s name in
Schedule
A
at the purchase price of 100% of the principal amount thereof. The Initial Purchasers’ obligations hereunder are several and not joint obligations, and no Initial Purchaser shall have any liability to any Person for the performance or non‑performance of any obligation by any other Initial Purchaser hereunder.
Section 2.2.
Subsequent Sales
. At any time, and from time to time, the Company and one or more Eligible Purchasers may enter into an agreement substantially in the form of the Supplemental Note Purchase Agreement attached hereto as
Exhibit 2.2
(a
“Supplemental Note Purchase Agreement”
) in which the Company shall agree to sell to each such Eligible Purchaser named on the Supplemental Purchaser Schedule attached thereto (collectively, the
“Supplemental Purchasers”
) and, subject to the terms and conditions herein and therein set forth, each such Supplemental Purchaser shall agree to purchase from the Company the aggregate principal amount of the Series of Supplemental Notes described in such Supplemental Note Purchase Agreement and set opposite such Supplemental Purchaser’s name in the Supplemental Purchaser Schedule attached thereto at the price and otherwise under the terms set forth in such Supplemental Note Purchase Agreement. The sale of the Supplemental Notes of the Series described in such Supplemental Note Purchase Agreement will take place at the location, date and time set forth therein at a closing (a
“Supplemental Closing”
). At such
Supplemental Closing the Company will deliver to each such Supplemental Purchaser one or more Notes of the Series to be purchased by such Supplemental Purchaser registered in such Supplemental Purchaser’s name (or in the name of its nominee), evidencing the aggregate principal amount of Notes of such Series to be purchased by such Supplemental Purchaser and in the denomination or denominations specified with respect to such Supplemental Purchaser in such Supplemental Purchaser Schedule against payment of the purchase price thereof by transfer of immediately available funds for credit to the Company’s account on the date of such Supplemental Closing (a
“Supplemental Closing Date”
) (as specified in a notice to each such Supplemental Purchaser at least three Business Days prior to such Supplemental Closing Date).
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Section 3
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Execution Date; Initial Closings.
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The execution and delivery of this Agreement will be made at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603 on October 18, 2012 (the
“Execution Date”
).
The sale and purchase of the Series A Notes to be purchased by each Initial Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 W. Monroe Street, Chicago, IL 60603, at 10:00 a.m. Central Time, at not more than three closings (individually an
“Initial Closing”
and, collectively, the
“Initial Closings”
). The first Initial Closing, at which Initial Closing the Tranche A Notes, Tranche B Notes and Tranche C Notes are, subject to this
Section 3
and
Section 4
, to be purchased, shall be held on October 18, 2012 or on such other Business Day thereafter on or prior to October 19, 2012 as may be agreed upon by the Company and the Initial Purchasers (the
“First Initial Closing”
); the second Initial Closing, at which Initial Closing the Tranche D Notes are, subject to this
Section 3
and
Section 4
, to be purchased, shall be held on December 14, 2012 or on such other Business Day thereafter on or prior to December 17 as may be agreed upon by the Company and the Initial Purchasers (the
“Second Initial Closing”
) and the third Initial Closing, at which Initial Closing the Tranche E Notes are, subject to this
Section 3
and
Section 4
, to be purchased, shall be held on March 18, 2013 or on such other Business Day thereafter on or prior to March 19, 2013 as may be agreed upon by the Company and the Initial Purchasers (the
“Third Initial Closing”
). At each Initial Closing the Company will deliver to each Initial Purchaser the Series A Notes of the tranche to be purchased by such Initial Purchaser at such Initial Closing in the form of a single Series A Note of such tranche (or such greater number of Series A Notes in denominations of at least $100,000 as such Initial Purchaser may request) dated the date of such Initial Closing and registered in such Initial Purchaser’s name (or in the name of its nominee), against delivery by such Initial Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to account number 30625941 at Citibank, N.A., 111 Wall St., New York, NY 10005 ABA: 021000089.
If at such Initial Closings the Company shall fail to tender such Series A Notes to any Initial Purchaser as provided above in this
Section
3
, or any of the conditions specified in
Section
4
shall not have been fulfilled to such Initial Purchaser’s satisfaction, such Initial Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Initial Purchaser may have by reason of such failure or such nonfulfillment. The Initial Closings and each Supplemental Closing are hereinafter sometimes each referred to as a
“Closing.”
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Section 4.
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Conditions to Closing.
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Each Initial Purchaser’s obligation to execute and deliver this Agreement at the Execution Date is subject to the representations and warranties of the Company in this Agreement being correct when made on the Execution Date. The obligations of each Initial Purchaser and each Supplemental Purchaser to purchase and pay for the Notes to be sold to such Purchaser at a Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at such Closing, of the following conditions:
Section 4.1.
Representations and Warranties
. The representations and warranties of the Company in this Agreement shall be correct when made and at the time of such Closing.
Section 4.2.
Performance; No Default
. (a) The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at such Closing, and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by
Section 5.14
), no Default or Event of Default shall have occurred and be continuing. Neither the Company nor any Subsidiary shall have entered into any transaction since the date of the Memorandum that would have been prohibited by
Section 10
had such Section applied since such date.
(b)
The Company shall have performed and complied in all material respects with all agreements and conditions contained in the LLC Agreement to which it is a party required to be performed and complied with by it.
Section 4.3.
Compliance Certificates
.
(a)
Officer’s Certificate
. The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of such Closing, certifying that the conditions specified in
Sections 4.1, 4.2(a)
and
(b)
and
4.9
have been fulfilled.
(b)
Secretary’s Certificate
. The Company shall have delivered to such Purchaser a certificate of its Secretary or Assistant Secretary, dated the date of such Closing, certifying as to the resolutions and LLC Agreement attached thereto and other legal proceedings relating to the authorization, execution and delivery of the Notes and this Agreement.
Section 4.4.
Opinions of Counsel
. Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of such Closing (a) from counsel for the Company (which may be an attorney of American Electric Power Service Corporation, an Affiliate of the Company), covering the matters set forth in
Exhibit 4.4(a‑1)
and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby instructs its counsel to deliver such opinion to the Purchasers), (b) from counsel for AEP (which may be an attorney of American Electric Power Service Corporation, an Affiliate of the Company), covering the matter set forth in
Exhibit 4.4(a‑2)
and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to the Purchasers) and (c) from Chapman and Cutler LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in
Exhibit 4.4(b)
and covering such other matters incident to such transactions as such Purchaser may reasonably request.
Section 4.5.
Purchase Permitted by Applicable Law, Etc
. On the date of such Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.
Section 4.6.
Sale of Other Notes
. Contemporaneously with such Closing, the Company shall sell to each other Purchaser, and each other Purchaser shall purchase, the Notes to be purchased by it at such Closing as specified in
Schedule A
hereto or attached to the applicable Supplemental Note Purchase Agreement.
Section 4.7.
Payment of Special Counsel Fees
.
Without limiting the provisions of
Section 15.1
, the Company shall have paid on or before such Closing the fees, charges and disbursements of the Purchasers’ special counsel referred to in
Section 4.4
to the extent reflected in a statement of such counsel rendered to the Company at least three Business Days prior to the Closing.
Section 4.8.
Private Placement Number
. A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for each tranche of each Series of the Notes.
Section 4.9.
Changes in Legal Structure
. The Company shall not have changed its jurisdiction of incorporation or organization, as applicable, or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in
Schedule 5.5
.
Section 4.10.
Funding Instructions.
At least three Business Days prior to the date of such Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the information specified in
Section 3
including (a) the name and address of the transferee bank, (b) such transferee bank’s ABA number and (c) the account name and number into which the purchase price for the Notes is to be deposited.
Section 4.11.
Company Regulatory Approvals
. (a) Prior to the date of such Closing, any approval or consent of any regulatory body, state, federal or local, required for the offer, issuance, sale and delivery of the Notes and the execution, delivery and performance by the
Company of this Agreement and the Notes, shall have been obtained, shall be in full force and effect, shall have not have been revoked or amended, shall not be the subject of a pending appeal and shall be legally sufficient to authorize the offer, issue and sale and delivery of the Notes and evidence of such approval or consent satisfactory to the Purchasers and their special counsel shall have been provided to them.
(b)
Prior to the date of such Closing, any approval or consent of any regulatory body, state, federal or local, required for the performance by the Company of its operations, shall have been obtained, shall be in full force and effect, shall have not have been revoked or amended, shall not be the subject of a pending appeal and shall be legally sufficient to authorize performance by the Company of its operations and evidence of such approval or consent satisfactory to the Purchasers and their special counsel shall have been provided to them.
Section 4.12.
Proceedings and Documents
. All legal and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.
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Section 5
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Representations and Warranties of the Company.
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The Company represents and warrants to each Purchaser that:
Section 5.1.
Organization; Power and Authority
. The Company is a limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign limited liability company and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the legal power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Series A Notes and to perform the provisions hereof and thereof.
Section 5.2.
Authorization, Etc
. This Agreement and the Series A Notes have been duly authorized by all necessary legal action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Series A Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 5.3.
Disclosure
. The Company, through its agents, Barclays Capital Inc. and Credit Suisse Securities (USA) LLC, has delivered to each Purchaser a copy of a Private Placement Memorandum, dated September 2012 (the
“Memorandum”
), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries. This Agreement, the Memorandum and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby and identified in
Schedule 5.3
, and the financial statements listed in
Schedule 5.5
(this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements delivered to each Purchaser prior to September 28, 2012 being referred to, collectively, as the
“Disclosure Documents”
), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made;
provided,
that no representation is hereby made with respect to the projections contained therein other than that such projections are based on information that the Company believes to be accurate and were calculated in a manner that the Company believes to be reasonable. Since December 31, 2011, there has been no change in the financial condition, operations, business or properties of the Company except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company that would reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.
Section 5.4.
Subsidiaries
. (a)
Schedule 5.4
contains (except as noted therein) complete and correct lists (i) of the Company’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar Equity Interests outstanding owned by the Company and each other Subsidiary, (ii) of the Company’s managers, and (iii) of the Company’s senior officers.
(b)
All of the outstanding shares of capital stock or similar Equity Interests of each Subsidiary shown in
Schedule 5.4
as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in
Schedule 5.4
).
(c)
Each Subsidiary identified in
Schedule 5.4
is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.
(d)
No Subsidiary is a party to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than this Agreement, the agreements listed on
Schedule 5.4
and customary limitations imposed by corporate law or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.
Section 5.5.
Financial Statements; Material Liabilities
. The Company has delivered to each Purchaser copies of the consolidated financial statements of the Company listed on
Schedule 5.5
. All of said consolidated financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such consolidated financial statements and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year‑end adjustments). The Company does not have any Material liabilities that are not disclosed on such consolidated financial statements or otherwise disclosed in the Disclosure Documents.
Section 5.6.
Compliance with Laws, Other Instruments, Etc
. The execution, delivery and performance by the Company of this Agreement and the Series A Notes will not (a) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by‑laws, limited liability company agreement, or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (b) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.
Section 5.7.
Governmental Authorizations, Etc
. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Series A Notes, other than (a) as may be required under state or foreign securities or blue sky laws, and (b) such registrations, filings and declarations that are not required to be made until after the date of the First Initial Closing and which will be made as and when required.
S
ection 5.8.
Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits, investigations or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
(b)
Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws or the USA Patriot Act) of any Governmental Authority, which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
Section 5.9.
Taxes
. The Company and its Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) the amount of which is not individually or in the aggregate Material or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that would reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of federal, state or other taxes for all fiscal periods are adequate.
Section 5.10.
Title to Property; Leases
. The Company and its Subsidiaries have good and sufficient title to, or other appropriate property interests in, their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to in
Section 5.5
or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.
Section 5.11.
Licenses, Permits, Etc.
(a) The Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others, the non‑ownership, non‑possession or lack of rights thereto of which, individually or in the aggregate, would have a Material Adverse Effect.
(b)
To the best knowledge of the Company, no product of the Company or any of its Subsidiaries infringes in any Material respect on any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person, which infringement, individually or in the aggregate, would have a Material Adverse Effect.
(c)
To the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries, which violation, individually or in the aggregate, would have a Material Adverse Effect.
Section 5.12.
Compliance with ERISA
. (a) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as would not be individually or in the aggregate Material.
(b)
For each of the Plans which are pension plans within the meaning of section 3(2) of ERISA (other than Multiemployer Plans) that are subject to the funding requirements of section 302 of ERISA or section 412 of the Code,
Schedule 5.12
sets forth the adjusted funding target attainment percentage as of January 1, 2012, as most recently certified by the Plan’s actuary on the basis of the actuarial assumptions specified for funding purposes in such Plan’s actuarial valuation report for the plan year beginning January 1, 2012. The term “adjusted funding target attainment percentage” has the meaning specified in section 303 of ERISA.
(c)
The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.
(d)
The expected postretirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company and its Subsidiaries is not Material.
(e)
The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the Company to each Initial Purchaser in the first sentence of this
Section 5.12(e)
is made in reliance upon and subject to the accuracy of such Initial Purchaser’s representation in
Section 6.2
as to the sources of the funds used to pay the purchase price of the Series A Notes to be purchased by such Initial Purchaser.
Section 5.13.
Private Offering by the Company
. Neither the Company nor anyone acting on its behalf has offered the Series A Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Initial Purchasers and not more than 80 other Institutional Investors, each of which has been offered the Series A Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Series A Notes to the registration requirements of Section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction.
Section 5.14.
Use of Proceeds; Margin Regulations
. The Company will apply the proceeds of the sale of the Series A Notes as set forth in Section 2.5 of the Memorandum. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for
the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 2% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 2% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.
Section 5.15.
Existing Debt; Future Liens
. (a)
Schedule 5.15
sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of the date hereof (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and Guaranty thereof, if any). Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary, the outstanding principal amount of which exceeds $1,000,000, and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment.
Annex A
to be attached hereto on the date of the Second Initial Closing will correctly describe all outstanding Debt and any Liens securing such Debt of the Company and its Subsidiaries as of the date of the Second Initial Closing. Since the First Initial Closing, there shall have been no Material increase in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries listed on
Schedule 5.15
(other than the inclusion of the Tranche A Notes, the Tranche B Notes and the Tranche C Notes).
Annex B
to be attached hereto on the date of the Third Initial Closing will correctly describe all outstanding Debt and any Liens securing such Debt of the Company and its Subsidiaries as of the date of the Third Initial Closing. Since the Second Initial Closing, there shall have been no Material increase in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries listed on
Schedule 5.15
(other than the inclusion of the Tranche D Notes).
(b)
Except as disclosed in
Schedule 5.15
, neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 10.3
.
(c)
Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Debt of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Debt of the Company or any Subsidiary, except as specifically indicated in
Schedule 5.15
.
Section 5.16.
Foreign Assets Control Regulations, Etc
. (a) None of the Company, any Subsidiary of the Company nor any Affiliate of the Company or any such Subsidiary for which
the Company or such Subsidiary possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such Affiliate, whether through the ownership of voting securities, by contract or otherwise (a
“Controlled Entity”
) is (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, U.S. Department of Treasury (
“OFAC”
) or a Person that is otherwise subject to an OFAC Sanctions Program (an
“OFAC Listed Person”
) or (ii) a department, agency or instrumentality of, or is otherwise controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is subject to any OFAC Sanctions Program (each OFAC Listed Person and each other Person, entity, organization or government of a country described in clause (ii), a
“Blocked Person”
).
(b)
No part of the proceeds from the sale of the Series A Notes hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used, directly by the Company or indirectly through any Controlled Entity, in connection with any investment in, or any transactions or dealings with, any Blocked Person or for investment in the Iranian energy sector (as defined in Section 201(1) of CISADA) except in accordance with applicable law and in a manner where such investments, transactions or dealings would not cause the purchase, holding or receipt of any payment or exercise of any rights in respect of any Series A Note by the holder thereof to be in violation of any laws or regulations administered by OFAC.
(c)
To the Company’s knowledge after making due inquiry, neither the Company nor any Controlled Entity (i) is under investigation by any Governmental Authority for, or has been charged with, or convicted of, money laundering, drug trafficking, terrorist‑related activities or other money laundering predicate crimes under any applicable law (collectively,
“Anti‑Money Laundering Laws”
), (ii) has been assessed civil penalties under any Anti‑Money Laundering Laws or (iii) has had any of its funds seized or forfeited in an action under any Anti‑Money Laundering Laws. The Company has taken reasonable measures appropriate to the circumstances (in any event as required by applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable current and future Anti‑Money Laundering Laws, except to the extent failure to do so would not reasonably be expected to result in a Material Adverse Effect.
(d)
No part of the proceeds from the sale of the Series A Notes hereunder will be used, directly or indirectly, for any improper payments to any governmental official or employee, political party, official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage. The Company has taken reasonable measures appropriate to the circumstances (in any event as required by applicable law) to ensure that the Company
and each Controlled Entity is and will continue to be in compliance with all applicable current and future anti‑corruption laws and regulations, except to the extent failure to do so would not reasonably be expected to result in a Material Adverse Effect.
Section 5.17.
Status under Certain Statutes
. Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.
Section 5.18.
Notes Rank Pari Passu
. The obligations of the Company under this Agreement and the Series A Notes rank at least
pari passu
in right of payment with all other unsecured Senior Debt (actual or contingent) of the Company, including, without limitation, all senior unsecured Debt of the Company described in
Schedule 5.15
hereto.
Section 5.19.
Environmental Matters
. (a) Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect.
(b)
Neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect.
(c)
Neither the Company nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them or has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that would reasonably be expected to result in a Material Adverse Effect.
(d)
All buildings on all real properties now owned, leased or operated by the Company or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply would not reasonably be expected to result in a Material Adverse Effect.
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Section 6.
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Representations of the Purchasers.
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Section 6.1.
Purchase for Investment
. Each Initial Purchaser severally represents that (a) it is purchasing the Series A Notes for its own account or for one or more separate accounts maintained by such Initial Purchaser or for the account of one or more pension or trust funds (each of which is an “accredited investor”) as for each of which such Initial Purchaser exercises sole investment discretion for investment purposes only and not with a view to the distribution thereof;
provided
that the re‑sale or disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control, (b) it is an “accredited investor” (as defined in Rule 501(a)(1), (2), (3), (7) or (8) under the Securities Act), (c) it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Notes, (d) it and any accounts for which it is acting are each able to bear the economic risk of its investments and (e) it has received adequate information concerning the Company and the Series A Notes to make an informed investment decision with respect to the purchase of the Series A Notes. Each Initial Purchaser understands that the Series A Notes have not been, and will not be, registered under the Securities Act (and that the Company is not
required to register the Notes) and may be resold only (A) if registered pursuant to the provisions of the Securities Act, (B) if an exemption from registration is available, including, without limitation, by disposition of any of the Series A Notes
and then (i) to the Company; (ii) inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) in compliance with Rule 144A; (iii) inside the United States to an institutional investor that (1) is an “accredited investor” (as defined in Rule 501(a)(1), (2), (3), (7) or (8) under the Securities Act) and (2) makes the representations set forth in this
Section 6
; or (iv) outside the United States in compliance with Rule 904 under the Securities Act or (C) if resold under circumstances where neither such registration nor such exemption is required by law.
Each Initial Purchaser agrees that, following the transfer of a Series A Note and upon the request of the Company and without invalidating any transfer of any Series A Note pursuant to this Agreement, it shall make reasonable best efforts to furnish to the Company any certificate which it may have received from any transferee of such Note with respect to such transferee’s compliance with the terms of this
Section 6.1
in order to confirm that the transfer was made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
Section 6.2.
Source of Funds
. Each Initial Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a
“Source”
) to be used by such Initial Purchaser to pay the purchase price of the Series A Notes to be purchased by such Initial Purchaser hereunder:
(a)
the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (
“PTE”
) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the
“NAIC Annual Statement”
)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed ten percent (10%) of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Initial Purchaser’s state of domicile; or
(b)
the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or
(c)
the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90‑1, or (ii) a bank collective investment fund, within the meaning of PTE 91‑38 and, except as have been disclosed by such Purchaser to the
Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or
(d)
the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “
QPAM Exemption
”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, as of the last day of its most recent calendar quarter, the QPAM does not own a 10% or more interest in the Company and no Person controlling or controlled by the QPAM (applying the definition of “control” in Section VI(e) of the QPAM Exemption) owns a 20% or more interest in the Company (or less than 20% but greater than 10%, if such Person exercises control over the management or policies of the Company by reason of its ownership interest) and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (d); or
(e)
the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the
“INHAM Exemption”
)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, as of the last day of its most recent calendar quarter, neither the INHAM nor a Person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(d) of the INHAM Exemption) owns a 10% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or
(f)
the Source is a governmental plan; or
(g)
the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or
(h)
the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.
As used in this
Section 6.2
, the terms “employee benefit plan”, “governmental plan”, “party in interest” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.
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Section 7.
|
Information as to the Company.
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Section 7.1.
Financial and Business Information
. The Company shall deliver to each holder of Notes that is an Institutional Investor:
(a)
Quarterly Statements
- within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of:
(i)
a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and
(ii)
consolidated statements of income, changes in members’ capital and cash flows of the Company and its Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year (other than periods in the fiscal year ending December 31, 2011), all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year‑end adjustments;
provided
that delivery within the time period specified above of copies of the Company’s Quarterly Report on Form 10‑Q (the
“Form 10‑Q”
) prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this
Section 7.1(a)
;
provided, further,
that the Company shall be deemed to have made such delivery of such Form 10‑Q if it shall have timely made such Form 10‑Q available on “EDGAR” and on its home page on the worldwide web (at the date of this Agreement located at: http/www.aep.com) and shall have given each Purchaser prior notice of such availability on EDGAR and on its home page in connection with each delivery (such availability and notice thereof being referred to as
“Electronic Delivery”
);
(b)
Annual Statements
- within 120 days after the end of each fiscal year of the Company, duplicate copies of,
(i)
a consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and
(ii)
consolidated statements of income, changes in members’ capital and cash flows of the Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous fiscal year (other than the fiscal year ending December 31, 2011), all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances;
provided
that the delivery within the time period specified above of the Company’s Form 10‑K for such fiscal year (together with the Company’s annual report to shareholders, if any, prepared pursuant to Rule 14a‑3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC, shall be deemed to satisfy the requirements of this
Section 7.1(b)
;
provided, further,
that the Company shall be deemed to have made such delivery of such financial statements if it shall have timely made Electronic Delivery thereof;
(c)
SEC and Other Reports
- promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to its principal lending banks as a whole (excluding information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability) or to its public securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the SEC and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material;
(d)
Notice of Default or Event of Default
- promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in
Section 11(f)
, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;
(e)
Significant Subsidiaries
- as soon as possible and in any event within ten Business Days after the chief financial officer or treasurer of the Company obtains knowledge that a Subsidiary of the Company constitutes a Significant Subsidiary, a statement of the chief financial officer or treasurer of the Company setting forth the identity of such Significant Subsidiary;
(f)
Notices from Governmental Authority
- promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or
other law or regulation that would reasonably be expected to have a Material Adverse Effect; and
(g)
Requested Information
- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes, including, without limitation, such information as is required by SEC Rule 144A under the Securities Act to be delivered to any prospective transferee of the Notes.
Section 7.2.
Officer’s Certificate
. Each set of financial statements delivered to a holder of Notes pursuant to
Section 7.1(a)
or
Section 7.1(b)
shall be accompanied by a certificate of a Senior Financial Officer setting forth (which, in the case of Electronic Delivery of such financial statements, shall be by separate concurrent delivery of such certificate to each holder of Notes):
(a)
Covenant Compliance
- the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of
Section 10.1
through
Section 10.4
, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and
(b)
Event of Default
- a statement that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.
Section 7.3.
Visitation
. The Company shall permit the representatives of each holder of Notes that is an Institutional Investor:
(a)
No Default
- if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company’s officers, and (with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing; and
(b)
Default
- if a Default or Event of Default then exists, at the expense of the Company, to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested.
