Exhibit A
TERM LOAN AND GUARANTY AGREEMENT
AGREEMENT dated as of the ____ day of __________, ____ between
AMERICAN ELECTRIC POWER SERVICE CORPORATION, a New York corporation
(herein called the "Company"), AMERICAN ELECTRIC POWER COMPANY,
INC., a New York corporation (herein called the "Parent") and
___________________________ (the "Bank").
SECTION 1. Amounts and Terms of the Loan.
Section 1.01. Definitions. As used herein the following
terms have the following meanings (which are equally applicable to
both the singular and plural forms of such terms):
"Agreement" means this Term Loan Agreement and any future
amendments or supplements hereto.
"Capitalization" of the Company means, as of any
particular time, an amount equal to the sum of the total
principal amount of all indebtedness for borrowed money,
secured or unsecured, of the Company then outstanding (whether
or not such indebtedness matures, pursuant to the instrument
by which such indebtedness shall be created or incurred,
within twelve months after such particular time) and the
aggregate of the par value of, or stated capital represented
by, the outstanding shares of all classes of stock and of the
surplus of the Company, paid in, earned and other, if any.
"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 which is a business
day, the average of the quotations for such day on such
transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank.
"LIBO rate" means, for any Note in the form of Exhibit B,
the average rate of interest per annum at which deposits in
United States dollars are offered by the principal office of
the Bank to prime banks in the London interbank market at
11:00 a.m. (London time) two Business Days prior to the date
of such Note for the amount and term of such Note.
"Maturity Date" means _________.
"Note" means the promissory note of the Company substan-
tially in the form of Exhibit A, B or C hereto, with
appropriate insertions.
"Prime Rate" means a fluctuating interest rate per annum
as shall be in effect from time to time, which rate per annum
is at all times equal to the higher of the (i) rate of
interest announced publicly by the Bank in ________
____________ from time to time as the Bank's
__________________ rate and (ii) 1/2 of one percent per annum
above the Federal Funds Rate from time to time.
"Short-Term Debt" means the principal amount of indebted-
ness for borrowed money represented by a note or draft issued,
renewed or guaranteed by the Company which has a maturity at
the time of issuance, renewal or guarantee of not more than
twelve months, exclusive of days of grace.
Section 1.02. Loan; Pricing; and Borrowing Procedure. The
Bank agrees, on the terms and conditions hereinafter set forth, to
make a loan (the "Loan") to the Company on ______________, ____
(the "Loan Date") in an amount totaling $__________.
The Loan shall bear interest from the Loan Date to the
Maturity Date at one or more of the following interest rates per
annum, as selected by the Company from time to time:
(i) at a fixed interest rate for the term of each
Note in the form of Exhibit A, such term to be designated
by the Company at least three Business Days (as defined
in Section 1.13) prior to the date of the relevant Note
and such rate to be quoted by the Bank for the designated
term and accepted by the Company; or
(ii) at a rate per annum for the term of each Note
in the form of Exhibit B, which shall be 1, 2, 3 or 6
months (such term to be selected by the Company at least
three Business Days prior to the date of the relevant
Note) equal to _____ of one percent (1.0%) per annum
above the LIBO rate (the rate of ____ of 1% per annum
above the LIBO rate is hereinafter called the "LIBO
Rate"); or
(iii) at a fluctuating rate per annum for the term
of each Note in the form of Exhibit C, which shall mature
on the Maturity Date, equal to the Prime Rate.
The Company may, from time to time, change the pricing of the
Loan (in whole or in part) from the LIBO Rate to the Prime Rate or
from the Prime Rate to the LIBO Rate, and, in the case of the LIBO
Rate, may continue such interest rate option (in whole or in part)
for a subsequent period, in either case by giving the Bank at least
three Business Days' notice thereof and by executing and delivering
a new promissory note in the form of Exhibit B or C, as the case
may be, with appropriate insertions, evidencing the changed or
continued interest rate option. Each such notice (which, in the
case of a notice requesting the LIBO Rate, shall be received by the
Bank by _____ a.m., ___________ time, at least three Business Days
prior to the date of the proposed change or continuation), shall
specify the date of the proposed change or continuation (which
shall be a Business Day and, in the case of a change from, or
continuation of, the LIBO Rate, shall be the maturity date of the
outstanding Note), whether the proposed interest rate is to be the
Prime Rate or the LIBO Rate, and, in the case of a LIBO Rate, the
term of the related Note.
In addition, the Company may, from time to time, change the
pricing of the Loan (in whole or in part) from the LIBO Rate or the
Prime Rate, as the case may be, to a fixed interest rate for a term
certain, and, in the case of a fixed rate, may continue such
interest rate option, by (i) requesting a fixed interest rate
option from the Bank for a term certain specified by the Company
and (ii) agreeing to the fixed interest rate proposed by the Bank
within the period that such proposal remains effective. The
Company may only convert from the LIBO Rate to a fixed interest
rate or continue a fixed interest rate on the maturity date of the
outstanding Note.
