Exhibit 1(b)
SWEPCO Capital I
Trust Preferred Securities
(liquidation preference $25 per preferred security)
guaranteed by
Southwestern Electric Power Company
UNDERWRITING AGREEMENT
............, 1997
Smith Barney Inc.,
[Names of Co-Representatives]
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
From time to time, SWEPCO Capital I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust") and Southwestern Electric
Power Company, a Delaware corporation, as depositor of the Trust and as
guarantor (the "Guarantor"), each proposes to enter into one or more Pricing
Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such
additions and deletions as the parties thereto may determine, and, subject to
the terms and conditions stated herein and therein, to issue and sell to the
firms named in Schedule I to the applicable Pricing Agreement (such firms
constituting the "Underwriters" with respect to such Pricing Agreement and the
securities specified therein) certain of the Trust's Trust Preferred Securities
(liquidation preference $25 per preferred security) (the "Securities")
representing undivided beneficial interests in the assets of the Trust,
guaranteed by the Guarantor as to the payment of distributions, and as to
payments on liquidation or redemption, as set forth in a guarantee agreement
(the "Guarantee") between the Guarantor and The Bank of New York, as trustee
(the "Guarantee Trustee"). The Securities represented by such Pricing Agreement
are referred to as the "Designated Securities" with respect to such Pricing
Agreement. The proceeds of the sale of the Securities and certain of the Trust's
Common Securities (liquidation preference $25 per common security) (the "Common
Securities") by the Trust are to be invested in Junior Subordinated Deferrable
Interest Debentures (the "Subordinated Debentures") of the Guarantor, to be
issued pursuant to an Indenture (the "Indenture") between the Guarantor and The
Bank of New York, as trustee (the "Debenture Trustee"), as heretofore
supplemented and amended, including by the supplemental indenture relating to
the Subordinated Debentures in which the proceeds of the sale of the Designated
Securities are to be invested.
The terms and rights of any particular issuance of Designated Securities
shall be as specified in the Pricing Agreement relating thereto.
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to Underwriters who act without any firm being designated
as their representative. This Underwriting Agreement shall not be construed as
an obligation of the Trust to sell any of the Securities or as an obligation of
any of the Underwriters to purchase any of the Securities. The obligation of the
Trust to issue and sell any of the Securities and the obligation of any of the
Underwriters to purchase any of the Securities shall be evidenced by the Pricing
Agreement with respect to the Designated Securities specified therein. Each
Pricing Agreement shall specify the aggregate number of Designated Securities,
the initial public offering price of such Securities or the manner of
determining such price, the terms of the Designated Securities, the purchase
price to the Underwriters of such Designated Securities, the names of the
Underwriters of such Designated Securities, the names of the Representatives of
such Underwriters, the number of such Designated Securities to be purchased by
each Underwriter and the commission, if any, payable to the Underwriters with
respect thereto and shall set forth the date, time and manner of delivery of
such Securities, and payment therefor. The Pricing Agreement shall also specify
(to the extent not set forth in the registration statement and prospectus with
respect thereto) the terms of such Designated Securities. A Pricing Agreement
shall be in the form of an executed writing (which may be in counterparts), and
may be evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of communications
transmitted. The obligations of the Underwriters under this Agreement and each
Pricing Agreement shall be several and not joint.
2. Each of the Guarantor and the Trust, jointly and severally,
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333- ) (the
"Initial Registration Statement") in respect of the Securities, the
Guarantee and the Subordinated Debentures (collectively, the "Registered
Securities"), including a prospectus relating to the Registered
Securities, and the offering thereof from time to time in accordance
with Rule 415 under the Securities Act of 1933, as amended (the "Act"),
has been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any post-effective
amendment thereto, each in the form heretofore delivered or to be
delivered to the Representatives and, excluding exhibits to such
registration statement but including all documents incorporated by
reference in the prospectus included therein, to the Representatives for
each of the other Underwriters has been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Act, which becomes
effective upon filing, no other document with respect to the Initial
Registration Statement or document incorporated by reference therein has
heretofore been filed, or transmitted for filing, with the Commission
(other than prospectuses filed pursuant to Rule 424 of the rules and
regulations of the Commission under the Act, each in the form heretofore
delivered to the Representatives); and no stop order suspending the
effectiveness of the Initial Registration Statement, and post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened, to the knowledge of the Guarantor or the Trust, by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) under the Act, is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement and the 462(b)
Registration Statement, if any, including all exhibits thereto and the
documents incorporated by reference in the prospectus contained in the
Initial Registration Statement at the time such part of the Initial
Registration Statement became effective (but excluding Form T-1) or such
part of the Rule 462(b) Registration Statement, if any, became or
hereafter becomes effective, each as amended at the time such part of
the Initial Registration Statement became effective, are hereinafter
collectively called the "Registration Statement"; the prospectus
relating to the Registered Securities in the form in which it has most
recently been filed, or transmitted for filing, with the Commission on
or prior to the date of this Agreement is hereinafter called the
"Prospectus"; any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to the applicable form under
the Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated
by reference in such Preliminary Prospectus or Prospectus, as the case
may be; any reference to any amendment to the Registration Statement
shall be deemed to refer to and include any annual report of the
Guarantor filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Registration Statement that is
incorporated by reference in the Registration Statement; and any
reference to the Prospectus as amended or supplemented shall be deemed
to refer to the Prospectus as amended or supplemented in relation to the
applicable Designated Securities in the form in which it is filed with
the Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof, including any documents incorporated by reference
therein as of the date of such filing).
(b) The documents incorporated by reference in the Prospectus as
amended or supplemented, when they became effective or were filed with
the Commission, as the case may be, conformed in all material respects
to the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and any further documents so
filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective or
are filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder
and will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; PROVIDED, HOWEVER, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Trust or the Guarantor by an Underwriter of
Designated Securities through the Representatives expressly for use in
the Prospectus as amended or supplemented relating to such Securities.
(c) The Registration Statement, as of its effective date, and the
Prospectus, at the time it is filed with the Commission, conform and
will conform, as the case may be, and any further amendments or
supplements to the Registration Statement or the Prospectus will
conform, in all material respects with the applicable requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission
thereunder; neither the Registration Statement, nor any amendment
thereto, as of the applicable effective date, contains an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and the Prospectus and any amendment or supplement thereto
at the time it is filed with the Commission, does not include and will
not include an untrue statement of a material fact and does not omit and
will not omit to state a material fact necessary to make the statements
therein in light of the circumstances under which they were made not
misleading; PROVIDED, HOWEVER, that this representation and warranty
shall not apply to the part of the Registration Statement that
constitutes the statement of eligibility on Form T-1 under the Trust
Indenture Act of the Property Trustee, the Delaware Trustee and the
Guarantor Trustee and any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Trust or
the Guarantor by an Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Securities.
(d) Since the respective dates as of which information is given
in the Registration Statement and in the Prospectus as amended or
supplemented, there has been no (i) material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Guarantor and its subsidiaries, taken as a whole, or
(ii) adverse development concerning the business or assets of the
Guarantor and its subsidiaries, taken as a whole, which would result in
a material adverse change in the prospective financial condition or
results of operations of the Guarantor and its subsidiaries, taken as a
whole, except such changes as are set forth or contemplated in such
Registration Statement or the Prospectus as amended or supplemented
(including the financial statements and notes thereto included or
incorporated by reference therein).
(e) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Business Trust Act
of the State of Delaware (the "Delaware Business Trust Act") with the
power and authority to own its properties and conduct its business as
described in the Prospectus as amended or supplemented, and the Trust
has conducted and will conduct no business in the future that would be
inconsistent with the description of the Trust set forth in the
Prospectus as amended or supplemented; the Trust is not a party to or
bound by any agreement or instrument other than this Agreement, the
Trust Agreement (the "Trust Agreement") between the Guarantor and the
trustees named therein (the "Trustees"), the Trust Certificate (as
hereinafter defined) and the agreements and instruments contemplated by
the Trust Agreement; the Trust has no liabilities or obligations other
than those arising out of the transactions contemplated by this
Agreement and the Trust Agreement and described in the Prospectus; based
on current law, the Trust is not classified as an association taxable as
a corporation for United States federal income tax purposes; and the
Trust is not a party to or subject to any action, suit or proceeding of
any nature.
(f) The Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus as amended or
supplemented, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business so as to require such qualification except where
the failure to so qualify would not have a material adverse effect on
the financial condition of the Guarantor and its subsidiaries, taken as
a whole.
(g) The Guarantor has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Guarantor have been duly and validly authorized and issued and are fully
paid and non-assessable.
(h) The Guarantor has no significant subsidiaries, as
"significant subsidiary" is defined in Rule 405 of Regulation C of the
rules and regulations promulgated by the Commission under the Act.
(i) This Agreement has been duly authorized, executed and
delivered by each of the Guarantor and the Trust.
(j) The Securities have been duly and validly authorized by the
Trust in accordance with the Trust Agreement, and, when issued and
delivered pursuant to this Agreement and the Pricing Agreement with
respect to such Designated Securities, such Designated Securities, will
be duly and validly issued and fully paid and non-assessable undivided
beneficial interests in the assets of the Trust and be entitled to the
benefits of the Trust Agreement; the Securities conform in all material
respects to the description thereof contained in the Registration
Statement and the Designated Securities will conform in all material
respects to the description thereof contained in the Prospectus as
amended or supplemented; the issuance of the Securities is not subject
to preemptive or other similar rights; and the terms of the Securities
are valid and binding on the Trust; the Securities will be entitled to
the same limitation of personal liability extended to stockholders of
private corporations for profit organized under the General Corporation
Law of the State of Delaware.