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Section 8.
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Payment and Prepayment of the Notes.
|
Section 8.1.
Maturity
. As provided therein, the entire unpaid principal amount of each tranche of the Series A Notes shall be due and payable on the stated maturity date thereof.
Section 8.2.
Optional Prepayments with Make‑Whole Amount
. The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes of any Series or tranche, in an amount not less than 10% of the aggregate principal amount of the Notes of such Series or tranche then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, and the Make‑Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes written notice of each optional prepayment under this
Section 8.2
not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with
Section 8.4
), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make‑Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make‑Whole Amount as of the specified prepayment date.
Section 8.3.
[Reserved]
.
Section 8.4.
Allocation of Partial Prepayments
. In the case of each partial prepayment of the Notes of any Series or tranche pursuant to
Section
8.2
, the principal amount of the Notes of such Series or tranche to be prepaid shall be allocated pro rata among all holders of such Series or tranche of Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.
Section 8.5.
Maturity; Surrender, Etc
. In the case of each prepayment of Notes pursuant to this
Section 8
, the principal amount of each Note to be prepaid shall mature and become due
and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make‑Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make‑Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.6.
Purchase of Notes
. The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to the holders of all Notes at the time outstanding upon the same terms and conditions. Any such offer shall provide each holder with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 15 Business Days. If the holders of more than 10% of the principal amount of the Notes then outstanding accept such offer, the Company shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least 5 Business Days from its receipt of such notice to accept such offer. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.
Section 8.7.
Make‑Whole Amount
. The term
“Make‑Whole Amount”
means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal;
provided
that the Make‑Whole Amount may in no event be less than zero. For the purposes of determining the Make‑Whole Amount, the following terms have the following meanings:
“Called Principal”
means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to
Section 8.2
or has become or is declared to be immediately due and payable pursuant to
Section 12.1
, as the context requires.
“Discounted Value”
means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.
“Reinvestment Yield”
means, with respect to the Called Principal of any Note, .50% (50 basis points) over the yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or
such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on the run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. In the case of each determination under clause (i) or clause (ii), as the case may be, of the preceding paragraph, such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond‑equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the applicable U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (2) the applicable U.S. Treasury security with the maturity closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
“Remaining Average Life”
means, with respect to any Called Principal, the number of years (calculated to the nearest one‑twelfth year) obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (i) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (ii) the number of years (calculated to the nearest one‑twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.
“Remaining Scheduled Payments”
means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date;
provided
that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to
Section 8.2
or
Section 12.1
.
“Settlement Date”
means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2
or has become or is declared to be immediately due and payable pursuant to
Section 12.1
, as the context requires.
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Section 9.
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Affirmative Covenants.
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The Company covenants that so long as any of the Notes are outstanding:
Section 9.1.
Compliance with Law
. The Company will, and will cause each of its Significant Subsidiaries to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, the USA Patriot Act and Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non‑compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.2.
Insurance
. The Company will, and will cause each of its Significant Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co‑insurance and self‑insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business, owning similar properties and located in the same general area as the Company and its Subsidiaries, except where any failure to maintain such insurance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
provided, however,
that so long as no Event of Default hereunder shall have occurred and be continuing, the Company may self‑insure by way of deductibles, through its captive insurance company affiliate, or otherwise, such amount as is customarily maintained on similar properties by companies of similar size and financial standing and having similar operations and to the extent consistent with prudent business practices.
Section 9.3.
Maintenance of Properties
. The Company will, and will cause each of its Significant Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times;
provided
that this
Section 9.3
shall not prevent the Company or any Significant Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.4.
Payment of Taxes and Claims
. The Company will, and will cause each of its Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent the same have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary;
provided
that neither the Company nor any Subsidiary need pay any such tax, assessment, charge, levy or claim if (a) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (b) the nonpayment of all such taxes, assessments, charges, levies and claims in the aggregate would not reasonably be expected to have a Material Adverse Effect.
Section 9.5.
Legal Existence, Etc
. Subject to
Section 10.5
, the Company will at all times preserve and keep in full force and effect its legal existence. The Company will at all times preserve and keep in full force and effect the legal existence of each of its Significant Subsidiaries (unless merged into the Company or a Wholly‑owned Significant Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such legal existence, right or franchise would not, individually or in the aggregate, have a Material Adverse Effect.
Section 9.6.
Notes to Rank Pari Passu.
The Notes and all other obligations under this Agreement of the Company are and at all times shall rank at least
pari passu
in right of payment with all other present and future unsecured Senior Debt (actual or contingent) of the Company which is not expressed to be subordinate or junior in rank to any other unsecured Debt of the Company.
Section 9.7.
Books and Records.
The Company will, and will cause each of its Significant Subsidiaries to, maintain proper books of record and account in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company, or such Subsidiary, as the case may be.
Section 9.8.
Intercompany Notes
. To the extent proceeds of the Notes are used by Subsidiaries of the Company, the Company shall loan such proceeds from the sale of the Notes to its Subsidiaries and shall promptly deliver to each holder of the Notes a copy of intercompany notes evidencing such loans by the Company to its Subsidiaries.
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Section 10.
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Negative Covenants.
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The Company covenants that so long as any of the Notes are outstanding:
Section 10.1.
Leverage Ratio
. The Company will not permit the ratio of Consolidated Debt to Consolidated Capital, as of the last day of each fiscal quarter, to be greater than 0.675 to 1.00.
Section 10.2.
Limitations on Consolidated Priority Debt.
The Company will not permit Consolidated Priority Debt to exceed (a) at any time from the date of the First Initial Closing to, and including, December 31, 2014, the greater of (i) $200,000,000 and (ii) 10% of Consolidated Tangible Net Assets and (b) at any time after December 31, 2014, 10% of Consolidated Tangible
Net Assets;
provided
that, without limiting the foregoing, at any time from the date of the First Initial Closing to, and including, December 31, 2014, Debt of the Company or a Subsidiary secured by a Lien created or incurred within the limitations of
Section 10.3(d)
may not exceed $50,000,000.
Section 10.3.
Limitation on Liens.
The Company will not create or suffer to exist, or permit any Significant Subsidiary to create or suffer to exist, any Lien on or with respect to any of its properties, including, without limitation, on or with respect to Equity Interests in any Subsidiary of the Company, whether now owned or hereafter acquired, or assign, or permit any Significant Subsidiary to assign, any right to receive income, other than
(a)
Permitted Liens,
(b)
the Liens existing on the date of the First Initial Closing and described on
Schedule 5.15
hereto, and
(c)
the replacement, extension or renewal of any Lien permitted by clause (b) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby, and
(d)
Liens created or incurred after the date of the First Initial Closing given to secure Debt of the Company or any Significant Subsidiary in addition to the Liens permitted by the preceding clauses (a) through (c) hereof;
provided
that at the time of creation, issuance, assumption, guarantee or incurrence of the Debt secured by such Lien and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist;
provided, further
, that, notwithstanding the foregoing, in the event that at any time the Company or any Significant Subsidiary provides a Lien to or for the benefit of the lenders under a Credit Facility or the administrative agent on their behalf, then the Company will, and will cause each of its Significant Subsidiaries that has provided any such Lien to concurrently grant to and for the benefit of the holders of the Notes a similar first priority Lien (subject only to Liens otherwise permitted by this
Section 10.3
, and ranking
pari passu
with the Lien provided to or for the benefit of the lenders and/or the administrative agent, as the case may be, under such Credit Facility), over the same assets, property and undertaking of the Company and the Subsidiary as those encumbered in respect of a Credit Facility, in form and substance satisfactory to the Required Holders with such security to be the subject of an intercreditor agreement among the lenders and/or the administrative agent, as the case may be, under a Credit Facility or the administrative agent on their behalf, as the case may be, and the holders of Notes, which shall be satisfactory in form and substance to the Required Holders.
Section 10.4.
Restricted Payments.
The Company shall not make payments, directly or indirectly, to its equity holders by way of dividends, advances, repayment of loans or intercompany charges, expenses and accruals or other returns on investments, if, at the time or as a result of such payment, (a) the ratio of Consolidated Debt to Consolidated Capital exceeds 0.675 to 1.00 or (b) a Default or Event of Default would exist.
Section 10.5.
Mergers, Consolidations, Etc.
The Company will not, and will not permit any Significant Subsidiary to, consolidate with or be a party to a merger with any other Person, or sell, lease or otherwise dispose of all or substantially all of its assets;
provided
that:
(a)
any Significant Subsidiary may merge or consolidate with or into the Company or any Wholly‑owned Subsidiary so long as in (i) any merger or consolidation involving the Company, the Company shall be the surviving or continuing corporation and (ii) in any merger or consolidation involving a Wholly‑owned Significant Subsidiary (and not the Company), the Wholly‑owned Significant Subsidiary shall be the surviving or continuing corporation or limited liability company;
(b)
the Company may consolidate or merge with or into any other Person if (i) the corporation or limited liability company which results from such consolidation or merger (the
“Surviving Person”
) is organized under the laws of any state of the United States or the District of Columbia or Canada or a Province of Canada, (ii) the due and punctual payment of the principal of and premium, if any, and interest on all of the Notes, according to their tenor, and the due and punctual performance and observation of all of the covenants in the Notes and this Agreement to be performed or observed by the Company are expressly assumed in writing by the Surviving Person and the Surviving Person shall furnish to the holders of the Notes an opinion of counsel satisfactory to the Required Holders to the effect that the instrument of assumption has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of the Surviving Person enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles, and (iii) at the time of such consolidation or merger and immediately after giving effect thereto, no Default or Event of Default would exist;
(c)
the Company may sell or otherwise dispose of all or substantially all of its assets to any Person for consideration which represents the fair market value of such assets (as determined in good faith by a Senior Financial Officer of the Company) at the time of such sale or other disposition if (i) the acquiring Person (the
“Acquiring Person”
) is a corporation or limited liability company organized under the laws of any state of the United States or the District of Columbia or Canada or a Province of Canada, (ii) the due and punctual payment of the principal of and premium, if any, and interest on all the Notes, according to their tenor, and the due and punctual performance and observance of all of the covenants in the Notes and in this Agreement to be performed or observed by the Company are expressly assumed in writing by the Acquiring Person and the Acquiring Person shall furnish to the holders of the Notes an opinion of counsel satisfactory to the Required Holders to the effect that the instrument of assumption has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of such Acquiring Person enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles, and (iii) at the time of such sale or
disposition and immediately after giving effect thereto, no Default or Event of Default would exist.
Section 10.6.
Sale of Assets.
The Company will not, and will not permit any Significant Subsidiary to, sell, lease, transfer, abandon or otherwise dispose of assets (except assets sold in the ordinary course of business for fair market value
)
;
provided
that the foregoing restrictions do not apply to:
(a)
the sale, lease, transfer or other disposition of assets of a Significant Subsidiary to the Company or a Wholly‑owned Significant Subsidiary; or
(b)
the sale of assets for cash or other property to a Person or Persons other than an Affiliate if all of the following conditions are met:
(i)
such assets (valued at net book value) do not, together with all other assets of the Company and its Significant Subsidiaries previously disposed of during the twelve‑month period then ending (other than in the ordinary course of business), exceed 15% of Consolidated Tangible Net Assets determined as of the end of the immediately preceding fiscal year;
(ii)
in the opinion of a Senior Financial Officer of the Company, the sale is for fair value and is in the best interests of the Company; and
(iii)
immediately before and immediately after the consummation of the transaction and after giving effect thereto, no Default or Event of Default would exist;
provided, however,
that for purposes of the foregoing calculation, there shall not be included any assets the proceeds of which were or are applied within 12 months of the date of sale of such assets to either (A) the acquisition of assets useful and intended to be used in the operation of the business of the Company and its Significant Subsidiaries and having a fair market value (as determined in good faith by a Senior Financial Officer of the Company at least equal to that of the assets so disposed of or (B) the prepayment at any applicable prepayment premium, on a
pro rata
basis, of Senior Debt of the Company. It is understood and agreed by the Company that any such proceeds paid and applied to the prepayment of the Notes as hereinabove provided shall be offered and prepaid as and to the extent provided below:
(w)
the offer to prepay Notes contemplated by this
Section 10.6
shall be an offer to each of the holders of the Notes to prepay on the Business Day specified in such offer, which date shall be not less than 30 days and not more than 120 days after the date of such offer (if the proposed prepayment date shall not be specified in such offer, the proposed prepayment date shall be the first Business Day after the 45th day after the date of such offer), all, or a
pro rata
part of, the Notes held by such holder (i) in the case of a voluntary sale, lease, transfer or other disposition of assets, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of prepayment, and the Make‑Whole Amount (to be calculated as of the prepayment date) or (ii) in the case
of a sale, lease, transfer or other disposition of assets required by laws, ordinances or governmental rules or regulations to which the Company or such Significant Subsidiary is subject, at par and without payment of Make‑Whole Amount or other premium;
(x)
any holder of the Notes may accept or decline any offer of prepayment pursuant to this
Section 10.6
by causing a notice of such acceptance or rejection to be delivered to the Company not later than 15 days after receipt by such holder of such offer of prepayment;
(y)
the failure of any such holder to accept or decline any such offer of prepayment shall be deemed to be an election by such holder to decline such prepayment; and
(z)
if such offer is so accepted, the proceeds so offered towards the prepayment of the Notes and accepted shall be prepaid and applied to 100% of the principal amount to be prepaid, together with interest accrued thereon to the date of such prepayment and (i) in the case of a voluntary sale, lease, transfer or other disposition of assets, with the Make‑Whole Amount (to be calculated as of the prepayment date) or (ii) in the case of a sale, lease, transfer or other disposition of assets required by laws, ordinances or governmental rules or regulations to which the Company or such Significant Subsidiary is subject, at par and without payment of Make‑Whole Amount or other premium.
To the extent that any holder of the Notes declines or is deemed to have declined such offer of prepayment, the amount of the prepayment offered to such holder shall be used by the Company to prepay other Debt, if any.
Notwithstanding the foregoing, the Company shall not sell, lease, transfer or otherwise dispose of Equity Interests in any Significant Subsidiary of the Company if such Significant Subsidiary would cease to be a Subsidiary as a result of such sale, lease, transfer or disposition.
Section 10.7.
Restrictive Agreements
. The Company will not enter into, or permit any Significant Subsidiary to enter into, any agreement after the date hereof, or amend, supplement or otherwise modify any agreement existing on the date hereof, that imposes any restriction on the ability of any Significant Subsidiary to make payments, directly or indirectly, to its equity holders by way of dividends, advances, repayment of loans or intercompany charges, expenses and accruals or other returns on investments that is more restrictive than any such restriction applicable to such Significant Subsidiary on the date hereof.
Section 10.8.
Transactions with Affiliates
. The Company will not and will not permit any Subsidiary to enter into directly or indirectly any transaction or group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Company’s or such Subsidiary’s business.
Section 10.9.
Line of Business
. The Company will not and will not permit any Subsidiary to engage in any business if, as a result, the general nature of the business in which the Company and its Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the business of owning and operating transmission-only electric utilities as described in the Memorandum.
Section 10.10.
LLC Agreement.
The Company shall not amend or modify the LLC Agreement in any manner that could reasonably be expected to result in a Material Adverse Effect.
Section 10.11.
Terrorism Sanctions Regulations
. The Company will not and will not permit any Controlled Entity to (a) become a Blocked Person or (b) have any investments in or engage in any dealings or transactions with any Blocked Person except in accordance with applicable law and in a manner where such investments, transactions or dealings would not cause the purchase, holding or receipt of any payment or exercise of any rights in respect of any Note by the holder thereof to be in violation of any laws or regulations administered by OFAC.
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Section 11.
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Events of Default.
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An
“Event of Default”
shall exist if any of the following conditions or events shall occur and be continuing:
(a)
the Company defaults in the payment of any principal or Make‑Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b)
the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or
(c)
the Company defaults in the performance of or compliance with (i) any term contained in
Section 7.1(d)
or
Sections 10.1
through
10.4
or (ii) any covenant in a Supplemental Note Purchase Agreement which specifically provides that it shall have the benefit of this
Section 11(c)(ii)
; or
(d)
(i) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in
Sections 11(a)
,
(b)
and
(c)
), and such default is not remedied within 30 days after the earlier of (A) a Responsible Officer obtaining actual knowledge of such default and (B) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this
Section 11(d)(i))
) or (ii) the Company defaults in the performance of or compliance with any term contained in any Supplemental Note Purchase Agreement (other than those referred to in
Sections 11(a)
,
(b)
and
(c)
) and such default is not remedied within 30 days after the earlier of (Y) a Responsible Officer obtaining actual knowledge of such default and (Z) the Company receiving written notice of such default from any holder of a Note (any such written
notice to be identified as a “notice of default” and to refer specifically to this
Section 11(d)(ii)
); or
(e)
(i) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made or (ii) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in any Supplemental Note Purchase Agreement or in any writing furnished in connection with the transactions contemplated hereby or thereby proves to have been false or incorrect in any material respect on the date as of which made; or
(f)
(i) the Company or any Significant Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt outstanding in a principal or notional amount of at least the Threshold Amount beyond any period of grace provided with respect thereto, or (ii) any other event shall occur or condition shall exist under any agreement or instrument relating to Debt of the Company or any Significant Subsidiary outstanding in a principal or notional amount of at least the Threshold Amount if the effect of such event or condition is to accelerate or require early termination of the maturity or tenor of such Debt, or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), terminated, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity or the original tenor thereof; or
(g)
the Company or any Significant Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes legal action for the purpose of any of the foregoing; or
(h)
a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Significant Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding‑up or liquidation of the Company or any of its Significant Subsidiaries, or any such petition shall be filed against the Company or any of its Significant Subsidiaries and such petition shall not be dismissed within 60 days; or
(i)
the Company shall cease to exist or be deemed to cease to exist as a limited liability company under the laws of the State of Delaware, whether by voluntary or involuntary winding‑up, liquidation, dissolution or termination, or proceedings are initiated to wind‑up, liquidate, dissolve or terminate the Company or an event occurs which, by operation of law or by an agreement of its members, or otherwise, would result in a winding‑up, liquidation or dissolution, or termination of the Company; or
(j)
any judgment or order for the payment of money in excess of the Threshold Amount to the extent not paid or insured shall be rendered against the Company or any Significant Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or
(k)
if (i) any Plan which is a pension plan within the meaning of section 3(2) of ERISA shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the “adjusted funding target attainment percentage” (within the meaning of section 303 of ERISA) under each Plan that is subject to the funding requirements of section 302 of ERISA or section 412 of the Code, as most recently certified by the Plan’s actuary, shall be less than 70%, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability with respect to any Plan pursuant to Title I or IV of ERISA (other than such liability for benefits as may be incurred in connection with the administration of such Plan) or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post‑employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect; or
(l)
the LLC Agreement shall cease to be in full force and effect for any reason whatsoever, including, without limitation, a determination by any Governmental Authority that the LLC Agreement is invalid, void or unenforceable or any party to the LLC Agreement shall contest or deny in writing the validity or enforceability of any of its obligations under such LLC Agreement and any such event, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect.
As used in
Section 11(k)
, the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in section 3 of ERISA.
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Section 12.
|
Remedies on Default, Etc.
|
Section 12.1.
Acceleration
. (a) If an Event of Default with respect to the Company described in
Section 11(g)
or
(h)
(other than an Event of Default described in clause (i) of
Section 11(g)
or described in clause (vi) of
Section 11(g)
by virtue of the fact that such clause encompasses clause (i) of
Section 11(g)
) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.
(b)
If any other Event of Default (other than an Event of Default described in
Section 11(c)(ii), (d)(ii)
or
(e)(ii))
has occurred and is continuing, the Required Holders may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.
(c)
If any Event of Default described in
Section 11(c)(ii), (d)(ii)
or
(e)(ii)
has occurred and is continuing with respect to a Series of Notes, the holders of at least 51% in principal amount of the Notes of such Series at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates) may at any time at its or their option, by notice or notices to the Company, declare all the Notes of such Series then outstanding to be immediately due and payable.
(d)
If any Event of Default described in
Section 11(a)
or
(b)
has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this
Section 12.1
, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (i) all accrued and unpaid interest thereon (including, but not limited to, interest accrued thereon at the Default Rate) and (ii) the Make‑Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for), and that the provision for payment of a Make‑Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.
Section 12.2.
Other Remedies
. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under
Section 12.1
, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.
Section 12.3.
Rescission
. At any time after (i) any Notes have been declared due and payable pursuant to
Section 12.1(b)
or
(d)
, the Required Holders, or (ii) Notes of any Series have been declared due and payable pursuant to
Section 12.1(c)
, the holders of at least 51% in principal amount of the Notes of such Series then outstanding (exclusive of Notes then owned by the Company or any of its Affiliates), by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make‑Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make‑Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor any other Person shall have paid any amounts which have become due solely by reason of such declaration, (c) all Events of Default and Defaults, other than non‑payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to
Section 17
, and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this
Section 12.3
will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.
Section 12.4.
No Waivers or Election of Remedies, Expenses, Etc
. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under
Section 15
, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this
Section 12
, including, without limitation, reasonable attorneys’ fees, expenses and disbursements of one special counsel for all holders of the Notes.
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Section 13.
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Registration; Exchange; Substitution of Notes.
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Section 13.1.
Registration of Notes
. The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.
Section 13.2.
Transfer and Exchange of Notes
. Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in
Section 18(iii))
for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within ten Business Days thereafter, the Company shall execute and deliver, at the Company’s expense (except as provided below), one or more new Notes of the same Series and tranche, if any (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of
Exhibit 1‑A
,
1‑B, 1‑C, 1‑D, 1‑E
or
1.2
, as the case may be. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $100,000;
provided
that if necessary to enable the registration of transfer by a holder of its entire holding of Notes of a Series or tranche thereof, one Note of such Series or tranche may be in a denomination of less than $100,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in
Section 6.2
.
Section 13.3.
Replacement of Notes
. Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in
Section 18(iii)
) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and
(a)
in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (
provided
that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $50,000,000 or a Qualified Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b)
in the case of mutilation, upon surrender and cancellation thereof,
within twenty Business Days thereafter, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note of the same Series or tranche, if any, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
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Section 14.
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Payments on Notes.
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Section 14.1.
Place of Payment
. Subject to
Section 14.2
, payments of principal, Make‑Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of Citibank N.A. in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of
the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction.
Section 14.2.
Home Office Payment
. So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in
Section 14.1
or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make‑Whole Amount, if any, and interest by the method and at the address specified for such purpose below such Purchaser’s name in
Schedule A
hereto or in any Supplemental Note Purchase Agreement, as the case may be, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to
Section 14.1
. The Company will make such payments in immediately available funds, no later than 11:00 a.m. New York time on the date due. If for any reason whatsoever the Company does not make any such payment by such 11:00 a.m. transmittal time, such payment shall be deemed to have been made on the next following Business Day and such payment shall bear interest at the Default Rate set forth in the Note. Prior to any sale or other disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes of the same Series and tranche, if any, pursuant to
Section 13.2
. The Company will afford the benefits of this
Section 14.2
to any Institutional Investor that is the direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this
Section 14.2
.
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Section 15.
|
Expenses, Etc.
|
Section 15.1.
Transaction Expenses
. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required by the Required Holders, local or other counsel) incurred by the Purchasers and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement or the Notes, or by reason of being a holder of any Note and (b) the costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work‑out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders
(other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes).
Section 15.2.
Survival
. The obligations of the Company under this
Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement.
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Section 16.
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Survival of Representations and Warranties; Entire Agreement.
|
All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.
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Section 17.
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Amendment and Waiver.
|
Section 17.1.