Each such notice given to the Bank by the Company pursuant to
this Section 1.02 shall be irrevocable. In the event that the
Company fails to deliver a proposed change or continuation notice
prior to the third Business Day next preceding the maturity date of
a Note in the form of Exhibit A or B, the interest rate on the Loan
shall be converted on the maturity date of the outstanding Note in
the form of Exhibit A or B into the Prime Rate.
Section 1.03. Making the Loan. Not later than ___________
(________________ time) on the Loan Date and upon fulfillment of
the applicable conditions set forth in Section 2, the Bank will
make the Loan available to the Company in same day funds at the
Bank's address referred to in Section 7.02.
Section 1.04. Optional Prepayments. The Company may prepay
any Note in whole at any time or in part from time to time without
premium or penalty, by giving at least 3 Business Days' notice to
the Bank specifying the amount and date of the proposed prepayment.
If notice is given as prescribed above, the principal amount of the
Note which the Company proposes to prepay, together with accrued
interest on such amount to the date of payment, shall become due
and payable on the specified date of prepayment. Notwithstanding
the foregoing, the Company shall have no right to prepay a Note in
the form of Exhibit A, unless Company pays the fee specified in
Section 1.14 and shall have no right to prepay a Note in the form
of Exhibit B prior to maturity of such Note.
Section 1.05. Interest and Repayment. The Company shall
repay the Loan in full on the last day of each March, June,
September and December (the "Repayment Date") commencing on the
first such date occurring on or after the Loan Date and shall pay
interest on the unpaid principal amount of the Loan in accordance
with one or more promissory notes of the Company (each, a "Note")
executed and delivered by the Company from time to time to evidence
the indebtedness resulting from the Loan. If the Loan or any part
thereof bears interest at the fixed interest rate, the Note
evidencing such amount shall be substantially in the form of
Exhibit A, with appropriate insertions, and shall be dated the Loan
Date or the date upon which the interest rate has been continued
for a subsequent period at a fixed rate or has been changed into a
fixed interest rate, as the case may be. If the Loan or any part
thereof bears interest the LIBO Rate, the Note evidencing such
amount shall be substantially in the form of Exhibit B, with
appropriate insertions, and shall be dated the Loan Date or the
date upon which the interest rate has been continued for a
subsequent period at the LIBO Rate or has been changed into the
LIBO Rate, as the case may be. If the Loan or any part thereof
bears interest at the Prime Rate, the Note evidencing such amount
shall be substantially in the form of Exhibit C, with appropriate
insertions, and shall be dated the Loan Date or the date upon which
the interest rate has been changed into the Prime Rate, as the case
may be.
Section 1.06. Reborrowings. On each Repayment Date, the
Company shall reborrow and the Bank shall relend the principal so
paid, provided that:
(a) No such reborrowing may be made on or after the Maturity
Date and, after giving effect to each such reborrowing,
the aggregate outstanding principal amount of the Loan
shall not exceed the principal amount of the Loan
outstanding immediately prior to the date of such
reborrowing.
(b) For purposes of this Section 1.06, any payment of
principal of the Loan, or any portion thereof,
represented by a Note in the form of Exhibit A pursuant
to Section 1.05 hereof which (x) the Company is required
to reborrow under this Section 1.06 on the date of such
payment but does not reborrow on such date, or (y) the
Company is not permitted to reborrow under this Section
1.06 on the date of such payment by reason of clause (c)
below, shall be deemed a prepayment of the Loan prior to
the Due Date (as defined in Section 1.14), and shall have
the effect of a prepayment, subject to the prepayment
provisions in Section 1.14. Any such payment which is so
reborrowed shall not be deemed a prepayment of the Loan
for purposes of Section 1.14.
(c) After giving effect to such reborrowing, each of the
representations and warranties of the Company set forth
in Section 4.01 shall be true with the exceptions of
Subsections 4.01(e) and (f) on and as of the date of such
reborrowing, and no Event of Default or other event
which, with the giving of notice or the lapse of time, or
both, would constitute such an Event of Default shall
have occurred and be continuing. Each reborrowing by the
Company pursuant to this Section 1.06 shall be deemed to
be a representation and warranty by the Company as to
such matters.
Section 1.07. Additional Interest. The Company shall pay to
the Bank, during the time that the Bank shall be required to
maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency liabilities (as defined in Regulation
D of the Board of Governors of the Federal Reserve System as in
effect from time to time), additional interest on the unpaid
principal amount of each Note in the form of Exhibit B from the
date of such Note until such principal amount is paid in full,
payable on the due date of each interest payment for such Note, at
an interest rate per annum equal at all times during the term of
such Note to the excess of (i) the rate obtained by dividing the
LIBO Rate for such Note by a percentage equal to 100% minus the
reserve percentage applicable during the term of such Note under
regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or if more than one such percentage is
so applicable, minus the daily average for such percentages for
those days during which such percentage shall be so applicable) for
determining the maximum reserve requirement (including, without
limitation, any marginal reserve requirement) for the Bank in
respect of liabilities or assets consisting of or including
Eurocurrency liabilities over (ii) the LIBO Rate for such Note.