(k) Other than as set forth in the Prospectus as amended or
supplemented, there are no legal or governmental proceedings pending or,
to the knowledge of the Guarantor, threatened to which the Guarantor or
any of its subsidiaries is a party or to which any of the properties of
the Guarantor or any of its subsidiaries is subject, which are required
to be described in the Prospectus, as amended or supplemented; and there
are no contracts or other documents that are required to be described in
the Registration Statement or the Prospectus as amended or supplemented
or to be filed as exhibits to the Registration Statement that are not
described or filed as required.
(l) The Guarantor (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) has received all permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) is in compliance with all
terms and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would
not, singly or in the aggregate, have a material adverse effect on the
Guarantor and its subsidiaries, taken as a whole.
(m) The Common Securities have been duly and validly authorized
by the Trust in accordance with the Trust Agreement and upon issuance
and delivery by the Trust to the Guarantor against payment therefor as
described in the Prospectus, will be duly and validly issued and fully
paid and non-assessable undivided beneficial interests in the assets of
the Trust and be entitled to the benefits of the Trust Agreement; the
Common Securities conform in all material respects to the description
thereof contained in the Prospectus as amended or supplemented; the
issuance of the Common Securities is not subject to preemptive or other
similar rights; and at the Time of Delivery (as defined in Section 4
hereof), all of the issued and outstanding Common Securities of the
Trust will be directly owned by the Guarantor free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(n) The Guarantee Agreement has been duly and validly authorized
by the Guarantor and when executed and delivered by the Guarantor and by
the Guarantee Trustee will have been duly executed and delivered and
will constitute a valid and legally binding obligation of the Guarantor
enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law); and the Guarantee Agreement has been qualified under
the Trust Indenture Act.
(o) The Subordinated Debentures have been duly and validly
authorized by the Guarantor and when executed, authenticated and
delivered in accordance with the Indenture will have been duly executed,
authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Guarantor enforceable in accordance
with their terms, except as limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization and other similar laws relating to
or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law) and
the Subordinated Debentures are entitled to the benefits of the
Indenture.
(p) The Trust Agreement has been duly and validly authorized by
the Guarantor and when executed and delivered by the Guarantor and by
the Administrative Trustees will have been duly executed and delivered
and will constitute a valid and legally binding obligation of the
Guarantor enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law); and the Trust Agreement has been qualified under the
Trust Indenture Act.
(q) The Indenture has been duly and validly authorized by the
Guarantor and when executed and delivered by the Guarantor and the
Debenture Trustee will have been duly executed and delivered and will
constitute a valid and legally binding obligation of the Guarantor
enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law); and the Indenture has been qualified under the Trust
Indenture Act.
(r) The Expense Agreement between the Guarantor and the Trust
(the "Expense Agreement") has been duly and validly authorized by the
Guarantor and when executed and delivered by the Guarantor and the
Trust, will have been duly executed and delivered and will constitute a
valid and legally binding obligation of the Guarantor enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization and other similar laws relating to
or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(s) The Commission has entered an order (the "Order") under the
Public Utility Holding Company Act of 1935, as amended (the "1935 Act"),
permitting to become effective the Form U-1 Application-Declaration
filed by the Guarantor authorizing the creation of the Trust, the issue
and sale of the Securities by the Trust, the issuance and delivery of
the Common Securities by the Trust, the issuance and sale of the
Subordinated Debentures by the Guarantor and the execution, delivery and
performance of the Guarantee. A copy of such order heretofore entered by
the Commission has been or will be delivered to Smith Barney Inc. on
behalf of the Representatives.
(t) The issue and sale of the Securities and the Common
Securities by the Trust, the compliance by the Trust with all of the
provisions of this Agreement and any Pricing Agreement, the execution,
delivery and performance by the Trust of the Expense Agreement, the
purchase of the Subordinated Debentures by the Trust, and the
consummation of the transactions contemplated herein and therein will
not conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture or other
material agreement or instrument to which the Trust is a party or by
which the Trust is bound or to which any of the property or assets of
the Trust is subject, nor will such action result in any violation of
the provisions of the Certificate of Trust of the Trust or the Trust
Agreement or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Trust or any
of its properties; and no consent, approval, authorization, order,
license, certificate, permit, registration or qualification of or with
any such court or governmental agency or body, other than the Order,
which has been duly obtained and is in full force and effect, is
required, for the issue and sale of the Securities and the Common
Securities by the Trust, the purchase of the Subordinated Debentures by
the Trust or the consummation by the Trust of the transactions
contemplated by this Agreement or any Pricing Agreement, except such as
have been, or will have been prior to the Time of Delivery (as defined
in Section 4 hereof), obtained under the Act and the Exchange Act, of
the Registered Securities and the Securities, respectively, the
qualification of the Trust Agreement, the Indenture and the Guarantee
Agreement under the Trust Indenture Act, and such consents, approvals,
authorizations, orders, licenses, certificates, permits, registrations
or qualifications as have already been obtained, or as may be
subsequently obtained in the ordinary course of business, or as may be
required under state securities or Blue Sky laws in connection with the
purchase of the Securities and the distribution of the Securities by the
Underwriters.
(u) The issuance by the Guarantor of the Guarantee, the
compliance by the Guarantor with all of the provisions of this Agreement
and any Pricing Agreement, the execution, delivery and performance by
the Guarantor of the Guarantee Agreement, the Subordinated Debentures,
the Trust Agreement, the Indenture and the Expense Agreement, and the
consummation of the transactions contemplated herein and therein will
not conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture or other
material agreement or instrument to which the Guarantor or any of its
subsidiaries is a party or by which the Guarantor or any of its
subsidiaries is bound or to which any of the property or assets of the
Guarantor or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Restated Certificate of
Incorporation or by-laws of the Guarantor or the charter or by-laws of
any of its subsidiaries or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Guarantor or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, license, certificate, permit,
registration or qualification of or with any such court or other
governmental agency or body, other than the Order, which has been duly
obtained and is in full force and effect, is required for the issue of
the Guarantee or the consummation by the Guarantor of the other
transactions contemplated by this Agreement or any Pricing Agreement,
except the registration under the Act of the Registered Securities, the
qualification of the Trust Agreement, the Indenture and the Guarantee
under the Trust Indenture Act and such consents, approvals,
authorizations, orders, licenses, certificates, permits, registrations
or qualifications as have already been obtained, or as may be
subsequently obtained in the ordinary course of business, or as may be
required under state securities or Blue Sky laws and in connection with
the purchase of the Securities and distribution of the Securities by the
Underwriters.
(v) Neither the Trust nor the Guarantor is in violation of its
organizational documents or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any indenture or other material agreement or instrument to which it
is a party or by which it or any of its properties may be bound.
(w) Neither the Trust nor the Guarantor is, and after giving
effect to the offering and sale of the Securities, neither the Trust nor
the Guarantor will be, an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(x) There are no contracts, agreements or understandings between
the Trust or the Guarantor and any person that grant such person the
right to require the Trust or the Guarantor to file a registration
statement under the Act with respect to any undivided beneficial
interests in the assets of the Trust or any capital stock of the
Guarantor owned or to be owned by such person or to require the Trust or
the Guarantor to include such securities in the securities registered
pursuant to the Registration Statement.
(y) Arthur Andersen LLP, who have certified certain financial
statements of the Guarantor and the Guarantor's subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities, the several Underwriters propose to offer the Designated
Securities for sale upon the terms and conditions set forth in the Prospectus as
amended or supplemented.
4. Certificates for the Designated Securities to be purchased by each
Underwriter pursuant to the Pricing Agreement relating thereto, in the form
specified in such Pricing Agreement, and in such authorized denominations and
registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Trust, shall be delivered by or on behalf
of the Trust to the Representatives for the account of such Underwriter, against
payment by such Underwriter or on its behalf of the purchase price therefor in
immediately available funds by wire transfer to an account designated in writing
by the Trust as specified in such Pricing Agreement, all in the manner and at
the place and time and date as the Representatives and the Trust may agree upon
in writing, such time and date being herein called the "Time of Delivery".