Requirements
. (a) This Agreement (including any Supplement hereto) and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of
Section 1, 2, 3, 4, 5, 6
or
21
hereof or the corresponding provision of any Supplement, or any defined term (as it is used in any such section or such corresponding provision of any Supplement), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of
Section 12
relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make
-
‑
Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of
Section 8
(except as permitted by
Section 17.1(b)), 11(a), 11(b), 12, 17
or
20
;
provided
that, anything contained in this
Section 17.1
or
Section 17.2
to the contrary notwithstanding, if for any reason whatsoever it becomes necessary or appropriate to enter into any amendment of this Agreement or any waiver with respect to compliance herewith by the Company during the period from and including the First Initial Closing through and including the Second Initial Closing, each of the Purchasers listed on
Schedule A
as purchasers of the Tranche D Notes and the Tranche E Notes shall be deemed to be the holder of an aggregate principal amount of outstanding Tranche D Notes and Tranche E Notes set opposite such entity’s name in
Schedule A
hereto, (i) for purposes of any determination of the percentage of holders of the Notes required to grant or deny such requested amendment or waiver and (ii) for purposes of any determination of any payment of remuneration, whether by way of
supplemental or additional interest, fee or otherwise pursuant to
Section 17.2
, notwithstanding that the issuance, sale and delivery of the Tranche D Notes and the Tranche E Notes on the Second Initial Closing and the Third Initial Closing, respectively, has not been consummated at the time such amendment or waiver is requested or such payment of remuneration is determined pursuant to
Section 17.2
;
provided, further,
that, anything contained in this
Section 17.1
or
Section 17.2
to the contrary notwithstanding, if for any reason whatsoever it becomes necessary or appropriate to enter into any amendment of this Agreement or any waiver with respect to compliance herewith by the Company during the period from and including the Second Initial Closing through and including the Third Initial Closing, each of the Purchasers listed on
Schedule A
as purchasers of the Tranche E Notes shall be deemed to be the holder of an aggregate principal amount of outstanding Tranche E Notes set opposite such entity’s name in
Schedule A
hereto, (i) for purposes of any determination of the percentage of holders of the Notes required to grant or deny such requested amendment or waiver and (ii) for purposes of any determination of any payment of remuneration, whether by way of supplemental or additional interest, fee or otherwise pursuant to
Section 17.2
, notwithstanding that the issuance, sale and delivery of the Tranche E Notes on the Third Initial Closing has not been consummated at the time such amendment or waiver is requested or such payment of remuneration is determined pursuant to
Section 17.2
. If for any reason whatsoever, the Tranche D Notes and the Tranche E Notes to be issued to the Purchasers listed on
Schedule A
as purchasers of the Tranche D Notes and the Tranche E Notes are not issued at the Second Initial Closing and the Third Initial Closing, respectively, any such amendment or waiver entered into as contemplated by the foregoing proviso of this
Section 17.1
shall, at the option of the Required Holders of the then outstanding Notes, be deemed null and void.
(b)
Change to Supplemental Note Purchase Agreements.
Notwithstanding anything to the contrary contained in
Section 17.1(a)
, with the prior written consent of (i) the Company and all of the holders of a Series of Notes (A) the interest rate on the Notes of such Series may be reduced, (B) the time of payment of interest on such Series which results in an effective reduction in the interest rate may be changed, (C) the Make-Whole Amount (or other prepayment premium, if applicable) (or method of computation thereof) associated with such Series of Notes may be changed, and (D) subject to the provisions of
Section 12
relating to acceleration or rescission, the time of or amount of any prepayment or payment of principal may be changed, and (ii) the Company and the holders of at least 51% in principal amount of the Notes of a Series at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates), (Y) the interest rate on the Notes of such Series may be increased, including any increase in the frequency of payment of such interest which results in an effective increase in the interest rate and (Z) any term or provision set forth in a Supplemental Note Purchase Agreement, which term or provision is applicable only to the Note or Notes of the Series issued pursuant to such Supplemental Note Purchase Agreement, may be amended, and the observance of any such term may be waived (either retroactively or prospectively), in each case, without any requirements to obtain the prior written consent of the holders of any other Series of Notes.
(c)
Issuance of Supplemental Notes.
Notwithstanding anything to the contrary contained herein, the Company may enter into any Supplemental Note Purchase Agreement providing for the issuance of one or more Series of Supplemental Note consistent with
Sections 1.2
and
2.2
hereof without obtaining the consent of any holder of any other Series of Notes.
Section 17.2.
Solicitation of Holders of Notes
.
(a)
Solicitation
. The Company will provide each holder of the Notes (irrespective of the amount, Series or tranche of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this
Section 17
to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.
(b)
Payment
. The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof or of any Note unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment.
(c)
Consent in Contemplation of Transfer
. Any consent made pursuant to this
Section 17.2
by the holder of any Note that has transferred or has agreed to transfer, or accepted an offer of prepayment of such Note to the Company, any Subsidiary or any Affiliate of the Company and has provided or has agreed to provide such written consent as a condition to such transfer or prepayment shall be void and of no force or effect except solely as to such holder with respect to such Note, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such transferring holder or holder whose Note is being prepaid.
Section 17.3.
Binding Effect, Etc
. Any amendment or waiver consented to as provided in this
Section 17
applies equally to all holders of each Series of Notes and is binding upon them and upon each future holder of any Note of any Series and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and the holder of any Note of any Series nor any delay in exercising any rights hereunder or under any Note of any Series shall operate as a waiver of any rights of any holder of such Note. As used herein, the term “this Agreement” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.
Section 17.4.
Notes Held by Company, Etc
. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes of any Series then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.
All notices and communications provided for hereunder shall be in writing and sent (a) by telefacsimile if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent:
(i)
if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in
Schedule A
hereto or in a Supplemental Note Purchase Agreement, or at such other address as such Purchaser or nominee shall have specified to the Company in writing,
(ii)
if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or
(iii)
if to the Company, to the Company at its address set forth at the beginning of this Agreement to the attention of President, or at such other address as the Company shall have specified to the holder of each Note in writing, with a copy to: American Electric Power Company, Inc., Attn: Treasurer, 1 Riverside Plaza, Columbus, Ohio 43215, Telephone: (614) 716-2800 and Fax: (614) 716-2807 and Attn: General Counsel, Telephone: (614) 716-2929, Fax: (614) 716-1560.
Notices under this
Section 18
will be deemed given only when actually received.
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Section 19.
|
Reproduction of Documents.
|
This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at a Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital or other similar process and such Purchaser may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19
shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.
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Section 20.
|
Confidential Information.
|
For the purposes of this
Section 20
,
“Confidential Information”
means information delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of the Company or such Subsidiary;
provided
that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser under
Section 7.1
that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser;
provided
that such Purchaser may deliver or disclose Confidential Information to (i) its directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), (ii) its financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this
Section 20
, (iii) any other holder of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this
Section 20
), (v) any Person from which it offers to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this
Section 20
), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate, (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser’s Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this
Section 20
as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this
Section 20
.
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Section 21.
|
Substitution of Purchaser.
|
Each Purchaser shall have the right to substitute any one of its Affiliates as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliate’s agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in
Section 6
. Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this
Section 21
) shall be deemed to refer to such Affiliate in lieu of such original Purchaser. In the event that such Affiliate is so substituted as a Purchaser hereunder and such Affiliate thereafter transfers to such original Purchaser all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, any reference to such Affiliate as a “Purchaser” in this Agreement (other than in this
Section 21
) shall no longer be deemed to refer to such Affiliate, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement.
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Section 22.
|
Miscellaneous.
|
Section 22.1.
Successors and Assigns
. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not.
Section 22.2.
Payments Due on Non‑Business Days
. Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting the requirement in
Section 8.4
that the notice of any optional prepayment specify a Business Day as the date fixed for such prepayment), any payment of principal of or Make‑Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day;
provided
that if the maturity date of any Note is a date other than a Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.
Section 22.3.
Accounting Terms
. All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP. Except as otherwise specifically provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance with GAAP and (ii) all financial statements shall be prepared in accordance with GAAP. For purposes of determining compliance with the financial covenants contained in this Agreement, any election by the Company to measure an item of Debt using fair value (as permitted by Accounting Standard Codification Topic No. 825‑10‑25 - Fair Value Option or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.
Section 22.4.
Severability
. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.
Section 22.5.
Construction, Etc
. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof.
Section 22.6.
Counterparts
. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.
Section 22.7.
Governing Law
. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York
,
excluding choice‑of‑law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
Section 22.8.
Jurisdiction and Process; Waiver of Jury Trial
Section
.
(a) The Company irrevocably submits to the non‑exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement or the Notes. To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
(b)
The Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in
Section 22.8(a)
by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in
Section 18
or at such other address of which such holder shall then have been notified pursuant to said Section. The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.
(c)
Nothing in this
Section 22.8
shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
(d)
The parties hereto hereby waive trial by jury in any action brought on or with respect to this Agreement, the Notes or any other document executed in connection herewith or therewith.
* * * * *
If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company.
Very truly yours,
AEP Transmission Company, LLC
By
/s/ Renee V. Hawkins
Name: Renee V. Hawkins
Title: Assistant Treasurer
This Agreement is hereby accepted and agreed to as of the date thereof.
John Hancock Life Insurance Company (U.S.A)
By:
/s/ Recep Kendircioglu
Name: Recep Kendircioglu
Title: Managing Director
John Hancock Life & Health Insurance Company
By:
/s/ Recep Kendircioglu
Name: Recep Kendircioglu
Title: Managing Director
Pacific Life Insurance Company
By:
/s/ Diane W. Dales
Name: Diane W. Dales
Title: Asst. Vice President
Pacific Life & Annuity Company
By:
/s/ Diane W. Dales
Name: Diane W. Dales
Title: Asst. Vice President
Guardian Life Insurance Company of America
By:
/s/ Barry Scheinholtz
Name: Barry Scheinholtz
Title: Senior Director, Private Placements
Guardian Insurance & Annuity Company, Inc.
By:
/s/ Barry Scheinholtz
Name: Barry Scheinholtz
Title: Senior Director, Private Placements
Massachusetts Mutual Life Insurance Company
C.M. Life Insurance Company
MassMutual Asia Limited
By: Babson Capital Management LLC as Investment Advisor
By: /s/ John B. Wheeler
Name: John B. Wheeler
Title: Managing Director
American Equity Investment Life Insurance Company
By:
/s/ Jeffrey A. Fossel
l
Name: Jeffrey A. Fossell
Title: Authorized Signatory
Life Insurance Company of the Southwest
By:
/s/ R. Scott Higgin
s
Name: R. Scott Higgins
Title: Senior Vice President, Sentinel Asset Management
ProAssurance Casualty Company
ProAssurance Indemnity Company, Inc.
Kansas Medical Mutual Company
National Mutual Benefit
By: Prime Advisors, Inc., its Attorney-in-Fact
By:
/s/ Scott Sel
l
Name: Scott Sell
Title: Vice President
CMFG Life Insurance Company
By:
/s/ Allen R. Cantrell
Name: Allen R. Cantrell
Title: Managing Director, Investments
Information Relating to Purchasers
|
|
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|
|
|
Name and Address of Purchaser
|
Principal Amount and
Tranche of Series A Notes
to be Purchased
|
Schedule A
(to Note Purchase Agreement)
Defined Terms
As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:
“Acquiring Person”
is defined in
Section 10.5(c)
.
“AEP”
means American Electric Power Company, Inc., a New York corporation.
“Affiliate”
means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and with respect to the Company, shall include any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or Equity Interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or Equity Interests. Unless the context otherwise clearly requires, any reference to an
“Affiliate”
is a reference to an Affiliate of the Company.
“Agreement”
or “
this Agreement”
means this Agreement as it may from time to time be amended or supplemented, and without limiting the generality of the foregoing, shall include all Supplemental Note Purchase Agreements.
“Anti-Money Laundering Laws”
is defined in
Section 5.16(c)
.
“Blocked Person”
is defined in
Section 5.16(a)
.
“Business Day”
means (a) for the purposes of
Section 8.7
only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York or Austin, Texas are required or authorized to be closed.
“Called Principal”
is defined in
Section 8.7
.
“CISADA”
means the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, United States Public Law 111195, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“Closing”
is defined in
Section 3
.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.
“Company”
means AEP Transmission Company, LLC, a Delaware limited liability company or any successor that becomes such in the manner prescribed in
Section 10.5
.
Schedule B
(to Note Purchase Agreement)
“Confidential Information”
is defined in
Section 20
.
“Consolidated Capital”
means the sum of (a) Consolidated Debt of the Company and (b) consolidated equity of all classes of membership interests or other equity (whether common, preferred, mandatorily convertible preferred or preference) of the Company, in each case determined in accordance with GAAP but including Equity-Preferred Securities issued by the Company and its Consolidated Subsidiaries and excluding the funded pension and other post retirement benefit plans, net of tax, components of accumulated other comprehensive income (loss) of the Company and its Consolidated Subsidiaries.
“Consolidated Debt”
of the Company means the total principal amount of all Debt described in clauses (a) through (e) of the definition of Debt and Guaranties of such Debt of the Company and its Consolidated Subsidiaries; excluding, however, Equity-Preferred Securities not to exceed 10% of Consolidated Capital (calculated for purposes of this clause without reference to any Equity-Preferred Securities)
provided
that Guaranties of Debt included in the total principal amount of Consolidated Debt shall not be added to such total principal amount, excluding, however, any Debt of the Company to a Subsidiary of the Company and any Debt of such Subsidiary of the Company to the Company.
“Consolidated Priority Debt”
means all Priority Debt of the Company and its Subsidiaries determined on a consolidated basis eliminating inter‑company items.
“Consolidated Subsidiary”
means, with respect to any Person at any time, any Subsidiary or other Person the accounts of which would be consolidated with those of such first Person in its consolidated financial statements in accordance with GAAP.
“Consolidated Tangible Net Assets”
means, on any date of determination and with respect to the Company at any time, the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the consolidated balance sheet of the Company and its Consolidated Subsidiaries most recently delivered to the holders of the Notes pursuant to
Section 7.1
as of such date of determination, 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 consolidated current liabilities of the Company and its Consolidated Subsidiaries appearing on such balance sheet.
“Control”
means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Controlled Entity”
means any of the Subsidiaries of the Company and any of their or the Company’s respective Controlled Affiliates.
“Credit Facility”
means any credit, revolving loan, note or other like agreement between the Company and one or more lenders or purchasers with the commitment from such lenders or purchasers to extend credit thereunder to the Company not being less than U.S. $50,000,000.
“Debt”
of any Person means, without duplication,
(a)
all indebtedness of such Person for borrowed money,
(b)
all obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 60 days incurred in the ordinary course of such Person’s business),
(c)
all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments,
(d)
all obligations of such Person as lessee under leases that have been, in accordance with GAAP, recorded as capital leases,
(e)
all obligations of such Person in respect of reimbursement agreements with respect to acceptances, letters of credit (other than trade letters of credit) or similar extensions of credit,
(f)
all Guaranties, and
(g)
all reasonably quantifiable obligations under indemnities or under support or capital contribution agreements, and other reasonably quantifiable obligations (contingent or otherwise) to purchase or otherwise to assure a creditor against loss in respect of, or to assure an obligee against loss in respect of, all Debt of others referred to in clauses (a) through (f) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss.
“Default”
means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.
“Default Rate”
means that rate of interest that is the greater of (i) 2% per annum above the rate of interest stated in clause (a) of the first paragraph of the applicable Note or (ii) 2% over the rate of interest publicly announced by Citibank, N.A., in New York, New York as its “base” or “prime” rate.
“Disclosure Documents”
is defined in
Section 5.3
.
“Discounted Value”
is defined in
Section 8.7
.
“Dollars”
and the
“$”
means the lawful currency of the United States of America.
“Electronic Delivery”
is defined in
Section 7.1(a)
.
“Eligible Purchasers”
means any Initial Purchaser of the Series A Notes and additional Institutional Investors.
“Environmental Laws”
means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to Hazardous Materials.
“Equity Interests”
means, in the case of a corporation, shares of capital stock of any class or series, including warrants, rights, participating interests or options to purchase or otherwise acquire any class or series of capital stock or Securities exchangeable for or convertible into any class or series of capital stock, and in the case of any limited liability company or other entity shall mean any class or series of limited liability company interests or like interests constituting equity, and in the case of each of the foregoing, any part or portion thereof or participation in any of the foregoing.
“Equity-Preferred Securities”
means (i) debt or preferred securities that are mandatorily convertible or mandatorily exchangeable into common shares of the Company and (ii) any other securities, however denominated, including but not limited to hybrid capital and trust originated preferred securities, (A) issued by the Company or any Consolidated Subsidiary of the Company, (B) that are not subject to mandatory redemption or the underlying securities, if any, of which are not subject to mandatory redemption, (C) that are perpetual or mature no less than 30 years from the date of issuance, (D) the indebtedness issued in connection with which, including any guaranty, is subordinate in right of payment to the unsecured and unsubordinated indebtedness of the issuer of such indebtedness or guaranty, and (E) the terms of which permit the deferral of the payment of interest or distributions thereon to a date occurring after March 18, 2043.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“ERISA Affiliate”
means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code.
“Event of Default”
is defined in
Section 11
.
“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“Execution Date”
is defined in
Section 3
.
“First Initial Closing”
is defined in
Section 3
.
“Fitch”
means Fitch Investors Service.
“Form 10‑Q”
is defined in
Section 7.1(a)
.
“GAAP”
means generally accepted accounting principles as in effect from time to time in the United States of America.
“Governmental Authority”
means
(a)
the government of
(i)
the United States of America or any State or other political subdivision thereof, or
(ii)
any other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or
(b)
any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.
“Guaranty”
of any Person means any obligation, contingent or otherwise, of such Person (i) to pay any Debt of any other Person or (ii) incurred in connection with the issuance by a third person of a guaranty of Debt of any other Person (whether such obligation arises by agreement to reimburse or indemnify such third Person or otherwise).
“Hazardous Materials”
means any and all pollutants, toxic or hazardous wastes or any other substances, including all substances listed in or regulated in any Environmental law that might pose a hazard to health and safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, regulated, prohibited or penalized by any applicable law including, but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.
“holder”
means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to
Section 13.1
.
“INHAM Exemption”
is defined in
Section 6.2(e)
.
“Initial Closing”
and
“Initial Closings”
are defined in
Section 3
.
“Initial Purchaser”
is defined in the first paragraph of this Agreement.
“Initial Purchaser Schedule”
means
Schedule A
to this Agreement.
“Institutional Investor”
means (a) any purchaser of a Note, (b) any holder of a Note holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the Notes then outstanding, (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of any Note.
“Lien”
means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.
“LLC Agreement”
means the Limited Liability Company Agreement of the Company in effect from time to time.
“Make‑Whole Amount”
is defined in
Section 8.7
.
“Material”
means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company and its Subsidiaries taken as a whole.
“Material Adverse Effect”
means a material adverse effect (i) on the business, condition (financial or otherwise) or operations of the Company and its Subsidiaries, taken as a whole, or (ii) that is reasonably likely to affect the legality, validity or enforceability of this Agreement, including, without limitation, under any Supplemental Note Purchase Agreement, against the Company or the ability of the Company to perform its obligations under this Agreement, including, without limitation, under any Supplemental Note Purchase Agreement, or the Notes.
“Memorandum”
is defined in
Section 5.3
.
“Multiemployer Plan”
means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).
“NAIC”
means the National Association of Insurance Commissioners or any successor thereto.
“NAIC Annual Statement”
is defined in
Section 6.2(a)
.
“Notes”
is defined in
Section 1.2
.
“OFAC”
is defined in
Section 5.16(a)
.
“OFAC Listed Person”
is defined in
Section 5.16(a)
.
“OFAC Sanctions Program”
means all laws, regulations, Executive Orders and any economic or trade sanction that OFAC is responsible for administering and enforcing, including, without limitation 31 CFR Subtitle B, Chapter V, as amended, along with any enabling legislation; the Bank Secrecy Act; Trading with the Enemy Act; and any similar laws, regulations or orders adopted by any State within the United States. A list of economic and trade sanctions administered by OFAC may be found at http://www.ustreas.gov/offices/enforcement/ofac/programs/.
“Officer’s Certificate”
means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate.
“PBGC”
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.
“Permitted Liens”
means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced:
(i)
Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under
Section 9.4
hereof;
(ii)
Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens, and other similar Liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings;
(iii)
Liens incurred or deposits made to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations;
(iv)
easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes;
(v)
any judgment Lien, unless an Event of Default under
Section 11(j)
shall have occurred and be continuing;
(vi)
any Lien on any asset of any Person existing at the time such Person is merged or consolidated with or into the Company or any Significant Subsidiary and not created in contemplation of such event;
(vii)
deposits made in the ordinary course of business to secure the performance of bids, trade contracts (other than for Debt), operating leases and surety bonds;
(viii)
Liens upon or in any real property or equipment acquired, constructed, improved or held by the Company or any Subsidiary in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely
for the purpose of financing the acquisition, construction or improvement of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property); and
(ix)
extensions, renewals or replacements of any Lien described in clause (iii), (vi), (vii) or (viii) for the same or a lesser amount,
provided, however,
that no such Lien shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or replaced.
“Person”
means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.
“Plan”
means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to Title I of ERISA that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.
“Priority Debt”
means, without duplication, (a) any Debt of the Company or a Subsidiary secured by a Lien created or incurred within the limitations of
Section 10.3(d)
and (b) any Debt of the Company’s Subsidiaries;
provided
that there shall be excluded from any calculation of Priority Debt, (i) the Debt of any Subsidiary owing to the Company or a Wholly‑owned Significant Subsidiary of the Company, (ii) the Debt of any Subsidiary outstanding on the date of the First Initial Closing and described on
Schedule 5.15
hereto and any extension, renewal or refunding of any such Debt, and (iii) the Debt of any Person which becomes a Subsidiary after the date of the First Initial Closing and any extension, renewal or refunding thereof;
provided
that such Debt was not incurred in contemplation of such Person becoming a Subsidiary.
“property”
or
“properties”
means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.
“PTE”
is defined in
Section 6.2(a)
.
“Purchaser”
means an Initial Purchaser or a Supplemental Purchaser.
“
QPAM Exemption
” is defined in
Section 6.2(d)
.
“Qualified Institutional Buyer”
means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.
“Reinvestment Yield”
is defined in
Section 8.7
.
“Related Fund”
means, with respect to any holder of any Note, any fund or entity that (a) invests in Securities or bank loans, and (b) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.
“Remaining Average Life”
is defined in
Section 8.7
.
“Remaining Scheduled Payments”
is defined in
Section 8.7
.
“Required Holders”
means, at any time, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).
“Responsible Officer”
means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.
“SEC”
shall mean the Securities and Exchange Commission of the United States, or any successor thereto.
“Second Initial Closing”
is defined in
Section 3
.
“Securities”
or
Security”
shall have the same meaning as in Section 2(1) of the Securities Act.
“Securities Act”
means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“Senior Debt”
means all Debt of the Company which is not expressed to be subordinate or junior in rank to any other Debt of the Company.
“Senior Financial Officer”
means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.
“Series”
means any one of or any combination of the Series A Notes and any subsequent Notes of any Series.
“Series A Notes”
is defined in
Section 1.1
.
“Settlement Date”
is defined in
Section 8.7
.
“Significant Subsidiary”
means, at any time, any Subsidiary of the Company that constitutes at such time a “significant subsidiary” of the Company, as such term is defined in Regulation S‑X of the SEC as in effect on the date hereof (17 C.F.R. Part 210).
“
Source
” is defined in
Section 6.2
.
“Subsidiary”
means, as to any Person, any other Person in which such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such second Person, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Company.
“Supplemental Closing”
is defined in
Section 2.2
.
“Supplemental Closing Date”
is defined in
Section 2.2
.
“Supplemental Note Purchase Agreement”
is defined in
Section 2.2
.
“Supplemental Notes”
is defined in
Section 1.2
.
“Supplemental Purchaser Schedule”
means the Schedule of Purchasers of any Series of Supplemental Notes which is attached to the Supplemental Note Purchase Agreement relating to such Series.
