THE CINCINNATI GAS & ELECTRIC COMPANY
AND
THE FIFTH THIRD BANK,
Trustee
Third Supplemental Indenture
Dated as of October 9, 1997
To
Indenture
Dated as of May 15, 1995
Liquid Asset Notes with Coupon Exchange ("LANCEs") Due 2007
THIRD SUPPLEMENTAL INDENTURE, dated as of October 9, 1997,
between The Cincinnati Gas & Electric Company, a corporation duly organized
and existing under the laws of the State of Ohio (herein called the
"Company"), having its principal office at 139 East Fourth Street, Cincinnati,
Ohio 45202, and The Fifth Third Bank, an Ohio banking corporation, as Trustee
(herein called the "Trustee") under the Indenture dated as of May 15, 1995
between the Company and the Trustee, as supplemented (the "Indenture").
Recitals of the Company
The Company has executed and delivered the Indenture to the
Trustee to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (the "Securities"), to be
issued in one or more series as in the Indenture provided.
Pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Securities to be known as
its "Liquid Asset Notes with Coupon Exchange ("LANCEs") Due 2007" (herein
called the "Debentures"), in this Third Supplemental Indenture.
All things necessary to make this Third Supplemental Indenture
a valid agreement of the Company have been done.
Now, Therefore, This Third Supplemental Indenture Witnesseth:
For and in consideration of the premises and the purchase of
the Debentures by the Holders thereof, it is mutually agreed, for the equal
and proportionate benefit of all Holders of the Debentures, as follows:
ARTICLE ONE
Terms of the Debentures
Section 101. There is hereby authorized a series of Securities
designated the "Liquid Asset Notes with Coupon Exchange ("LANCEs") Due 2007",
limited in aggregate principal amount to $100,000,000 (except as provided in
Section 301(2) of the Indenture). The Debentures shall mature and the
principal shall be due and payable together with all accrued and unpaid
interest thereon on October 1, 2007 and shall be issued in the form of a
registered Global Security without coupons, registered in the name of Cede &
Co.
Section 102. The provisions of Section 305 of the Indenture
applicable to Global Securities shall apply to the Debentures.
Section 103. (a) Interest Rates. During any Floating Rate
Period (as defined below), interest on each of the Debentures shall be payable
semi-annually in arrears on each April 1 and October 1 (each an "Interest
Payment Date"), commencing on April 1, 1998, at the Floating Rate (as defined
below), determined and compounded from time to time on a quarterly basis.
During any Fixed Rate Period (as defined below), interest on each of the
Debentures shall be payable semi-annually in arrears on each Interest Payment
Date at the Fixed Rate (as defined below). Interest, whether accruing at the
Floating Rate or the Fixed Rate, will accrue from and including October 1,
1997 or, if later, from and including the most recent Interest Payment Date
on which interest has been paid or duly provided for. Interest on the
Debentures calculated at the Floating Rate for any period shall be computed on
the basis of the actual number of days elapsed in such period and a 360-day
year. Interest on the Debentures calculated at the Fixed Rate for any period
shall be computed on the basis of a 360-day year of twelve 30-day months and,
for any period shorter than a full semi-annual Interest Accrual Period for
which interest is computed, on the basis of the actual number of days elapsed
in such period.
(b) Interest Rate Election. Effective on the Interest Rate
Reset Date or on any Interest Payment Date after the Interest Rate Reset Date
to and including October 1, 2002, if the Swap Termination Date shall not have
occurred by such date, the Holders of not less than 66 2/3% in aggregate
principal amount of the Debentures shall have the right to elect that the
interest rate on all, but not less than all, of the Debentures be converted
from the Fixed Rate to the Floating Rate for each subsequent Interest Accrual
Period (in accordance with the definition of Floating Rate Period) (the
"Interest Rate Election") by delivering to the Company and to the Trustee not
less than two Business Days prior to the Interest Rate Election Date (as
defined below) irrevocable written notice (the "Interest Rate Election
Notice") of such Holders' election to exercise the Interest Rate Election.
