Exhibit 1
APPALACHIAN POWER COMPANY
Underwriting Agreement
Dated _______________, 1994
AGREEMENT made among APPALACHIAN POWER COMPANY, a corpo-
ration organized and existing under the laws of the Commonwealth
of Virginia (the Company), and the several persons, firms and
corporations (the Underwriters) named in Exhibit 1 hereto.
WITNESSETH:
WHEREAS, the Company proposes to issue and sell 300,000
shares of its _____% Cumulative Preferred Stock, without par
value (the Stock); and
WHEREAS, the Underwriters have designated the person signing
this Agreement (the Representative) to execute this Agreement on
behalf of the respective Underwriters and to act for the
respective Underwriters in the manner provided in this Agreement;
and
WHEREAS, the Company has prepared and filed, in accordance
with the provisions of the Securities Act of 1933 (the Act), with
the Securities and Exchange Commission (the Commission), a
registration statement and prospectus relating to the Stock and
such registration statement has become effective; and
WHEREAS, such registration statement, as it may have been
amended through the time the same first became effective (the
Effective Date), including the financial statements, the
documents incorporated or deemed incorporated therein by
reference, the exhibits thereto and the information deemed to be
part thereof pursuant to Rule 430A(b) of the Commission's General
Rules and Regulations under the Act (the "Rules"), being herein
called the Registration Statement, the prospectus included in the
Registration Statement when the same became effective that omits
the information, if any, deemed to be a part thereof pursuant to
Rule 430A(b) of the Rules, being herein called the Preliminary
Prospectus and the prospectus, including the price and terms of
the offering, the dividend rate and certain information relating
to the Underwriters of the Stock first filed with the Commission,
in accordance with Rule 430A and pursuant to Rule 424(b) of the
Rules, including all documents then incorporated or deemed to
have been incorporated therein by reference being herein called
the Prospectus.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, it is agreed between the
parties as follows:
1. Purchase and Sale: Upon the basis of the warranties
and representations and on the terms and subject to the
conditions herein set forth, the Company agrees to sell to the
respective Underwriters named in Exhibit 1 hereto, severally and
not jointly, and the respective Underwriters, severally and not
jointly, agree to purchase from the Company, at the price of $100
per share, the respective numbers of shares of Stock set opposite
their names in Exhibit 1 hereto, together aggregating all of the
Stock, which the Underwriters agree will be offered to the public
at an initial public offering price equal to $____ per share.
The Company agrees to pay to the Representative for the
respective accounts of the Underwriters named in Exhibit 1 hereto
$_____ per share as compensation.
2. Payment and Delivery: Payment for the Stock shall be
made to the Company or its order by certified or bank check or
checks, payable in New York Clearing House funds, at the office
of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York,
New York 10017-3909, or at such other place as the Company and
the Representative shall mutually agree in writing, upon the
delivery of the Stock to the Representative for the respective
accounts of the Underwriters against receipt therefor signed by
the Representative on behalf of itself and for the other
Underwriters. The Company contemporaneously will pay to the
Representative for the accounts of the respective Underwriters
against receipt therefor the aggregate compensation of the
Underwriters by certified or bank check or checks payable in New
York Clearing House funds at said office. Such payments and
delivery shall be made at 10:00 A.M., New York Time, on
______________, 1994 (or on such later business day, not more
than five business days subsequent to such day, as may be
designated by the Company), unless postponed in accordance with
the provisions of Section 7 hereof. The time at which payment
and delivery are to be made is herein called the Time of
Purchase.
Delivery of the certificates for the Stock shall be made in
definitive form registered in such names and denominations as the
Representative may request in writing to the Company not later
than three full business days prior to the Time of Purchase, or
if no such request is received, in the respective names of the
Underwriters for the respective amounts of Stock opposite their
names in Exhibit 1 in denominations selected by the Company. If
the Representative shall request that any certificates be issued
in a name other than that of the Underwriter agreeing to purchase
the shares represented thereby, such Underwriter shall pay any
transfer taxes resulting from such issuance.
The Company agrees to make such certificates available for
inspection by the Representative at the office of First Chicago
Trust Company of New York, 525 Washington Street, Jersey City,
New Jersey, at least 20 hours prior to the Time of Purchase.