“Supplemental Purchasers”
is defined in
Section 2.2
.
“Surviving Person”
is defined in
Section 10.5(b)
.
“SVO”
means the Securities Valuation Office of the NAIC or any successor to such Office.
“Third Initial Closing”
is defined in
Section 3
.
“Threshold Amount”
means $50,000,000.
“tranche”
is defined in
Section 1.2
.
“Tranche A Notes”
is defined in
Section 1.1
.
“Tranche B Notes”
is defined in
Section 1.1
.
“Tranche C Notes”
is defined in
Section 1.1
.
“Tranche D Notes”
is defined in
Section 1.1
.
“Tranche E Notes”
is defined in
Section 1.1
.
“USA Patriot Act”
means United States Public Law 107‑56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“Voting Stock”
means Securities of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect the corporate directors (or Persons performing similar functions).
“Wholly‑owned Significant Subsidiary”
means, at any time, any Significant Subsidiary one hundred percent (100%) of all of the Equity Interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company’s other Wholly‑owned Significant Subsidiaries at such time.
“Wholly‑owned Subsidiary”
means, at any time, any Subsidiary one hundred percent (100%) of all of the Equity Interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company’s other Wholly‑owned Subsidiaries at such time.
Disclosure Materials
U.S. Private Placement Investor Road Show Presentation dated September 2012
Schedule 5.3
(to Note Purchase Agreement)
Subsidiaries of the Company and Ownership of Subsidiary Stock
List of Subsidiary Companies
: each 100% owned
AEP Appalachian Transmission Company, Inc.
AEP Indiana Michigan Transmission Company, Inc.
AEP Kentucky Transmission Company, Inc.
AEP Ohio Transmission Company, Inc.
AEP Oklahoma Transmission Company, Inc.
AEP Southwestern Transmission Company, Inc.
AEP West Virginia Transmission Company, Inc.
Schedule 5.4
(to Note Purchase Agreement)
Financial Statements
AEP Transmission Company and Subsidiaries 2011 Annual Report Unaudited Consolidated Financial Statements
AEP Transmission Company and Subsidiaries 2012 Second Quarter Report Unaudited Consolidated Financial Statements
Schedule 5.5
(to Note Purchase Agreement)
ERISA Matters
January 1, 2012 Defined Benefit Adjusted Funding Target Attainment Percentage
For the American Electric Power System Retirement Plan, which is a pension plans within the meaning of section 3(2) of ERISA (other than a Multiemployer Plan) that is subject to the funding requirements of section 302 of ERISA or section 412 of the Code, the adjusted funding target attainment percentage as of January 1, 2012, as most recently certified by the Plan’s actuary on the basis of the actuarial assumptions specified for funding purposes in such Plan’s actuarial valuation report for the plan year beginning January 1, 2012, is 85.64%.
Schedule 5.12
(to Note Purchase Agreement)
Existing Debt
5.15(a)
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AEP Transmission Company, LLC
|
$12,797,994.39
|
|
|
AEP Ohio Transmission Company, Inc.
|
$144,451,276.83
|
|
|
AEP Indiana Michigan Transmission Company, Inc.
|
$38,767,560.84
|
|
|
AEP Oklahoma Transmission Company, Inc.
|
$55,342,885.52
|
|
|
AEP Appalachian Transmission Company, Inc.
|
$495,093.64
|
|
|
AEP Kentucky Transmission Company, Inc.
|
$315,919.01
|
|
|
AEP Southwestern Transmission Company, Inc.
|
$557,073.86
|
|
|
AEP West Virginia Transmission Company, Inc.
|
$547,335.16
|
|
5.15(b)
None
5.15(c)
None
Schedule 5.15
(to Note Purchase Agreement)
Existing Debt as of the Second Initial Closing
5.15(a)
TO BE PROVIDED FOR SECOND INITIAL CLOSING
5.15(b)
TO BE PROVIDED FOR SECOND INITIAL CLOSING
Annex A
(to Note Purchase Agreement)
Existing Debt as of the Third Initial Closing
5.15(a)
TO BE PROVIDED FOR THIRD INITIAL CLOSING
5.15(b)
TO BE PROVIDED FOR THIRD INITIAL CLOSING
Annex B
(to Note Purchase Agreement)
[Form Tranche A Note]
AEP Transmission Company, LLC
3.30% Senior Notes, Series A, Tranche A, due October 18, 2022
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No. [_________]
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[Date]
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$[____________]
|
PPN 00114* AA1
|
For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] Dollars (or so much thereof as shall not have been prepaid) on October 18, 2022, with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance hereof at the rate of 3.30% per annum from the date hereof, payable semiannually, on the 18th day of April and October in each year next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 5.30% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series A Notes”
) issued pursuant to the Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreement”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof, together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes”
, and collectively, with the Series A Notes, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in
Section 20
of the Note Purchase Agreement and (ii) made the representation set forth in
Section 6
of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney
Exhibit 1-A
(to Note Purchase Agreement)
duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By__________________________
[Title]
__________________________
E-1-A-2
[Form Tranche B Note]
AEP Transmission Company, LLC
4.00% Senior Notes, Series A, Tranche B, due October 18, 2032
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No. [_________]
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[Date]
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$[____________]
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PPN 00114* AB9
|
For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] Dollars (or so much thereof as shall not have been prepaid) on October 18, 2032, with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance hereof at the rate of 4.00% per annum from the date hereof, payable semiannually, on the 18th day of April and October in each year next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.00% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series A Notes”
) issued pursuant to the Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreement”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof, together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes”
, and collectively, with the Series A Notes, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in
Section 20
of the Note Purchase Agreement and (ii) made the representation set forth in
Section 6
of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney
Exhibit 1-B
(to Note Purchase Agreement)
duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
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By
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_________________________________________
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[Title]____________________________
__
E-1-B-2
[Form Tranche C Note]
AEP Transmission Company, LLC
4.73% Senior Notes, Series A, Tranche C, due October 18, 2042
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No. [_________]
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[Date]
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$[____________]
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PPN 00114* AC7
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For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] Dollars (or so much thereof as shall not have been prepaid) on October 18, 2042, with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance hereof at the rate of 4.73% per annum from the date hereof, payable semiannually, on the 18th day of April and October in each year next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.73% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series A Notes”
) issued pursuant to the Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreement”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof, together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes”
, and collectively, with the Series A Notes, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in
Section 20
of the Note Purchase Agreement and (ii) made the representation set forth in
Section 6
of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney
Exhibit 1-C
(to Note Purchase Agreement)
duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By_________________________________
[Title]____________________________
E-1-C-2
[Form Tranche D Note]
AEP Transmission Company, LLC
4.78% Senior Notes, Series A, Tranche D, due December 14, 2042
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No. [_________]
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[Date]
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$[____________]
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PPN 00114* AD5
|
For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] Dollars (or so much thereof as shall not have been prepaid) on December 14, 2042, with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance hereof at the rate of 4.78% per annum from the date hereof, payable semiannually, on the 14th day of June and December in each year next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.78% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series A Notes”
) issued pursuant to the Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreement”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof, together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes”
, and collectively, with the Series A Notes, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in
Section 20
of the Note Purchase Agreement and (ii) made the representation set forth in
Section 6
of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney
Exhibit 1-D
(to Note Purchase Agreement)
duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By
_______________________________________
[Title]____________________________
E-1-D-2
[Form Tranche E Note]
AEP Transmission Company, LLC
4.83% Senior Notes, Series A, Tranche E, due March 18, 2043
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No. [_________]
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[Date]
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$[____________]
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PPN 00114* AE3
|
For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] Dollars (or so much thereof as shall not have been prepaid) on March 18, 2043, with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance hereof at the rate of 4.83% per annum from the date hereof, payable semiannually, on the 18th day of March and September in each year next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) 6.83% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Citibank, N.A. in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series A Notes”
) issued pursuant to the Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreement”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof, together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes”
, and collectively, with the Series A Notes, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in
Section 20
of the Note Purchase Agreement and (ii) made the representation set forth in
Section 6
of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney
Exhibit 1-E
(to Note Purchase Agreement)
duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By
__________________________________
[Title]________________________
E-1-E-2
[Form of Supplemental Note]
AEP Transmission Company, LLC
[____]% Senior Note,
Series _______, due [___________, ____]
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No. [_______]
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[Date]
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$[__________]
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PPN [_________]
|
For Value Received, the undersigned, AEP Transmission Company, LLC (herein called the
“Company”
), a limited liability company organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] Dollars on [________________, ____] with interest (computed on the basis of a 360‑day year of twelve 30‑day months) (a) on the unpaid balance thereof at the rate of [_]% per annum from the date hereof, payable [semiannually], on the [____] day of [_____________] and [______________] in each year, commencing with the [__________] or [__________] next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the greater of (i) [__]% or (ii) 2% over the rate of interest publicly announced by Citibank, N.A. from time to time in New York, New York as its “base” or “prime” rate payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at [___] or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
“Series ___ Notes”
) issued pursuant to the Supplemental Note Purchase Agreement dated as of _________________ to that certain Note Purchase Agreement, dated as of October 18, 2012 (as from time to time amended or supplemented, the
“Note Purchase Agreements”
), among the Company and the Purchasers named therein and is entitled to the benefits thereof together with additional Series of Notes from time to time issued thereunder (the
“Supplemental Notes,”
and collectively with notes issued under the Note Purchase Agreement, the
“Notes”
). Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
Exhibit 1.2
(to Note Purchase Agreement)
registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
[The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement.] [This Note is [also] subject to [optional] prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.] [This Note is not subject to prepayment.]
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
AEP Transmission Company, LLC
By
___________________________________
[Title:]________________________
E-1.2-2
Form of Supplemental Note Purchase Agreement
AEP Transmission Company, LLC
1 Riverside Plaza
Columbus, Ohio 43215
As of ____________, _____
To Each of the Purchasers
Named in the Supplemental
Purchaser Schedule Attached Hereto
Ladies and Gentlemen:
Reference is made to that certain Note Purchase Agreement, dated as of October 18, 2012 between AEP Transmission Company, LLC, a Delaware limited liability company, and each of the Initial Purchasers named in the Initial Purchaser Schedule attached thereto (the
“Agreement”
). Terms used but not defined herein shall have the respective meanings set forth in the Agreement.
As contemplated in
Section 2.2
of the Agreements, the Company agrees with you as follows:
A.
Subsequent Series of Notes.
The Company has authorized and will create a Subsequent Series of Notes to be called the
“Series ___ Notes.”
Said Series ___ Notes will be dated the date of issue; will bear interest (computed on the basis of a 360‑day year of twelve 30‑day months) from such date at the rate of ____% per annum, payable semiannually in arrears on the ___ day of each _________ and __________ in each year (commencing _________, _____) until the principal amount thereof shall become due and payable and shall bear interest on overdue principal (including any overdue optional prepayment of principal) and premium, if any, and, to the extent permitted by law, on any overdue installment of interest at the rate specified therein after the date due for payment, whether by acceleration or otherwise, until paid; will be expressed to mature on __________, _____; and will be substantially in the form attached to the Agreement as
Exhibit 1.2
with the appropriate insertions to reflect the terms and provisions set forth above and with such changes therefrom, if any, as may be approved by you and the Company.
B.
Purchase and Sale of Series ___ Notes.
The Company hereby agrees to sell to each Supplemental Purchaser set forth on the Supplemental Purchaser Schedule attached hereto (collectively, the
“Series ___ Purchasers”
) and, subject to the terms and conditions in the Agreement and herein set forth, each Series ___ Purchaser agrees to purchase from the Company the aggregate principal amount of the Series ___ Notes set opposite each Series ___ Purchaser’s name in the Supplemental Purchaser Schedule at 100% of the aggregate principal amount. The obligations of the Series __ Purchasers hereunder are several and not joint obligations, and no
Exhibit 2.2
(to Note Purchase Agreement)
Series __ Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Series ___ Purchaser hereunder. The sale of the Series ___ Notes shall take place at the offices of ________________________ at 10:00 a.m. _________ time, at a closing the (
“Series ___ Closing”
) on ____________, ____, or such other date as shall be agreed upon by the Company and each Series ___ Purchaser. At the Series ___ Closing the Company will deliver to each Series ___ Purchaser one or more Series ___ Notes registered in such Series ___ Purchaser’s name (or in the name of its nominee), evidencing the aggregate principal amount of Series ___ Notes to be purchased by said Series ___ Purchaser and in the denomination or denominations specified with respect to such Series ___ Purchaser in the Supplemental Purchaser Schedule attached hereto against payment of the purchase price thereof by transfer of immediately available funds for credit to the Company’s account on the date of the Series ___ Closing (the
“Series ___ Closing Date”
) (as specified in a notice to each Series ___ Purchaser at least three Business Days prior to the Series ___ Closing Date).
C.
Conditions of Series ___ Closing.
The obligation of each Series ___ Purchaser to purchase and pay for the Series ___ Notes to be purchased by such purchaser hereunder on the Series ___ Closing Date is subject to the satisfaction, on or before such Series ___ Closing Date, of the conditions set forth in
Section 4
of the Agreement, and to the following additional conditions:
(a)
Except as supplemented, amended or superseded by the representations and warranties set forth in
Exhibit A
hereto, each of the representations and warranties of the Company set forth in
Section 5
of the Note Purchase Agreement shall be correct as of the Series __ Closing Date and the Company shall have delivered to each Series __ Purchaser an Officer’s Certificate, dated the Series __ Closing Date certifying that such condition has been fulfilled.
[(b)
Each Subsidiary Guarantor shall have confirmed in writing that the Series __ Notes shall be guaranteed and secured, as the case may be, by the Subsidiary Guaranty.]
(c)
Contemporaneously with the Series __ Closing, the Company shall sell to each Series __ Purchaser, and each Series __ Purchaser shall purchase, the Series __ Notes to be purchased by such Series __ Purchaser at the Series __ Closing as specified in the
Supplemental Purchaser Schedule.
D.
Prepayments
. The Series ___ Notes shall be subject to prepayment only (a) pursuant to the required prepayments, if any, specified in clause (x) below; and (b) pursuant to the optional prepayments specified in clause (y) below.
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(x)
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Required Prepayments; Maturity
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[to be determined]
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(y)
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Optional and Contingent Prepayments. As provided in
Sections 8.2
of the Agreement.
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E-2.2-2
E.
Purchaser Representations
. Each Series ___ Purchaser represents and warrants that the representations and warranties set forth in
Section 6
of the Agreement are true and correct on the date hereof with respect to the purchase of the Series __ Notes by such Series ___ Purchaser with the same force and effect as if each reference to “Series A Notes” set forth therein was modified to refer the “Series __ Notes” and each reference to “Initial Purchaser” set forth therein was modified to refer the “Series __ Purchaser”.
F.
Series ___ Notes Issued under and Pursuant to Agreement.
Except as otherwise specifically provided above (and expressly permitted by the Agreement), all of the provisions of the Agreement are incorporated by reference herein and shall apply to the Series __ Notes as if expressly set forth in this Supplement. Accordingly, the Series ___ Notes shall be deemed to be issued under, to be subject to and to have the benefit of all of the terms and provisions of the Agreement as the same may from time to time be amended and supplemented in the manner provided therein.
The execution hereof by the Series ___ Purchasers shall constitute a contract among the Company and the Series ___ Purchasers for the uses and purposes hereinabove set forth. By their acceptance hereof, each of the Series ___ Purchasers shall also be deemed to have accepted and agreed to the terms and provisions of the Agreement, as in effect on the date hereof.
AEP Transmission Company, LLC
By
____________________________________
Its____________________________
Accepted as of
_________________________
[Variation]
By
____________________________________
Its ____________________________
E-2.2-3
Information Relating to Series __ Purchasers
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Name and Address of Series __ Purchaser
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Principal
Amount of Series
__ Notes to Be
Purchased
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[Name of Series __ Purchaser]
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$
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(1)
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All payments by wire transfer of
immediately available funds to:
with sufficient information to identify the
source and application of such funds.
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(2)
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All notices of payments and written
confirmations of such wire transfers:
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(3)
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All other communications:
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Schedule A
(to Supplement)
Form of Opinion of Counsel to the Company
1.
The Company is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware, has the limited liability company power and the limited liability company authority to execute and perform the Note Purchase Agreement and to issue the Notes and has the full limited liability company power and the limited liability company authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing as a foreign limited liability company in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary except where the failure to be so qualified will not have a material adverse effect on the business, properties or condition (financial or otherwise) of the Company.
2.
The Note Purchase Agreement has been duly authorized by all necessary limited liability company action on the part of the Company, has been duly executed and delivered by the Company and constitutes the legal, valid and binding contract of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent transfer and conveyance, voidable preference, moratorium, receivership, conservatorship, arrangement, or similar laws, and related regulations and judicial doctrines, from time to time in effect affecting creditors’ rights and remedies generally, and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing, and reasonableness, equitable defenses, the exercise of judicial discretion, and limits on the availability of equitable remedies), whether such principles are considered in a proceeding at law or in equity.
3.
The Notes have been duly authorized by all necessary limited liability company action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, fraudulent transfer and conveyance, voidable preference, moratorium, receivership, conservatorship, arrangement, or similar laws, and related regulations and judicial doctrines, from time to time in effect affecting creditors’ rights and remedies generally, and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing, and reasonableness, equitable defenses, the exercise of judicial discretion, and limits on the availability of equitable remedies), whether such principles are considered in a proceeding at law or in equity.
4.
No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any Governmental Authority, Federal or state, is necessary in connection with the Company’s execution and delivery of the Note Purchase Agreement or the Notes.
5.
The issuance and sale of the Notes and the execution, delivery and performance by the Company of the Note Purchase Agreement do not (a) conflict with or result in any breach of any of the provisions of or constitute a default under or result in the creation or imposition of any Lien upon any of the property of the Company pursuant to the provisions of the charter documents or operating agreement of the Company or any agreement or other instrument known
Exhibit 4.4(a-1)
(to Note Purchase Agreement)
to such counsel to which the Company is a party or by which the Company may be bound, (b) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to the Company or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company.
6.
There are no proceedings pending, or to the knowledge of such counsel, threatened against or directly affecting the Company in any court or before any Governmental Authority or arbitration board or tribunal which if adversely determined would individually or in the aggregate materially and adversely affect the business or properties of the Company or the ability of it to perform its obligations under the Note Purchase Agreement or the Notes.
7.
The issuance of the Notes and the use of the proceeds of the sale of the Notes in accordance with the provisions of and contemplated by the Note Purchase Agreement do not violate or conflict with Regulation T, U or X of the Board of Governors of the Federal Reserve System.
8.
The Company is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended.
9.
(i) Assuming (a) the accuracy of the representations of the Purchasers set forth in Section 6 of the Note Purchase Agreement and (b) the accuracy of the representations made in the certificate, dated [__________], 2012, delivered by Barclays Capital Inc. and Creidt Suisse Securities (USA) LLC, agents to the Company, the offer, sale and delivery of the Notes to the Purchasers in the manner contemplated by the Note Purchase Agreement constitute exempted transactions under the registration provisions of the Securities Act of 1933 and do not require any registration thereof under the Securities Act of 1933 (it being understood that I express no opinion as to any subsequent resale of any Notes).
E-4.4(a-1)-2
Form of Opinion of Counsel to AEP
1.
AEP is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and the corporate authority to execute and perform the LLC Agreement and has the full corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary except where the failure to be so qualified will not have a material adverse effect on the business, properties or condition (financial or otherwise) of AEP.
2.
The LLC Agreement has been duly authorized by all necessary corporate action on the part of AEP, has been duly executed and delivered by AEP and constitutes the legal, valid and binding contract of AEP enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent transfer and conveyance, voidable preference, moratorium, receivership, conservatorship, arrangement, or similar laws, and related regulations and judicial doctrines, from time to time in effect affecting creditors’ rights and remedies generally, and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing, and reasonableness, equitable defenses, the exercise of judicial discretion, and limits on the availability of equitable remedies), whether such principles are considered in a proceeding at law or in equity.
3.
No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any Governmental Authority, Federal or state, is necessary in connection with AEP’ execution and delivery of the LLC Agreement.
4.
The execution, delivery and performance by AEP of the LLC Agreement do not (a) conflict with or result in any breach of any of the provisions of or constitute a default under the provisions of the charter documents or bylaws of AEP or any agreement or other instrument known to such counsel to which AEP is a party or by which AEP may be bound, (b) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to AEP or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to AEP.
5.
There are no proceedings pending, or to the knowledge of such counsel, threatened against or directly affecting AEP in any court or before any Governmental Authority or arbitration board or tribunal which if adversely determined would individually or in the aggregate materially and adversely affect the business or properties of AEP or the ability of it to perform its obligations under the LLC Agreement.
Exhibit 4.4(a-2)
(to Note Purchase Agreement)
Form of Opinion of Special Counsel
to the Purchasers
[Delivered to Purchasers only.]
Exhibit 4.4(b)
(to Note Purchase Agreement)
Exhibit 5
AEP Transmission Company, LLC
1 Riverside Plaza
Columbus, Ohio 43215
April 4, 2017
Ladies and Gentlemen:
I am an employee of American Electric Power Service Corporation, a New York corporation and a service company affiliate of AEP Transmission Company, LLC, a Delaware limited liability company (the “Company”). I have acted as counsel to the Company in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), relating to $300,000,000 aggregate principal amount of 3.10% Senior Notes, Series F due 2026 and $400,000,000 aggregate principal amount of 4.00% Senior Notes, Series G due 2046 (collectively, the "Exchange Notes") to be issued under an Indenture, dated as of November 1, 2016 (the "Indenture"), between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee (the "Trustee"). The Exchange Notes will be offered by the Company in exchange for $300,000,000 aggregate principal amount of 3.10% Senior Notes, Series D due 2026 and $400,000,000 aggregate principal amount of 4.00% Senior Notes, Series E due 2046.
I have examined the Registration Statement and the Indenture which has been filed with the Commission as an exhibit to the Registration Statement. I also have examined the originals, or duplicates or certified or conformed copies, of such corporate records, agreements, documents and other instruments and have made such other investigations as I have deemed relevant and necessary in connection with the opinions hereinafter set forth. As to questions of fact material to this opinion, I have relied upon certificates or comparable documents of public officials and of officers and representatives of the Company.
In rendering the opinions set forth below, I have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as duplicates or certified or conformed copies and the authenticity of the originals of such latter documents. I also have assumed that the Indenture is the valid and legally binding obligation of the Trustee.
Based upon the foregoing, and subject to the qualifications and limitations stated herein, I am of the opinion that: assuming the due execution, authentication, issuance and delivery of such Exchange Notes, upon the exchange, the Exchange Notes will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the effects of (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally; (ii) general equitable principles (whether considered in a proceeding in equity or at law); and (iii) an implied covenant of good faith and fair dealing.
I do not express any opinion herein concerning any law other than the laws of the State of New York and Delaware and the Federal law of the United States.