Section 1.08. Increased Costs, etc.
(a) If either (i) the introduction of or any change
(including, without limitation, any change by way of
imposition or increase of reserve requirements) in or in
the interpretation of any law or regulation or (ii) the
compliance by the Bank with any guideline or request from
any central bank or other governmental authority (whether
or not having the force of law), shall result in any
increase in the cost to the Bank of making, funding or
maintaining loans bearing interest at the LIBO Rate, then
the Company shall from time to time, upon demand by the
Bank, pay to the Bank additional amounts sufficient to
indemnify the Bank against such increased cost. A
certificate as to the amount of such increased cost
(including calculations thereof in reasonable detail),
submitted to the Company by the Bank, shall, in absence
of manifest error, be conclusive.
(b) If it shall become unlawful for the Bank to obtain funds
in the London interbank market in order to fund or
maintain loans bearing interest at the LIBO Rate or
otherwise to perform their obligations hereunder with
respect to any such loans, then, upon at least five
Business Days' notice by the Bank to the Company the rate
of interest on any portion of the Loan then bearing
interest at the LIBO Rate shall thereupon be the Prime
Rate, and the right of the Company to select the LIBO
Rate shall thereupon terminate. In such event, the
Company will execute and deliver a Note substantially in
the form of Exhibit C, with appropriate insertions.
(c) The Company shall indemnify the Bank against any loss or
expense which the Bank may sustain or incur as a
consequence of any default in payment or prepayment of
the principal amount of any portion of the Loan bearing
interest at the LIBO Rate.
Section 1.09. Inability to Determine LIBO Rate. In the event
that the Bank shall have determined that:
(i) by reason of circumstances affecting the
London interbank market generally, adequate and
reasonable means do not exist for ascertaining the LIBO
Rate with respect to a changed or continued interest rate
option that the Company has requested be made bearing
interest at the LIBO Rate; or
(ii) the LIBO Rate will not adequately and fairly
reflect the cost to the Bank of maintaining or funding a
changed or continued interest rate option that the
Company has requested be made bearing interest at the
LIBO Rate,
then, the Bank shall forthwith give prompt notice, confirmed in
writing, of such determination to the Company, at least one
Business Day prior to the date for such change or continuation. If
such notice is given, the interest rate on such portion of the Loan
shall be the Prime Rate and the Company shall execute and deliver
to the Bank a Note substantially in the form of Exhibit C, with
appropriate insertions.
Section 1.10. Increased Capital. If the Bank determines (i)
that compliance with any law or regulation or any guideline or
request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect
the amount of capital required or expected to be maintained by the
Bank or any corporation controlling the Bank or would have the
effect of reducing the rate of return on the Bank's capital or on
the capital of such corporation and (ii) that the amount of such
capital is increased by or based upon, or such reduction is a
consequence of the existence of, the Bank's commitment to lend
hereunder and other commitments of this type or the Loan or any
Note in the form of Exhibit B, then the Company shall, within ten
days following demand therefor by the Bank, from time to time as
specified by the Bank pay to the Bank additional amounts sufficient
to compensate the Bank in the light of such circumstances, to the
extent that the Bank reasonably determines such increase in capital
or reduction in rate of return, as the case may be, to be allocable
to the existence of the Bank's commitment to lend hereunder or the
making or maintenance of its Loan or any Note in the form of
Exhibit B. A certificate as to such amounts submitted to the
Company by the Bank accompanied by an explanation of the basis
therefor, shall constitute such demand and shall be conclusive and
binding for all purposes, absent manifest error.
Section 1.11. Assignments and Participations. The Bank may
assign, or sell participations in, all or any part of the Loan to
another bank or other entity, in which event (a) in the case of an
assignment, upon notice thereof by the Bank to the Company and
receipt by the Bank of the Company's written consent to such
assignment, such consent not to be unreasonably withheld, the
assignee shall have, to the extent of such assignment, the same
rights and benefits as it would have if it were the Bank hereunder
and (b) in the case of a participation, the participant shall not
have any rights under this Agreement and the Notes (the
participant's rights against the Bank in respect of such
participation to be those set forth in the agreement(s) executed by
the Bank in favor of the participant relating thereto) and all
amounts payable by the Company under Section 1 shall be determined
as if the Bank had not sold such participation. The Bank may
furnish any information concerning the Company in the possession of
the Bank from time to time to assignees and participants (including
prospective assignees and participants).
Section 1.12. Payments and Computations. The Company shall
make each payment hereunder and under an outstanding Note not later
than 12:00 noon (New York Time) on the day when due in lawful money
of the United States of America and in same day funds to the Bank
at its address referred to in Section 7.02. The Company hereby
authorizes the Bank, if and to the extent payment is not made when
due hereunder or under an outstanding Note, to charge from time to
time against the Company's account with the Bank any amount so due.
All computations of interest under a Note shall be made by the Bank
on the basis of a year of 365/366 days for the actual number of
days (including the first day but excluding the last day) elapsed,
except that interest under any Note in the form of Exhibit B shall
be computed on the basis of a year of 360 days for the actual days
elapsed.