The Interest Rate Election Notice shall set forth the name of the Holders
exercising such right, the Interest Rate Election Date and the amount of
Debentures held by such Holders, and a statement that the Interest Rate
Election is being exercised thereby. Any exercise of the Interest Rate
Election shall be irrevocable and the conversion from interest at the Fixed
Rate to interest at the Floating Rate shall be effective on the Interest Rate
Election Date. From and after the Interest Rate Election Date and for each
Interest Accrual Period ending prior to the end of such Floating Rate Period
beginning on such Interest Rate Election Date, interest on all of the
Debentures shall accrue at the Floating Rate.
(c) Election upon Swap Termination Date. Notwithstanding the
foregoing, upon the occurrence of the Swap Termination Date, if the Debentures
shall then bear interest at the Floating Rate, the Holders of not less than 66
2/3% in aggregate principal amount of the Debentures will have the right to
elect to convert the interest rate on all, but not less than all, of the
Debentures from the Floating Rate to the Fixed Rate by delivering to the
Company and the Trustee irrevocable written notice of such Holders' election
to so convert the interest rate. Such notice to the Company and the Trustee
shall set forth the name of the Holders exercising such right and a statement
that the Swap Termination Date has occurred and that the Holders wish to
exercise their right to convert the interest rate pursuant to this Section.
Any exercise of such conversion right shall be irrevocable. Upon receipt of
such notice by the Company, (i) any Floating Rate Period then in effect shall
terminate, (ii) a Fixed Rate Period will then be in effect and be deemed to
have been in effect at all times from the then most recent Interest Payment
Date on which interest has been paid or duly provided for (or, if no interest
has been paid or duly provided for on any Interest Payment Date, October 1,
1997) and (iii) no Floating Rate Period shall thereafter be in effect at any
time.
(d) Certain Definitions. As used in this Third Supplemental
Indenture with respect to the Debentures, the following terms have the
following meanings:
"Business Day" means any day, other than a Saturday or Sunday,
or a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to be closed.
"Calculation Agent" means the Swap Counterparty, as calculation
agent, and its successors in such capacity under the Swap Agreement.
"Final Maturity Date" means October 1, 2007.
"Fixed Rate" means 6.50% per annum.
"Fixed Rate Period" exists at any time until the Final Maturity
Date (or if earlier, when the principal amount of each Debenture is paid or
provided for in full with accrued interest thereon) at which a Floating Rate
Period is not in effect.
"Floating Rate" means, for any Interest Accrual Period during a
Floating Rate Period, a rate per annum equal to 0.1025% plus the London
interbank offered rate for three-month United States dollar deposits
("LIBOR"), determined from time to time on the Interest Determination Date
immediately prior to the beginning of such Interest Accrual Period and on the
Interest Determination Date during such Interest Accrual Period by the
Calculation Agent in accordance with the following provisions (in each case,
with all percentages resulting from any calculation rounded to the nearest
one hundred-thousandth of a percent, with five one-millionths of a percent
rounded upward; and all dollar amounts used in or resulting from any such
calculation will be rounded to the nearest cent, with one-half cent rounded
upward):
(i) For each applicable quarterly period, LIBOR will be determined
on the basis of the offered rates for deposits in U.S. dollars having a three-
month maturity, commencing on the first day of such quarterly period
immediately following the related Interest Determination Date, which appear on
Telerate Page 3750 on the Dow Jones Telerate Service (or such other page as
may replace that page on that service for the purpose of displaying London
interbank offered rates of major banks) as of 11:00 a.m. (London time) on that
Interest Determination Date. If such rate does not so appear on Telerate Page
3750, LIBOR in respect of such Interest Determination Date will be determined
as described in (ii) below.