3. Conditions of Underwriters' Obligations: The several
obligations of the Underwriters hereunder are subject to the
accuracy in all material respects of the warranties and
representations on the part of the Company and to the following
other conditions:
(a) That all legal proceedings to be taken and all
legal opinions to be rendered in connection with
the issue and sale of the Stock shall be
satisfactory in form and substance to Winthrop,
Stimson, Putnam & Roberts, counsel to the Under-
writers.
(b) That, at the Time of Purchase, the Representative
shall be furnished with the following opinions,
dated the day of the Time of Purchase, with
conformed copies or signed counterparts thereof
for each of the other Underwriters, with such
changes therein as may be agreed upon by the
Company and the Representative with the approval
of Winthrop, Stimson, Putnam & Roberts, counsel to
the Underwriters:
(1) Opinion of Simpson Thacher & Bartlett, of New
York, New York, counsel to the Company,
substantially in the form heretofore made
available to the Underwriters;
(2) Opinion of Winthrop, Stimson, Putnam &
Roberts, of New York, New York, counsel to
the Underwriters, substantially in the form
heretofore made available to the
Underwriters.
(c) That the Representative shall have received a
letter from Deloitte & Touche in form and
substance satisfactory to the Representative,
dated as of the day of the Time of Purchase, (i)
confirming that they are independent public
accountants within the meaning of the Act and the
applicable published rules and regulations of the
Commission thereunder, (ii) stating that in their
opinion the financial statements audited by them
and included or incorporated by reference in the
Registration Statement complied as to form in all
material respects with the then applicable
accounting requirements of the Commission,
including the applicable published rules and
regulations of the Commission and (iii) covering
as of a date not more than five business days
prior to the day of the Time of Purchase such
other matters as the Representative reasonably
requests.
(d) That no amendment to the Registration Statement
and that no prospectus or prospectus supplement of
the Company (other than the Prospectus) and no
document which would be deemed incorporated in the
Prospectus by reference filed subsequent to the
date hereof and prior to the Time of Purchase
shall contain material information substantially
different from that contained in the Registration
Statement which is unsatisfactory in substance to
the Representative or unsatisfactory in form to
Winthrop, Stimson, Putnam & Roberts, counsel to
the Underwriters.
(e) That, at the Time of Purchase, appropriate orders
of the State Corporation Commission of Virginia
and the Tennessee Public Service Commission,
necessary to permit the sale of the Stock to the
Underwriters, shall be in effect; and that, prior
to the Time of Purchase, no stop order with
respect to the effectiveness of the Registration
Statement shall have been issued under the Act by
the Commission or proceedings therefor initiated.
(f) That, at the Time of Purchase, there shall have
been no change in the business, properties or
financial condition of the Company from that set
forth in the Prospectus (other than changes
referred to in or contemplated by the Prospectus),
except changes arising from transactions in the
ordinary course of business, none of which
individually has, or in the aggregate have, had a
material adverse effect on the business, proper-
ties or financial condition of the Company, and
that the Company shall, at the Time of Purchase,
have delivered to the Representative a
certificate, dated the day of the Time of
Purchase, of an executive officer of the Company
to the effect that, to the best of his knowledge,
information and belief, there has been no such
change.
(g) That the Company shall have performed such of its
obligations under this Agreement as are to be
performed at or before the Time of Purchase by the
terms hereof.
4. Certain Covenants of the Company: In further
consideration of the agreements of the Underwriters herein
contained, the Company covenants as follows:
(a) As soon as the Company is advised thereof, to
advise the Representative and confirm the advice
in writing of any request made by the Commission
for amendments to the Registration Statement,
Preliminary Prospectus or Prospectus or for
additional information with respect thereto or of
the entry of a stop order suspending the
effectiveness of the Registration Statement or of
the initiation or threat of any proceedings for
that purpose and, if such a stop order should be
entered by the Commission, to make every reason-
able effort to obtain the prompt lifting or
removal thereof.