5. Each of the Trust and the Guarantor, jointly and severally, agrees
with each of the Underwriters of any Designated Securities:
(a) To prepare the Prospectus as amended and supplemented in
relation to the applicable Designated Securities in a form approved by
the Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of the Pricing
Agreement relating to the applicable Designated Securities, or, if
applicable, such time as may be required by Rule 424(b) under the Act;
to make no further amendment or any supplement to the Registration
Statement or Prospectus as amended or supplemented after the date of the
Pricing Agreement relating to such Securities and prior to any Time of
Delivery for such Securities which shall be disapproved in writing by
the Representatives for such Securities promptly after reasonable notice
thereof; to advise the Representatives promptly of any such amendment or
supplement after any Time of Delivery for such Securities and furnish
the Representatives with copies thereof; to file promptly all reports
and any definitive proxy or information statements required to be filed
by the Trust or the Guarantor with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the
delivery of a prospectus is required in connection with the offering or
sale of such Securities, and during such same period to advise the
Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any prospectus relating to the Securities, of the suspension
of the qualification of the Registered Securities for offering or sale
in any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or
for additional information; and, in the event of the issuance of any
such stop order or of any such order preventing or suspending the use of
any prospectus relating to the Securities or suspending any such
qualification, promptly to use its best efforts to obtain the withdrawal
of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Securities for
offering and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of such
Securities, provided that in connection therewith neither the Trust nor
the Guarantor shall be required to qualify as a foreign corporation or
trust or to qualify as a dealer in Securities or to file any general
consents to service of process in any jurisdiction;
(c) To use its best efforts to furnish, prior to 12:00 noon, New
York City time, on the New York Business Day next succeeding the date of
the applicable Pricing Agreement and from time to time during the period
when a prospectus is required to be delivered under the Act by any
Underwriter or dealer, the Underwriters with copies of the Prospectus as
amended or supplemented in New York City in such quantities as the
Representatives may reasonably request, and if, in the reasonable
opinion of counsel to the Guarantor, the delivery of a prospectus is
required at any time in connection with the offering or sale of the
Securities and if at such time any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would in the
reasonable opinion of counsel for the Guarantor include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus or to
file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply in the reasonable opinion of counsel
for the Guarantor with the Act or the Exchange Act, to notify the
Representatives and upon their request to file such document and to
prepare and furnish without charge to each Underwriter and to any dealer
in securities as many copies as the Representatives may from time to
time reasonably request of an amended Prospectus or a supplement to the
Prospectus, if any, which will correct such statement or omission or
effect such compliance;
(d) To make generally available to its security holders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Guarantor and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Guarantor, Rule 158);
(e) During the period beginning from the date of the Pricing
Agreement for such Designated Securities and continuing to and including
the earlier of (i) the date, after the Time of Delivery, on which the
distribution of the Securities ceases, as determined by the
Representatives on behalf of the Underwriters, and (ii) 30 days after
the Time of Delivery for such Designated Securities, not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder,
any securities of the Trust, any other beneficial interests of the
Trust, or any preferred securities or any other securities of the Trust
or the Guarantor, as the case may be, that are substantially similar to
the Designated Securities, including the Guarantee, and including but
not limited to any securities that are convertible into or exchangeable
for, or that represent the right to receive securities, preferred
securities or any such substantially similar securities of either the
Trust or the Guarantor, without the prior consent of the
Representatives;
(f) To issue the Guarantee concurrently with the issue and sale
of the Securities as contemplated herein;
(g) To use its best efforts to list, subject to notice of
issuance, the Securities on the New York Stock Exchange; and
(h) If the Trust and the Guarantor elect to rely upon Rule
462(b), to file a Rule 462(b) Registration Statement with the Commission
in compliance with Rule 462(b) by 10:00 p.m. Washington, D.C. time, on
the date of the applicable Pricing Agreement, and at the time of filing
either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act.
6. The Guarantor covenants and agrees with the several Underwriters that
it will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Trust's and the Guarantor's counsel and accountants in
connection with the registration of the Registered Securities under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
any amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers, excluding the fees and disbursements of
counsel for the Underwriters, except as set forth in clause (iii) below and
Section 11 hereof; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, any Pricing Agreement, the Indenture, the
Guarantee, any Blue Sky Memorandum and any other documents in connection with
the offering, purchase, sale and delivery of the Registered Securities; (iii)
all expenses in connection with the qualification of the Registered Securities
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky surveys,
not exceeding however $6,000 in the aggregate; (iv) any fees charged by
securities rating services for rating the Securities; (v) the cost and charges
of the transfer agent or registrar; (vi) the cost of qualifying the Securities
with The Depository Trust Company; (vii) all reasonable fees and expenses of the
Trustees, the Debenture Trustee, the Guarantee Trustee and their counsel; (viii)
all fees and expenses in connection with the listing of the Securities on the
New York Stock Exchange and the cost of registering the Securities under Section
12 of the Exchange Act; and (ix) the cost of preparing certificates for the
Securities and the Subordinated Debentures. It is understood, however, that,
except as provided in this Section and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Securities by them, and
any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities
under the Pricing Agreement relating to such Designated Securities shall be
subject, in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Trust and the
Guarantor in or incorporated by reference in the Pricing Agreement relating to
such Designated Securities are, at and as of each Time of Delivery for such
Designated Securities, true and correct, the condition that the Trust and the
Guarantor shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to such
Designated Securities shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with
Section 5(a) hereof; if the Trust and the Guarantor have elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 p.m. Washington, D.C. time, on the date of the
applicable Pricing Agreement; no stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been issued
and no proceeding for that purpose shall have been initiated or, to the
knowledge of the Guarantor or the Representatives, threatened by the
Commission;
(b) Sidley & Austin, counsel for the Underwriters, shall have
furnished to the Representatives such opinion or opinions (a draft of
each such opinion is attached as Annex II(a) hereto), dated each Time of
Delivery for such Designated Securities, with respect to: the
incorporation of the Guarantor; insofar as the federal laws of the
United States or the General Corporation Law of the State of Delaware is
concerned, the validity of the Registered Securities and the
Subordinated Debentures; the Registration Statement and the Prospectus;
and other related matters as the Representatives may reasonably request;
and such counsel shall have received such papers and information as they
may reasonably request to enable them to pass upon such matters;
(c) Richards, Layton & Finger, P.A., special Delaware counsel for
the Guarantor and the Trust, shall have furnished to the Representatives
their written opinion (a draft of such opinion is attached as Annex
II(b) hereto), dated each Time of Delivery for such Designated
Securities, in form and substance satisfactory to the Representatives,
to the effect set forth in such Annex;
(d) Milbank, Tweed, Hadley & McCloy, counsel for the Trust and
the Guarantor, shall have furnished to the Representatives their written
opinion (a draft of such opinion is attached as Annex II(c) hereto),
dated each Time of Delivery for such Designated Securities, in form and
substance satisfactory to the Representatives, to the effect set forth
in such Annex;
(e) Christy & Viener, special tax counsel for the Guarantor and
the Trust, shall have furnished to the Representatives their written
opinion (a draft of such opinion is attached as Annex II(d) hereto),
dated each Time of Delivery for such Designated Securities, in form and
substance satisfactory to the Representatives, to the effect set forth
in such Annex;
(f) [ ], special Arkansas counsel for the Guarantor and the
Trust, shall have furnished to the Representatives their written opinion
(a draft of such opinion is attached as Annex II(e) hereto), dated each
Time of Delivery for such Designated Securities, in form and substance
satisfactory to the Representatives, to the effect set forth in such
Annex;
(g) [ ], special Oklahoma counsel for the Guarantor and the
Trust, shall have furnished to the Representatives their written opinion
(a draft of such opinion is attached as Annex II(f) hereto), dated each
Time of Delivery for such Designated Securities, in form and substance
satisfactory to the Representatives, to the effect set forth in such
Annex;
(h) [ ], special Louisiana counsel for the Guarantor and the
Trust, shall have furnished to the Representatives their written opinion
(a draft of such opinion is attached as Annex II(g) hereto), dated each
Time of Delivery for such Designated Securities, in form and substance
satisfactory to the Representatives, to the effect set forth in such
Annex;
(i) [ ], special Texas counsel for the Guarantor and the Trust,
shall have furnished to the Representatives their written opinion (a
draft of such opinion is attached as Annex II(h) hereto), dated each
Time of Delivery for such Designated Securities, in form and substance
satisfactory to the Representatives, to the effect set forth in such
Annex;
(j) On the date of the Pricing Agreement for such Designated
Securities at a time prior to the execution of the Pricing Agreement
with respect to the Designated Securities and at each Time of Delivery
for such Designated Securities, Arthur Andersen LLP shall have furnished
to the Representatives a letter, dated the effective date of the
Registration Statement or the date of the most recent report filed with
the Commission containing financial statements and incorporated by
reference in the Registration Statement, if the date of such report is
later than such effective date, and a letter dated such Time of
Delivery, respectively, to the effect set forth in Annex III hereto, and
with respect to such letter dated such Time of Delivery, as to such
other matters as the Representatives may reasonably request and in form
and substance satisfactory to the Representatives; (a draft of the form
of letter to be delivered at a time prior to the execution of the
Pricing Agreement, on the effective date of any post-effective amendment
to the Registration Statement and as of each Time of Delivery may be
attached as Annex III hereto);
Subsequent to the respective dates as of which information is
given in each of the Registration Statement and the Prospectus, there
shall not have been any change or decrease specified in the letters
required by subsection (g) of this Section 7 which is, in the judgment
of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the
delivery of the Designated Securities as contemplated by the
Registration Statement and the Prospectus;
(k) The Trust Agreement, the Guarantee and the Indenture shall
have been executed and delivered, in each case in a form reasonably
satisfactory to the Representatives;
(l) Since the respective dates as of which information is given
in each of the Registration Statement and in the Prospectus as amended
prior to the date of the Pricing Agreement relating to the Designated
Securities there shall have been no (i) material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Guarantor and its subsidiaries, taken as a whole, or
(ii) any adverse development concerning the business or assets of the
Guarantor and its subsidiaries, taken as a whole, which would result in
a material adverse change in the prospective financial condition or
results of operations of the Guarantor and its subsidiaries, taken as a
whole, except such changes as are set forth or contemplated in such
Registration Statement or the Prospectus as amended prior to the date of
the Pricing Agreement relating to the Designated Securities (including
the financial statements and notes thereto included or incorporated by
reference in the Registration Statement);
(m) On or after the date of the Pricing Agreement relating to the
Designated Securities no downgrading shall have occurred in the rating
accorded the Securities or the Guarantor's debt securities or preferred
stock by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2)
under the Act;
(n) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a suspension
or material limitation in trading in the Guarantor's or the Trust's
securities on the New York Stock Exchange; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York
State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
war, if the effect of any such event specified in this Clause (iv) in
the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Designated Securities on the terms and in the manner contemplated in the
Prospectus as first amended or supplemented relating to the Designated
Securities;
(o) The Securities at each Time of Delivery shall have been
approved for listing, subject to notice of issuance, on the New York
Stock Exchange; and
(p) The Trust and the Guarantor shall have furnished or caused to
be furnished to the Representatives at each Time of Delivery for
Designated Securities certificates of officers or Administrative
Trustees of the Trust (as defined in the Trust Agreement), as
applicable, of the Guarantor and the Trust, satisfactory to the
Representatives, as to the accuracy of the representations and
warranties of the Trust and the Guarantor herein at and as of such Time
of Delivery, as to the performance by the Trust and the Guarantor of all
of their obligations hereunder to be performed at or prior to such Time
of Delivery, as to the matters set forth in subsections (a) and (l) of
this Section and as to such other matters as the Representatives may
reasonably request.