(ii) If on any applicable Interest Determination Date the rate for
deposits of U.S. dollars having a three-month maturity does not appear on
Telerate Page 3750 as specified in (i) above, LIBOR will be determined on the
basis of the rates at which deposits in U.S. dollars having a three-month
maturity are offered by major banks selected by the Calculation Agent in the
London interbank market at approximately 11:00 a.m. (London time) on the
related Interest Determination Date to prime banks in the London interbank
market for a period commencing on the first day of such Interest Accrual Period
immediately following that Interest Determination Date and in a principal
amount of not less than $1 million that in the Calculation Agent's judgment is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each such bank
to provide a quotation of its rate. If at least two such quotations are
provided, LIBOR in respect of that Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR in respect of that Interest Determination Date will be the
arithmetic mean of the rates quoted by major banks in New York City selected
by the Calculation Agent at approximately 11:00 a.m. (New York City time) on
that Interest Determination Date for loans in U.S. dollars to leading European
banks, having a three-month maturity, commencing on the first day of such
Interest Accrual Period immediately following that Interest Determination Date
and in a principal amount of not less than $1 million that, in the Calculation
Agent's judgment, is representative for a single transaction in such market at
such time.
The Calculation Agent's determination of any interest rate will
be final and binding in the absence of manifest error.
"Floating Rate Period" means (i) the period from October 1,
1997 until the Interest Rate Reset Date (the "Initial Floating Rate Period")
and (ii) after the Initial Floating Rate Period, the period from the Interest
Rate Election Date (as defined below) until the Final Maturity Date.
Notwithstanding the foregoing, upon the occurrence of a Swap Termination Date
(if any) and the election by Holders of not less than 66 2/3% of the aggregate
principal amount of the Debentures, (A) any Floating Rate Period then in
effect shall automatically terminate, (B) a Fixed Rate Period shall
automatically be in effect and be deemed to have been in effect at all times
from the then most recent Interest Payment Date on which interest has been
paid or duly provided for (or, if no such interest has been paid or duly
provided for on any Interest Payment Date, October 1, 1997) and (C) no
Floating Rate Period shall thereafter be in effect at any time.
"Interest Determination Date" means (i) September 29, 1997 in
the case of the period from October 1, 1997 to but excluding January 1, 1998
and (ii) in the case of each Interest Accrual Period thereafter during a
Floating Rate Period, the second Market Day next preceding each LIBOR Reset
Date within such Interest Accrual Period.
"Interest Accrual Period" means, for each Interest Payment
Date, the period from and including the prior Interest Payment Date (or, in
the case of the first Interest Accrual Period, from and including October 1,
1997) to but excluding such Interest Payment Date.
"Interest Rate Election Date" means the Interest Payment Date
on which the Interest Rate Election is exercised, as set forth in the Interest
Rate Election Notice.
"Interest Rate Reset Date" means October 1, 1999.
"LIBOR Reset Date" means each January 1, April 1, July 1 and
October 1.
"Market Day" means any day on which dealings in deposits in
U.S. dollars are transacted in the London interbank market.
"Swap Agreement" means the ISDA Master Agreement, the Schedule
thereto and the Confirmation thereto, each dated as of October 2, 1997 between
Cincinnati Gas & Electric Company TIERS[SM] Certificates Trust CG&E 1997-9 and
the Swap Counterparty.
"Swap Counterparty" means Salomon Swapco([Registered]) Inc.
"Swap Termination Date" means the Early Termination Date as
defined in the Swap Agreement.
Section 104. The interest payable on the Debentures, and
punctually paid or duly provided for, on any Interest Payment Date will be
paid by 10:00 A.M. (New York City time) on such Interest Payment Date to the
Person in whose name such Debenture (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be one Business Day prior to the relevant Interest
Payment Date (except that if the Debentures are no longer represented by a
Global Security as a result of the occurrence of an event specified in Section
305(2) of the Indenture, the Regular Record Date for such interest payment
shall be the close of business on the fifteenth day (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date). In the
event that any date on which interest is payable on the Debentures is not a
Business Day, then payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (without any interest or
other payment in respect of any such delay).