Section 1.13. Payment on Non-Business Days. Whenever any
payment to be made hereunder or under a Note shall be stated to be
due on a Saturday, a Sunday or a public or bank holiday or the
equivalent for banks generally under the laws of the State of New
York and, if the issuance or payment of a Note bearing interest at
the LIBO Rate is involved, or a day on which banks in the London
interbank market are not open for transactions in dollars (any
other day being a "Business Day"), such payment may be made on the
next succeeding Business Day, provided, however, that in the case
of a Note in the form of Exhibit B, if such extension would cause
such payment to be made in a new calendar month, such payment shall
be made on the next preceding Business Day and such extension of
time shall in such case be included in the computation of payment
of interest. Any prepayments to the Bank on account of the
principal of the Note shall be endorsed on the Note prior to any
transfer by the Bank of the Note.
Section 1.14. Fee for Cancellation or Payment Prior to
Maturity Date.
(a) For purposes of this Section 1.14, the following terms
shall have the following meanings:
"Due Date" means the Due Date (as defined in the
outstanding Note in the form of Exhibit A which governs the
Loan or the portion of the Loan being repaid).
"Liquidation Rate" means one-quarter of the interest rate
per annum equal to the latest three-week moving average of
secondary market midafternoon quotations of yields to maturity
of U.S. Treasury notes trading closest to par value and
maturing on, or within three months of, the Due Date, such
three-week moving average to be determined by the Bank on the
Fee Determination Date on the basis of such yields reported by
dealers of U.S. Treasury notes to and published by the Federal
Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of quotations of such
yields received by the Bank from three New York dealers of
U.S. Treasury notes of recognized standing.
"Loan Rate" means one-quarter of the Fixed Rate (as
defined in the outstanding Note in the form of Exhibit A which
governs the Loan or the portion of the Loan being repaid).
"Fee Determination Date" means the Loan Date, if the Loan
has not been made on or before the Loan Date, and means the
date prior to the Due Date on which the Company repays the
Loan or any part thereof pursuant to Section 1.04 or
otherwise, if the Loan has been made.
(b) If the Company prepays the Loan or any part of it, which
is then evidenced by a Note in the form of Exhibit A,
prior to the Due Date (whether or not such prepayment is
due to acceleration of the Loan pursuant to Section
6.01), the Company shall pay to the Bank a fee (as
liquidated damages, and not as a penalty) equal to the
sum of the present values, each determined at the
Liquidation Rate, of the excess, if any, of (A) the sum
of the quarterly interest payments on the principal
amount of the Loan evidenced by a Note in the form of
Exhibit A that is prepaid between the Fee Determination
Date and the Due Date computed at the Loan Rate over (B)
the sum of the quarterly interest payments on the
principal amount of the Loan evidenced by a Note in the
form of Exhibit A that is prepaid between the Fee
Determination Date and the Due Date computed at the
Liquidation Rate, such fee to be payable five Business
Days after the Fee Determination Date, and such present
value ("PV") to be calculated in accordance with the
following formula:
PV = (P x (R - T)) x [(1 - (1 + T)-n)/T]
where R = the Loan Rate;
T = the Liquidation Rate;
n = the number of quarters or any portion thereof from the
Fee Determination Date to the Due Date; and
P = the principal amount of the Loan being prepaid.
SECTION 2. Conditions of Lending.
Section 2.01. Conditions Precedent to the Loan. The
obligation of the Bank to make the Loan on the Loan Date is subject
to the conditions precedent that:
(a) the Bank shall have received on or before the Loan Date
the following, each dated such day, in form and substance
satisfactory to the Bank:
(i) One or more promissory notes duly executed by
the Company, dated the Loan Date, in the form of one or
more of the Notes appended hereto;
(ii) Certified copies of the resolutions of the
Board of Directors of the Company and Parent approving
this Agreement and the transactions contemplated hereby,
and of all documents evidencing other necessary corporate
action and governmental approvals (including, without
limitation, an order of the Securities and Exchange
Commission approving the transactions contemplated by
this Agreement) with respect to this Agreement and the
transactions contemplated hereby;
(iii) A certificate of the Secretary or an Assistant
Secretary of the Company and the Parent certifying the
names and true signatures of the officers of the Company
and the Parent authorized to sign this Agreement and the
Note and the other documents to be delivered hereunder;
(iv) A favorable opinion of an attorney of the
Company, counsel for the Company and the Parent, as to
matters referred to in Section 4.01 (except subsections
(e) and (f) thereof) and as to such other matters as the
Bank may reasonably request; and
(b) on the Loan Date the following statements shall be true
and the Bank shall have received a certificate signed by
a duly authorized officer of the Company and the Parent,
dated the Loan Date, stating that:
(i) The representations and warranties of the
Company or the Parent, as the case may be, contained in
Section 4.01 are correct on and as of the Loan Date as
though made on and as of such date, and
(ii) No event has occurred and is continuing, or
would result from the Loan, which constitutes an Event of
Default (as defined in Section 6.01 hereof) or would
constitute an Event of Default but for the requirement
that notice be given or time elapse or both; and
(c) the Bank shall have received such other approvals,
opinions or documents as the Bank may reasonably request.
