1
EXHIBIT 1
2
CENTRAL POWER AND LIGHT COMPANY
PREFERRED STOCK
UNDERWRITING AGREEMENT
___________ __ , 19__
Central Power and Light Company
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
Dear Sirs:
We (the "Managers") understand that Central Power and Light Company, a
Texas corporation (the "Company"), proposes to issue and sell an aggregate
of _______ shares of its Preferred Stock, $100 par value per share,
designated ____% Preferred Stock (the "Offered Securities"). Subject to the
terms and conditions set forth herein or incorporated by reference herein,
the Company hereby agrees to sell and the underwriter or underwriters named
in Schedule I hereto (such underwriter or underwriters being herein called
the "Underwriters") agree to purchase, severally and not jointly, the
respective aggregate number of such Offered Securities set forth opposite
their names in Schedule I hereto at a purchase price of $____ per share plus
accrued dividends, if any, from ____ to the date of payment and delivery at
a compensation of $______ per share.
The Underwriters will pay for such Offered Securities at the offices of
Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York
10005 at 10:00 a.m., New York Time, on ___________, 19__ or at such other
place and time, not later than __________, 19__, as shall be mutually
agreed. The Offered Securities shall be concurrently delivered to the
Underwriters at the offices of ______________________________.
The Offered Securities shall have the following terms:
Initial Per
Share Offering Price: $_______ per share
--------------------
Underwriting Compensation: $_______ per share, payable by the
------------------------- Company on the Closing Date by
[payment method].
Dividend Rate: %
-------------
Mandatory and Optional
Sinking Fund Provisions: As described in the Prospectus and
----------------------- applicable Prospectus Supplement for
Offered Securities
Optional Redemption Provisions: As described in the Prospectus and
------------------------------ applicable Prospectus Supplement for
the Offered Securities
Dividend Payment Dates: _________, __________, _________ and
---------------------- _________ commencing ________ __, 19__
3
Address for Notices
to Managers under
Underwriting Agreement:
----------------------
Payment Method:
--------------
All the provisions contained in the document entitled Central Power and
Light Company Underwriting Agreement Standard Provisions (Preferred Stock-
Shelf) dated __________________, 19__, a copy of which you and we have
previously received, are herein incorporated by reference in their entirety
and shall be deemed to be a part of this Underwriting Agreement to the same
extent as if such provisions had been set forth in full herein. References
herein and therein to numbered sections of the Underwriting Agreement shall
mean the numbered sections of such Standard Provisions.
Please confirm your agreement by having an authorized officer sign a
copy of this Underwriting Agreement in the space set forth below and
returning the signed copy to us. This Underwriting Agreement may be signed
in any number of counterparts with the same effect as if the signature
thereto and hereto were upon the same instrument. It is understood that our
acceptance of this agreement 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 Company for
examination, upon request.
Very truly yours,
_________________________________
By:______________________________
Title:___________________________
(Acting severally on behalf of
themselves and the several
Underwriters named in Schedule I
hereto)
Accepted:
CENTRAL POWER AND LIGHT COMPANY
By:_______________________________
4
Schedule I
----------
Number of
Shares of
Underwriters Offered Securities
------------ ------------------
-----------
Total
===========
5
CENTRAL POWER AND LIGHT COMPANY
UNDERWRITING AGREEMENT
STANDARD PROVISIONS (PREFERRED STOCK-SHELF)
Dated __________ __, 19__
From time to time Central Power and Light Company, a Texas corporation
(the "Company"), may enter into one or more underwriting agreements that
provide for the sale of designated securities to the several underwriters
named therein. The standard provisions set forth herein may be incorporated
by reference in any such underwriting agreement and any such underwriting
agreement, including the provisions incorporated therein by reference, is
herein referred to as the "Underwriting Agreement".
The Company proposes to issue the series of Preferred Stock specified
in the Underwriting Agreement (the "Offered Securities"). The Offered
Securities will have the terms and rights, including the dividend rate and
times of payment of dividends, selling price and redemption terms, as set
forth in the Underwriting Agreement and Prospectus (as hereinafter defined).
The Underwriting 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.
1. Representations and Warranties of the Company.
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File No. 33-_____),
including a prospectus, relating to the Offered Securities, and the offering
thereof from time to time in accordance with Rule 415 under the Securities
Act of 1933, as amended (the "Securities Act"), and such registration
statement has become effective. The Company has prepared or will promptly
prepare for filing with, or transmission for filing to, the Commission,
pursuant to Rule 424 under the Securities Act, a Prospectus Supplement (the
"Supplement") for the purpose of supplying information in respect of the
public offering of the Offered Securities, the names of the underwriter or
group of underwriters and other matters. Said registration statement, as
amended at the time it became effective, including the information contained
in the final prospectus filed with the Commission pursuant to Rule 424(b) of
the Securities Act, and the prospectus, as supplemented by the Supplement,
relating to the Offered Securities in final form as filed with the
Commission pursuant to Rule 424 under the Securities Act are hereinafter
called the "Registration Statement" and the "Prospectus", respectively. The
term "Basic Prospectus" means the prospectus included in the Registration
Statement. The term "preliminary prospectus" means a preliminary prospectus
supplement, if any, relating to the Offered Securities together with the
Basic Prospectus. Whenever the word "Registration Statement", "registration
statement", "Prospectus", "preliminary prospectus" or "prospectus" is used
herein it shall be deemed to include all documents incorporated therein by
reference pursuant to the requirements of Form S-3 under the Securities Act
(the "Incorporated Documents").