Section 105. Subject to agreements with or the rules of The
Depository Trust Company or any successor book-entry security system or
similar system with respect to Global Securities, payments of interest will be
made by check mailed to the Holder of each Debenture at the address shown in
the Security Register, and payments of the principal amount of each Debenture
will be made at maturity by check against presentation of the Debenture at the
office or agency of the Trustee.
Section 106. The Debentures shall be issued in denominations
of $100,000 or any integral multiple of $100,000.
Section 107. Principal of and interest on the Debentures shall
be payable in the coin or currency of the United States of America, which, at
the time of payment, is legal tender for public and private debts.
Section 108. The Debenture shall be subject to defeasance, at
the Company's option, as provided for in Sections 1302 and 1303 of the
Indenture.
Section 109. Subject to the terms of Article Eleven of the
Indenture, the Company shall have the right to redeem the Debentures, in whole
but not in part, from time to time and at any time (such redemption, an
"Optional Redemption", and the date thereof, the "Optional Redemption Date"),
upon not less than 30 days' notice to the Holders (with a copy thereof to the
Swap Counterparty), at a redemption price equal to the sum of (A) the greater
of (i) 100% of the principal amount of the Debentures to be redeemed and (ii)
the sum of the present values of the Remaining Scheduled Payments thereon
discounted to the Optional Redemption Date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15
basis points, less the Applicable Accrued Interest Amount plus (B) the
Applicable Accrued Interest Amount plus (C) any payment required to be made by
the Trust under the Swap Agreement in respect of the termination of the Swap
Agreement resulting from the Optional Redemption.
"Applicable Accrued Interest Amount" means, at the Optional
Redemption Date, the amount of interest accrued and unpaid from the prior
Interest Payment Date (or, in the case of the first Interest Accrual Period,
from October 1, 1997) to the Optional Redemption Date on the Notes subject to
the Optional Redemption determined at the Fixed Rate, regardless of whether
a Fixed Rate Period or Floating Rate Period is then in effect.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
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 term of the Debentures to
be redeemed pursuant to the Optional Redemption. "Independent Investment
Banker" means one of the Reference Treasury Dealers appointed by the Trustee
after consultation with the Company.
"Comparable Treasury Price" means, with respect to the Optional
Redemption Date, the average of the Reference Treasury Dealer Quotations for
such Optional Redemption Date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or if the Trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
Quotations.
"Reference Treasury Dealer" means each of Salomon Brothers Inc,
Chase Securities Inc., CS First Boston Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer") the Company will substitute therefor another
Primary Treasury Dealer. "Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any redemption date, the
average, as determined by 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 Trustee by such Reference Treasury
Dealer at 5:00 p.m. on the third Business Day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to any
Debenture, the remaining scheduled payments of the principal thereof to be
redeemed and interest thereon that would be due after the Optional Redemption
Date but for the Optional Redemption and if such interest were determined at
the Fixed Rate (regardless of whether a Fixed Rate Period or Floating Rate
Period is then in effect).
"Treasury Rate" means, with respect to the Optional Redemption
Date (if any), the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to
the Comparable Treasury Price for such Optional Redemption Date.
The Debentures will not be redeemable at the option of any
Holder prior to maturity and will not be subject to any sinking fund.
Section 110. Upon the occurrence of (a) a default by the
Company in the payment of any amount due (and the continuation thereof for any
applicable grace period) on the Debentures, (b) the acceleration of the
maturity of the Debentures or (c) a Swap Termination Date, the Trustee shall
promptly deliver notice of such occurrence to each Holder.