8. (a) The Trust and the Guarantor, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such Underwriter or such
controlling person may become subject under the Securities Act, the Exchange Act
or the common law or otherwise, and to reimburse each such Underwriter or such
controlling person for any reasonable legal or other expenses (including, to the
extent hereinafter provided, reasonable counsel fees) incurred by it or them in
connection with defending against any such losses, claims, damages or
liabilities, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Guarantor shall have furnished any amendments or supplements
thereto) or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the indemnity agreement contained in this
subsection (a) shall not apply to any such losses, claims, damages or
liabilities arising out of or based upon (i) any such untrue statement or
alleged untrue statement, or any such omission or alleged omission, if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Trust or the Guarantor by any of the
Underwriters for use in the Registration Statement or the Prospectus or any
amendment or supplement to either thereof or (ii) the failure of any Underwriter
to deliver (either directly or through the Representatives) a copy of the
Prospectus (excluding the documents incorporated therein by reference), or of
the Prospectus as amended or supplemented after it shall have been amended or
supplemented by the Guarantor (excluding the documents incorporated therein by
reference), to any person to whom a copy of any preliminary prospectus shall
have been delivered by or on behalf of such Underwriter and to whom any
Designated Securities shall have been sold by such Underwriter, as such delivery
may be required by the Securities Act and the rules and regulations of the
Commission thereunder.
(b) Each of the Underwriters, severally and not jointly, agrees to
indemnify and hold harmless the Trust and the Guarantor, each of their officers
who signs the Registration Statement, each of their directors, each person who
controls the Trust or the Guarantor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each other Underwriter and
each person, if any, who so controls such other Underwriter, from and against
any and all losses, claims, damages or liabilities, joint or several, to which
any one or more of them may become subject under the Securities Act, the
Exchange Act or the common law or otherwise, and to reimburse each of them for
any reasonable legal or other expenses (including, to the extent hereinafter
provided, reasonable counsel fees) incurred by them in connection with defending
against any such losses, claims, damages or liabilities of the character above
specified arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus or any amendment to the Registration Statement or amendment or
supplement to the Prospectus or upon any omission or alleged omission to state
in any thereof a material fact required to be stated therein or necessary to
make the statements therein not misleading if such statement or omission was
made in reliance upon and in conformity with information furnished in writing to
the Trust or the Guarantor by such Underwriter for use in the Registration
Statement or the Prospectus or any amendment or supplement to either thereof or
(ii) the failure of such Underwriter, due to the negligence of such Underwriter,
to deliver (either directly or through the Representatives) a copy of the
Prospectus (excluding the documents incorporated therein by reference), or of
the Prospectus as amended or supplemented after it shall have been amended or
supplemented by the Guarantor (excluding the documents incorporated therein by
reference), to any person to whom a copy of any preliminary prospectus shall
have been delivered by or on behalf of such Underwriter and to whom any
Designated Securities shall have sold by such Underwriter, as such delivery may
be required by the Securities Act and the rules and regulations of the
Commission thereunder.
(c) Promptly after receipt by a party indemnified under this Section 8
(an "indemnified party") of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against a
party granting an indemnity under this Section 8 (the "indemnifying party"),
notify the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent that it may
elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof (thereby conceding that the action in question is subject to
indemnification by the indemnifying party), with counsel reasonably satisfactory
to such indemnified party, and shall pay the fees and disbursements of such
counsel related to such action; provided, however, that if the defendants in any
such action include both the indemnified party and the indemnifying party and
representation of both parties would be inappropriate due to actual or potential
differing interests between them, the indemnified party or parties shall have
the right to select separate counsel. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel), approved by the
Representatives in the case of subsection (a), representing the indemnified
parties under subsection (a) who are parties to such action and that all such
fees and expenses shall be reimbursed as they are incurred) or (ii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that such liability
shall be only in respect of the counsel referred to in clause (i) or (ii). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in this Section 8 shall be
unenforceable under applicable law by an indemnified party, the Trust and the
Guarantor, jointly and severally, agree to contribute to such indemnified party
with respect to any and all losses, claims, damages and liabilities for which
such indemnification provided for in this Section 8 shall be unenforceable, in
such proportion as shall be appropriate to reflect the relative fault of the
Trust and the Guarantor on the one hand and the indemnified party on the other
hand in connection with the statements or omissions which have resulted in such
losses, claims, damages and liabilities, as well as any other relevant equitable
considerations; provided, however, that no indemnified party guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from the Trust or the
Guarantor if the Trust or the Guarantor, respectively, is not guilty of such
fraudulent misrepresentation. Relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Trust or the Guarantor or the indemnified
party and each such party's relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Trust, the Guarantor and each of the Underwriters agree that it would not be
just and equitable if contribution pursuant to this subparagraph were to be
determined solely by PRO RATA allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above.
(e) The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
(f) The indemnity and contribution agreements contained in this Section
8 and the representations and warranties of the Trust and the Guarantor in the
Underwriting Agreement shall remain operative and in full force regardless of
(i) any termination of the Underwriting Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of the Trust or the Guarantor, their directors or officers or
any person controlling the Trust or the Guarantor and (iii) acceptance of and
payment for any of the Designated Securities.
9. (a) If any Underwriter shall default in its obligation to purchase
the Designated Securities which it has agreed to purchase under the Pricing
Agreement relating to such Designated Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Designated Securities on the terms contained herein. If within
twenty-four hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Designated Securities, then the Trust and
the Guarantor shall be entitled to a further period of twenty-four hours within
which to procure another party or other parties satisfactory to the
Representatives to purchase such Designated Securities on such terms. In the
event that, within the respective prescribed period, the Representatives notify
the Trust and the Guarantor that they have so arranged for the purchase of such
Designated Securities, or the Trust or the Guarantor notifies the
Representatives that it has so arranged for the purchase of such Designated
Securities, the Representatives or the Trust and the Guarantor shall have the
right to postpone a Time of Delivery for a period of not more than seven days,
in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus as amended or supplemented, or in any
other documents or arrangements, and the Trust and the Guarantor agree to file
promptly any amendments or supplements to the Registration Statement or the
Prospectus which may be required in the opinion of counsel for the Guarantor.
The term "Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had originally
been a party to the Pricing Agreement with respect to such Designated
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Trust and the Guarantor as provided in subsection (a)
above, the aggregate number of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate number of the
Designated Securities to be purchased at the respective Time of Delivery, then
the Trust and the Guarantor shall have the right to require each non-defaulting
Underwriter to purchase the number of Designated Securities which such
Underwriter agreed to purchase under the Pricing Agreement relating to such
Designated Securities and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Designated
Securities which such Underwriter agreed to purchase under such Pricing
Agreement) of the Designated Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Trust and the Guarantor as provided in subsection (a)
above, the aggregate number of Designated Securities which remains unpurchased
exceeds one-eleventh of the aggregate number of Designated Securities to be
purchased at the respective Time of Delivery, as referred to in subsection (b)
above, or if the Trust and the Guarantor shall not exercise the right described
in subsection (b) above to require non-defaulting Underwriters to purchase
Designated Securities of a defaulting Underwriter or Underwriters, then the
Pricing Agreement relating to such Designated Securities shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter, the
Trust or the Guarantor, except for the expenses to be borne by the Guarantor and
the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Trust, the Guarantor and the several Underwriters,
as set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Trust, the Guarantor or any officer, trustee or director or controlling person
of the Trust or the Guarantor, and shall survive delivery of and payment for the
Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, neither the Trust nor the Guarantor shall then be under any liability to
any Underwriter with respect to the Designated Securities with respect to which
such Pricing Agreement shall have been terminated except as provided in Sections
6 and 8 hereof; but, if any Pricing Agreement shall be terminated by the
Underwriters, or any of them, because of any failure or refusal on the part of
the Trust or the Guarantor to comply with the terms or to fulfill any of the
conditions of the Pricing Agreement (excluding those conditions set forth in
Section 7(j) hereof), or if for any reason the Trust or the Guarantor shall be
unable to perform its obligations under the Pricing Agreement, the Trust and the
Guarantor will reimburse the Underwriters or such Underwriters who have so
terminated the Pricing Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of Underwriters'
counsel) reasonably incurred by such Underwriters in connection with the Pricing
Agreement or the offering contemplated thereunder. Neither the Trust nor the
Guarantor shall in any event be liable to any of the Underwriters for damages on
account of loss of anticipated profits.
12. In all dealings hereunder, the Representatives of the Underwriters
of Designated Securities shall act on behalf of each of such Underwriters, and
the parties hereto shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Trust or the Guarantor shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Trust or the
Guarantor, respectively, set forth in the Registration Statement, Attention:
Secretary; provided, however that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire, or telex constituting such Questionnaire, which address will be
supplied to the Trust and the Guarantor by the Representatives upon request. Any
such statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Trust, the Guarantor and,
to the extent provided in Sections 8 and 10 hereof, the officers, trustees and
directors of the Guarantor and the Trust and each person who controls the Trust,
the Guarantor or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement or any such Pricing
Agreement. No purchaser of any of the Securities from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, the term "business day" shall mean any day when the Commission's office
in Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please
sign and return to us __________ counterparts hereof.