(b) To deliver to the Underwriters, without charge, as
soon as practicable (and in any event within 24
hours after the date hereof), and from time to
time thereafter during such period of time (not
exceeding nine months) after the date hereof as
they are required by law to deliver a prospectus,
as many copies of the Prospectus (as supplemented
or amended if the Company shall have made any
supplements or amendments thereto) as the
Representative may reasonably request; and in case
any Underwriter is required to deliver a
prospectus after the expiration of nine months
after the date hereof, to furnish to any
Underwriter, upon request, at the expense of such
Underwriter, a reasonable quantity of a
supplemental prospectus or of supplements to the
Prospectus complying with Section 10(a)(3) of the
Act.
(c) To furnish to the Representative a copy, certified
by the Secretary or an Assistant Secretary of the
Company, of the Registration Statement as
initially filed with the Commission and of all
amendments thereto (exclusive of exhibits), and,
upon request, to furnish to the Representative
sufficient plain copies thereof (exclusive of
exhibits) for distribution of one to each of the
other Underwriters.
(d) For such period of time (not exceeding nine
months) after the date hereof as they are required
by law to deliver a prospectus, if any event shall
have occurred as a result of which it is necessary
to amend or supplement the Prospectus in order to
make the statements therein true or, in the light
of the circumstances when the Prospectus is
delivered to a purchaser, not misleading in any
material respect, forthwith to prepare and
furnish, at its own expense, to the Underwriters
and to dealers (whose names and addresses are fur-
nished to the Company by the Representative) to
whom shares of the Stock may have been sold by the
Representative for the accounts of the
Underwriters and, upon request, to any other
dealers making such request, copies of such
amendments to the Prospectus or supplements to the
Prospectus.
(e) As soon as practicable, the Company will make
generally available to its security holders and to
the Underwriters an earning statement of the
Company and its subsidiaries which will satisfy
the provisions of Section 11(a) of the Act.
(f) To use its best efforts to qualify the Stock for
offer and sale under the securities or "blue sky"
laws of such jurisdictions as the Representative
may designate within six months after the date
hereof and itself to pay, or to reimburse the
Underwriters and their counsel for, reasonable
filing fees and expenses in connection therewith
in an amount not exceeding $5,000 in the aggregate
(including filing fees and expenses paid and
incurred prior to the effective date hereof),
provided, however, that the Company shall not be
required to qualify as a foreign corporation or to
file a consent to service of process or to file
annual reports or to comply with any other
requirements deemed by the Company to be unduly
burdensome.
(g) To pay all expenses, fees and taxes (other than
transfer taxes on sales by the respective
Underwriters) in connection with the issuance and
delivery of the Stock, except that the Company
shall be required to pay the fees and
disbursements (other than disbursements referred
to in paragraph (f) of this Section 4) of
Winthrop, Stimson, Putnam & Roberts, counsel to
the Underwriters, only in the events provided in
paragraph (h) of this Section 4, the Underwriters
hereby agreeing to pay such fees and disbursements
in any other event.
(h) If the Underwriters shall not take up and pay for
the Stock due to the failure of the Company to
comply with any of the conditions specified in
Section 3 hereof, or, if this Agreement shall be
terminated in accordance with the provisions of
Section 7 or 8 hereof, to pay the fees and
disbursements of Winthrop, Stimson, Putnam &
Roberts, counsel to the Underwriters, and, if the
Underwriters shall not take up and pay for the
Stock due to the failure of the Company to comply
with any of the conditions specified in Section 3
hereof, to reimburse the Underwriters for their
reasonable out-of-pocket expenses, in an aggregate
amount not exceeding a total of $10,000, incurred
in connection with the financing contemplated by
this Agreement.