SECTION 3. Parent Guaranty.
Section 3.01. Unconditional Guaranty. In order to induce the
Bank to enter into this Agreement and to make the Loan hereunder,
the Parent unconditionally agrees that if the Company should fail
to make any payment of principal or interest when due, whether at
maturity or earlier by reason of acceleration or otherwise, or any
other amount payable by the Company hereunder pursuant to the terms
of this Agreement, the Parent shall, within ten (10) days after
receipt of written notice thereof from the Bank, pay to the Bank
the amount due and unpaid by the Company. The Parent consents that
the performance or observance by the Company of any provisions of
the Agreement or the Note may be waived or the time of performance
thereof extended and the payment of any obligations hereby
guaranteed may be extended or renewed, in whole or in part, without
affecting this guaranty.
Section 3.02. Validity. The obligations of the Parent under
this Section 3 shall be unconditional irrespective of the
genuineness, validity, regularity or enforceability of the
obligations of the Company under this Agreement or the Note or, to
the fullest extent permitted by applicable law, any other
circumstances which might otherwise constitute a legal or equitable
discharge of a surety or guarantor.
Section 3.03. Waivers. The Parent hereby expressly waives
diligence, presentment, protest and any requirement that any right
or power be exhausted or any action be taken against the Company
and all notices and demands whatsoever.
Section 3.04. Reinstatement. The obligations of the Parent
under this Section 3 shall be reinstated if at any time any payment
received by the Bank from the Company hereunder or under the Note
is required to be repaid by the Bank.
SECTION 4. Representations and Warranties.
Section 4.01. Representations and Warranties of the Company.
The Company and the Parent represent and warrant as follows:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State
of New York and the Parent is a corporation duly
incorporated, validly existing and in good standing under
the laws of the State of New York.
(b) The execution, delivery and performance by the Company
and by the Parent of this Agreement and the transactions
contemplated hereby are within the Company's and the
Parent's corporate powers, have been duly authorized by
all necessary corporate action, and do not contravene (i)
the Company's or the Parent's charter or by-laws or (ii)
law or any contractual restriction binding on or
affecting the Company or the Parent.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required for the due execution,
delivery and performance by the Company or the Parent of
this Agreement or the transactions contemplated hereby,
except for the authorization of the Securities and
Exchange Commission, which authorization has been duly
obtained and is in full force and effect.
(d) This Agreement is the legal, valid and binding obligation
of the Company and the Parent, and the Note when executed
and delivered hereunder will be the legal, valid and
binding obligation of the Company, enforceable against
the Company or the Parent, as the case may be, in
accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, 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).
(e) The balance sheet of the Company and the Parent as at
December 31, 199_, and the related statement of income
and retained earnings of the Company and the Parent for
the year then ended (the "Financial Statements"), copies
of which have been furnished to the Bank, fairly present
the financial condition of the Company and the Parent as
of such date and the results of the operations of the
Company and the Parent for the period ended on such date,
all in accordance with generally accepted accounting
principles consistently applied, and since December 31,
199_, there has been no material adverse change in such
condition or operations or in the business prospects of
the Company or the Parent.
(f) There is no pending or threatened action or proceeding
affecting the Company or the Parent, except as otherwise
disclosed in the Financial Statements, the Parent's
Annual Report on Form 10-K for the year ended December
31, 199_, the Parent's Quarterly Reports on Form 10-Q for
the quarter ended March 31, 199_, or otherwise reported
to the Bank prior to the date of this Agreement, before
any court, governmental agency or arbitrator, which may
materially adversely affect the financial condition,
operations or business prospects of the Company or the
Parent.
(g) No proceeds of the Loan will be used to acquire any
security in any transaction which is subject to Section
13 or 14 of the Securities Exchange Act of 1934.
(h) The Company is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the
Board of Governors of the Federal Reserve System), and no
proceeds of the Loan will be used to purchase or carry
any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
SECTION 5. Covenants of the Company.
Section 5.01. Affirmative Covenants. The Company, and the
Parent to the extent set forth below, covenant and agree that
during the term of this Agreement, and so long as any Note remains
outstanding and unpaid, unless the Bank shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. The Company and the Parent
will comply in all material respects with all applicable
laws, rules, regulations and orders, such compliance to
include, without limitation, paying before the same
become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to
the extent contested in good faith.
(b) Reporting Requirements. The Company and the Parent will
furnish to the Bank: (i) as soon as available and in any
event within 90 days after the end of each of the first
three quarters of each fiscal year of the Company and the
Parent, the balance sheet of the Company and the Parent
as of the end of each such quarter and the statement of
income and retained earnings of the Company and the
Parent for the period commencing at the end of the
previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of the
Company and the Parent; (ii) as soon as available and in
any event within 130 days after the end of each fiscal
year of the Company and the Parent, a copy of the annual
report for each such year, containing financial
statements for such year certified in the case of the
Parent in a manner acceptable to the Bank by Deloitte &
Touche or another independent public accountant of
recognized standing and certified in the case of the
Company by the chief financial officer of the Company or
by Deloitte & Touche or another independent public
accountant of recognized standing; and (iii) such other
information respecting the condition or operations,
financial or otherwise, of the Company and the Parent as
the Bank may from time to time reasonably request.