I hereby consent to the filing of this opinion letter as Exhibit 5
to the Registration Statement and to the use of my name under the caption “Legal Matters” in the Prospectus included in the Registration Statement. In giving this consent, I do not hereby admit that I am in the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Thomas G. Berkemeyer
Thomas G. Berkemeyer
Associate General Counsel
EXHIBIT 12
AEP TRANSMISSION COMPANY, LLC AND SUBSIDIARIES
Computation of Consolidated Ratios of Earnings to Fixed Charges
(in thousands except ratio data)
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Years Ended December 31,
|
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2012
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2013
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2014
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2015
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2016
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EARNINGS
|
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Income Before Income Taxes
|
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$
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22,004
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$
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60,825
|
|
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$
|
137,317
|
|
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$
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192,987
|
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$
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286,768
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Fixed Charges (as below)
|
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4,716
|
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18,408
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32,556
|
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52,509
|
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61,950
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Total Earnings
|
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$
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26,720
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$
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79,233
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$
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169,873
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$
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245,496
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$
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348,718
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FIXED CHARGES
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Interest Expense
|
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$
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3,242
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|
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$
|
9,854
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|
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$
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21,385
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|
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$
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34,596
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|
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$
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46,034
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Credit for Allowance for Borrowed Funds Used During Construction
|
|
1,374
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8,454
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|
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11,071
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|
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17,713
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|
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15,616
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Estimated Interest Element in Lease Rentals
|
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100
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|
|
100
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100
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|
|
200
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|
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300
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|
Total Fixed Charges
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$
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4,716
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$
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18,408
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$
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32,556
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$
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52,509
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$
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61,950
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|
|
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|
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|
|
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Ratio of Earnings to Fixed Charges
|
|
5.66
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|
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4.30
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|
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5.21
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|
|
4.67
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|
|
5.62
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Earnings, for purposes hereof, consist of income before income taxes plus fixed charges. Fixed charges consist of all interest on indebtedness, amortization of debt discount and expense.
April 4, 2017
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-7561
Dear Sirs/Madams:
We have read the disclosures under the heading “Changes in and Disagreements with Accountants on Accounting and Financial Disclosure” included in AEP Transmission Company, LLC's Registration Statement on Form S-4 submitted to the Securities and Exchange Commission on April 4, 2017 (the “Disclosures”), and have the following comments:
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1.
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We agree with the statements made regarding our firm in the second paragraph of the Disclosures.
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2.
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We have no basis on which to agree or disagree with the other statements made in the Disclosures.
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Yours truly,
/s/ Deloitte & Touche LLP
Columbus, Ohio
Subsidiaries of
AEP Transmission Company, LLC
As of December 31, 2016
The following is the list of subsidiaries of AEP Transmission Company, LLC.
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Name of Company
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Location of
Incorporation
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AEP Appalachian Transmission Company, Inc.
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Virginia
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AEP Indiana Michigan Transmission Company, Inc.
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Indiana
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AEP Kentucky Transmission Company, Inc.
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Kentucky
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AEP Ohio Transmission Company, Inc.
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Ohio
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AEP Oklahoma Transmission Company, Inc.
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Oklahoma
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AEP Southwestern Transmission Company, Inc.
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Delaware
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AEP West Virginia Transmission Company, Inc.
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West Virginia
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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement on Form S-4 of our report dated April 4, 2017 relating to the financial statements of AEP Transmission Company, LLC and subsidiaries and the financial statement schedule listed in Item 21 at Exhibit 99(e) appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading “Experts” in such Prospectus.
/s/ Deloitte & Touche LLP
Columbus, Ohio
April 4, 2017
Exhibit 24
AEP TRANSMISSION COMPANY, LLC
POWER OF ATTORNEY
Each of the undersigned managers or officers of AEP TRANSMISSION COMPANY, LLC, a Delaware limited liability company, which is to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Act of 1933, as amended, one or more Registration Statements for the registration thereunder of up to $850,000,000 aggregate principal amount of its Debt Securities, including up to $850,000,000 of indebtedness, comprised of unsecured promissory notes in one or more new series, each series to have a maturity not less than nine months and not more than 50 years, does hereby appoint NICHOLAS K. AKINS, LISA M. BARTON, BRIAN X. TIERNEY, LONNI L. DIECK and RENEE V. HAWKINS, his or her true and lawful attorneys, and each of them his or her true and lawful attorney, with power to act without the others, and with full power of substitution or resubstitution, to execute for him or her and in his or her name said Registration Statement(s) and any and all amendments thereto, whether said amendments add to, delete from or otherwise alter the Registration Statement(s) or the related Prospectus(es) included therein, or add or withdraw any exhibits or schedules to be filed therewith and any and all instruments necessary or incidental in connection therewith, hereby granting unto said attorneys and each of them full power and authority to do and perform in the name and on behalf of each of the undersigned, and in any and all capacities, every act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as each of the undersigned might or could do in person, hereby ratifying and approving the acts of said attorneys and each of them.
IN WITNESS WHEREOF the undersigned have hereunto set their hands this 16th day of December, 2016.
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/s/ Nicholas K. Akins
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/s/ A. Wade Smith
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Nicholas K. Akins
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A. Wade Smith
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/s/ Lisa M. Barton
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/s/ Brian X. Tierney
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Lisa M. Barton
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Brian X. Tierney
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/s/ David M. Feinberg
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David M. Feinberg
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Exhibit 25
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
___________________________
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.
(Exact name of trustee as specified in its charter)
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(Jurisdiction of incorporation
if not a U.S. national bank)
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95-3571558
(I.R.S. employer
identification no.)
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400 South Hope Street
Suite 500
Los Angeles, California
(Address of principal executive offices)
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90071
(Zip code)
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___________________________
AEP Transmission Company, LLC
(Exact name of obligor as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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46-1125168
(I.R.S. employer
identification no.)
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1 Riverside Plaza
Columbus, Ohio
(Address of principal executive offices)
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43215-2373
(Zip code)
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___________________________
3.10% Senior Notes, Series F due 2026
and 4.00% Senior Notes, Series G due 2046
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
1.
General information. Furnish the following information as to the trustee:
(a)
Name and address of each examining or supervising authority to which it is subject.
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Name
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Address
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Comptroller of the Currency
United States Department of the
Treasury
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Washington, DC 20219
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Federal Reserve Bank
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San Francisco, CA 94105
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Federal Deposit Insurance Corporation
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Washington, DC 20429
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(b)
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Whether it is authorized to exercise corporate trust powers.
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Yes.
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2.
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Affiliations with Obligor.
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If the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a‑29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
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1.
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A copy of the articles of association of The Bank of New York Mellon Trust Company, N.A., formerly known as The Bank of New York Trust Company, N.A. (Exhibit 1 to Form T-1 filed with Registration Statement No. 333-121948 and Exhibit 1 to Form T-1 filed with Registration Statement No. 333-152875).
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2.
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A copy of certificate of authority of the trustee to commence business. (Exhibit 2 to Form T-1 filed with Registration Statement No. 333-121948).
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3.
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A copy of the authorization of the trustee to exercise corporate trust powers (Exhibit 3 to Form T-1 filed with Registration Statement No. 333-152875).
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4.
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A copy of the existing by-laws of the trustee (Exhibit 4 to Form T-1 filed with Registration Statement No. 333-162713).
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6.
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The consent of the trustee required by Section 321(b) of the Act (Exhibit 6 to Form T-1 filed with Registration Statement No. 333-152875).
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7.
|
A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority.
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SIGNATURE
Pursuant to the requirements of the Act, the trustee, The Bank of New York Mellon Trust Company, N.A., a banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Los Angeles, and State of California, on the 24
th
day of March, 2017.
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.
By:
/s/ Manjari Purkayastha
Name: Manjari Purkayastha
Title: Vice President
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
of 400 South Hope Street, Suite 500, Los Angeles, CA 90071
At the close of business December 31, 2016, published in accordance with Federal regulatory authority instructions.
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Dollar amounts
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in thousands
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ASSETS
|
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Cash and balances due from
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|
|
depository institutions:
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Noninterest-bearing balances
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and currency and coin
|
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1,645
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Interest-bearing balances
|
|
278,360
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|
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Securities:
|
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Held-to-maturity securities
|
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0
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Available-for-sale securities
|
|
719,638
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Federal funds sold and securities
|
|
|
|
purchased under agreements to resell:
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Federal funds sold
|
|
0
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|
|
Securities purchased under agreements to resell
|
|
0
|
|
|
Loans and lease financing receivables:
|
|
|
|
Loans and leases held for sale
|
|
0
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|
|
Loans and leases,
|
|
|
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net of unearned income
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0
|
|
|
|
LESS: Allowance for loan and
|
0
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|
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lease losses
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|
Loans and leases, net of unearned
|
|
|
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income and allowance
|
|
0
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Trading assets
|
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0
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|
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Premises and fixed assets (including
|
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|
|
capitalized leases)
|
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11,405
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|
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Other real estate owned
|
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0
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Investments in unconsolidated
|
|
|
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subsidiaries and associated
|
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|
companies
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0
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Direct and indirect investments in real estate ventures
|
|
0
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|
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Intangible assets:
|
|
|
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Goodwill
|
|
856,313
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|
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Other intangible assets
|
|
50,819
|
|
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Other assets
|
|
187,830
|
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Total assets
|
|
$
|
2,106,010
|
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LIABILITIES
|
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Deposits:
|
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In domestic offices
|
|
616
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Noninterest-bearing
|
616
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Interest-bearing
|
0
|
|
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|
Not applicable
|
|
|
|
Federal funds purchased and securities
|
|
|
|
sold under agreements to repurchase:
|
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Federal funds purchased
|
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0
|
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Securities sold under agreements to repurchase
|
|
0
|
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|
Trading liabilities
|
|
0
|
|
|
Other borrowed money:
|
|
|
|
(includes mortgage indebtedness
|
|
|
|
and obligations under capitalized
|
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|
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leases)
|
|
0
|
|
|
Not applicable
|
|
|
|
Not applicable
|
|
|
|
Subordinated notes and debentures
|
|
0
|
|
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Other liabilities
|
|
292,769
|
|
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Total liabilities
|
|
293,385
|
|
|
Not applicable
|
|
|
|
|
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|
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EQUITY CAPITAL
|
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|
|
|
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Perpetual preferred stock and related surplus
|
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0
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Common stock
|
|
1,000
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|
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Surplus (exclude all surplus related to preferred stock)
|
|
1,122,729
|
|
|
Not available
|
|
|
|
Retained earnings
|
|
690,002
|
|
|
Accumulated other comprehensive income
|
|
-1,106
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|
|
Other equity capital components
|
|
0
|
|
|
Not available
|
|
|
|
Total bank equity capital
|
|
1,812,625
|
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Noncontrolling (minority) interests in consolidated subsidiaries
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0
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Total equity capital
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1,812,625
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Total liabilities and equity capital
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2,106,010
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I, Matthew J. McNulty, CFO of the above-named bank do hereby declare that the Reports of Condition and Income (including the supporting schedules) for this report date have been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and belief.
We, the undersigned directors (trustees), attest to the correctness of the Report of Condition (including the supporting schedules) for this report date and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct.
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Antonio I. Portuondo, President
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)
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William D. Lindelof, Director
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)
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Directors (Trustees)
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Alphonse J. Briand, Director
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)
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Exhibit 99(a)
AEP Transmission Company, LLC
Letter of Transmittal
Offers to Exchange
$300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F, due 2026 and
$400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G, due 2046,
each of which have been registered under the Securities Act of 1933, as amended,
for any and all of its outstanding 3.10% Senior Notes, Series D, due 2026 and
4.00% Senior Notes, Series E, due 2046, respectively
(such transactions, collectively, the “Exchange Offers”)
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THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [____________, 2017] (THE “EXPIRATION DATE”) UNLESS THE OFFERS ARE EXTENDED. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
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The Exchange Agent for the Exchange Offers is:
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
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By Mail, Hand or Courier
The Bank of New York Mellon Trust Company, N.A.
c/o The Bank of New York Mellon Corporation
Corporate Trust Operations-Reorganization Unit
111 Sanders Creek Parkway
East Syracuse, NY 13057
Attn:
Tel:
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By Facsimile Transmission
(eligible institutions only)
(732) 667-9408
To Confirm by Telephone
____________________
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DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned acknowledges receipt of a prospectus dated ___________, 2017 (as it may be amended or supplemented from time to time, the “Prospectus”) of AEP Transmission Company, LLC a Delaware limited liability company (the “Company”), and this Letter of Transmittal (the “Letter of Transmittal”), which together constitute the Company’s offer to exchange $300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F, due 2026 (the “2026 Exchange Notes”) and $$400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G, due 2046 (the “2046 Exchange Notes” and, together with the 2026 Exchange Notes, the “Exchange Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for any and all of its outstanding 3.10% Senior Notes, Series D, due 2026 (the “2026 Outstanding Notes”) and 4.00% Senior Notes, Series E, due 2046 (the “2046 Outstanding Notes” and, together with the 2026 Outstanding Notes, the “Outstanding Notes”).
Holders of Outstanding Notes should complete this Letter of Transmittal either (a) if certificates representing the Outstanding Notes are to be forwarded herewith or (b) if tenders of Outstanding Notes are to be made by book-entry transfer to an account maintained by the Exchange Agent at the book-entry transfer facility specified by the holder pursuant to the procedures set forth in “The Exchange Offers - Procedures for Tendering Outstanding Notes” and “The Exchange Offers - Book-Entry Delivery Procedures” in the Prospectus and an Agent’s Message (as defined below) is not delivered. If tender is being made by book-entry transfer, the holder may have an Agent’s Message delivered in lieu of this Letter of Transmittal.
Holders of Outstanding Notes whose certificates for such Outstanding Notes are not immediately available or who cannot deliver their certificates and all other required documents to the Exchange Agent prior to the Expiration Date or who cannot complete the procedures for book-entry transfer on a timely basis must tender their Outstanding Notes according to the guaranteed delivery procedures set forth in “The Exchange Offers - Guaranteed Delivery Procedures” in the Prospectus.
For each Outstanding Note of any series accepted for exchange, the holder of such Outstanding Note will receive an Exchange Note of the corresponding series having a principal amount equal to that of the surrendered Outstanding Note. The 2026 Exchange Notes will accrue interest at a rate of 3.10% per annum and the 2046 Exchange Notes will accrue interest at a rate of 4.00% per annum, in each case payable on June 1 and December 1 of each year.
Unless the context otherwise requires, the term “holder” for purposes of this Letter of Transmittal means any person in whose name Outstanding Notes are registered or any other person who has obtained a properly completed bond power from the registered holder or any person whose Outstanding Notes are held of record by The Depository Trust Company (“DTC”).
Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT, WHOSE ADDRESS AND TELEPHONE NUMBER APPEAR ON THE FRONT PAGE OF THIS LETTER OF TRANSMITTAL.
The undersigned has completed the appropriate boxes below and signed this Letter of Transmittal to indicate the action that the undersigned desires to take with respect to the Exchange Offers.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
List below the Outstanding Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and aggregate principal amounts of Outstanding Notes should be listed on a separate signed schedule affixed hereto.
All Tendering Holders Complete Box 1:
Box 1*
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Description of Outstanding Notes Tendered Herewith
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Name(s) and Address(es)
of Registered Holder(s)
(Please fill in, if Blank,
Exactly as Name(s)
Appear(s) on
Certificate(s))
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Series of
Outstanding Notes
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Certificate or
Registration
Number(s) of
Outstanding Notes**
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Aggregate Principal
Amount Represented
by Outstanding Notes
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Aggregate Principal
Amount of
Outstanding Notes
Being Tendered***
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Total:
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*If the space provided is inadequate, list the certificate numbers and principal amount of Outstanding Notes on a separate signed schedule and attach the list to this Letter of Transmittal.
**Need not be completed by book-entry holders.
***The minimum permitted tender is $2,000 in principal amount. All tenders must be in the amount of $2,000 or in integral multiples of $1,000 in excess thereof, provided that any untendered Outstanding Notes must be in a minimum denomination of $2,000. Unless otherwise indicated in this column, the holder will be deemed to have tendered the full aggregate principal amount represented by such Outstanding Notes. See instruction 2.
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Box 2
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Book-Entry Transfer
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☐
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CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
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Name of Tendering Institution: _______________________________________________________________
Account Number:__________________________________________________________________________
Transaction Code Number:___________________________________________________________________
Holders of Outstanding Notes that are tendering by book-entry transfer to the Exchange Agent’s account at DTC can execute the tender through DTC’s Automated Tender Offer Program (“ATOP”). DTC participants that are accepting the Exchange Offers must transmit their acceptances to DTC, which will verify the acceptance and execute a book-entry delivery to the Exchange Agent’s account at DTC. DTC will then send a computer-generated message (an “Agent’s Message”) to the Exchange Agent for its acceptance in which the holder of the Outstanding Notes acknowledges and agrees to be bound by the terms of, and makes the representations and warranties contained in, this Letter of Transmittal, and the DTC participant confirms on behalf of itself and the beneficial owners of such Outstanding Notes all provisions of this Letter of Transmittal (including any representations and warranties) applicable to it and such beneficial owner as fully as if it had completed the information required herein and executed and transmitted this Letter of Transmittal to the Exchange Agent. Each DTC participant transmitting an acceptance of the Exchange Offers through the ATOP procedures will be deemed to have agreed to be bound by the terms of this Letter of Transmittal.
DELIVERY OF AN AGENT’S MESSAGE BY DTC WILL SATISFY THE TERMS OF THE EXCHANGE OFFERS AS TO EXECUTION AND DELIVERY OF A LETTER OF TRANSMITTAL BY THE PARTICIPANT IDENTIFIED IN THE AGENT’S MESSAGE. DTC PARTICIPANTS MAY ALSO ACCEPT THE EXCHANGE OFFERS BY SUBMITTING A NOTICE OF GUARANTEED DELIVERY THROUGH ATOP.
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Box 3
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Notice of Guaranteed Delivery
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(See Instruction 1 below)
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☐
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CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
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Name(s) of Registered Holder(s):__________________________________________________________
Window Ticket Number (if any):___________________________________________________________
Name of Eligible Guarantor Institution that Guaranteed Delivery:_________________________________
Date of Execution of Notice of Guaranteed Delivery:___________________________________________
IF GUARANTEED DELIVERY IS TO BE MADE BY BOOK-ENTRY TRANSFER:
Name of Tendering Institution:_____________________________________________________________
Account Number:________________________________________________________________________
Transaction Code Number:_________________________________________________________________
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Box 4
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Return of Non-Exchanged Outstanding Notes
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Tendered by Book-Entry Transfer
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☐
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CHECK HERE IF OUTSTANDING NOTES TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OUTSTANDING NOTES ARE TO BE RETURNED BY CREDITING THE ACCOUNT NUMBER SET FORTH ABOVE.
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Box 5
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Participating Broker-Dealer
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Tendered by Book-Entry Transfer
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☐
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CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OUTSTANDING NOTES FOR YOUR OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND WISH TO RECEIVE TEN (10) ADDITIONAL COPIES OF THE PROSPECTUS AND OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
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The undersigned represents that it is not an affiliate of the Company within the meaning of Rule 405 under the Securities Act, it is acquiring the Exchange Notes in the ordinary course of business, and it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes, it represents that the Outstanding Notes to be exchanged for the Exchange Notes were acquired as a result of market-making activities or other trading activities and that it did not purchase its Outstanding Notes from the Company or any of the Company’s affiliates, and it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale or transfer of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. A broker-dealer may not participate in the Exchange Offers with respect to Outstanding Notes acquired other than as a result of market-making activities or other trading activities. Any broker-dealer who purchased Outstanding Notes from the Company to resell pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act must comply with the registration and prospectus delivery requirements under the Securities Act.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offers, the undersigned hereby tenders to the Company the aggregate principal amount of the Outstanding Notes indicated above. Subject to, and effective upon, the acceptance for exchange of all or any portion of the Outstanding Notes tendered herewith in accordance with the terms and conditions of the Exchange Offers (including, if the Exchange Offers are extended or amended, the terms and conditions of any such extension or amendment), the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Outstanding Notes as are being tendered herewith.
The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its true and lawful agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Company, in connection with the Exchange Offers) with respect to the tendered Outstanding Notes, with full power of substitution and resubstitution (such power of attorney being deemed an irrevocable power coupled with an interest) to (a) deliver certificates representing such Outstanding Notes, or transfer ownership of such Outstanding Notes on the account books maintained by the book-entry transfer facility specified by the holder(s) of the Outstanding Notes, together, in each such case, with all accompanying evidences of transfer and authenticity to, or upon the order of, the Company, (b) present and deliver such Outstanding Notes for transfer on the books of the Company and (c) receive all benefits or otherwise exercise all rights and incidents of beneficial ownership of such Outstanding Notes, all in accordance with the terms of the Exchange Offers.
The undersigned hereby represents and warrants that (a) the undersigned has full power and authority to tender, exchange, assign and transfer the Outstanding Notes tendered hereby, (b) when such tendered Outstanding Notes are accepted for exchange, the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and (c) the Outstanding Notes tendered for exchange are not subject to any adverse claims or proxies when accepted by the Company. The undersigned hereby further represents that (a) any Exchange Notes acquired in exchange for Outstanding Notes tendered hereby will have been acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the undersigned, (b) neither the holder of such Outstanding Notes nor any such other person is engaged in or intends to engage in, nor has an arrangement or understanding with any person to participate in, the distribution of such Exchange Notes, and (c) neither the holder of such Outstanding Notes nor any such other person is an “affiliate,” as such term is defined in Rule 405 under the Securities Act, of the Company. If the undersigned is a broker-dealer that will receive the Exchange Notes for its own account in exchange for the Outstanding Notes, it represents that (a) the Outstanding Notes to be exchanged for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities and (b) that it did not purchase its Outstanding Notes from the Company or any of its affiliates and acknowledges that it will deliver a prospectus in connection with any resale or transfer of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an
-
underwriter” within the meaning of the Securities Act. If the undersigned is a person in the United Kingdom, the undersigned represents that its ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business.
The undersigned also acknowledges that the Exchange Offers are being made based on the Company’s understanding of interpretations by the staff of the Securities and Exchange Commission (the “SEC”) as set forth in no-action letters issued to third parties, including
Exxon Capital Holdings Corporation
(available May 13, 1988),
Morgan Stanley & Co. Incorporated
(available June 5, 1991) and
Shearman & Sterling
(available July 2, 1993), that the Exchange Notes issued in exchange for the Outstanding Notes pursuant to the Exchange Offers may be offered for resale, resold and otherwise transferred by each holder thereof (other than a broker-dealer who acquires such Exchange Notes directly from the Company for resale pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act or any such holder that is an “affiliate” of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder’s business and such holder is not engaged in, and does not intend to engage in, a distribution of such Exchange Notes and has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes. If a holder of the Outstanding Notes is an affiliate of the Company, is not acquiring the Exchange Notes in the ordinary course of its business, is engaged in or intends to engage in a distribution of the Exchange Notes or has any arrangement or understanding with respect to the distribution of the Exchange Notes to be acquired pursuant to the Exchange Offers, such holder (x) may not rely on the applicable interpretations of the staff of the SEC and (y) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction.
The undersigned will, upon request, execute and deliver any additional documents deemed by the Company or the Exchange Agent to be necessary or desirable to complete the exchange, assignment and transfer of the tendered Outstanding Notes or transfer ownership of such Outstanding Notes on the account books maintained by the book-entry transfer facility. The undersigned further agrees that acceptance of any and all validly tendered Outstanding Notes by the Company and the issuance of Exchange Notes in exchange therefor shall constitute performance in full by the Company of its obligations under the Registration Rights Agreement dated November 21, 2016, among the Company, Barclays Capital Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, and Scotia Capital (USA) Inc., as representatives of the several initial purchasers (the “Registration Rights Agreement”), and that the Company shall have no further obligations or liabilities thereunder except as provided in Section 5 (Indemnification) of such agreement. The undersigned will comply with its obligations under the Registration Rights Agreement.
The Exchange Offers are subject to certain conditions as set forth in the Prospectus under the caption “The Exchange Offers -Conditions to the Exchange Offers.” The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Company), as more particularly set forth in the Prospectus, the Company may not be required to exchange any of the Outstanding Notes tendered hereby and, in such event, the Outstanding Notes not exchanged will be returned to the undersigned at the address shown above, promptly following the expiration or termination of the Exchange Offers. In addition, the Company may amend the Exchange Offers at any time prior to the Expiration Date if the Company determines that any of the conditions set forth under “The Exchange Offers - Conditions to the Exchange Offers” occur.
All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, administrators, trustees in bankruptcy and legal representatives of the undersigned. Tendered Outstanding Notes may be withdrawn at any time prior to the Expiration Date in accordance with the procedures set forth in the terms of this Letter of Transmittal.