5. Warranties of and Indemnity by the Company:
(a) The Company warrants and represents to each of the
Underwriters that (i) the Registration Statement
on the Effective Date did, and the Prospectus when
first filed in accordance with Rule 424(b) and at
the Time of Purchase will, comply, or be deemed to
comply, in all material respects with the
applicable provisions of the Act and the published
rules and regulations of the Commission, (ii) the
Registration Statement on the Effective Date did
not contain any untrue statement of a material
fact or omit to state a material fact required to
be stated therein or necessary to make the
statements therein not misleading (other than
material omitted in reliance upon Rule 430A), and
(iii) the Prospectus when first filed in
accordance with Rule 424(b) and at the Time of
Purchase will not contain any untrue statement of
a material fact or omit to state a material fact
required to be stated therein or necessary in
order to make the statements therein, in the light
of the circumstances under which they were made,
not misleading, except that the Company makes no
warranty or representation to any Underwriter with
respect to any statements or omissions made
therein in reliance upon and in conformity with
information furnished in writing to the Company by
the Representative on behalf of any Underwriter
expressly for use therein.
(b) The Company agrees, to the extent permitted by
law, to indemnify and hold harmless each of the
Underwriters and each person, if any, who controls
any such Underwriter within the meaning of Section
15 of the Act, against any and all losses, claims,
damages or liabilities, joint or several, to which
they or any of them may become subject under the
Act or otherwise, and to reimburse the
Underwriters and such controlling person or
persons, if any, for any legal or other expenses
incurred by them in connection with defending any
action, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based
upon any alleged untrue statement of a material
fact contained in the Registration Statement, in
the Preliminary Prospectus or in the Prospectus,
or if the Company shall furnish or cause to be
furnished to the Underwriters any amendments or
any supplements to the Prospectus, in the
Prospectus as so amended or supplemented (provided
that if such Prospectus or such Prospectus, as
amended or supplemented, is used after the period
of time referred to in Section 4(d) hereof, it
shall contain such amendments or supplements as
the Company deems necessary to comply with Section
10(a) of the Act), or arise out of or are based
upon any alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein, in the
light of the circumstances under which they were
made, not misleading, except insofar as such
losses, claims, damages, liabilities or actions
arise out of or are based upon any such alleged
untrue statement or omission which was made in the
Registration Statement, in the Preliminary
Prospectus, or in the Prospectus as so amended or
supplemented, in reliance upon and in conformity
with information furnished in writing to the
Company by the Representative on behalf of any
Underwriter expressly for use therein, and except
that this indemnity shall not inure to the benefit
of any Underwriter (or of any person controlling
such Underwriter) on account of any losses,
claims, damages, liabilities or actions arising
from the sale of shares of the Stock to any person
if a copy of the Prospectus or the Prospectus as
the same may then be supplemented or amended
(excluding, however, any document then
incorporated or deemed incorporated therein by
reference) was not sent or given by or on behalf
of such Underwriter to such person with or prior
to the written confirmation of the sale involved
and the alleged omission or alleged untrue
statement was corrected in the Prospectus or in
the Prospectus as supplemented or amended at the
time of such confirmation. Each Underwriter
agrees within ten days after the receipt by it of
notice of the commencement of any action in
respect to which indemnity from the Company on
account of its agreement contained in this Section
5(b) may be sought by it, or by any person
controlling it, to notify the Company in writing
of the commencement thereof, but the failure of
such Underwriter so to notify the Company of any
such action shall not release the Company from any
liability which it may have to such Underwriter or
to such controlling person otherwise than on
account of the indemnity agreement contained in
this Section 5(b). In case any such action shall
be brought against any Underwriter or any such
person controlling such Underwriter and such
Underwriter shall notify the Company of the
commencement thereof, as above provided, the
Company shall be entitled to participate in (and,
to the extent that it shall wish, including the
selection of counsel, to direct) the defense
thereof at its own expense. In case the Company
elects to direct such defense and select such
counsel (hereinafter, Company's counsel), any
Underwriter or any controlling person shall have
the right to employ its own counsel, but, in any
such case, the fees and expenses of such counsel
shall be at the expense of such Underwriter or
controlling person unless (i) the Company has
agreed in writing to pay such fees and expenses or
(ii) the named parties to any such action
(including any impleaded parties) include both any
Underwriter or any controlling person and the
Company, and any Underwriter or any controlling
person shall have been advised by its counsel that
a conflict of interest between the Company and any
Underwriter or any controlling person may arise
(and the Company's counsel shall have concurred
with such advice) and for this reason it is not
desirable for the Company's counsel to represent
both the indemnifying party and the indemnified
party (it being understood, however, that the
Company shall not, in connection with any one such
action or separate but substantially similar or
related actions in the same jurisdiction arising
out of the same general allegations or
circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of
attorneys for any Underwriter or any controlling
person (plus any local counsel retained by any
Underwriter or any controlling person in their
reasonable judgment), which firm (or firms) shall
be designated in writing by any Underwriter or any
controlling person). The Company shall not be
liable in the event of any settlement of any such
action effected without its consent.