Very truly yours,
Southwestern Electric Power Company
By:_____________________________
Name:
Title:
SWEPCO Capital I
By: Southwestern Electric Power
Company, as Depositor
By:_____________________________
Name:
Title:
Accepted as of the date hereof:
Smith Barney Inc.
[Names of Co-Representatives]
By:________________________________
(Smith Barney Inc.)
On behalf of each of the Underwriters
ANNEX I
PRICING AGREEMENT
Smith Barney Inc.,
[Names of Co-Representative(s),]
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o Smith Barney Inc.,
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
SWEPCO Capital I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust") and Southwestern Electric Power Company, a
Delaware corporation (the "Guarantor"), each proposes, subject to the terms and
conditions stated herein and in the Underwriting Agreement, dated ________, 1997
(the "Underwriting Agreement"), among the Trust and the Guarantor on the one
hand and Smith Barney Inc. [and (names of Co-Representatives named therein)] on
the other hand, to issue and sell to the Underwriters named in Schedule I hereto
(the "Underwriters") the Securities specified in Schedule II hereto (the
"Designated Securities"). Each of the provisions of the Underwriting Agreement
is incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities which are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and on behalf
of each of the Underwriters of the Designated Securities pursuant to Section 12
of the Underwriting Agreement and the address of the Representatives referred to
in such Section 12 are set forth in Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Trust agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Trust, at the time and place and
at the purchase price to the Underwriters set forth in Schedule II hereto, the
number of Designated Securities set forth opposite the name of such Underwriter
in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us _________ counterparts hereof, and upon acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof, including the provisions of the Underwriting Agreement incorporated
herein by reference, shall constitute a binding agreement between each of the
Underwriters and the Trust and the Guarantor. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is or will be
pursuant to the authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted to the Trust and the Guarantor for
examination but without warranty on the part of the Representatives as to the
authority of the signers thereof.
Very truly yours,
SWEPCO Capital I
By:_____________________
Name:
Title:
Southwestern Electric Power Company
By:_____________________
Name:
Title:
Accepted as of the date hereof:
Smith Barney Inc.
[Name(s) of Co-Representative(s)]
By:________________________________
(Smith Barney Inc.)
On behalf of each of the Underwriters
SCHEDULE I
UNDERWRITER Number of
Designated Securities
TO BE PURCHASED
Smith Barney Inc.
[Name(s) of Co-Representative(s)]
[Names of other Underwriters]
Total
SCHEDULE II
Title of Designated Securities:
Number of Designated Securities:
Initial Offering Price to Public:
[$___ per Preferred Security] [formula]
Purchase Price by Underwriters:
[$____ per Preferred Security][Formula]
[Commission Payable to Underwriters:
$_________ per Preferred Security in Federal (same day) Funds
[by wire transfer]]
Form of Designated Shares:
[Definitive form, to be made available for checking [and packaging] at least
twenty-four hours prior to the Time of Delivery at the office of [The Depository
Trust Company or its designated custodian] [the Representatives]]
[Book-entry only form represented by one or more global securities deposited
with The Depository Trust Company ("DTC") or its designated custodian for
trading in the Same Day Funds Settlement System of DTC, and to be made available
for checking by the Representatives at least twenty-four hours prior to the Time
of Delivery at the office of DTC.]
Specified Funds for Payment of Purchase Price:
[Federal (same day) Funds [by wire transfer]]
[Describe any blackout provisions with respect to the Designated Securities]
Time of Delivery:
____ a.m. (New York City time), _________, 19___
Closing Location:
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Names and addresses of Representatives:
Designated Representatives
Address for Notices, etc.:
[Other Terms]*:
- --------------------------
* A description of particular tax, accounting or other unusual features
(including any event risk provisions) of the Designated Securities should be set
forth, or referenced to an attached or accompanying description, if necessary,
to ensure agreement as to the terms of the Designated Securities to be purchased
and sold. Such a description might appropriately be in the form in which such
features will be described in the Prospectus Supplement for the offering.
ANNEX II(a)
Form of Opinion of Sidley & Austin
Smith Barney Inc.
[Names of Co-Representatives]
as Representatives of the Several Underwriters
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Re: SWEPCO CAPITAL I % TRUST PREFERRED SECURITIES, SERIES
Dear Ladies and Gentlemen:
We address this opinion to you individually and as
Representatives of the Underwriters (the "Underwriters") named in Schedule I to
the Pricing Agreement dated _________, 1997 (the "Pricing Agreement") among you,
as such Representatives, Southwestern Electric Power Company, a Delaware
corporation (the "Guarantor"), and SWEPCO Capital I, a statutory business trust
organized under the Business Trust Act of the State of Delaware (the "Trust"
and, together with the Guarantor, the "Offerors"), with respect to the issuance
and sale pursuant thereto and to the Underwriting Agreement dated _________,
1997 (together with the Pricing Agreement, the "Underwriting Agreement"), among
you, as such Representatives, and the Offerors of $___________ in aggregate
liquidation amount of the ____% Trust Preferred Securities, Series [__] ($25
liquidation preference per security), of the Trust (the "Securities"). The
Securities are being issued under the Amended and Restated Trust Agreement dated
as of ________, 1997 (the "Trust Agreement") among the Guarantor, The Bank of
New York, as Property Trustee, The Bank of New York (Delaware), as Delaware
Trustee, and the Administrative Trustees named therein. Capitalized terms not
defined herein have the meanings specified in the Underwriting Agreement.
As counsel for the Underwriters, we have, among other things,
participated with officers and representatives of the Guarantor, including its
counsel and independent public accountants, and representatives of the
Underwriters in the preparation of the Offerors' Registration Statement on Form
S-3 (Registration No. 333-________), filed on ________, 1997 with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), which registration statement became effective on
__________, 1997. Such registration statement at the time it became effective
(including all documents incorporated by reference therein pursuant to Item 12
of Form S-3 at the date hereof (the "Incorporated Documents")), is hereinafter
called the "Registration Statement." The Offerors' Prospectus Supplement dated
__________, 1997, which was filed with the Commission on ________, 1997,
together with the Prospectus dated _________, 1997 (including the Incorporated
Documents) included in the Registration Statement, are hereinafter collectively
called the "Prospectus."
Pursuant to Section 7(b) of the Underwriting Agreement, this will
advise you that in the opinion of the undersigned, as counsel for the
Underwriters:
1. The Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware;
2. Each of the Underwriting Agreement and the Pricing Agreement
has been duly authorized, executed and delivered by the Guarantor and by the
Guarantor as Depositor on behalf of the Trust;
3. The Indenture and the [First] Supplemental Indenture dated as
of ________, 1997 and as of _________, 1997, respectively (collectively the
"Indenture"), between the Guarantor and The Bank of New York, as trustee (the
"Indenture Trustee"), under which $________ aggregate principal amount of the
Guarantor's __% Junior Subordinated Deferrable Interest Debentures, Series ___
(the "Subordinated Debentures") are being issued on the date hereof, have been
duly qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
4. The Indenture has been duly authorized, executed and delivered
by the Guarantor and, assuming the Indenture has been duly authorized, executed
and delivered by the Indenture Trustee, constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms; and the Indenture conforms in all material respects to the
description thereof contained in the Prospectus;
5. The Guarantee Agreement dated as of ______, 1997 (the
"Guarantee") between the Guarantor and The Bank of New York, as trustee (the
"Guarantee Trustee"), has been duly qualified under the Trust Indenture Act.
6. The Guarantee has been duly authorized, executed and delivered
by the Guarantor and, assuming the Guarantee has been duly authorized, executed
and delivered by the Guarantee Trustee, constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms; and the Guarantee conforms in all material respects to the
description thereof contained in the Prospectus.
7. The Subordinated Debentures have been duly authorized,
executed and delivered by the Guarantor and, when authenticated, issued and
delivered as specified in or pursuant to the Indenture against payment of the
agreed consideration therefor as provided in __________, will constitute valid
and legally binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their respective terms and will be entitled to the
benefits provided by the Indenture; and the Subordinated Debentures conform in
all material respects to the description thereof contained in the Prospectus.
8. The Securities conform in all material respects to the
description thereof contained in the Prospectus and are entitled to the benefits
provided by the Trust Agreement.
9. The statements contained in the Prospectus under the captions
"Description of the Preferred Securities," "Description of the Guarantees,"
"Description of the Debentures," "Certain Terms of the Series __ Preferred
Securities," "Certain Terms of the Series __ Guarantee," "Certain Terms of the
Series __ Debentures" and "Relationship Among the Preferred Securities, the
Debentures and the Guarantees," insofar as such statements purport to constitute
a summary of the terms of the securities therein described, fairly summarize the
terms of such securities.
10. The statements set forth in the Prospectus under the captions
"Underwriting" and "Plan of Distribution," insofar as they purport to describe
the provisions of the laws or documents referred to therein, fairly summarize
the terms of such provisions.
11. The Registration Statement has become effective under the
Act; and, to our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose are
pending or threatened under the Act.
12. The Registration Statement, as of its effective date, and the
Prospectus, as of its issue date and the date hereof (except, in each case, for
the financial statements, financial data, statistical data and supporting
schedules included therein, as to which we express any opinion), complied and
complies as to form in all material respects with the Act and the rules and
regulations of the Commission promulgated thereunder.
13. The Trust is not an "investment company" or an entity
"controlled" by an "investment company" required to be registered under the 1940
Act.