ARTICLE TWO
Form of the Debentures
Section 201. The Debentures are to be substantially in the
following form and shall include substantially the legend shown so long as the
Debentures are Global Securities:
(FORM OF FACE OF DEBENTURE)
No. R-1 100 Liquid Asset Notes with Coupon
Exchange ("LANCEs") Due 2007 In
Denominations Of $100,000 Each
CUSIP No. __________
THE CINCINNATI GAS & ELECTRIC COMPANY
LIQUID ASSET NOTES WITH COUPON
EXCHANGE ("LANCEs") DUE 2007
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS 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.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, 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, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT 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 THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT UPON THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OTHER INFORMATION SATISFACTORY TO THE TRUSTEE AND
THE COMPANY, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT UPON THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE
TRUSTEE AND THE COMPANY, SUBJECT IN EACH OF THE FOREGOING CASES, TO A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY BEING COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
THE CINCINNATI GAS & ELECTRIC COMPANY, a corporation duly
organized and existing under the laws of the State of Ohio (herein called the
"Company", which term includes any successor Person under the Indenture
hereafter referred to), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, the principal sum of One Hundred Million and
No/100 Dollars ($100,000,000) on October 1, 2007, and to pay interest thereon
from October 1, 1997 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually in arrears on each
April 1 and October 1 (each an "Interest Payment Date"), determined as set
forth on the reverse hereof, commencing April 1, 1998, at the rate of interest
determined as set forth on the reverse hereof, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be one Business Day prior
to the relevant Interest Payment Date (except that if the Debentures are no
longer represented by a Global Security as a result of the occurrence of an
event specified in Section 305(2) of the Indenture, the Regular Record Date
for such interest payment shall be the close of business on the fifteenth day
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date). In the event that any date on which interest is
payable on the Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day which is a
Business Day (without any interest or other payment in respect of any such
delay). Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in the Indenture.
Payment of the principal of (and premium, if any) and interest
on this Security will be made at the office or agency of the Company
maintained for that purpose in the City of Cincinnati, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
Except as provided above with respect to the payment of
interest, any payment on this Security due on any day which is not a Business
Day in the City of New York need not be made on such day, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the due date and no interest shall accrue for the period from and after such
date.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to
be duly executed.
THE CINCINNATI GAS & ELECTRIC COMPANY
By ________________________________
Authorized Signature
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE FIFTH THIRD BANK, as Trustee
By ________________________________
Authorized Signature
(FORM OF REVERSE OF DEBENTURE)
This Security is one of a duly authorized issue of securities of the Company
(herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of May 15, 1995 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Fifth Third Bank, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $100,000,000.
During any Floating Rate Period (as defined below), interest on this Security
shall be payable semi-annually in arrears on each Interest Payment Date,
commencing on April 1, 1998, at the Floating Rate (as defined below),
determined and compounded on a quarterly basis. During any Fixed Rate Period
(as defined below), interest on this Security shall be payable semi-annually
in arrears on each Interest Payment Date at the Fixed Rate (as defined below).
Interest, whether accruing at the Floating Rate or the Fixed Rate, will accrue
from and including October 1, 1997 or, if later, from and including the most
recent Interest Payment Date on which interest has been paid or duly provided
for. Interest on this Security calculated at the Floating Rate for any period
shall be computed on the basis of the actual number of days elapsed in such
period and a 360-day year. Interest on this Security calculated at the Fixed
Rate for any period shall be computed on the basis of a 360-day year of twelve
30-day months and, for any period shorter than a full semi-annual Interest
Accrual Period for which interest is computed, on the basis of the actual
number of days elapsed in such period.
As used herein:
"Business Day" means any day, other than a Saturday or Sunday, or a day on
which banking institutions in New York, New York are authorized or obligated
by law or executive order to be closed.
"Calculation Agent" means the Swap Counterparty, as calculation agent, and its
successors in such capacity under the Swap Agreement.
"Final Maturity Date" means October 1, 2007.
"Fixed Rate" means 6.50% per annum.