Unless otherwise indicated herein in the box entitled “Special Registration Instructions” below, please deliver the Exchange Notes (and, if applicable, substitute certificates representing the Outstanding Notes for any Outstanding Notes not exchanged) in the name of the undersigned or, in the case of a book-entry delivery of the Outstanding Notes, please credit the account indicated above. Similarly, unless otherwise indicated under the box entitled “Special Delivery Instructions” below, please send the Exchange Notes (and, if applicable, substitute certificates representing the Outstanding Notes for any Outstanding Notes not exchanged) to the undersigned at the address shown above in the box entitled “Description of Outstanding Notes Tendered Herewith.”
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED “DESCRIPTION OF OUTSTANDING NOTES TENDERED HEREWITH” ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OUTSTANDING NOTES AS SET FORTH IN SUCH BOX.
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Box 6
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SPECIAL REGISTRATION INSTRUCTIONS
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(See Instructions 4 and 5)
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To be completed ONLY if certificates for the Outstanding Notes not tendered and/or certificates for the Exchange Notes are to be issued in the name of someone other than the registered holder(s) of the Outstanding Notes whose name(s) appear(s) above.
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Issue:
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☐
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Outstanding Notes not tendered to:
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☐
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Exchange Notes to:
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Name(s):
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(Please Print or Type)
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Address:
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(Include Zip Code)
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Daytime Area Code and Telephone Number:_________________________________________________________________
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Taxpayer Identification or Social Security Number:____________________________________________________________
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Box 7
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SPECIAL REGISTRATION INSTRUCTIONS
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(See Instructions 4 and 5)
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To be completed ONLY if certificates for the Outstanding Notes not tendered and/or certificates for the Exchange Notes are to be sent in the name of someone other than the registered holder(s) of the Outstanding Notes whose name(s) appear(s) above.
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Issue:
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☐
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Outstanding Notes not tendered to:
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☐
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Exchange Notes to:
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Name(s):
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(Please Print or Type)
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Address:
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(Include Zip Code)
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Daytime Area Code and Telephone Number:_________________________________________________________________
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Taxpayer Identification or Social Security Number:____________________________________________________________
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Box 8
TENDERING HOLDER(S) SIGN HERE
(Complete accompanying Form W-9 or IRS Form W-8, as applicable)
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Must be signed by the registered holder(s) (which term, for the purposes described herein, shall include the participant whose name appears on a security position listing of the book-entry transfer facility as the owner of the Outstanding Notes) of the Outstanding Notes exactly as their name(s) appear(s) on the Outstanding Notes hereby tendered or on such security position listing or by any person(s) authorized to become the registered holder(s) by properly completed bond powers or endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth the full title of such person. See Instruction 4.
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__________________________________________________________________________________________________________
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(Signature(s) of Holder(s))
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Date:______________________________________________________________________________________________________
Name(s):___________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
(Please Print or Type)
Capacity (full title):__________________________________________________________________________________________
Address:___________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
(Include Zip Code)
Daytime Area Code and Telephone Number:______________________________________________________________________
Taxpayer Identification or Social Security Number:_________________________________________________________________
GUARANTEE OF SIGNATURE(S)
(If Required - See Instruction 4)
Authorized Signature:________________________________________________________________________________________
Date:_____________________________________________________________________________________________________
Name:____________________________________________________________________________________________________
Title:_____________________________________________________________________________________________________
Name of Firm:______________________________________________________________________________________________
Address:___________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
(Include Zip Code)
Daytime Area Code and Telephone Number:______________________________________________________________________
Taxpayer Identification or Social Security Number:_________________________________________________________________
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INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFERS
General
Please do not send certificates for Outstanding Notes directly to the Company. Your certificates for Outstanding Notes, together with your signed and completed Letter of Transmittal and any required supporting documents, should be mailed or otherwise delivered to the Exchange Agent at the address set forth on the first page hereof. The method of delivery of Outstanding Notes, this Letter of Transmittal and all other required documents is at your sole option and risk and the delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, or overnight or hand delivery service is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.
1.
Delivery of this Letter of Transmittal and Certificates; Guaranteed Delivery Procedures.
A holder of Outstanding Notes (which term, for the purposes described herein, shall include the participant whose name appears on a security position listing of the book-entry transfer facility as the owner of the Outstanding Notes) may tender the same by (i) properly completing and signing this Letter of Transmittal or a facsimile hereof (all references in the Prospectus to the Letter of Transmittal shall be deemed to include a facsimile thereof) and delivering the same, together with the certificate or certificates, if applicable, representing the Outstanding Notes being tendered and any required signature guarantees and any other documents required by this Letter of Transmittal, to the Exchange Agent at its address set forth above on or prior to the Expiration Date, (ii) complying with the procedure for book-entry transfer described below or (iii) complying with the guaranteed delivery procedures described below.
Holders of Outstanding Notes that are tendering by book-entry transfer to the Exchange Agent’s account at DTC can execute the tender through DTC’s Automated Tender Offer Program (“ATOP”). DTC participants that are accepting the Exchange Offers must transmit their acceptances to DTC, which will verify the acceptance and execute a book-entry delivery to the Exchange Agent’s account at DTC. DTC will then send a computer-generated message (an “Agent’s Message”) to the Exchange Agent for its acceptance in which the holder of the Outstanding Notes acknowledges and agrees to be bound by the terms of, and makes the representations and warranties contained in, this Letter of Transmittal, and the DTC participant confirms on behalf of itself and the beneficial owners of such Outstanding Notes all provisions of this Letter of Transmittal (including any representations and warranties) applicable to it and such beneficial owner as fully as if it had completed the information required herein and executed and transmitted this Letter of Transmittal to the Exchange Agent. Each DTC participant transmitting an acceptance of the Exchange Offers through the ATOP procedures will be deemed to have agreed to be bound by the terms of this Letter of Transmittal.
Delivery of an Agent’s Message by DTC will satisfy the terms of the Exchange Offers as to execution and delivery of a Letter of Transmittal by the participant identified in the Agent’s Message. DTC participants may also accept the Exchange Offers by submitting a Notice of Guaranteed Delivery through ATOP.
Holders who wish to tender their Outstanding Notes and (i) whose Outstanding Notes are not immediately available or (ii) who cannot deliver their Outstanding Notes, this Letter of Transmittal and all other required documents to the Exchange Agent prior to the Expiration Date or (iii) who cannot comply with the book-entry transfer procedures on a timely basis, must tender their Outstanding Notes pursuant to the guaranteed delivery procedure set forth in “The Exchange Offers - Guaranteed Delivery Procedures” in the Prospectus and by completing Box 3. Holders may tender their Outstanding Notes pursuant to the guaranteed delivery procedures if: (i) the tender is made by or through an Eligible Guarantor Institution (as defined below); (ii) the Exchange Agent receives (by facsimile transmission, mail or hand delivery), prior to the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery in the form provided with this Letter of Transmittal that (a) sets forth the name and address of the holder of Outstanding Notes, if applicable, the certificate number(s) of the Outstanding Notes to be tendered and the principal amount of Outstanding Notes tendered; (b) states that the tender is being made thereby; and (c) guarantees that, within three New York Stock Exchange trading days after the Expiration Date, the Letter of Transmittal, or a facsimile thereof, together with the Outstanding Notes or a book-entry confirmation (including an Agent’s Message), and any other documents required by the Letter of Transmittal, will be deposited by the Eligible Guarantor Institution with, or transmitted by the Eligible Guarantor Institution to, the Exchange Agent; and (iii) the Exchange Agent receives a properly completed and executed Letter of Transmittal, or facsimile thereof and the certificate(s) representing all tendered Outstanding Notes in proper form or a confirmation of book-entry transfer of the Outstanding Notes (including an Agent’s Message) into the Exchange Agent’s account at the appropriate book-entry transfer facility and all other documents required by this Letter of Transmittal within three New York Stock Exchange trading days after the Expiration Date.
Any Holder who wishes to tender Outstanding Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery relating to such Outstanding Notes prior to the Expiration Date. Failure to complete the guaranteed delivery procedures outlined above will not, of itself, affect the validity or effect a revocation of any Letter of Transmittal form properly completed and executed by a holder who attempted to use the guaranteed delivery procedures.
No alternative, conditional, irregular or contingent tenders will be accepted. Each tendering holder, by execution of this Letter of Transmittal (or facsimile thereof), shall waive any right to receive notice of the acceptance of the Outstanding Notes for exchange.
2.
Partial Tenders; Withdrawals.
Tenders of Outstanding Notes will be accepted only in the principal amount of $2,000 and integral multiples of $1,000 in excess thereof. If less than the entire principal amount of Outstanding Notes evidenced by a submitted certificate is tendered, the tendering holder(s) must fill in the aggregate principal amount of Outstanding Notes tendered in the column entitled “Description of Outstanding Notes Tendered Herewith” in Box 1 above. A newly issued certificate for the Outstanding Notes submitted but not tendered will be sent to such holder promptly after the Expiration Date, unless otherwise provided in the appropriate box on this Letter of Transmittal. All Outstanding Notes delivered to the Exchange Agent will be deemed to have been tendered in full unless otherwise clearly indicated. Outstanding Notes tendered pursuant to the Exchange Offers may be withdrawn at any time prior to the Expiration Date, after which tenders of Outstanding Notes are irrevocable.
To be effective with respect to the tender of Outstanding Notes, a written notice of withdrawal (which may be by telegram, telex, facsimile or letter) must: (i) be received by the Exchange Agent at the address for the Exchange Agent set forth above before 5:00 p.m., New York City time, on the Expiration Date; (ii) specify the name of the person who tendered the Outstanding Notes to be withdrawn; (iii) identify the Outstanding Notes to be withdrawn (including the principal amount of such Outstanding Notes, or, if applicable, the certificate numbers shown on the particular certificates evidencing such Outstanding Notes and the principal amount of Outstanding Notes represented by such certificates); (iv) include a statement that such holder is withdrawing its election to have such Outstanding Notes exchanged; (v) specify the name in which any such Outstanding Notes are to be registered, if different from that of the withdrawing holder; and (vi) be signed by the holder in the same manner as the original signature on this Letter of Transmittal (including any required signature guarantee). The Exchange Agent will return the properly withdrawn Outstanding Notes promptly following receipt of notice of withdrawal. If Outstanding Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn Outstanding Notes or otherwise comply with the book-entry transfer facility’s procedures. All questions as to the validity, form and eligibility of notices of withdrawals, including time of receipt, will be determined by the Company, and such determination will be final and binding on all parties.
Any Outstanding Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offers. Any Outstanding Notes which have been tendered for exchange but which are not accepted for exchange for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Outstanding Notes tendered by book-entry transfer into the Exchange Agent’s account at the book entry transfer facility pursuant to the book-entry transfer procedures described above, such Outstanding Notes will be credited to an account with such book-entry transfer facility specified by the holder) promptly after withdrawal, rejection of tender or termination of the Exchange Offers. Properly withdrawn Outstanding Notes may be retendered by following one of the procedures described under the caption “The Exchange Offers - Procedures for Tendering Outstanding Notes” in the Prospectus at any time prior to the Expiration Date.
Neither the Company, any affiliate or assigns of the Company, the Exchange Agent nor any other person will be under any duty to give any notification of any irregularities in any notice of withdrawal or incur any liability for failure to give such notification (even if such notice is given to other persons).
3.
Beneficial Owner Instructions.
Only a holder of Outstanding Notes (i.e., a person in whose name Outstanding Notes are registered on the books of the registrar or, or, in the case of Outstanding Notes held through book-entry, such book-entry transfer facility specified by the holder), or the legal representative or attorney-in-fact of a holder, may execute and deliver this Letter of Transmittal. Any beneficial owner of Outstanding Notes who wishes to accept the Exchange Offers must arrange promptly for the appropriate holder to execute and deliver this Letter of Transmittal on his or her behalf through the execution and delivery to the appropriate holder of the “Instructions to Registered Holder from Beneficial Owner” form accompanying this Letter of Transmittal.
4.
Signature on this Letter of Transmittal; Written Instruments and Endorsements; Guarantee of Signatures.
If this Letter of Transmittal is signed by the registered holder(s) (which term, for the purposes described herein, shall include the participant whose name appears on a security position listing of the book-entry transfer facility as the owner of the Outstanding Notes) of the
Outstanding Notes tendered hereby, the signature must correspond exactly with the name(s) as written on the face of the certificates (or on such security position listing) without alteration, addition, enlargement or any change whatsoever.
If any of the Outstanding Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Outstanding Notes registered in different names are tendered, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal (or facsimiles thereof) as there are different registrations of Outstanding Notes.
When this Letter of Transmittal is signed by the registered holder(s) of Outstanding Notes (which term, for the purposes described herein, shall include the participant whose name appears on a security position listing of the book-entry transfer facility as the owner of the Outstanding Notes) listed and tendered hereby, no endorsements of certificates or separate written instruments of transfer or exchange are required. If, however, this Letter of Transmittal is signed by a person other than the registered holder(s) of the Outstanding Notes listed or the Exchange Notes are to be issued, or any untendered Outstanding Notes are to be reissued, to a person other than the registered holder(s) of the Outstanding Notes, such Outstanding Notes must be endorsed or accompanied by separate written instruments of transfer or exchange in form satisfactory to the Company and duly executed by the registered holder, in each case signed exactly as the name or names of the registered holder(s) appear(s) on the Outstanding Notes and the signatures on such certificates must be guaranteed by an Eligible Guarantor Institution. If this Letter of Transmittal, any certificates or separate written instruments of transfer or exchange are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, submit proper evidence satisfactory to the Company, in its sole discretion, of such persons’ authority to so act.
Endorsements on certificates for the Outstanding Notes or signatures on bond powers required by this Instruction 4 must be guaranteed by a member firm of a registered national securities exchange or of the Financial Industry Regulatory Authority, a commercial bank or trust company having an office or correspondent in the United States or another “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an “Eligible Guarantor Institution”).
Signatures on this Letter of Transmittal must be guaranteed by an Eligible Guarantor Institution, unless Outstanding Notes are tendered: (i) by a registered holder (which term, for the purposes described herein, shall include the participant whose name appears on a security position listing of the book-entry transfer facility as the owner of the Outstanding Notes) who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instructions” on this Letter of Transmittal; or (ii) for the account of an Eligible Guarantor Institution.
5.
Special Registration and Delivery Instructions.
Tendering holders should indicate, in the applicable Box 6 or Box 7, the name and address in/to which the Exchange Notes and/or certificates for Outstanding Notes not exchanged are to be issued or sent, if different from the name(s) and address(es) of the person signing this Letter of Transmittal. In the case of issuance in a different name, the tax identification number or social security number of the person named must also be indicated. A holder tendering the Outstanding Notes by book-entry transfer may request that the Outstanding Notes not exchanged be credited to such account maintained at the book-entry transfer facility as such holder may designate. See Box 4.
If no such instructions are given, the Exchange Notes (and any Outstanding Notes not tendered or not accepted) will be issued in the name of and sent to the holder signing this Letter of Transmittal or deposited into such holder’s account at the applicable book-entry transfer facility.
6.
Transfer Taxes.
The Company shall pay all transfer taxes, if any, applicable to the transfer and exchange of the Outstanding Notes to it or its order pursuant to the Exchange Offers. If, however, the Exchange Notes are delivered to or issued in the name of a person other than the registered holder, or if a transfer tax is imposed for any reason other than the transfer and exchange of Outstanding Notes to the Company or its order pursuant to the Exchange Offers, the amount of any such transfer taxes (whether imposed on the registered holder or any other person) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith the amount of such transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Outstanding Notes listed in this Letter of Transmittal.
7.
Waiver of Conditions.
The Company reserves the absolute right to waive, in whole or in part, any of the conditions to the Exchange Offers set forth in the Prospectus.
8.
Mutilated, Lost, Stolen or Destroyed Securities.
Any holder whose Outstanding Notes have been mutilated, lost, stolen or destroyed, should promptly contact the Exchange Agent at the address set forth on the first page hereof for further instructions. The holder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen certificate(s) have been completed.
9.
No
Conditional Tenders; No Notice of Irregularities.
No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of their Outstanding Notes for exchange. The Company reserves the right, in its reasonable judgment, to waive any defects, irregularities or conditions of tender as to particular Outstanding Notes. The Company’s interpretation of the terms and conditions of the Exchange Offers (including the instructions in this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes must be cured within such time as the Company shall determine. Although the Company intends to notify holders of defects or irregularities with respect to tenders of Outstanding Notes, neither the Company, the Exchange Agent nor any other person is under any obligation to give such notice nor shall they incur any liability for failure to give such notification. Tenders of Outstanding Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Outstanding Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holder promptly following the Expiration Date.
10.
Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent at the address and telephone number set forth on the first page hereof.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE OR COPY THEREOF (TOGETHER WITH CERTIFICATES OF OUTSTANDING NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under U.S. federal income tax law, a tendering holder whose Outstanding Notes are accepted for exchange may be subject to backup withholding unless the holder provides the Exchange Agent with its correct taxpayer identification number (“TIN”) and certifies that it is not subject to backup withholding by completing the enclosed Form W-9, or otherwise establishes an exemption from the backup withholding rules. In general, for an individual, the TIN is such individual’s social security number. If the Exchange Agent is not provided with the correct TIN, the tendering holder (or other payee) may be subject to a $50 penalty imposed by the Internal Revenue Service (the “IRS”), and any reportable payments made to such person with respect to Outstanding Notes may be subject to backup withholding at the applicable rate, currently 28%. Such reportable payments generally will be subject to information reporting, even if the Exchange Agent is provided with a TIN. Failure to comply truthfully with the backup withholding requirements also may result in the imposition of severe criminal and/or civil fines and penalties.
Certain holders of Outstanding Notes (including, among others, generally all corporations and certain foreign holders) are not subject to these backup withholding and reporting requirements. However, exempt holders of Outstanding Notes that are U.S. persons should sign, date and return the Form W-9 to the Exchange Agent. See the enclosed instructions to Form W-9 for additional information. In order for a foreign holder to qualify as an exempt recipient, the holder must submit an applicable Form W-8 (such as an IRS Form W-8BEN or Form W-8BEN-E, as applicable), signed under penalties of perjury, attesting to that holder’s non-U.S. status. An applicable Form W-8 can be obtained from the Exchange Agent or the IRS’s website. Holders should consult their own tax advisors to determine whether they are exempt from these backup withholding and reporting requirements, and the procedure for obtaining the exemption.
If backup withholding applies, the Exchange Agent is required to withhold 28% of any reportable payments made to the holder of Outstanding Notes or other payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS, provided the required information is furnished. The Exchange Agent cannot refund amounts withheld by reason of backup withholding.
A holder who does not have a TIN may write “Applied For” as indicated on the Form W-9 if the surrendering holder of Outstanding Notes has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. In such case, the Exchange Agent will withhold 28% of all reportable payments made prior to the time a properly certified TIN is provided to the Exchange Agent and, if the Exchange Agent is not provided with a TIN within 60 days, such amounts will be paid over to the IRS. The holder of Outstanding Notes is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the record owner of the Outstanding Notes. If the Outstanding Notes are in more than one name or are not in the name of the actual owner, consult the enclosed instructions to Form W-9 for additional guidance on which number to report.
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Form
W-9
(Rev. December 2014)
Department of the Treasury
Internal Revenue Service
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Request for Taxpayer
Identification Number and Certification
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Give Form to the
requester. Do not
send to the IRS.
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1
Name (as shown on your income tax return). Name is required on this line; do not leave this line blank.
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2
Business name/disregarded entity name, if different from above
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3
Check appropriate box for federal tax classification; check only
one
of the following seven boxes:
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Individual/sole proprietor or
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C Corporation
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S Corporation
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Partnership
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Trust/estate
single-member LLC
Limited liability company. Enter the tax classification (C=C corporation, S=S corporation, P=partnership)
▶
Note.
For a single-member LLC that is disregarded, do not check LLC; check the appropriate box in the line above for the tax classification of the single-member owner.
¨
Other (see instructions)
▶
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4
Exemptions (codes apply only to
certain entities, not individuals; see
instructions on page 3):
Exempt payee code (if any)
Exemption from FATCA reporting
code (if any)_________________
(Applies to accounts maintained outside the U.S.)
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5
Address (number, street, and apt. or suite no.)
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Requester’s name and address (optional)
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6
City, state, and ZIP code
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7
List account number(s) here (optional)
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Part I
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2. Taxpayer Identification Number (TIN)
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Enter your TIN in the appropriate box. The TIN provided must match the name given on line 1 to avoid backup withholding. For individuals, this is generally your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the Part I instructions on page 3. For other entities, it is your employer identification number (EIN). If you do not have a number, see
How to get a TIN
on page 3.
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Social security number
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or
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Note.
If the account is in more than one name, see the instructions for line 1 and the chart on page 4 for guidelines on whose number to enter.
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Employer identification number
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Under penalties of perjury, I certify that:
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1.
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The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and
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2.
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I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and
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3.
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I am a U.S. citizen or other U.S. person (defined below); and
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4.
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The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.
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Certification instructions.
You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions on page 3.
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Sign
Here
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Signature of
U.S. Person
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Date
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General Instructions
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-Form 1099-MISC (various types of income, prizes, awards, or gross proceeds)
-Form 1099-B (stock or mutual fund sales and certain other transactions by brokers)
-Form 1099-S (proceeds from real estate transactions)
-Form 1099-K (merchant card and third party network transactions)
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Section references are to the Internal Revenue Code unless otherwise noted.
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Future developments
. Information about developments affecting Form W-9 (such as legislation enacted after we release it) is at
www.irs.gov/fw9
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3. Purpose of Form
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An individual or entity (Form W-9 requester) who is required to file an information return with the IRS must obtain your correct taxpayer identification number (TIN) which may be your social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN), to report on an information return the amount paid to you, or other amount reportable on an information return. Examples of information returns include, but are not limited to, the following:
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-Form 1099-INT (interest earned or paid)
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-Form 1099-DIV (dividends, including those from stocks or mutual funds)
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- Form 1098 (home mortgage interest), 1098-E (student loan interest), 1098-T (tuition)
- Form 1099-C (canceled debt)
- Form 1099-A (acquisition or abandonment of secured property)
Use Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN.
If you do not return Form W-9 to the requester with a TIN, you might be subject to backup withholding.
See
What is backup withholding?
on page 2.
By signing the filled-out form you:
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1. Certify that the TIN you are giving is correct (or you are waiting for a number to be issued),
2. Certify that you are not subject to backup withholding, or
3. Claim exemption from backup withholding if you are a U.S. exempt payee. If applicable, you are also certifying that as a U.S. person, your allocable share of any partnership income from a U.S. trade or business is not subject to the withholding tax on foreign partners' share of effectively connected income, and
4. Certify that FATCA code(s) entered on this form (if any) indicating that you are exempt from the FATCA reporting, is correct. See
What is FATCA reporting?
on page 2 for further information.
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Cat. No. 10231X
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____________
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Form
W-9
(Rev. 12-2014)
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Note.
If you are a U.S. person and a requester gives you a form other than Form W-9 to request your TIN, you must use the requester’s form if it is substantially similar to this Form W-9.
Definition of a U.S. person.
For federal tax purposes, you are considered a U.S. person if you are:
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•
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An individual who is a U.S. citizen or U.S. resident alien;
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A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States;
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An estate (other than a foreign estate); or
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A domestic trust (as defined in Regulations section 301.7701-7).
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Special rules for partnerships.
Partnerships that conduct a trade or business in the United States are generally required to pay a withholding tax under section 1446 on any foreign partners’ share of effectively connected taxable income from such business. Further, in certain cases where a Form W-9 has not been received, the rules under section 1446 require a partnership to presume that a partner is a foreign person, and pay the section 1446 withholding tax. Therefore, if you are a
U.S. person that is a partner in a partnership conducting a trade or business in the United States, provide Form W-9 to the partnership to establish your U.S. status and avoid section 1446 withholding on your share of partnership income.