14. The order of the Commission dated ________, 1997, in File No.
________, issued under the Public Utility Holding Company Act of 1935, as
amended, relating, among other things, to the creation of the Trust, the
issuance and sale of the Securities by the Trust, the issuance and sale of the
Subordinated Debentures by the Guarantor and the execution, delivery and
performance of the Guarantee (being the order of the Commission referred to in
subsection (s) of Section 2 of the Underwriting Agreement) has been entered and,
to our knowledge,is still in full force and effect. Except for the effectiveness
of the Registration Statement, no other approval, authorization, consent,
certificate or order of any commission or regulatory authority of the United
States of America is necessary with respect to the issuance and sale of the
Registered Securities by the Offerors as contemplated by the Underwriting
Agreement and the Prospectus.
In the course of the preparation of the Registration Statement
and the Prospectus, we have considered the information set forth therein in
light of the matters required to be set forth therein, and, as noted above, we
have participated in conferences with officers and representatives of the
Guarantor, including its counsel and independent public accountants, and your
representatives, during the course of which the contents of the Registration
Statement and the Prospectus and related matters were discussed. We have not
independently checked the accuracy or completeness of, or otherwise verified,
and, accordingly, are not passing upon, and do not assume responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus; and we have relied as to materiality,
to a large extent, upon the judgment of officers and representatives of the
Guarantor. However, as a result of such consideration and participation, nothing
has come to our attention which causes us to believe that the Registration
Statement (other than the financial statements, financial data, statistical data
and supporting schedules included therein, as to which we express no belief), at
the time it became effective, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus (other than
the financial statements, financial data, statistical data and supporting
schedules included therein, as to which we express no belief), at the time the
Registration Statement became effective and at the date hereof, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
For the purpose of rendering the foregoing opinions and
statements, we have relied, as to various questions of fact material to such
opinions and statements, upon the representations made in the Underwriting
Agreement and the Pricing Agreement and upon certificates of officers of the
Guarantor. We also have examined originals, or copies of originals certified to
our satisfaction, of such agreements, documents, certificates and other
statements of government officials and other instruments, have examined such
questions of law and have satisfied ourselves as to such matters of fact as we
have considered relevant and necessary as a basis for such opinions. We have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the legal capacity of all natural persons and the
conformity with the original documents of any copies thereof submitted to us for
our examination.
Except as otherwise stated in the third sentence of this
paragraph, this opinion is limited to the laws of the State of New York, the
General Corporation Law of the State of Delaware and the federal laws of the
United States of America.
Any opinion or statement herein which is expressed to be "to our
knowledge" or is otherwise qualified by words of like import means that the
lawyers in this firm who have had an involvement in the preparation of the
Registration Statement and the Prospectus and the transactions contemplated by
the Underwriting Agreement have no current conscious awareness of any facts or
information contrary to such opinion or statement.
The opinions expressed in paragraphs 4, 6 and 7 with respect to
the enforceability of the documents therein referenced are subject to the
qualification that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws affecting
creditors' rights generally and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
This letter is being delivered solely for the benefit of the
persons to whom it is addressed; accordingly, it may not be quoted, filed with
any governmental authority or other regulatory agency or otherwise circulated or
utilized for any other purpose without our prior written consent. We assume no
obligation to update this opinion after the date hereof.
Very truly yours,
Annex II(b)
Form of Opinion of Richards, Layton & Finger
____________, 1997
Smith Barney Inc.
Dean Witter Reynolds Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
c/o ______________
- -----------------
New York, New York _____
Re: SWEPCO CAPITAL I
Ladies and Gentlemen:
We have acted as special Delaware counsel for Southwestern
Electric Power Company, a Delaware corporation (the "Company"), and SWEPCO
Capital I, a Delaware business trust (the "Trust"), in connection with the
matters set forth herein. At your request, this opinion is being furnished to
you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of January
29, 1997 (the "Certificate"), as filed in the office of the Secretary of State
of the State of Delaware (the "Secretary of State") on January 29, 1997;
(B) THE TRUST AGREEMENT OF THE TRUST, DATED AS OF JANUARY 29,
1997, BETWEEN THE COMPANY AND THE TRUSTEES OF THE TRUST NAMED THEREIN
(COLLECTIVELY, THE "TRUSTEES"), AS AMENDED AND RESTATED PURSUANT TO AN AMENDED
AND RESTATED TRUST AGREEMENT OF THE TRUST, DATED AS OF JANUARY __, 1997, AMONG
THE COMPANY, THE TRUSTEES AND THE HOLDERS, FROM TIME TO TIME, OF THE UNDIVIDED
BENEFICIAL INTERESTS IN THE ASSETS OF THE TRUST (INCLUDING THE EXHIBITS C AND E
THERETO) (COLLECTIVELY, THE "TRUST AGREEMENT");
(C) THE UNDERWRITING AGREEMENT, DATED AS OF JANUARY __, 1997
TOGETHER WITH THE PRICING AGREEMENT, DATED AS OF JANUARY __, 1997 (COLLECTIVELY,
THE "UNDERWRITING AGREEMENT"), AMONG THE TRUST, THE COMPANY AND THE UNDERWRITERS
NAMED THEREIN;
(D) THE PROSPECTUS, DATED JANUARY __, 1997, as
supplemented by the Prospectus Supplement, dated January __, 1997 (collectively,
the "Prospectus"), relating to the ____% Trust Preferred Securities, Series A,
of the Trust representing preferred undivided beneficial interests in the assets
of the Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"); AND
(E) A CERTIFICATE OF GOOD STANDING FOR THE TRUST, DATED JANUARY
__, 1997, OBTAINED FROM THE SECRETARY OF STATE.
Capitalized terms used herein and not otherwise defined are used
as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (e) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (e) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i)
the authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation, and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation, due formation or
due organization, as the case may be, and valid existence in good standing of
each party to the documents examined by us under the laws of the jurisdiction
governing its creation, formation or organization, (iii) the legal capacity of
each signatory to the documents examined by us, (iv) except to the extent set
forth in paragraph 4 below, that each of the parties to the documents examined
by us has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) except to the extent provided in
paragraph 5 below, that each of the parties to the documents examined by us has
duly authorized, executed and delivered such documents, (VI) THE RECEIPT BY EACH
PERSON TO WHOM A PREFERRED SECURITY IS TO BE ISSUED BY THE TRUST (COLLECTIVELY,
THE "PREFERRED SECURITY HOLDERS") OF A PREFERRED SECURITIES CERTIFICATE AND THE
PAYMENT FOR THE PREFERRED SECURITY ACQUIRED BY IT, IN ACCORDANCE WITH THE TRUST
AGREEMENT, AND AS DESCRIBED IN THE PROSPECTUS, AND (VII) THAT THE PREFERRED
SECURITIES ARE ISSUED AND SOLD TO THE PREFERRED SECURITY HOLDERS IN ACCORDANCE
WITH THE TRUST AGREEMENT AND THE PROSPECTUS, (viii) the receipt by the Person
(the "Common Security Holder") to whom a Common Security of the Trust
representing common undivided beneficial interests in the assets of the Trust
(each, a "Common Security" and collectively, the "Common Securities") (the
Preferred Securities and the Common Securities being hereinafter collectively
referred to as "Trust Securities") is to be issued by the Trust of a Common
Securities Certificate for the Common Security and the payment for the Common
Security acquired by it, in accordance with the Trust Agreement, and as
described in the Prospectus, (ix) that the Common Securities are issued and sold
to the Common Security Holder in accordance with the Trust Agreement, and as
described in the Prospectus, (x) that the Trust derives no income from or
connected with sources within the State of Delaware and has no assets,
activities (other than having a Delaware trustee as required by the Delaware
Business Trust Act and filing documents with the Secretary of State) or
employees in the State of Delaware, and (xi) that the Trust is treated as a
grantor trust for federal income tax purposes. WE HAVE NOT PARTICIPATED IN THE
PREPARATION OF THE PROSPECTUS AND ASSUME NO RESPONSIBILITY FOR ITS CONTENTS.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions as set forth herein, we are of the opinion that:
2. The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act and all
filings required under the laws of the State of Delaware with respect to the
creation and valid existence of the Trust as a business trust have been made.
3. Under the Trust Agreement and the Delaware Business
Trust Act, the Trust has the trust power and authority to own its properties and
conduct its business, all as described in the Prospectus.
4. The Trust Agreement constitutes a legal, valid and binding
obligation of the Company and the Trustees, and is enforceable against the
Company and the Trustees, in accordance with its terms.
5. Under the Trust Agreement and the Delaware Business
Trust Act, the Trust has the power and authority to (A) execute and deliver, and
to perform its obligations under, the Underwriting Agreement, and (B) issue and
perform its obligations under the Trust Securities.
6. Under the Trust Agreement and the Delaware Business Trust
Act, the execution and delivery by the Trust of the Underwriting Agreement, and
the performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Trust.
7. The Preferred Securities have been duly authorized by the
Trust Agreement and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and nonassessable undivided
beneficial interests in the assets of the Trust and are entitled to the benefits
of the Trust Agreement (subject to the terms of the Trust Agreement). The
Preferred Security Holders, as beneficial owners of the Trust, will be entitled
to the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. We note that the Preferred Security Holders may be obligated,
pursuant to the Trust Agreement, (A) to provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from transfers or
exchanges of Preferred Securities Certificates and the issuance of replacement
Preferred Securities Certificates, and (B) to provide security or indemnity in
connection with requests of or directions to the Property Trustee to exercise
its rights and powers under the Trust Agreement.
8. The Common Securities have been duly authorized by the
Trust Agreement and are duly and validly issued undivided beneficial interests
in the assets of the Trust.