"Fixed Rate Period" exists at any time until the Final Maturity Date (or if
earlier, when the principal amount hereof is paid or provided for in full with
accrued interest hereon) at which a Floating Rate Period is not in effect.
"Floating Rate" means, for any Interest Accrual Period during a Floating Rate
Period, a rate per annum equal to 0.1025% plus the London interbank offered
rate for three-month United States dollar deposits ("LIBOR"), determined from
time to time on the Interest Determination Date immediately prior to the
beginning of such Interest Accrual Period and on the Interest Determination
Date during such Interest Accrual Period by the Calculation Agent in accordance
with the following provisions (in each case, with all percentages resulting
from any calculation rounded to the nearest one hundred-thousandth of a
percent, with five one-millionths of a percent rounded upward; and all dollar
amounts used in or resulting from any such calculation will be rounded to the
nearest cent, with one-half cent rounded upward):
(i) For each applicable quarterly period, LIBOR will be determined
on the basis of the offered rates for deposits in U.S. dollars having a three-
month maturity, commencing on the first day of such quarterly period
immediately following the related Interest Determination Date, which appear on
Telerate Page 3750 on the Dow Jones Telerate Service (or such other page as
may replace that page on that service for the purpose of displaying London
interbank offered rates of major banks) as of 11:00 a.m. (London time) on that
Interest Determination Date. If such rate does not so appear on Telerate Page
3750, LIBOR in respect of such Interest Determination Date will be determined
as described in (ii) below.
(ii) If on any applicable Interest Determination Date the rate for
deposits of U.S. dollars having a three-month maturity does not appear on
Telerate Page 3750 as specified in (i) above, LIBOR will be determined on the
basis of the rates at which deposits in U.S. dollars having a three-month
maturity are offered by major banks selected by the Calculation Agent in the
London interbank market at approximately 11:00 a.m. (London time) on the
related Interest Determination Date to prime banks in the London interbank
market for a period commencing on the first day of such Interest Accrual Period
immediately following that Interest Determination Date and in a principal
amount of not less than $1 million that in the Calculation Agent's judgment is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each such bank
to provide a quotation of its rate. If at least two such quotations are
provided, LIBOR in respect of that Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR in respect of that Interest Determination Date will be the
arithmetic mean of the rates quoted by major banks in New York City selected
by the Calculation Agent at approximately 11:00 a.m. (New York City time) on
that Interest Determination Date for loans in U.S. dollars to leading European
banks, having a three-month maturity, commencing on the first day of such
Interest Accrual Period immediately following that Interest Determination Date
and in a principal amount of not less than $1 million that, in the Calculation
Agent's judgment, is representative for a single transaction in such market at
such time.
The Calculation Agent's determination of any interest rate will
be final and binding in the absence of manifest error.
"Floating Rate Period" means (i) the period from October 1, 1997 until the
Interest Rate Reset Date (the "Initial Floating Rate Period") and (ii) after
the Initial Floating Rate Period, the period from the Interest Rate Election
Date until the Final Maturity Date. Notwithstanding the foregoing, upon the
occurrence of a Swap Termination Date (if any) and the election by Holders of
not less than 66 2/3% in aggregate principal amount of the Securities of this
series, (A) any Floating Rate Period then in effect shall automatically
terminate and a Fixed Rate Period shall automatically be in effect, (B) be
deemed to have been in effect at all times from the then most recent Interest
Payment Date on which interest has been paid or duly provided for (or, if no
such interest has been paid or duly provided for on any Interest Payment Date,
October 1, 1997) and (C) no Floating Rate Period shall thereafter be in effect
at any time.
"Interest Determination Date" means (i) September 29, 1997 in the case of the
period from October 1, 1997 to but excluding January 1, 1998 and (ii) in the
case of each Interest Accrual Period thereafter during a Floating Rate Period,
the second Market Day next preceding each LIBOR Reset Date within such
Interest Accrual Period.