The Company's indemnity agreement contained in Section 5(b)
hereof, and its covenants, warranties and representations
contained in this Agreement, shall remain in full force and
effect regardless of any investigation made by or on behalf of
any person, and shall survive the delivery of and payment for the
Stock hereunder.
6. Warranties of and Indemnity by Underwriters:
(a) Each Underwriter warrants and represents that the
information furnished in writing to the Company
through the Representative for use in the
Registration Statement, in the Prospectus, in the
Preliminary Prospectus, or in the Prospectus, as
amended or supplemented, is correct as to such
Underwriter.
(b) Each Underwriter agrees, to the extent permitted
by law, to indemnify, hold harmless and reimburse
the Company, its directors and such of its
officers as shall have signed the Registration
Statement, and each person, if any, who controls
the Company within the meaning of Section 15 of
the Act, to the same extent and upon the same
terms as the indemnity agreement of the Company
set forth in Section 5(b) hereof, but only with
respect to alleged untrue statements or omissions
made in the Registration Statement, in the
Preliminary Prospectus, in the Prospectus, or in
the Prospectus as so amended or supplemented, in
reliance upon and in conformity with information
furnished in writing to the Company by the
Representative on behalf of such Underwriter
expressly for use therein.
The indemnity agreement on the part of each Underwriter
contained in Section 6(b) hereof, and the warranties and
representations of such Underwriter contained in this Agreement,
shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or other
person, and shall survive the delivery of and payment for the
Stock hereunder.
7. Substitution of Underwriters: If any Underwriter under
this Agreement shall fail or refuse (whether for some reason
sufficient to justify its termination of its obligations to
purchase or otherwise) to purchase the shares of the Stock which
it had agreed to purchase, the Company shall immediately notify
the Representative, and the Representative may, within 24 hours
of receipt of such notice, procure some other responsible party
or parties satisfactory to the Company to purchase or agree to
purchase such shares of the Stock on the terms herein set forth;
and, if the Representative shall fail to procure a satisfactory
party or parties to purchase or agree to purchase such shares of
the Stock on such terms within such period after the receipt of
such notice, then the Company shall be entitled to an additional
period of 24 hours within which to procure another party or
parties to purchase or agree to purchase such shares of the Stock
on the terms herein set forth. In any such case, either the
Representative or the Company shall have the right to postpone
the Time of Purchase for a period not to exceed five full
business days from the date determined as provided in Section 2
hereof, in order that the necessary changes in the Registration
Statement and Prospectus and any other documents and arrangements
may be effected. If the Representative and the Company shall
fail to procure a satisfactory party or parties, as above
provided, to purchase or agree to purchase such shares of the
Stock, then this Agreement shall terminate. In the event of any
such termination, the Company shall not be under any liability to
any Underwriter (except to the extent, if any, provided in
Section 4(h) hereof), nor shall any Underwriter (other than an
Underwriter who shall have failed or refused to purchase shares
of the Stock without some reason sufficient to justify, in
accordance with the terms hereof, its termination of its
obligations hereunder) be under any liability to the Company or
any other Underwriter.
Nothing herein contained shall release any defaulting
Underwriter from its liability to the Company or any non-
defaulting Underwriter for damages occasioned by its default
hereunder.