9. Under the Trust Agreement and the Delaware Business
Trust Act, the issuance of the Trust Securities is not subject to preemptive
rights.
10. The issuance and sale of the Trust Securities by the Trust,
the execution and delivery by the Trust of the Underwriting Agreement, the
consummation by the Trust of the transactions contemplated by the Underwriting
Agreement and compliance by the Trust with its obligations under the
Underwriting Agreement do not violate (A) any of the provisions of the
Certificate or the Trust Agreement or (B) any applicable Delaware law or
Delaware administrative regulation.
11. No authorization, approval, consent or order of any
Delaware court or any Delaware governmental authority or Delaware agency is
required to be obtained by the Trust solely in connection with the issuance and
sale of the Trust Securities.
12. The Preferred Security Holders (other than those Preferred
Security Holders who reside or are domiciled in the State of Delaware) will have
no liability for income taxes imposed by the State of Delaware solely as a
result of their participation in the Trust, and the Trust will not be liable for
any income tax imposed by the State of Delaware.
The opinions expressed in paragraphs 3 and 6 above are subject,
as to enforcement, to the effect upon the Trust Agreement of (i) bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation, fraudulent
conveyance or transfer and other similar laws relating to or affecting the
rights and remedies of creditors generally, (ii) principles of equity, including
applicable law relating to fiduciary duties (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions relating to
indemnification or contribution.
We consent to your relying as to matters of Delaware law upon this
opinion in connection with the Purchase Agreement. We also consent to Milbank,
Tweed, Hadley & McCloy and Sidley & Austin's relying as to matters of Delaware
law upon this opinion in connection with opinions to be rendered by them on the
date hereof pursuant to the Underwriting Agreement. Except as stated above,
without our prior written consent, this opinion may not be furnished or quoted
to, or relied upon by, any other Person for any purpose.
Very truly yours,
Annex II(c)
Form of Opinion of Milbank, Tweed, Hadley & McCloy
[-----------], [----]
Smith Barney Inc.
[-------------------]
c/o Smith Barney Inc.
390 Greenwich Street
New York, New York 10013
Re: SWEPCO Capital I
[ ][ ]% Trust Preferred Securities, Series
A
Ladies and Gentlemen:
We have acted as special counsel to Southwestern Electric Power
Company, a Delaware corporation (the "Company"), and SWEPCO Capital I, a
statutory business trust formed under the laws of the State of Delaware ("SWEPCO
Capital"), in connection with the purchase by you, severally, from SWEPCO
Capital, pursuant to the Underwriting Agreement and related Pricing Agreement,
each dated [__________], [____] (together, the "Underwriting Agreement"), among
you, SWEPCO Capital and the Company, of [_________] [____]% Trust Preferred
Securities, Series A ("Preferred Securities"). The Preferred Securities will be
issued pursuant to the Amended and Restated Trust Agreement of SWEPCO Capital,
dated as of [__________], [____] (the "Trust Agreement"), among the Company, as
depositor, The Bank of New York, as property trustee (the "Property Trustee"),
The Bank of New York (Delaware), as Delaware trustee (the "Delaware Trustee")
and Wendy G. Hargus and R. Russell Davis, as administrative trustees (the
"Administrative Trustees"). In connection with the issuance by SWEPCO Capital of
the Preferred Securities, SWEPCO Capital is to purchase from the Company, as
contemplated in the Underwriting Agreement, Junior Subordinated Deferrable
Interest Debentures, [____]% Series due [____], in the principal amount of
$[_________] (the "Junior Subordinated Debentures"). The Junior Subordinated
Debentures are to be issued under and pursuant to the Indenture, dated as of
[_________], [____] (the "Indenture"), between the Company and The Bank of New
York, as trustee (the "Trustee"), and the related Supplemental Indenture dated
[_________], [____]. Also in connection with the issuance by SWEPCO Capital of
the Preferred Securities, the Company will guarantee (the "Guarantee") the
Preferred Securities to the extent set forth in a Guarantee Agreement dated as
of [______], [____], between the Company and The Bank of New York, as trustee
(the "Guarantee Agreement"). Capitalized terms used herein and not otherwise
defined have the meanings ascribed to them in the Underwriting Agreement.
We have examined originals, or copies certified to our satisfaction,
of such corporate records of the Company and such trust records of SWEPCO
Capital, indentures, agreements and other instruments, certificates of public
officials, certificates of officers and representatives of the Company and of
SWEPCO Capital and other documents as we have deemed it necessary to require as
a basis for the opinions hereinafter expressed. In our examination we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity with the original documents of all
documents submitted to us as copies and the authenticity of the originals of
such latter documents. As to various questions of fact material to such
opinions, we have, when relevant facts were not independently established,
relied upon certifications by the Company, SWEPCO Capital, officers of the
Company, the Property Trustee, the Delaware Trustee and the Administrative
Trustees and other appropriate persons and statements contained in the
Registration Statement hereinafter mentioned.
In addition, we attended the closing held today at our offices, during
the course of which (i) SWEPCO Capital delivered the Preferred Securities to
your representatives at the office of The Depository Trust Company, 55 Water
Street, New York, New York, for your several accounts, in accordance with the
Underwriting Agreement, against payment therefor and (ii) the Company caused the
Junior Subordinated Debentures to be delivered to SWEPCO Capital, against
payment thereof.
Based upon the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that:
1. The Company is a validly organized and existing
corporation under the laws of the State of Delaware.
2. The Underwriting Agreement has been duly
authorized, executed and delivered by each of SWEPCO
Capital and the Company.
3. The Registration Statement (Nos. [__________] and [____________])
on Form S-3, as amended, with respect to the Preferred Securities, the
Junior Subordinated Debentures and the Guarantee (the "Registration
Statement"), filed with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Act of 1933, as amended (the
"Act"), has become effective and, to our knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending
under the Act. The Prospectus, dated [_____________], 1997, as amended by
the Prospectus Supplement, dated [____________], 1997 (the "Prospectus"),
including all documents incorporated by reference therein pursuant to the
requirements of Form S-3 under the Act, constituting a part thereof, may
lawfully be used for the purposes specified in the Act in connection with
the offer and sale of the Preferred Securities in the manner therein
specified, subject to compliance with the provisions of "blue sky" or
securities laws of certain States in connection with the offer for sale or
sale of the Preferred Securities in such States.
4. The Registration Statement and the Prospectus, including all
documents incorporated by reference pursuant to the requirements of Form
S-3 under the Act (other than financial statements and related schedules
and other financial and statistical data included or incorporated by
reference therein or omitted therefrom, as to which we express no opinion
or belief), as of their respective effective or issue dates complied as to
form, in all material respects, with the requirements of the Act (or, where
appropriate, the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) and to the applicable rules and regulations of the Commission under
each such statutes.
5. The statements under "Description of Preferred Securities",
"Description of Guarantees", "Description of Junior Subordinated
Debentures", "Description of Corresponding Junior Subordinated Debentures",
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees" and "Plan of Distribution" in
the Prospectus, insofar as such statements constitute summaries of legal
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings, and fairly summarize the matters referred to therein in all
material respects.
6. The order of the Commission, dated [____________], [____], in File
No. 70-[_________], under the Public Utility Holding Company Act of 1935,
as amended, relating to the offer and sale by SWEPCO Capital of the
Preferred Securities, the sale by the Company of the Junior Subordinated
Debentures and the issuance by the Company of the Guarantee (being the
order of the Commission referred to in paragraph (s) of Section 2 of the
Underwriting Agreement) has been duly entered by the Commission and, to our
knowledge, remains in full force and effect. No further authorization,
approval, consent or order of any Federal governmental body or regulatory
authority is required for the authorization of the issuance or sale of the
Junior Subordinated Debentures and Preferred Securities and the undertaking
of the Company of the Guarantee in conformity with the order by the Company
pursuant to the terms of the Underwriting Agreement, except for (i) the
registration under the Act of the Preferred Securities, the Guarantee and
the Junior Subordinated Debentures and (ii) the qualification of the
Indenture, Trust Agreement and Guarantee Agreement under the Trust
Indenture Act of 1939, as amended.
7. The Guarantee Agreement has been duly and validly authorized by all
necessary corporate action of the Company and has been duly and validly
executed and delivered by the Company, and the Guarantee constitutes a
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except (a) as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general applicability affecting the enforceability of
creditors' rights and (b) that enforceability may be limited by the
application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including without
limitation (i) the possible unavailability of specific performance,
injunctive relief or any other equitable remedies and (ii) concepts of
materiality, reasonableness, good faith and fair dealing.
8. The Indenture, the Trust Agreement and the Expense Agreement have
been duly and validly authorized by all necessary corporate action of the
Company, have been duly and validly executed and delivered by the Company,
and are valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except (a) as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws of general applicability affecting the enforceability of
creditors' rights and (b) that enforceability may be limited by the
application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including without
limitation (i) the possible unavailability of specific performance,
injunctive relief or any other equitable remedies and (ii) concepts of
materiality, reasonableness, good faith and fair dealing.
9. Each of the Indenture, the Trust Agreement and the Guarantee
Agreement have been duly qualified under the Trust Indenture Act of 1939,
as amended.
10. The issue and sale of the Junior Subordinated Debentures by the
Company as contemplated by the Underwriting Agreement have been duly
authorized by all necessary corporate action. The Junior Subordinated
Debentures, when duly executed, authenticated and delivered to SWEPCO
Capital, against payment to the Company of the agreed consideration
therefor, will be (subject to the qualifications stated in paragraph 8
above) valid and binding obligations of the Company and are entitled to the
benefits afforded by the Indenture in accordance with the terms of the
Indenture and the Junior Subordinated Debentures.