(c) Notices. The Company will promptly give notice to the
Bank of (a) any litigation affecting the Company in which
the amount involved is $10,000,000 or more and is not
covered by insurance and (b) the occurrence of each Event
of Default and each event which, with notice or lapse of
time or both, would constitute an Event of Default.
(d) Maintenance of Corporate Existence; Etc. The Company and
the Parent will preserve and maintain their respective
corporate existences in the jurisdiction of their
incorporation (except as provided in Section 5.02(b)) and
the rights, franchises and privileges necessary for the
ordinary conduct of their respective businesses, maintain
their respective properties and assets in good working
order and condition and maintain, with respect to their
respective properties and assets and their respective
businesses, insurance with financially sound and
reputable insurers against loss or damage of the kinds
and in the amounts customarily carried under similar
circumstances by other corporations engaged in the same
or similar businesses and similarly situated.
Notwithstanding the provisions of the foregoing sentence,
however, the Company and the Parent may self-insure by
deductible provisions in a prudent amount with respect to
each loss.
Section 5.02. Negative Covenants. The Company covenants and
agrees that during the term of this Agreement, and so long as any
Note remains outstanding and unpaid, it will not, without the
written consent of the Bank:
(a) Limitation on Liens, Etc. Create, incur, assume or
suffer to be created, incurred, assumed, or to exist, any
mortgage, deed of trust, pledge, lien, security interest
or other charge or encumbrance of any nature (all of the
foregoing being hereinafter referred to in this Section
as "liens") upon or with respect to any of its property
or assets, whether now owned or hereafter acquired,
except that the foregoing restrictions shall not apply
to:
(i) lien of the Trust Indenture and Open-End
Mortgage dated as of December 13, 1983 between the
Company and State Street Bank and Trust Company of
Connecticut, National Association, as amended and
supplemented, on the property and improvements located at
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇;
(ii) liens for taxes, assessments or governmental
charges or levies not yet delinquent or being contested
in good faith by appropriate proceedings;
(iii) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due or being
contested in good faith by appropriate proceedings;
(iv) liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of or
compliance with statutory obligations, tenders, bids,
leases, surety and appeal bonds, performance and return-
of-money bonds and other similar obligations (other than
obligations for the payment of borrowed money);
(v) any judgment lien, unless the judgment it
secures shall not, within sixty days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall not have been discharged within
sixty days after the expiration of any such stay;
(vi) liens on any property acquired, constructed or
improved by the Company after the date of this Agreement,
or liens on any property existing at the time of the
acquisition thereof, provided that the lien shall not
apply to any property theretofore owned by the Company
other than any theretofore unimproved real property on
which the property so constructed, or the improvement, is
located;
(vii) liens incidental to the conduct of the
Company's business or the ownership of its property and
assets, which were not incurred in connection with the
borrowing of money or the obtaining of credit, none of
which materially interferes with the Company's use and
operation of its properties and assets or detracts from
the value thereof; and
(viii) liens for the sole purpose of extending,
renewing or replacing in whole or in part the
indebtedness secured by any lien referred to in the
foregoing clauses (i) and (vi) or in this clause (viii);
provided, however, that the principal amount of
indebtedness secured thereby shall not exceed the
principal amount of indebtedness so secured at the time
of such extension, renewal or replacement, and that such
extension, renewal or replacement shall be limited to all
or a part of the property which secured the lien so
extended, renewed or replaced (and any improvements on
such property).
(b) Limitation on Mergers. Merge into or consolidate with
any corporation or other entity, or permit any
corporation or other entity to merge into or consolidate
with it, or sell or otherwise dispose of all or
substantially all of its assets to any other corporation
or entity, if such successor corporation or entity (if
other than the Company) shall fail to assume the
obligations of the Company under any outstanding Note and
to subject itself to the terms of this Agreement.
(c) Limitation on Plan Withdrawals or Terminations. Permit
any employee benefit pension plan (other than a
multiemployer plan of the United Mine Workers of America)
(within the meaning of Section 3(2)(A) of the Employee
Retirement Income Security Act) with respect to which the
Company may have any liability to terminate, or withdraw
from such plan, while there shall exist an accumulated
funding deficiency of more than $50,000,000 in plan
assets available to satisfy the benefits guaranteeable
under the Employee Retirement Income Security Act of
1974, as amended, with respect to such plan.
SECTION 6. Events of Default.