8. Termination of Agreement: This Agreement may be
terminated at any time prior to the Time of Purchase by the
Representative if, after the execution and delivery of this
Agreement and prior to the Time of Purchase, in the
Representative's reasonable judgment, the Underwriters' ability
to market the Stock shall have been materially adversely affected
because:
(i) trading in securities on the New York Stock
Exchange shall have been generally suspended by the
Commission or by the New York Stock Exchange, or
(ii) (A) a war involving the United States of America
shall have been declared, (B) any other national calamity
shall have occurred, or (C) any conflict involving the armed
services of the United States of America shall have
escalated, or
(iii) a general banking moratorium shall have been
declared by Federal or New York State authorities, or
(iv) there shall have been any decrease in the ratings
of any of the Company's preferred stock by Moody's Investors
Services, Inc. (Moody's) or Standard & Poor's Corporation
(S&P) or either Moody's or S&P shall publicly announce that
it has any of such preferred stock under consideration for
possible downgrade.
If the Representative elects to terminate this Agreement, as
provided in this Section 8, the Representative will promptly
notify the Company by telephone or by telex or facsimile
transmission, confirmed in writing. If this Agreement shall not
be carried out by any Underwriter for any reason permitted
hereunder, or if the sale of the Stock to the Underwriters as
herein contemplated shall not be carried out because the Company
is not able to comply with the terms hereof, the Company shall
not be under any obligation under this Agreement and shall not be
liable to any Underwriter or to any member of any selling group
for the loss of anticipated profits from the transactions
contemplated by this Agreement (except that the Company shall
remain liable to the extent provided in Section 4(h) hereof) and
the Underwriters shall be under no liability to the Company nor
be under any liability under this Agreement to one another.
9. Notices: All notices hereunder shall, unless otherwise
expressly provided, be in writing and be delivered at or mailed
to the following addresses or by telex or facsimile transmission
confirmed in writing to the following addresses: if to the
Underwriters, to Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, as Representative, c/o Syndicate Operations, World
Financial Center-North Tower, New York, New York 10281-1305 (fax
212/449-2784), and, if to the Company, to Appalachian Power
Company, c/o American Electric Power Service Corporation, 1
Riverside Plaza, Columbus, Ohio 43215, attention of G. P.
Maloney, Vice President, (fax 614/223-1687).
10. Parties in Interest: The agreement herein set forth
has been and is made solely for the benefit of the Underwriters,
the Company (including the directors thereof and such of the
officers thereof as shall have signed the Registration
Statement), the controlling persons, if any, referred to in
Sections 5 and 6 hereof, and their respective successors,
assigns, executors and administrators, and, except as expressly
otherwise provided in Section 7 hereof, no other person shall
acquire or have any right under or by the virtue of this
Agreement.
11. Definition of Certain Terms: If there be two or more
persons, firms or corporations named in Exhibit 1 hereto, the
term "Underwriters", as used herein, shall be deemed to mean the
several persons, firms or corporations, so named (including the
Representative herein mentioned, if so named) and any party or
parties substituted pursuant to Section 7 hereof, and the term
"Representative", as used herein, shall be deemed to mean the
representative or representatives designated by, or in the manner
authorized by, the Underwriters. All obligations of the
Underwriters hereunder are several and not joint. If there shall
be only one person, firm or corporation named in Exhibit 1
hereto, the term "Underwriters" and the term "Representative", as
used herein, shall mean such person, firm or corporation. The
term "successors" as used in this Agreement shall not include any
purchaser, as such purchaser, of any of the shares of the Stock
from any of the respective Underwriters.
12. Conditions of the Company's Obligations: The
obligations of the Company hereunder are subject to the
Underwriters' performance of their obligations hereunder, and the
further condition that at the Time of Purchase the State
Corporation Commission of Virginia and the Tennessee Public
Service Commission shall have issued appropriate orders, and such
orders shall remain in full force and effect, authorizing the
transactions contemplated hereby.
13. Execution of Counterparts: This Agreement may be
executed in several counterparts, each of which shall be regarded
as an original and all of which shall constitute one and the same
document.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, on the date first above written.
APPALACHIAN POWER COMPANY
By_____________________________
G. P. Maloney
Vice President
MERRILL LYNCH, PIERCE, FENNER
& SMITH, INCORPORATED, as
Representative and on behalf
of the Underwriters named
in Exhibit 1 hereto
By____________________________
apcocps.94\undrwrit.s-3
EXHIBIT 1
Number
of Shares
to be
Name Purchased
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Goldman, Sachs & Co.
Total . . . . . . . . . . . . . 300,000