In the cases below, the following person must give Form W-9 to the partnership for purposes of establishing its U.S. status and avoiding withholding on its allocable share of net income from the partnership conducting a trade or business in the United States:
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In the case of a disregarded entity with a U.S. owner, the U.S. owner of the disregarded entity and not the entity;
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In the case of a grantor trust with a U.S. grantor or other U.S. owner, generally, the U.S. grantor or other U.S. owner of the grantor trust and not the trust; and
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In the case of a U.S. trust (other than a grantor trust), the U.S. trust (other than a grantor trust) and not the beneficiaries of the trust.
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Foreign person.
If you are a foreign person or the U.S. branch of a foreign bank that has elected to be treated as a U.S. person, do not use Form W-9. Instead, use the appropriate Form W-8 or Form 8233 (see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities).
Nonresident alien who becomes a resident alien.
Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income. However, most tax treaties contain a provision known as a “saving clause.” Exceptions specified in the saving clause may permit an exemption from tax to continue for certain types of income even after the payee has otherwise become a U.S. resident alien for tax purposes.
If you are a U.S. resident alien who is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement to Form W-9 that specifies the following five items:
1.
The treaty country. Generally, this must be the same treaty under which you claimed exemption from tax as a nonresident alien.
2.
The treaty article addressing the income.
3.
The article number (or location) in the tax treaty that contains the saving clause and its exceptions.
4.
The type and amount of income that qualifies for the exemption from tax.
5.
Sufficient facts to justify the exemption from tax under the terms of the treaty article.
Example.
Article 20 of the U.S.-China income tax treaty allows an exemption from tax for scholarship income received by a Chinese student temporarily present in the United States. Under U.S. law, this student will become a resident alien for tax purposes if his or her stay in the United States exceeds 5 calendar years.
However, paragraph 2 of the first Protocol to the U.S.-China treaty (dated April 30, 1984) allows the provisions of Article 20 to continue to apply even after the Chinese student becomes a resident alien of the United States. A Chinese student who qualifies for this exception (under paragraph 2 of the first protocol) and is relying on this exception to claim an exemption from tax on his or her scholarship or fellowship income would attach to Form W-9 a statement that includes the information described above to support that exemption.
If you are a nonresident alien or a foreign entity, give the requester the appropriate completed Form W-8 or Form 8233.
4.
Backup Withholding
What is backup withholding?
Persons making certain payments to you must under certain conditions withhold and pay to the IRS 28% of such payments. This is called “backup withholding.” Payments that may be subject to backup withholding include interest, tax-exempt interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee pay, payments made in settlement of payment card and third party network transactions, and certain payments from fishing boat operators. Real estate transactions are not subject to backup withholding.
You will not be subject to backup withholding on payments you receive if you give the requester your correct TIN, make the proper certifications, and report all your taxable interest and dividends on your tax return.
5.
Payments you receive will be subject to backup withholding if:
1.
You do not furnish your TIN to the requester,
2.
You do not certify your TIN when required (see the Part II instructions on page 3 for details),
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3.
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The IRS tells the requester that you furnished an incorrect TIN,
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4.
The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only), or
5.
You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend accounts opened after 1983 only).
Certain payees and payments are exempt from backup withholding. See
Exempt payee code
on page 3 and the separate Instructions for the Requester of Form
W-9 for more information.
Also see
Special rules for partnerships
above.
6.
What is FATCA reporting?
The Foreign Account Tax Compliance Act (FATCA) requires a participating foreign financial institution to report all United States account holders that are specified United States persons. Certain payees are exempt from FATCA reporting. See
Exemption from FATCA reporting code
on page 3 and the Instructions for the Requester of Form W-9 for more information.
7.
Updating Your Information
You must provide updated information to any person to whom you claimed to be an exempt payee if you are no longer an exempt payee and anticipate receiving reportable payments in the future from this person. For example, you may need to provide updated information if you are a C corporation that elects to be an S corporation, or if you no longer are tax exempt. In addition, you must furnish a new Form W-9 if the name or TIN changes for the account; for example, if the grantor of a grantor trust dies.
8.
Penalties
Failure to furnish TIN.
If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.
Civil penalty for false information with respect to withholding.
If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.
Criminal penalty for falsifying information.
Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.
Misuse of TINs.
If the requester discloses or uses TINs in violation of federal law, the requester may be subject to civil and criminal penalties.
9.
Specific Instructions
10.
Line 1
You must enter one of the following on this line;
do not
leave this line blank. The name should match the name on your tax return.
If this Form W-9 is for a joint account, list first, and then circle, the name of the person or entity whose number you entered in Part I of Form W-9.
a.
Individual.
Generally, enter the name shown on your tax return. If you have changed your last name without informing the Social Security Administration (SSA) of the name change, enter your first name, the last name as shown on your social security card, and your new last name.
Note. ITIN applicant:
Enter your individual name as it was entered on your Form W-7 application, line 1a. This should also be the same as the name you entered on the Form 1040/1040A/1040EZ you filed with your application.
b.
Sole proprietor or single-member LLC.
Enter your individual name as shown on your 1040/1040A/1040EZ on line 1. You may enter your business, trade, or “doing business as” (DBA) name on line 2.
c.
Partnership, LLC that is not a single-member LLC, C Corporation, or S Corporation.
Enter the entity's name as shown on the entity's tax return on line 1 and any business, trade, or DBA name on line 2.
d.
Other entities.
Enter your name as shown on required U.S. federal tax documents on line 1. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or DBA name on line 2.
e.
Disregarded entity.
For U.S. federal tax purposes, an entity that is disregarded as an entity separate from its owner is treated as a “disregarded entity.” See Regulations section 301.7701-2(c)(2)(iii). Enter the owner's name on line 1. The name of the entity entered on line 1 should never be a disregarded entity. The name on line 1 should be the name shown on the income tax return on which the income should be reported. For example, if a foreign LLC that is treated as a disregarded entity for U.S. federal tax purposes has a single owner that is a
U.S. person, the U.S. owner's name is required to be provided on line 1. If the direct owner of the entity is also a disregarded entity, enter the first owner that is not disregarded for federal tax purposes. Enter the disregarded entity's name on line 2, “Business name/disregarded entity name.” If the owner of the disregarded entity is a foreign person, the owner must complete an appropriate Form W-8 instead of a Form W-9. This is the case even if the foreign person has a U.S. TIN.
11.
Line 2
If you have a business name, trade name, DBA name, or disregarded entity name, you may enter it on line 2.
12.
Line 3
Check the appropriate box in line 3 for the U.S. federal tax classification of the person whose name is entered on line 1. Check only one box in line 3.
Limited Liability Company (LLC).
If the name on line 1 is an LLC treated as a partnership for U.S. federal tax purposes, check the “Limited Liability Company” box and enter “P” in the space provided. If the LLC has filed Form 8832 or 2553 to be taxed as a corporation, check the “Limited Liability Company” box and in the space provided enter “C” for C corporation or “S” for S corporation. If it is a
single-member LLC that is a disregarded entity, do not check the “Limited Liability Company” box; instead check the first box in line 3 “Individual/sole proprietor or single-member LLC.”
13.
Line 4, Exemptions
If you are exempt from backup withholding and/or FATCA reporting, enter in the appropriate space in line 4 any code(s) that may apply to you.
14.
Exempt payee code.
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Generally, individuals (including sole proprietors) are not exempt from backup withholding.
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•
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Except as provided below, corporations are exempt from backup withholding for certain payments, including interest and dividends.
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•
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Corporations are not exempt from backup withholding for payments made in settlement of payment card or third party network transactions.
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•
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Corporations are not exempt from backup withholding with respect to attorneys' fees or gross proceeds paid to attorneys, and corporations that provide medical or health care services are not exempt with respect to payments reportable on Form 1099-MISC.
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The following codes identify payees that are exempt from backup withholding. Enter the appropriate code in the space in line 4.
1-An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2)
2-The United States or any of its agencies or instrumentalities
3-A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions or instrumentalities
4-A foreign government or any of its political subdivisions, agencies, or instrumentalities
5-A corporation
6-A dealer in securities or commodities required to register in the United States, the District of Columbia, or a U.S. commonwealth or possession
7-A futures commission merchant registered with the Commodity Futures Trading Commission
8-A real estate investment trust
9-An entity registered at all times during the tax year under the Investment Company Act of 1940
10-A common trust fund operated by a bank under section 584(a)
11-A financial institution
12-A middleman known in the investment community as a nominee or custodian
13-A trust exempt from tax under section 664 or described in section 4947 The following chart shows types of payments that may be exempt from backup
withholding. The chart applies to the exempt payees listed above, 1 through 13.
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IF the payment is for . . .
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THEN the payment is exempt for . . .
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Interest and dividend payments
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All exempt payees except for 7
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Broker transactions
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Exempt payees 1 through 4 and 6 through 11 and all C corporations. S corporations must not enter an exempt payee code because they are exempt only for sales of noncovered securities acquired prior to 2012.
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Barter exchange transactions and patronage dividends
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Exempt payees 1 through 4
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Payments over $600 required to be reported and direct sales over $5,000
1
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Generally, exempt payees 1 through 5
2
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Payments made in settlement of payment card or third party network transactions
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Exempt payees 1 through 4
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1
See Form 1099-MISC, Miscellaneous Income, and its instructions.
2
However, the following payments made to a corporation and reportable on Form 1099-MISC are not exempt from backup withholding: medical and health care payments, attorneys' fees, gross proceeds paid to an attorney reportable under section 6045(f), and payments for services paid by a federal executive agency.
Exemption from FATCA reporting code.
The following codes identify payees that are exempt from reporting under FATCA. These codes apply to persons submitting this form for accounts maintained outside of the United States by certain foreign financial institutions. Therefore, if you are only submitting this form for an account you hold in the United States, you may leave this field blank.
Consult with the person requesting this form if you are uncertain if the financial institution is subject to these requirements. A requester may indicate that a code is not required by providing you with a Form W-9 with “Not Applicable” (or any similar indication) written or printed on the line for a FATCA exemption code.
A-An organization exempt from tax under section 501(a) or any individual retirement plan as defined in section 7701(a)(37)
B-The United States or any of its agencies or instrumentalities
C-A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions or instrumentalities
D-A corporation the stock of which is regularly traded on one or more established securities markets, as described in Regulations section 1.1472-1(c)(1)(i)
E-A corporation that is a member of the same expanded affiliated group as a corporation described in Regulations section 1.1472-1(c)(1)(i)
F-A dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any state
G-A real estate investment trust
H-A regulated investment company as defined in section 851 or an entity registered at all times during the tax year under the Investment Company Act of 1940
I-A common trust fund as defined in section 584(a)
J-A bank as defined in section 581
K-A broker
L-A trust exempt from tax under section 664 or described in section 4947(a)(1)
M-A tax exempt trust under a section 403(b) plan or section 457(g) plan
Note.
You may wish to consult with the financial institution requesting this form to determine whether the FATCA code and/or exempt payee code should be completed.
15.
Line 5
Enter your address (number, street, and apartment or suite number). This is where the requester of this Form W-9 will mail your information returns.
16.
Line 6
Enter your city, state, and ZIP code.
Part I. Taxpayer Identification Number (TIN)
Enter your TIN in the appropriate box.
If you are a resident alien and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number (ITIN). Enter it in the social security number box. If you do not have an ITIN, see
How to get a TIN
below.
If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN. However, the IRS prefers that you use your SSN.
If you are a single-member LLC that is disregarded as an entity separate from its owner (see
Limited Liability Company (LLC)
on this page), enter the owner’s SSN (or EIN, if the owner has one). Do not enter the disregarded entity’s EIN. If the LLC is classified as a corporation or partnership, enter the entity’s EIN.
Note.
See the chart on page 4 for further clarification of name and TIN combinations.
How to get a TIN.
If you do not have a TIN, apply for one immediately. To apply for an SSN, get Form SS-5, Application for a Social Security Card, from your local SSA office or get this form online at
www.ssa.gov
.
You may also get this form by calling 1-800-772-1213. Use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN, or Form SS-4, Application for Employer Identification Number, to apply for an EIN. You can apply for an EIN online by accessing the IRS website at
www.irs.gov/businesses
and clicking on Employer Identification Number (EIN) under Starting a Business. You can get Forms W-7 and SS-4 from the IRS by visiting IRS.gov or by calling 1-800-TAX-FORM
(1-800-829-3676).
If you are asked to complete Form W-9 but do not have a TIN, apply for a TIN and write “Applied For” in the space for the TIN, sign and date the form, and give it to the requester. For interest and dividend payments, and certain payments made with respect to readily tradable instruments, generally you will have 60 days to get a TIN and give it to the requester before you are subject to backup withholding on payments. The 60-day rule does not apply to other types of payments. You will be subject to backup withholding on all such payments until you provide your TIN to the requester.
Note.
Entering “Applied For” means that you have already applied for a TIN or that you intend to apply for one soon.
Caution:
A disregarded U.S. entity that has a foreign owner must use the appropriate Form W-8.
17.
Part II. Certification
To establish to the withholding agent that you are a U.S. person, or resident alien, sign Form W-9. You may be requested to sign by the withholding agent even if items 1, 4, or 5 below indicate otherwise.
For a joint account, only the person whose TIN is shown in Part I should sign (when required). In the case of a disregarded entity, the person identified on line 1 must sign. Exempt payees, see
Exempt payee code
earlier.
Signature requirements.
Complete the certification as indicated in items 1 through 5 below.
1.
Interest, dividend, and barter exchange accounts opened before 1984 and broker accounts considered active during 1983.
You must give your correct TIN, but you do not have to sign the certification.
2.
Interest, dividend, broker, and barter exchange accounts opened after 1983 and broker accounts considered inactive during 1983.
You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form.
3.
Real estate transactions.
You must sign the certification. You may cross out item 2 of the certification.
4.
Other payments.
You must give your correct TIN, but you do not have to sign the certification unless you have been notified that you have previously given an incorrect TIN. “Other payments” include payments made in the course of the requester’s trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services, payments made in settlement of payment card and third party network transactions, payments to certain fishing boat crew members and fishermen, and gross proceeds paid to attorneys (including payments to corporations).
5.
Mortgage interest paid by you, acquisition or abandonment of secured property, cancellation of debt, qualified tuition program payments (under section 529), IRA, Coverdell ESA, Archer MSA or HSA contributions or distributions, and pension distributions.
You must give your correct TIN, but you do not have to sign the certification.
18.
What Name and Number To Give the Requester
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For this type of account:
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Give name and SSN of:
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1. Individual
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The individual
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2. Two or more individuals (joint account)
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The actual owner of the account or, if combined funds, the first individual on the account
1
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3. Custodian account of a minor (Uniform Gift to Minors Act)
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The minor
2
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4. a. The usual revocable savings trust (grantor is also trustee)
b. So-called trust account that is not a legal or valid trust under state law
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The grantor-trustee
1
The actual owner
1
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5. Sole proprietorship or disregarded entity owned by an individual
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The owner
3
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6. Grantor trust filing under Optional Form 1099 Filing Method 1 (see Regulations section 1.671-4(b)(2)(i) (A))
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The grantor*
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For this type of account:
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Give name and EIN of:
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7. Disregarded entity not owned by an individual
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The owner
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8. A valid trust, estate, or pension trust
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Legal entity
4
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9. Corporation or LLC electing corporate status on Form 8832 or Form 2553
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The corporation
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10. Association, club, religious, charitable, educational, or other tax- exempt organization
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The organization
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11. Partnership or multi-member LLC
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The partnership
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12. A broker or registered nominee
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The broker or nominee
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13. Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments
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The public entity
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14. Grantor trust filing under the Form 1041 Filing Method or the Optional Form 1099 Filing Method 2 (see Regulations section 1.671-4(b)(2)(i) (B))
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The trust
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1
List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person’s number must be furnished.
2
Circle the minor’s name and furnish the minor’s SSN.
3
You must show your individual name and you may also enter your business or DBA name on the “Business name/disregarded entity” name line. You may use either your SSN or EIN (if you have one), but the IRS encourages you to use your SSN.
4
List first and circle the name of the trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) Also see
Special rules for partnerships
on page 2.
*Note.
Grantor also must provide a Form W-9 to trustee of trust.
Note.
If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.
19.
Secure Your Tax Records from Identity Theft
Identity theft occurs when someone uses your personal information such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund.
To reduce your risk:
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Ensure your employer is protecting your SSN, and
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Be careful when choosing a tax preparer.
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If your tax records are affected by identity theft and you receive a notice from the IRS, respond right away to the name and phone number printed on the IRS notice or letter.
If your tax records are not currently affected by identity theft but you think you are at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Theft Hotline at 1-800-908-4490 or submit Form 14039.
For more information, see Publication 4535, Identity Theft Prevention and Victim Assistance.
Victims of identity theft who are experiencing economic harm or a system problem, or are seeking help in resolving tax problems that have not been resolved through normal channels, may be eligible for Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling the TAS toll-free case intake line at
1-877-777-4778 or TTY/TDD 1-800-829-4059.
Protect yourself from suspicious emails or phishing schemes.
Phishing is the creation and use of email and websites designed to mimic legitimate business emails and websites. The most common act is sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.
The IRS does not initiate contacts with taxpayers via emails. Also, the IRS does not request personal detailed information through email or ask taxpayers for the PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts.
If you receive an unsolicited email claiming to be from the IRS, forward this message to
phishing@irs.gov.
You may also report misuse of the IRS name, logo, or other IRS property to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484. You can forward suspicious emails to the Federal Trade Commission at:
spam@uce.gov
or contact them at
www.ftc.gov/idtheft
or 1-877-IDTHEFT (1-877-438-4338).
Visit IRS.gov to learn more about identity theft and how to reduce your risk.
20.
Privacy Act Notice
Section 6109 of the Internal Revenue Code requires you to provide your correct TIN to persons (including federal agencies) who are required to file information returns with the IRS to report interest, dividends, or certain other income paid to you; mortgage interest you paid; the acquisition or abandonment of secured property; the cancellation of debt; or contributions you made to an IRA, Archer MSA, or HSA. The person collecting this form uses the information on the form to file information returns with the IRS, reporting the above information. Routine uses of this information include giving it to the Department of Justice for civil and criminal litigation and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their laws. The information also may be disclosed to other countries under a treaty, to federal and state agencies to enforce civil and criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. You must provide your TIN whether or not you are required to file a tax return. Under section 3406, payers must generally withhold a percentage of taxable interest, dividend, and certain other payments to a payee who does not give a TIN to the payer. Certain penalties may also apply for providing false or fraudulent information.
Exhibit 99(b)
AEP TRANSMISSION COMPANY, LLC
Offers to Exchange
$300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F, due 2026 and
$400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G, due 2046,
each of which have been registered under the Securities Act of 1933, as amended,
for any and all of its outstanding
3.10% Senior Notes, Series D, due 2026 and
4.00% Senior Notes, Series E, due 2046, respectively
(such transactions, collectively, the “Exchange Offers”)
________________, 2017
To Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees:
As described in the enclosed Prospectus, dated ________________, 2017 (as the same may be amended or supplemented from time to time, the “Prospectus”), and Letter of Transmittal (the “Letter of Transmittal”), AEP Transmission Company, LLC (the “Company”) is offering to exchange an aggregate principal amount of up to $300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F, due 2026 and $400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G, due 2046 (collectively, the “Exchange Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for any and all of its outstanding 3.10% Senior Notes, Series D, due 2026 and 4.00% Senior Notes, Series E, due 2046 (the “Outstanding Notes”) in integral multiples of $2,000 and multiples of $1,000 in excess thereof upon the terms and subject to the conditions of the enclosed Prospectus and Letter of Transmittal. The terms of the Exchange Notes are identical in all material respects (including principal amount, interest rate and maturity) to the terms of the Outstanding Notes for which they may be exchanged pursuant to the Exchange Offers, except that the Exchange Notes are freely transferable by holders thereof, upon the terms and subject to the conditions of the enclosed Prospectus and the Letter of Transmittal, and are not subject to any covenant regarding registration under the Securities Act. The Company will accept for exchange any and all Outstanding Notes properly tendered according to the terms of the Prospectus and the Letter of Transmittal. Consummation of the Exchange Offers is subject to certain conditions described in the Prospectus.
WE URGE YOU TO PROMPTLY CONTACT YOUR CLIENTS FOR WHOM YOU HOLD OUTSTANDING NOTES REGISTERED IN YOUR NAME OR IN THE NAME OF YOUR NOMINEE. PLEASE BRING THE EXCHANGE OFFERS TO THEIR ATTENTION AS PROMPTLY AS POSSIBLE.
Enclosed are copies of the following documents:
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2.
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The Letter of Transmittal for your use in connection with the tender of Outstanding Notes and for the information of your clients, including a Form W-9;
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3.
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A form of Notice of Guaranteed Delivery; and
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4.
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A form of letter, including a letter of instructions to a registered holder from a beneficial owner, which you may use to correspond with your clients for whose accounts you hold Outstanding Notes that are registered in your name or the name of your nominee, with space provided for obtaining such clients’ instructions regarding the Exchange Offers.
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Your prompt action is requested. Please note that the Exchange Offers will expire at 5:00 p.m., New York City time, on ________________, 2017 (the “Expiration Date”), unless the Company otherwise extends the Exchange Offers. The Exchange Offers are not conditioned upon any minimum number of Outstanding Notes being tendered.
To participate in the Exchange Offers, certificates for Outstanding Notes, together with a duly executed and properly completed Letter of Transmittal or facsimile thereof, or a timely confirmation of a book-entry transfer of such Outstanding Notes into the account of The Bank of New York Mellon Trust Company, N.A. (the “Exchange Agent”), at the book-entry transfer facility, with any required signature guarantees, and any other required documents, must be received by the Exchange Agent by the Expiration Date as indicated in the Prospectus and the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of the Outstanding Notes will represent to the Company that (a) any Exchange Notes acquired in exchange for Outstanding Notes tendered hereby will have been acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the holder, (b) neither the holder of such Outstanding Notes nor any such other person is engaged in or intends to engage in, nor has an arrangement or understanding with any person to participate in, the distribution of such Exchange Notes, and (c) neither the holder of such Outstanding Notes nor any such other person is an “affiliate,” as such term is defined in Rule 405 under the Securities Act, of the Company.
If the holder is a broker-dealer that will receive the Exchange Notes for its own account in exchange for the Outstanding Notes, it will represent that (a) the Outstanding Notes to be exchanged for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities and (b) that it did not purchase its Outstanding Notes from the Company or any of its affiliates, and will acknowledge that it will deliver a prospectus in connection with any resale or transfer of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.
The enclosed letter to clients contains an authorization by the beneficial owners of the Outstanding Notes for you to make the foregoing representations.
The Company will not pay any fees or commissions to any broker or dealer or to any other persons in connection with the solicitation of tenders of the Outstanding Notes pursuant to the Exchange Offers. However, the Company will pay the fees of the Exchange Agent for its services in connection with the Exchange Offer and will pay or cause to be paid any transfer taxes applicable to the tender of the Outstanding Notes to it or its order, except as otherwise provided in the Prospectus and Letter of Transmittal.
If holders of the Outstanding Notes wish to tender, but it is impracticable for them to forward their Outstanding Notes prior to the Expiration Date or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures described in the Prospectus and in the Letter of Transmittal.
Any inquiries you may have with respect to the procedures for tendering Outstanding Notes in the Exchange Offers should be addressed to the Exchange Agent at its address and telephone number set forth in the enclosed Prospectus and Letter of Transmittal. Additional copies of the enclosed materials may be obtained from the Exchange Agent.
Very truly yours,
AEP TRANSMISSION COMPANY, LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM IN CONNECTION WITH THE EXCHANGE OFFERS, OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS EXPRESSLY CONTAINED THEREIN.