Section 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Company shall fail to pay the principal of, or any
installment of interest on, any outstanding Note when
due; or
(b) The Company shall fail to pay any interest on the Note
for more than 10 days after the date due or shall fail to
pay any other amounts payable under this Agreement for
more than 10 days after the date due; or
(c) Any representation or warranty made by the Company or the
Parent herein or by the Company or by the Parent (or any
of its officers) in connection with this Agreement shall
prove to have been incorrect in any material respect when
made; or
(d) The Company or the Parent shall fail to perform or
observe any other term, covenant or agreement contained
in this Agreement on its part to be performed or observed
and any such failure shall remain unremedied for 10 days
after written notice thereof shall have been given to the
Company or the Parent by the Bank; or
(e) The Company shall fail to pay the principal of, or
interest on, any obligation of the Company for borrowed
money (other than under this Agreement and any
outstanding Note) when due, whether by acceleration, by
required prepayment or otherwise, for a period longer
than any period of grace provided in such obligation, or
fail to perform any other term, condition or covenant
contained in any such obligation, the effect of which is
to cause, or to permit the holder of such obligation or
others on its behalf to cause, such obligation then to
become due prior to its stated maturity, unless such
failure shall have been cured or effectively waived; or
(f) The Company 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 Company
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 or other similar
official for it or for any substantial part of its
property; or the Company shall take any corporate action
to authorize any of the actions set forth above in this
subsection (f); or
(g) All of the Common Stock, other than directors' qualifying
shares, of the Company, or of any successor corporation
or entity, shall not be owned, directly or indirectly, by
the Parent or a successor thereto;
then, and in any such event, the Bank may, by notice to the
Company, (i) declare its obligation to make the Loan to be
terminated, whereupon the same shall forthwith terminate, and (ii)
declare any outstanding Note or Notes, all interest thereon and all
other amounts payable under this Agreement to be forthwith due and
payable, whereupon such Note or Notes, all such interest and all
such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived by the Company.
SECTION 7. Miscellaneous.
Section 7.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or any Note, nor consent to any
departure by the Company therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Bank and then
such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 7.02. Notices, Etc. All notices and other communica-
tions provided for hereunder shall be in writing and mailed or
delivered personally or by means of telex, telecopy or other wire
transmission or sent by nationwide overnight delivery service (with
charges prepaid), if to the Company, at its address at ▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: Vice President-Finance;
and if to the Bank, at its address at
____________________________________ or, as to each party, at such
other address as shall be designated by such party in a written
notice to the other party. All such notices and communications
shall, when mailed, telecopied or sent, be effective when deposited
in the mails or delivered to the delivery service, respectively,
addressed as aforesaid.
Section 7.03. No Waiver; Remedies. No failure on the part of
the Bank to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder or
under any Note 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 7.04. Right of Set-Off. Upon the occurrence and
during the continuance of any Event of Default the Bank 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 the Bank to
or for the credit or the account of the Company against any and all
of the obligations of the Company now or hereafter existing under
this Agreement and any Note, irrespective of whether or not the
Bank shall have made any demand under this Agreement or any Note
and although such obligations may be unmatured. The Bank agrees
promptly to notify the Company after any such set-off and
application, provided that the failure to give such notice shall
not affect the validity to such set-off and application. The
rights of the Bank under this Section are in addition to other
rights and remedies (including, without limitation, other rights of
set-off) which the Bank may have.
Section 7.05. Binding Effect; Governing Law. This Agreement
shall be binding upon and inure to the benefit of the Company and
the Bank and their respective successors and assigns, except that
the Company shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the
Bank. This Agreement and any Notes shall be governed by, and
construed in accordance with, the laws of the State of New York.
Section 7.06. Costs, Expenses and Taxes. The Company agrees
to pay or reimburse the Bank for the payment of (i) all reasonable
out-of-pocket expenses of the Bank, including attorneys' fees,
arising in connection with the enforcement or preservation of any
rights under this Agreement and any Note, and (ii) any and all
present and future stamp and other taxes (including interest and
penalties, if any) which may be assessed or payable in respect of
any Note, or of any modification of any Note, or of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
AMERICAN ELECTRIC POWER SERVICE CORPORATION
By:_____________________________
Treasurer
AMERICAN ELECTRIC POWER COMPANY, INC.
By:______________________________
Treasurer
[BANK]
By:
[Title]
FIXED RATE EXHIBIT A
PROMISSORY NOTE
$__________ Dated: __________, ____
FOR VALUE RECEIVED, the undersigned, AMERICAN ELECTRIC POWER
SERVICE CORPORATION, a New York corporation (the "Borrower"),
hereby promises to pay to the order of ____________________ (the
"Bank"), the principal sum of ____________ Dollars ($__________) on
_______________, ____ (the "Due Date"), together with interest on
the principal amount remaining unpaid hereunder from time to time
outstanding from the date hereof until said principal sum shall be
paid in full, payable on the first day of January, April, July and
October during the term hereof and on the Due Date, at a rate of
interest per annum equal at all times to ______% per annum (the
"Fixed Rate"). Any amount of principal hereof which is not paid
when due, whether at stated maturity, by acceleration or otherwise,
shall bear interest from the day when due until said principal
amount is paid in full, payable on demand, at a rate of interest
per annum equal at all times to one percent (1%) over the Fixed
Rate. Interest shall be computed on the basis of a year consisting
of 365 or 366 days, as the case may be, for the actual number of
days elapsed.