"Interest Accrual Period" means, for each Interest Payment Date, the period
from and including the prior Interest Payment Date (or, in the case of the
first Interest Accrual Period, from and including October 1, 1997) to but
excluding such Interest Payment Date.
"Interest Rate Reset Date" means October 1, 1999.
"LIBOR Reset Date" means each January 1, April 1, July 1 and October 1.
"Market Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
"Swap Agreement" means the ISDA Master Agreement, the Schedule thereto and the
Confirmation thereto, each dated as of October 2, 1997 between Cincinnati Gas
& Electric Company TIERS[SM] Certificates Trust CG&E 1997-9 and the Swap
Counterparty.
"Swap Counterparty" means Salomon Swapco([Registered]) Inc.
"Swap Termination Date" means the Early Termination Date as defined in the
Swap Agreement.
Effective on the Interest Rate Reset Date or on any Interest Payment Date
after the Interest Rate Reset Date to and including October 1, 2002, if the
Swap Termination Date shall not have occurred by such date, the Holders of not
less than 66 2/3% in aggregate principal amount of the Securities of this
series shall have the right to elect that the interest rate on all, but not
less than all, of the Securities of this series be converted from the Fixed
Rate to the Floating Rate for each subsequent Interest Accrual Period (subject
to the definition of Floating Rate Period) (the "Interest Rate Election") by
delivering to the Company and to the Trustee not less than two Business Days
prior to the Interest Rate Election Date (as defined below) irrevocable written
notice (the "Interest Rate Election Notice") of such Holders' election to
exercise the Interest Rate Election. The Interest Rate Election Notice shall
set forth the name of the Holders exercising such right, the Interest Rate
Election Date and the amount of Securities of this series held by such
Holders, and a statement that the Interest Rate Election is being exercised
thereby. Any exercise of the Interest Rate Election shall be irrevocable and
the conversion from interest at the Fixed Rate to interest at the Floating
Rate shall be effective on the Interest Rate Election Date. From and after
the Interest Rate Election Date and for each Interest Accrual Period ending
prior to the end of such Floating Rate Period beginning on such Interest Rate
Election Date, interest on all of the Securities of this series shall accrue
at the Floating Rate. As used herein, the "Interest Rate Election Date" shall
mean the Interest Payment Date on which the Interest Rate Election is
exercised, as set forth in the Interest Rate Election Notice.
Notwithstanding the foregoing, upon the occurrence of the Swap Termination
Date, if the Securities of this series shall then bear interest at the
Floating Rate, the Holders of not less than 66 2/3% in aggregate principal
amount of the Securities of this series will have the right to elect to
convert the interest rate on all, but not less than all, of the Securities of
this series from the Floating Rate to the Fixed Rate by delivering to the
Company and the Trustee irrevocable written notice of such Holders' election
to so convert the interest rate. Such notice to the Company and the Trustee
shall set forth the name of the Holders exercising such right and a statement
that the Swap Termination Date has occurred and that the Holders wish to
exercise their right to convert the interest rate pursuant to this Section.
Any exercise of such conversion right shall be irrevocable. Upon receipt of
such notice by the Company, (i) any Floating Rate Period then in effect shall
terminate, (ii) a Fixed Rate Period will then be in effect and be deemed to
have been in effect at all times from the then most recent Interest Payment
Date on which interest has been paid or duly provided for (or, if no interest
has been paid or duly provided for on any Interest Payment Date, October 1,
1997) and (iii) no Floating Rate Period shall thereafter be in effect at any
time.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security upon compliance with certain conditions
set forth in the Indenture.