Exhibit 99(c)
AEP TRANSMISSION COMPANY, LLC
Offers to Exchange
$300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F, due 2026 and
$400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G, due 2046,
each of which have been registered under the Securities Act of 1933, as amended,
for any and all of its outstanding
3.10% Senior Notes, Series D, due 2026 and
4.00% Senior Notes, Series E, due 2046, respectively
(such transactions, collectively, the “Exchange Offers”)
________________, 2017
To Our Clients:
Enclosed for your consideration are a Prospectus, dated ________________, 2017 (as the same may be amended or supplemented from time to time, the “Prospectus”), and a Letter of Transmittal (the “Letter of Transmittal”), relating to the offer by AEP Transmission Company, LLC (the “Company”) to exchange (the “Exchange Offers”) an aggregate principal amount of up to $300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F, due 2026 and $400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G, due 2046 (collectively, the “Exchange Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for any and all of its outstanding 3.10% Senior Notes, Series D, due 2026 and 4.00% Senior Notes, Series E, due 2046 (the “Outstanding Notes”) in integral multiples of $2,000 and multiples of $1,000 in excess thereof upon the terms and subject to the conditions of the enclosed Prospectus and Letter of Transmittal. The terms of the Exchange Notes are identical in all material respects (including principal amount, interest rate and maturity) to the terms of the Outstanding Notes for which they may be exchanged pursuant to the Exchange Offers, except that the Exchange Notes are freely transferable by holders thereof, upon the terms and subject to the conditions of the enclosed Prospectus and the related Letter of Transmittal. The Company will accept for exchange any and all Outstanding Notes properly tendered according to the terms of the Prospectus and the Letter of Transmittal. Consummation of the Exchange Offers is subject to certain conditions described in the Prospectus.
PLEASE NOTE THAT THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ________________, 2017 (THE “EXPIRATION DATE”), UNLESS THE COMPANY EXTENDS THE EXCHANGE OFFERS.
The enclosed materials are being forwarded to you as the beneficial owner of the Outstanding Notes held by us for your account but not registered in your name. A tender of such Outstanding Notes may only be made by us as the registered holder and pursuant to your instructions. Therefore, the Company urges beneficial owners of Outstanding Notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee to contact such registered holder promptly if such beneficial owners wish to tender their Outstanding Notes in the Exchange Offers.
Accordingly, we request instructions as to whether you wish to tender any or all such Outstanding Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal. If you have any questions regarding procedures for tendering Outstanding Notes in the Exchange Offers, please direct your questions to The Bank of New York Mellon Trust Company, N.A., the exchange agent for the Exchange Offers (the “Exchange Agent”). If you wish to have us tender any or all of your Outstanding Notes, please so instruct us by completing, signing and returning to us the “Instructions to Registered Holder from Beneficial Owner” form that appears below. We urge you to read the Prospectus and the Letter of Transmittal carefully before instructing us as to whether or not to tender your Outstanding Notes. If you require assistance, you should consult your financial, tax or other professional advisors. Holders who wish to participate in the Exchange Offers are asked to respond promptly by completing and returning the enclosed Letter of Transmittal and all other required documentation to the Exchange Agent.
The accompanying Letter of Transmittal is furnished to you for your information only and may not be used by you to tender Outstanding Notes held by us and registered in our name or in the name of our nominee for your account or benefit.
If we do not receive written instructions in accordance with the below and the procedures presented in the Prospectus and the Letter of Transmittal, we will not tender any of the Outstanding Notes held by us for your account.
INSTRUCTIONS TO REGISTERED HOLDER FROM BENEFICIAL OWNER
The undersigned beneficial owner
acknowledges receipt of your letter and the accompanying Prospectus dated ________________, 2017 (as the same may be amended or supplemented from time to time, the “Prospectus”), and a Letter of Transmittal (the “Letter of Transmittal”), relating to the offer (the “Exchange Offers”) by AEP Transmission Company, LLC (the “Company”) to exchange an aggregate principal amount of up to $300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F, due 2026 and $400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G, due 2046 (collectively, the “Exchange Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for any and all of its outstanding 3.10% Senior Notes, Series D, due 2026 and 4.00% Senior Notes, Series E, due 2046 (the “Outstanding Notes”), upon the terms and subject to the conditions set forth in the Prospectus and the Letter of
Transmittal. Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book entry transfer facility participant, to tender the principal amount of the Outstanding Notes indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal.
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Principal Amount Held for Account
Holder(s)
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Principal Amount to be Tendered*
($2,000 and integral multiples of $1,000 in excess thereof,
provided that any untendered Outstanding Notes must be
in a minimum principal amount of $2,000)
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*Unless otherwise indicated, the entire principal amount held for the account of the undersigned will be tendered.
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If the undersigned instructs you to tender the Outstanding Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner of the Outstanding Notes, including but not limited to the representations that (a) the Exchange Notes acquired in exchange for the Outstanding Notes pursuant to the Exchange Offers are being acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not the undersigned, (b) the undersigned is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of Exchange Notes and (c) the undersigned is not an “affiliate,” as defined in Rule 405 under the Securities Act, of the Company. If the holder is a broker-dealer that will receive the Exchange Notes for its own account in exchange for the Outstanding Notes, representations and warranties include that (a) the Outstanding Notes to be exchanged for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities, (b) it did not purchase its Outstanding Notes from the Company or any of its affiliates and (c) it will deliver a prospectus in connection with any resale or transfer of such Exchange Notes. If a holder of the Outstanding Notes is an affiliate of the Company, is not acquiring the Exchange Notes in the ordinary course of its business, is engaged in or intends to engage in a distribution of the Exchange Notes or has any arrangement or understanding with respect to the distribution of the Exchange Notes to be acquired pursuant to the Exchange Offers, such holder may not rely on the applicable interpretations of the staff of the Securities and Exchange Commission relating to exemptions from the registration and prospectus delivery requirements of the Securities Act and must comply with such requirements in connection with any secondary resale transaction.
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SIGN HERE
Dated: ________________, 2011
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Signature(s): ______________________________________________________________________
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Print Name(s)______________________________________________________________________
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Address:__________________________________________________________________________
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__________________________________________________________________________________
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(Please include Zip Code)
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Telephone Number:__________________________________________________________________
(Please include Zip Code)
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Tax Identification Number or Social Security Number:______________________________________
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My Account Number with You:________________________________________________________
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Exhibit 99(d)
AEP TRANSMISSION COMPANY, LLC
Notice of Guaranteed Delivery
Offers to Exchange
$300,000,000 aggregate principal amount of its 3.10% Senior Notes, Series F, due 2026 and
$400,000,000 aggregate principal amount of its 4.00% Senior Notes, Series G, due 2046,
each of which have been registered under the Securities Act of 1933, as amended,
for any and all of its outstanding
3.10% Senior Notes, Series D, due 2026 and
4.00% Senior Notes, Series E, due 2046, respectively
(such transactions, collectively, the “Exchange Offers”)
This form, or one substantially equivalent hereto, must be used to accept the Exchange Offers made by AEP Transmission Company, LLC a Delaware limited liability company (the “Company”), pursuant to the Prospectus dated ________, 2017 (the “Prospectus”), and the related Letter of Transmittal (the “Letter of Transmittal”), if the certificates for the Outstanding Notes are not immediately available or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach The Bank of New York Mellon Trust Company, N.A. (the “Exchange Agent”) prior to 5:00 p.m., New York City time, on the Expiration Date of the Exchange Offers. Such form may be delivered or transmitted by facsimile transmission, mail or hand delivery to the Exchange Agent, as set forth below. Capitalized terms not defined herein have the meanings ascribed to them in the Letter of Transmittal.
The Exchange Agent for the Exchange Offers is:
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
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By Mail, Hand or Courier
The Bank of New York Mellon Trust Company, N.A.
c/o The Bank of New York Mellon Corporation
Corporate Trust Operations-Reorganization Unit
111 Sanders Creek Parkway
East Syracuse, NY 13057
Attn:
Tel:
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By Facsimile Transmission
(eligible institutions only)
(732) 667-9408
To Confirm by Telephone
____________________
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DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an “Eligible Guarantor Institution” under the instructions thereto, such signature guarantee must appear in the applicable space in Box 8 provided on the Letter of Transmittal for guarantee of signatures.
Ladies and Gentlemen:
Upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, the undersigned hereby tenders to the Company the principal amount of Outstanding Notes indicated below, pursuant to the guaranteed delivery procedures described in “The Exchange Offers - Guaranteed Delivery Procedures” section of the Prospectus and Instruction 1 of the Letter of Transmittal.
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Certificate Number(s) (if known) of Outstanding Notes or Account
Number at Book-Entry Transfer Facility
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Aggregate Principal Amount
Represented by Outstanding
Notes
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Aggregate Principal
Amount of Outstanding
Notes Being Tendered
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PLEASE COMPLETE AND SIGN
(Signature(s) of Record Holder(s))
(Please Type or Print Name(s) of Record Holder(s))
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Dated:__________, 2011
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Address:
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(Zip Code)
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(Daytime Area Code and Telephone No.)
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Check this Box if the Outstanding Notes will be delivered by book-entry transfer to The Depository Trust Company.
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED.
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member of a recognized signature medallion program or an “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), hereby (a) represents that the above person(s) “own(s)” the Outstanding Notes tendered hereby within the meaning of Rule 14e-4(b)(2) under the Exchange Act, (b) represents that the tender of those Outstanding Notes complies with Rule 14e-4 under the Exchange Act and (c) guarantees to deliver to the Exchange Agent, at its address set forth in the Notice of Guaranteed Delivery, a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, together with the certificates representing all tendered Outstanding Notes, in proper form for transfer, or a book-entry confirmation (a confirmation of a book-entry transfer of the Outstanding Notes (including an Agent’s Message) into the Exchange Agent’s account at The Depository Trust Company), or any other documents required by the Letter of Transmittal within three (3) New York Stock Exchange trading days after the Expiration Date.
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Name of Firm:
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Address:
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(Zip Code)
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Area Code and Tel. No.:
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Name:
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(Please type or Print)
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Title:
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Dated:_________, 2011
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INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
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1.
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Delivery of this Notice of Guaranteed Delivery
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A properly completed and duly executed copy of this Notice of Guaranteed Delivery and any other documents required by this Notice of Guaranteed Delivery must be received by the Exchange Agent at its address set forth on the cover page hereof prior to the Expiration Date of the Exchange Offers. The method of delivery of this Notice of Guaranteed Delivery and any other required documents to the Exchange Agent is at the election and risk of the holders and the delivery will be deemed made only when actually received by the Exchange Agent. Instead of delivery by mail, it is recommended that the holders use an overnight or hand delivery service, properly insured. If such delivery is by mail, it is recommended that the holders use properly insured, registered mail with return receipt requested. As an alternative to delivery by mail, the holders may wish to consider using an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. For a description of the guaranteed delivery procedure, see Instruction 1 of the Letter of Transmittal. No notice of Guaranteed Delivery should be sent to the Company.
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2.
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Signatures on this Notice of Guaranteed Delivery
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If this Notice of Guaranteed Delivery is signed by the registered holder(s) of the Outstanding Notes referred to herein, the signatures must correspond with the name(s) written on the face of the Outstanding Notes without alteration, addition, enlargement or any change whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of the book-entry transfer facility whose name appears on a security position listing as the owner of the Outstanding Notes, the signature must correspond with the name shown on the security position listing as the owner of the Outstanding Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the registered holder(s) of any Outstanding Notes listed, this Notice of Guaranteed Delivery must be accompanied by appropriate bond powers, signed in the name of the registered holder(s) as such name appear(s) on the Outstanding Notes without alteration, addition, enlargement or any change whatsoever, or signed as the name of the participant shown on the book-entry transfer facility’s security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and, unless waived by the Company, evidence satisfactory to the Company of their authority so to act must be submitted with this Notice of Guaranteed Delivery.
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3.
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Questions and Requests for Assistance of Additional Copies
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Questions and requests for assistance with respect to the procedures for guaranteed delivery and requests for additional copies of the Prospectus may be directed to the Exchange Agent at the address set forth on the cover hereof. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offers.
SCHEDULE I
AEP TRANSMISSION COMPANY, LLC (AEPTCo Parent)
CONDENSED FINANCIAL INFORMATION
CONDENSED STATEMENTS OF INCOME
For the Years Ended December 31, 2016, 2015 and 2014
(in thousands)
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Years Ended December 31,
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2016
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2015
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2014
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EXPENSES
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Other Operation
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$
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817
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$
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186
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$
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180
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TOTAL EXPENSES
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817
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186
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180
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OPERATING LOSS
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(817
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)
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(186
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(180
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)
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Other Income (Expense):
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Interest Income
−
Affiliated
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57,762
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49,619
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29,921
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Interest Expense
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(57,886
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)
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(49,782
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)
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(30,123
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)
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LOSS BEFORE INCOME TAX CREDIT AND EQUITY EARNINGS
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(941
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)
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(349
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)
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(382
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Income Tax Credit
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(330
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)
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(122
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(133
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)
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Equity Earnings of Unconsolidated Subsidiaries
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193,300
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133,171
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101,474
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NET INCOME
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$
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192,689
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$
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132,944
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$
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101,225
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See Condensed Notes to Condensed Financial Information beginning on page S-7.
SCHEDULE I
AEP TRANSMISSION COMPANY, LLC (AEPTCo Parent)
CONDENSED FINANCIAL INFORMATION
CONDENSED BALANCE SHEETS
ASSETS
December 31, 2016 and 2015
(in thousands)
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December 31,
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2016
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2015
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CURRENT ASSETS
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Advances to Affiliates
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$
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14,242
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$
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14,132
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Accounts Receivable:
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General
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97
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—
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Affiliated Companies
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21,653
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23,923
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Total Accounts Receivable
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21,750
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23,923
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Accrued Tax Benefits
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6
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90
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TOTAL CURRENT ASSETS
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35,998
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38,145
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OTHER NONCURRENT ASSETS
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Notes Receivable
−
Affiliated
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1,931,984
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1,544,401
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Investments in Unconsolidated Subsidiaries
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1,960,139
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1,554,831
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Deferred Charges and Other Noncurrent Assets
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1,677
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185
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TOTAL OTHER NONCURRENT ASSETS
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3,893,800
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3,099,417
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TOTAL ASSETS
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$
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3,929,798
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$
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3,137,562
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See Condensed Notes to Condensed Financial Information beginning on page S-7.
SCHEDULE I
AEP TRANSMISSION COMPANY, LLC (AEPTCo Parent)
CONDENSED FINANCIAL INFORMATION
CONDENSED BALANCE SHEETS
LIABILITIES AND EQUITY
December 31, 2016 and 2015
(in thousands)
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December 31,
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2016
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2015
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CURRENT LIABILITIES
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Accounts Payable:
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General
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$
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85
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$
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243
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Affiliated Companies
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18,920
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15,926
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Accrued Interest
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10,541
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7,968
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Other Current Liabilities
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10,686
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16,140
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TOTAL CURRENT LIABILITIES
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40,232
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40,277
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NONCURRENT LIABILITIES
|
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Long-term Debt
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1,931,984
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1,544,401
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TOTAL NONCURRENT LIABILITIES
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1,931,984
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1,544,401
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TOTAL LIABILITIES
|
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1,972,216
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1,584,678
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MEMBER’S EQUITY
|
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Paid-in Capital
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1,455,009
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1,243,000
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Retained Earnings
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502,573
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309,884
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TOTAL MEMBER’S EQUITY
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1,957,582
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1,552,884
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TOTAL LIABILITIES AND MEMBER’S EQUITY
|
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$
|
3,929,798
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$
|
3,137,562
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See Condensed Notes to Condensed Financial Information beginning on page S-7.
SCHEDULE I
AEP TRANSMISSION COMPANY, LLC (AEPTCo Parent)
CONDENSED FINANCIAL INFORMATION
CONDENSED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2016, 2015 and 2014
(in thousands)
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|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
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|
2016
|
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2015
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2014
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OPERATING ACTIVITIES
|
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|
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Net Income
|
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$
|
192,689
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$
|
132,944
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$
|
101,225
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Adjustments to Reconcile Net Income to Net Cash Flows
|
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from Operating Activities:
|
|
|
|
|
|
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|
Deferred Income Taxes
|
|
(1,660
|
)
|
|
1
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|
165
|
|
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Equity Earnings of Unconsolidated Subsidiaries
|
|
(193,300
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)
|
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(133,171
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)
|
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(101,474
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)
|
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Change in Other Noncurrent Assets
|
|
168
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|
|
33
|
|
|
233
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|
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Changes in Certain Components of Working Capital:
|
|
|
|
|
|
|
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Accounts Receivable, Net
|
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2,173
|
|
|
(13,008
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)
|
|
(5,843
|
)
|
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Accounts Payable
|
|
2,836
|
|
|
1,416
|
|
|
3,111
|
|
|
Accrued Taxes, Net
|
|
84
|
|
|
(119
|
)
|
|
18
|
|
|
Accrued Interest
|
|
2,573
|
|
|
926
|
|
|
2,795
|
|
|
Other Current Liabilities
|
|
(5,453
|
)
|
|
12,133
|
|
|
3,165
|
|
|
Net Cash Flows from Operating Activities
|
|
110
|
|
|
1,155
|
|
|
3,395
|
|
|
|
|
|
|
|
|
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|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Change in Advances to Affiliates, Net
|
|
(110
|
)
|
|
(1,155
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)
|
|
(12,977
|
)
|
|
Issuance of Notes Receivable to Affiliated Companies
|
|
(686,904
|
)
|
|
(449,988
|
)
|
|
(479,864
|
)
|
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Repayments of Notes Receivable from Affiliated Companies
|
|
300,000
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|
|
—
|
|
|
—
|
|
|
Capital Contributions to Subsidiaries
|
|
(212,009
|
)
|
|
(279,000
|
)
|
|
(347,500
|
)
|
|
Net Cash Flows Used for Investing Activities
|
|
(599,023
|
)
|
|
(730,143
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)
|
|
(840,341
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)
|
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|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
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|
Capital Contribution from Parent
|
|
212,009
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|
|
279,000
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|
|
347,500
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|
|
Issuance of Long-term Debt - Nonaffiliated
|
|
686,904
|
|
|
449,988
|
|
|
479,864
|
|
|
Retirement of Long-term Debt - Nonaffiliated
|
|
(300,000
|
)
|
|
—
|
|
|
—
|
|
|
Change in Advances from Affiliates, Net
|
|
—
|
|
|
—
|
|
|
9,582
|
|
|
Net Cash Flows from Financing Activities
|
|
598,913
|
|
|
728,988
|
|
|
836,946
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Cash and Cash Equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash and Cash Equivalents at Beginning of Period
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
See Condensed Notes to Condensed Financial Information beginning on page S-7
SCHEDULE I
AEP TRANSMISSION COMPANY, LLC (AEPTCo Parent)
INDEX OF CONDENSED NOTES TO CONDENSED FINANCIAL INFORMATION
|
|
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|
|
1. Summary of Significant Accounting Policies
|
|
|
|
2. Commitments, Guarantees and Contingencies
|
|
|
|
3. Financing Activities
|
|
|
|
4. Related Party Transactions
|
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed financial information of AEPTCo Parent is required as a result of the restricted net assets of AEPTCo consolidated subsidiaries exceeding 25% of AEPTCo consolidated net assets as of December 31,
2016
. AEPTCo Parent is the direct holding company for the seven wholly-owned FERC-regulated transmission-only electric utilities listed below. The primary source of income for AEPTCo Parent is equity in its subsidiaries’ earnings.
AEPTCo’s seven wholly-owned public utility companies are:
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AEP Appalachian Transmission Company, Inc. (“APTCo”), covering Tennessee and Virginia
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AEP Indiana Michigan Transmission Company, Inc. (“IMTCo”), covering Indiana and Michigan
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AEP Kentucky Transmission Company, Inc. (“KTCo”)
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AEP Ohio Transmission Company, Inc. (“OHTCo”)
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AEP Oklahoma Transmission Company, Inc. (“OKTCo”)
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AEP Southwestern Transmission Company, Inc. (“SWTCo”), covering Arkansas and Louisiana
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AEP West Virginia Transmission Company, Inc. (“WVTCo”)
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APTCo, KTCo, IMTCo, OHTCo and WVTCo are members of PJM. OKTCo and SWTCo are members of SPP.
Income Taxes
AEPTCo Parent joins in the filing of a consolidated federal income tax return with its affiliates in the AEP System. The allocation of the AEP System’s current consolidated federal income tax to the AEP System companies allocates the benefit of current tax losses to the AEP System companies giving rise to such losses in determining their current tax expense. The tax benefit of AEP Parent is allocated to its subsidiaries with taxable income.
2.
COMMITMENTS, GUARANTEES AND CONTINGENCIES
AEPTCo Parent and its subsidiaries are parties to environmental and other legal matters. For further discussion of commitments, guarantees and contingencies, see Note
5
to AEPTCo’s audited consolidated financial statements, included elsewhere in this prospectus.
3.
FINANCING ACTIVITIES
For further discussion of Financing Activities, see Note
10
to AEPTCo’s audited consolidated financial statements, included elsewhere in this prospectus.
4.
RELATED PARTY TRANSACTIONS
Payments on Behalf of Subsidiaries
Due to occasional time sensitivity and complexity of payments, Parent makes certain insurance, tax and other payments on behalf of subsidiary companies. Parent is then fully reimbursed by the subsidiary companies. AEPTCo Parent also makes convenience payments on behalf of its State Transcos. AEPTCo Parent is then fully reimbursed by its State Transcos.
Long-term Lending to Subsidiaries
AEPTCo Parent enters into debt arrangements with nonaffiliated entities. AEPTCo Parent has Long-term Debt of $1.9 billion and $1.5 billion as of December 31,
2016
and
2015
, respectively. AEPTCo Parent uses the proceeds from these nonaffiliated debt arrangements to make affiliated loans to its State Transcos using the same interest rates and maturity dates as the nonaffiliated debt arrangements. AEPTCo Parent has recorded Notes Receivable
− Affiliated
of $1.9 billion and $1.5 billion as of December 31,
2016
and
2015
, respectively. Related to these nonaffiliated and affiliated debt arrangements, AEPTCo Parent has recorded Accrued Interest and Accounts Receivable
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Affiliated Companies of $10.5 million and $8 million as of December 31, 2016 and 2015, respectively. AEPTCo Parent has recorded Interest Income
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Affiliated of $57.4 million, $49.5 million and $29.9 million for the years ended December 31,
2016
,
2015
and
2014
, respectively, related to the Notes Receivable
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Affiliated. AEPTCo Parent has recorded Interest Expense of $57.9 million, $49.5 million and $29.9 million for the years ended December 31,
2016
,
2015
and
2014
, respectively, related to the nonaffiliated debt arrangements.
Short-term Lending to Subsidiaries
Parent uses a commercial paper program to meet the short-term borrowing needs of subsidiaries. The program is used to fund both a Utility Money Pool, which funds the utility subsidiaries, and a Nonutility Money Pool, which funds certain nonutility subsidiaries. In addition, the program also funds, as direct borrowers, the short-term debt requirements of other subsidiaries that are not participants in either money pool for regulatory or operational reasons. The program also allows some direct borrowers to invest excess cash with Parent.
Interest expense related to AEPTCo Parent’s short-term borrowing is included in Interest Expense on AEPTCo Parent’s statements of income. AEPTCo Parent incurred interest expense for amounts borrowed from AEP affiliates of $0 thousand, $0 thousand and $35 thousand for the years ended December 31,
2016
,
2015
and
2014
, respectively.
Interest income related to AEPTCo Parent’s short-term lending is included in Interest Income
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Affiliated on AEPTCo Parent’s statements of income. AEPTCo Parent earned interest income for amounts advanced to AEP affiliates of $315 thousand, $70 thousand and $22 thousand for the years ended December 31,
2016
,
2015
and
2014
, respectively.