Both principal and interest are payable in lawful money of the
United States of America and in immediately available funds to the
Bank at _________________________________.
This Note evidences indebtedness incurred under a Term Loan
and Guaranty Agreement dated as of ____________, ____, between the
Borrower, American Electric Power Company, Inc. and the Bank (the
"Agreement"), as the same may be amended, modified or supplemented
from time to time, and is entitled to the benefits thereof,
including the unconditional guaranty of the amounts due hereunder
by American Electric Power Company, Inc. The Agreement, among
other things, contains provisions for acceleration of the maturity
of the principal amount hereof upon the happening of certain stated
events and also for the payment of a fee in the event of repayment
of principal hereof prior to the Due Date hereof upon the terms and
conditions therein specified.
AMERICAN ELECTRIC POWER SERVICE CORPORATION
By:_____________________________
Treasurer
LIBO RATE EXHIBIT B
PROMISSORY NOTE
$__________ Dated: __________, ____
FOR VALUE RECEIVED, the undersigned, AMERICAN ELECTRIC POWER
SERVICE CORPORATION, a New York corporation (the "Borrower"),
hereby promises to pay to the order of ____________________ (the
"Bank"), the principal sum of ____________ Dollars ($__________) on
_______________, ____, and to pay interest on the unpaid principal
amount hereof from the date hereof as provided below. For Notes
with a term greater than three months, interest on the unpaid
principal amount shall be payable quarterly on the last day of
March, June, September and December prior to, and at maturity
hereof; for Notes with a term of three months or less, interest on
the unpaid principal amount shall be payable at maturity only; in
all cases, without exception, interest on the unpaid principal
amount shall be payable after such maturity on demand. Said
interest shall be: (i) prior to the maturity hereof, at a rate per
annum equal to _____% (the "Rate"), and (ii) from the maturity
hereof (whether by acceleration or otherwise), at a rate per annum
equal at all times to the sum of 1% plus the Rate until payment in
full. Interest shall be computed on the basis of a year consisting
of 360 days for the actual number of days elapsed.
Both principal and interest are payable in lawful money of the
United States of America and in immediately available funds to the
Bank at __________________________________.
This Note evidences indebtedness incurred under a Term Loan
and Guaranty Agreement dated as of _____________________, between
the Borrower, American Electric Power Company, Inc. and the Bank
(the "Agreement"), as the same may be amended, modified or
supplemented from time to time, and is entitled to the benefits
thereof, including the unconditional guaranty of the amounts due
hereunder by American Electric Power Company, Inc. The Agreement,
among other things, contains provisions for acceleration of the
maturity of the principal amount hereof upon the happening of
certain stated events and also for optional and mandatory
prepayments of principal prior to the maturity hereof.
AMERICAN ELECTRIC POWER SERVICE CORPORATION
By:_____________________________
Treasurer
PRIME RATE EXHIBIT C
PROMISSORY NOTE
$__________ Dated: _________, ____
FOR VALUE RECEIVED, the undersigned, AMERICAN ELECTRIC POWER
SERVICE CORPORATION, a New York corporation (the "Borrower"),
hereby promises to pay to the order of ____________________ (the
"Bank"), the principal sum of _____________ Dollars ($__________)
on _______________, ____, and to pay interest on the unpaid
principal amount hereof from the date hereof as provided below.
Interest on the unpaid principal amount shall be payable quarterly
on the last day of March, June, September and December prior to
and, at the maturity hereof (whether by acceleration or otherwise),
and after such maturity on demand. Said interest shall be: (i)
prior to the maturity hereof, at a fluctuating rate per annum equal
at all times to the Prime Rate (the "Prime Rate") as defined in the
Term Loan and Guaranty Agreement dated as of __________________
between the Borrower, American Electric Power Company, Inc. and the
Bank (the "Agreement"); and (ii) from the maturity hereof (whether
by acceleration or otherwise), at a fluctuating rate per annum
equal at all times to 1% plus the Prime Rate until payment in full.
Any change in the interest rate hereon resulting from a change in
the Prime Rate shall be effective as of the opening of business on
the date of such change in the Prime Rate. Interest shall be
computed on the basis of a year consisting of 365 or 366 days, as
the case may be, for the actual number of days elapsed.
Both principal and interest are payable in lawful money of the
United States of America and in immediately available funds to the
Bank at __________________________________.
This Note evidences indebtedness incurred under the Agreement,
as the same may be amended, modified or supplemented from time to
time, and is entitled to the benefits thereof, including the
unconditional guaranty of the amounts due hereunder by American
Electric Power Company, Inc. The Agreement, among other things,
contains provisions for acceleration of the maturity of the
principal amount hereof upon the happening of certain stated events
and also for optional and mandatory prepayments of principal prior
to the maturity hereof.
AMERICAN ELECTRIC POWER SERVICE CORPORATION
By:_____________________________
Treasurer