This Security is subject to optional redemption, in a whole but not in part,
from time to time and at any time (such redemption, an "Optional Redemption",
and the date thereof, the "Optional Redemption Date"), upon not less than 30
days' notice to the Holders (with a copy thereof to the Swap Counterparty), at
a redemption price equal to the sum of (A) the greater of (i) 100% of the
principal amount hereof to be redeemed and (ii) the sum of the present values
of the Remaining Scheduled Payments hereon discounted to the Optional
Redemption Date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 15 basis points, less the
Applicable Accrued Interest Amount, plus (B) the Applicable Accrued Interest
Amount plus (C) any payment required to be made by the Trust under the Swap
Agreement in respect of the termination of the Swap Agreement resulting from
such Optional Redemption.
"Applicable Accrued Interest Amount" means, at the Optional Redemption Date,
the amount of interest accrued and unpaid from the prior Interest Payment Date
(or, in the case of the first Interest Accrual Period, from October 1, 1997)
to the Optional Redemption Date on the Notes subject to the Optional
Redemption determined at the Fixed Rate, regardless of whether a Fixed Rate
Period or Floating Rate Period is then in effect.
"Comparable Treasury Issue" means the United States Treasury security selected
by an Independent Investment Banker as having a maturity 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 term of the Securities of this series to be redeemed
pursuant to the Optional Redemption. "Independent Investment Banker" means
one of the Reference Treasury Dealers appointed by the Trustee after
consultation with the Company.
"Comparable Treasury Price" means, with respect to the Optional Redemption
Date, the average of the Reference Treasury Dealer Quotations for such
Optional Redemption Date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or if the Trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
Quotations.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Chase
Securities Inc., CS First Boston Corporation, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Morgan Stanley & Co. Incorporated and their respective
successors; provided, however, that if any of the foregoing shall cease to be
a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer") the Company will substitute therefor another Primary Treasury
Dealer. "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by 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 Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Remaining Scheduled Payments" means the remaining scheduled payments of the
principal hereof to be redeemed and interest hereon that would be due after
the Optional Redemption Date but for the Optional Redemption and if such
interest were determined at the Fixed Rate (regardless of whether a Fixed Rate
Period or a Floating Rate Period is then in effect).
"Treasury Rate" means, with respect to the Optional Redemption Date (if any),
the rate per annum equal to the semi-annual equivalent yield to maturity of
the Comparable Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Optional Redemption Date.
Interest installments whose Stated Maturity is on or prior to such Optional
Redemption Date will be payable to Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.
The Securities of this series are not subject to redemption at the option of
any Holder prior to maturity and will not be subject to any sinking fund.
If an Event of Default with respect to Securities of this series shall occur
and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
at the time Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of a majority in the principal
amount of the Securities of each series at the time Outstanding, on behalf of
the Holders of all Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of
this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously
given the Trustee written notice of a continuing Event of Default with respect
to the Securities of this series, the Holders of not less than 35% in
principal amount of the Securities of this series at the time Outstanding
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee reasonably
satisfactory indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin and
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $100,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
ARTICLE THREE
Original Issue of Debentures
Section 301. Debentures in the aggregate principal amount of
$100,000,000, may, upon execution of this Third Supplemental Indenture, or
from time to time thereafter, be executed by the Company and delivered to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Debentures upon a Company Order without any further action by the
Company.
ARTICLE FOUR
Paying Agent and Security Registrar
Section 401. The Fifth Third Bank will be the Paying Agent and
Security Registrar for the Debentures.
ARTICLE FIVE
Sundry Provisions
Section 501. Except as otherwise expressly provided in this
Third Supplemental Indenture or in the form of Debenture or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said
form of Debenture that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.
Section 502. The Indenture, as supplemented by this Third
Supplemental Indenture, is in all respects ratified and confirmed, and this
Third Supplemental Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.
_______________________________
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this Third
Supplemental Indenture to be duly executed as of the day and year first above
written.
THE CINCINNATI GAS & ELECTRIC COMPANY
By /s/ William L. Sheafer
-------------------------------
William L. Sheafer
Vice President and Treasurer
THE FIFTH THIRD BANK, as Trustee
By /s/ Kerry Byrne
-------------------------------
Authorized Signature