11. To our knowledge, there are no legal or governmental proceedings
pending or threatened to which the Company is a party which are required to
be disclosed in the Prospectus, other than those disclosed therein; and, to
our knowledge, there are no contracts or documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described therein or
filed therewith.
12. Neither SWEPCO Capital nor the Company is an "investment company"
nor an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
The Registration Statement was filed on Form S-3 under the Act and,
accordingly, the Prospectus does not necessarily contain a current description
of the Company's business and affairs since Form S-3 provides for the
incorporation by reference of certain documents filed with the Commission which
contain descriptions as of various dates. We participated in the preparation of
the Registration Statement and Prospectus and we have reviewed certain documents
filed by the Company under the Exchange Act, which are incorporated by reference
in the Prospectus (such documents listed in the Prospectus as being incorporated
by reference are herein called the "Incorporated Documents"). Although we have
not independently verified the accuracy, completeness or fairness of the
statements contained therein or in the Incorporated Documents, none of the
foregoing disclosed to us any information which gave us reason to believe that
the Registration Statement and the Incorporated Documents, considered as a whole
on the effective date of the Registration Statement, contained or contain any
untrue statement of a material fact or omitted or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectus and the Incorporated Documents,
considered as a whole on the date hereof, contained or contain any untrue
statement of a material fact or omitted or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. Except as set forth in paragraphs 3 and 4 above, we
express no opinion as to any document filed by the Company under the Exchange
Act, whether prior or subsequent to such effective date, except to the extent
that such documents are Incorporated Documents read together with the
Registration Statement or the Prospectus and considered as a whole, nor do we
express any opinion as to the operating statistics, financial statements or
other financial data included in or omitted from, or incorporated by reference
in, the Registration Statement, the Prospectus or the Incorporated Documents.
In rendering the opinions hereinabove expressed, we have relied, with
your permission, subject to the assumptions, qualifications or limitations
therein, upon the opinions of Wilkinson, Carmody & Gilliam, special Louisiana
counsel to the Company as to all matters of Louisiana law, Matthews, Campbell,
Rhoads, McClure & Thompson, special Arkansas counsel to the Company as to all
matters of Arkansas law, [ ], special Texas counsel to the Company
as to all matters of Texas law, Doerner, Saunders, Daniel & Anderson, special
Oklahoma counsel to the Company as to all matters of Oklahoma law, and Richards,
Layton & Finger, P.A., special Delaware counsel to the Company and SWEPCO
Capital, to the extent that Delaware law other than the General Corporation Law
of the State of Delaware, including Delaware trust law, is concerned, furnished
pursuant to paragraphs [ ], respectively, of Section 7 of the Underwriting
Agreement.
We are members of the bar of the State of New York and we do not
express any opinion as to matters governed by any laws other than the laws of
the State of New York, the General Corporation Law of the State of Delaware and
the Federal laws of the United States of America, and, with your consent as set
forth above, and solely in reliance upon opinions of special counsel to the
Company and SWEPCO Capital, the laws of the States of Delaware (other than the
General Corporation Law), Louisiana, Arkansas, Texas and Oklahoma.
Very truly yours,
RBW/DBB/JMH
Annex II(d)
Form of Christy & Viener Opinion
to be delivered pursuant to section 7(e)
Smith Barney Inc.
[Names of Co-Representative(s)]
As Representatives of the several
Underwriters
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
We have acted as special tax counsel to Southwestern Electric
Power Company, a Delaware corporation (the "Company) and SWEPCO Capital I, a
Delaware statutory business trust (the "Trust") in connection with the offering
by the Trust of its Trust Preferred Securities, Series A (the "Series A
Preferred Securities"), as described in the Registration Statement on Form S-3
(the "Registration Statement"), filed by the Company, the Trust, and SWEPCO
Capital II, a Delaware statutory business trust, with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended. The
Registration Statement includes the Prospectus and the Prospectus Supplement
dated as of [ , 1997] (collectively, the "Prospectuses"), relating to such
offering. Capitalized terms not defined herein have the meanings specified in
the Prospectuses.
In rendering the opinions expressed below, we have examined the
Prospectuses and such other documents as we have deemed relevant and necessary,
including, without limitation, the Amended and Restated Trust Agreement, the
Indenture, and the Guarantee Agreement relating to the Series A Preferred
Securities each dated as of [ , 1997]. Such opinions are conditioned, among
other things, upon the accuracy and completeness of the facts, information and
representations contained in the Prospectuses as of the date hereof. We have not
undertaken any independent investigation of any factual matters set forth in the
Prospectuses or such other documents. We have assumed that the transactions
contemplated by the Prospectuses and such other documents will occur as provided
therein. We have also assumed that the Series A Preferred Securities, when
issued, will be rated not less than [ ] by Standard & Poor's Rating Services and
[ ]by Moody's Investors Service, Inc.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of all natural
persons, and the conformity with original documents of all copies submitted to
us for our examination. We have also assumed that all obligations imposed by
such documents on the parties thereto are or will be enforceable, and have been
or will be performed or satisfied in accordance with their terms. In addition,
we have relied, with your consent, on the opinion of Richards, Layton & Finger
with respect to the validity of the Series A Preferred Securities, the
enforceability of the Amended and Restated Trust Agreement, and the formation of
the Trust and on the opinion of Milbank, Tweed, Hadley & McCloy with respect to
the validity of the Series A Debentures and the Series A Guarantee.
In rendering the opinions expressed below, we have considered the
applicable provisions of the Internal Revenue Code of 1986, as amended the (the
"Code"), regulations promulgated thereunder by the United States Treasury
Department (the "Regulations"), pertinent judicial authorities, rulings of the
Internal Revenue Service, and such other authorities as we have considered
relevant. It should be noted that the Code, the Regulations, and such judicial
decisions, administrative interpretations and other authorities are subject to
change at any time and, in some circumstances, with retroactive effect, and any
such change could affect the opinions stated herein.
Based upon and subject to the foregoing, we are of the opinion that:
(i) under current law, for United States federal income tax purposes
(A) the Series A Debentures will constitute indebtedness of the Company and (B)
the interest on the Series A Debentures will be deductible by the Company in
accordance with section 163 of the Code and the Regulations promulgated
thereunder, subject to any applicable limitations on the Company's ability to
deduct interest on any of its indebtedness;
(ii) under current law, the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation; accordingly, for United States federal income tax purposes,
each beneficial owner of Series A Preferred Securities generally will be
considered the owner of an undivided beneficial interest in the Series A
Debentures, and will be required to include in its gross income its allocable
share of any interest and original issue discount paid or accrued with respect
to the Series A Debentures; and
(iii) the discussion set forth in the Prospectus Supplement under the
caption "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" is a fair and accurate
summary of the matters addressed therein, based upon current law and the
assumptions stated or referred to therein.
We assume no obligation to update or supplement this letter to reflect
any facts or circumstances which may hereafter come to our attention with
respect to the opinions expressed above, including any changes in applicable law
which may hereafter occur.
Very truly yours,
ANNEX III
Form of letter of Arthur Andersen LLP
to be delivered pursuant to Section 7(j)
Pursuant to Section 7(j) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Guarantor and its subsidiaries within the meaning of the Act and
the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included or incorporated by reference in the Prospectus or the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act or the Exchange Act,
as applicable, and the related published rules and regulations
thereunder, and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified Public
Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited financial
statements of the Guarantor for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been separately
furnished to the representatives of the Underwriters (the
"Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or the Guarantor's quarterly reports on Form 10-Q
incorporated by reference into the Prospectus as indicated in their
reports thereon copies of which have been separately furnished to the
Representatives; and on the basis of specified procedures including
inquiries of officials of the Guarantor who have responsibility for
financial and accounting matters regarding whether the unaudited
condensed consolidated financial statements referred to in paragraph
(vi)(A)(i) below comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the Act
and the Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Guarantor for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Guarantor's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Guarantor's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter nothing came
to their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d) respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Guarantor and its subsidiaries, inspection
of the minute books of the Guarantor and its subsidiaries since the date
of the latest audited financial statements included or incorporated by
reference in the Prospectus, inquiries of officials of the Guarantor and
its subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements
of cash flows included in the Prospectus and/or included or
incorporated by reference in the Guarantor's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus or included in the Guarantor's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus, for them
to be in conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
or incorporated by reference in the Guarantor's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in clause (B)
were not determined on a basis substantially consistent with the
basis for the audited financial statements included or
incorporated by reference in the Guarantor's Annual Report on
Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included or
incorporated by reference in the Prospectus) or any increase in
the consolidated long-term debt of the Guarantor and its
subsidiaries, or any decreases in consolidated net current assets
or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in
the latest balance sheet included or incorporated by reference in
the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the
Prospectus to the specified date referred to in clause (E) there
were any decreases in consolidated net revenue or operating
profit or the total or per share amounts of consolidated net
income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with the comparable period in the preceding year
and with any other period of corresponding length specified by
the Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information
specified by the Representatives which are derived from the general
accounting records of the Guarantor and its subsidiaries, which appear
in the Prospectus (excluding documents incorporated by reference), or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representatives or in documents incorporated by
reference in the Prospectus specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Guarantor and its subsidiaries and
have found them to be in agreement.
All references in this Annex III to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement and to the Prospectus as amended
or supplemented (including all documents incorporated by reference therein) for
the purposes of the letter delivered either (i) on the effective date of any
post-effective amendment to the Registration Statement or Rule 462(b)
Registration Statement filed subsequent to the date of the Underwriting
Agreement or (ii) at the Time of Delivery, as the case may be.