6
[(b) The Company has filed with the Commission a Form U-1 Application-
Declaration with respect to the issue and sale of the Offered Securities and
has no reason to believe that the Commission will not enter an order under
the Public Utility Holding Company Act of 1935, as amended (the "Holding
Company Act"), permitting such Application-Declaration to become effective
prior to the purchase by the Underwriters of the Offered Securities pursuant
to the Underwriting Agreement. A copy of such order and any supplemental
order entered into by the Commission pursuant to Rule 50 under the Holding
Company Act with respect to such Application-Declaration will be delivered
to the Underwriters on or prior to the Closing Date.] [OR]
[(b) The Commission has entered an order under the Public Utility
Holding Company Act of 1935, as amended (the "Holding Company Act"),
permitting to become effective the Form U-1 Application-Declaration filed by
the Company with respect to the issue and sale of the Offered Securities. A
copy of such order heretofore entered by the Commission has been or will be
delivered to the Underwriters.]
(c) Except as otherwise contemplated herein, no approval,
authorization, consent, certificate or order of any State commission or
regulatory authority is necessary with respect to the issuance or the sale
of the Offered Securities by the Company.
(d) The Basic Prospectus filed as a part of the registration statement
relating to the Offered Securities as originally filed, or as a part of any
amendment thereto, any preliminary prospectus at the time of its issuance,
and the Registration Statement and the Prospectus and any amendment or
supplement to the Registration Statement or the Prospectus as of their
effective or issue dates, and as of the Closing Date (as hereinafter
defined), complied or will comply, in each case in all material respects,
with the provisions of the Securities Act and the rules and regulations of
the Commission thereunder, and neither the Registration Statement nor any
amendment thereto contains or will contain an untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading
and the Basic Prospectus, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto 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 required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were made
not misleading; provided that the foregoing representations and warranties
in this subsection (d) shall not apply to omissions from the Registration
Statement or Prospectus resulting from the failure of any of the
Underwriters to furnish the Company with the information pertaining to such
Underwriters and the underwriting of the Offered Securities required to
complete the Registration Statement or the Prospectus, or to statements in
or omissions from the Prospectus made in reliance upon and in conformity
with information furnished in writing to the Company by any of the
Underwriters for use in connection with the preparation of the Prospectus.
The Incorporated Documents that were filed under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), complied at their respective times
of filing, and any documents deemed to be incorporated in the Registration
Statement and Prospectus at all times during which a prospectus is required
to be delivered under the Securities Act will comply at their respective
times of filing, with the provisions of the Exchange Act and the rules and
regulations of the Commission thereunder.
7
(e) Except as the Company may have furnished supplemental information
to each prospective Underwriter or to the Managers prior to the receipt of
proposals to purchase the Offered Securities as to matters to be reflected
in the Prospectus, since the respective dates as of which information is
given in the Registration Statement and in the Prospectus, there has been no
(A) material adverse change in the condition, financial or otherwise, or in
the earnings of the Company, or (B) adverse development concerning the
Company's business or assets which would result in a material adverse change
in its prospective financial condition or results of operations, except such
changes as are set forth or contemplated in such Registration Statement
(including the financial statements and notes thereto included or
incorporated by reference in the Registration Statement) or the Prospectus.
(f) At or prior to the acceptance by the Company of a proposal for the
purchase of the Offered Securities, the Company will have taken all
corporate action necessary to be taken by it to authorize the acceptance of
such proposal and, at or before the Closing Date, will have taken all
corporate action necessary to be taken by it to authorize the performance by
it of all obligations on its part to be performed under the Underwriting
Agreement; and the consummation of the transactions contemplated in, and the
fulfillment of the terms of, the Underwriting Agreement will not result in a
breach of any of the terms and provisions of, or constitute a default under,
any indenture, mortgage, deed of trust or other agreement or instrument to
which the Company is a party at the Closing Date, or the Restated Articles
of Incorporation of the Company, as amended, or any order, rule or
regulation applicable to the Company of any court or of any state or Federal
regulatory body or administrative agency having jurisdiction over the
Company or over its property.
(g) Arthur Andersen & Co. are independent accountants with respect to
the Company as required by the Securities Act and the applicable rules and
regulations thereunder.
2. Purchase, Sale and Delivery of Underwriters' Securities.
The Company is advised by the Managers that the Underwriters propose to
make a public offering of their respective number of shares of the Offered
Securities as soon after the Underwriting Agreement is entered into as in
the Managers' judgment is advisable. The terms of the public offering of
the Offered Securities are or will be set forth in the Prospectus.
Payment for the Offered Securities shall be made by certified or
official bank check or checks payable to the Company or its order in
immediately available Federal funds (unless the Underwriting Agreement shall
otherwise specify) at the time and place set forth in the Underwriting
Agreement upon delivery to the Managers for the respective accounts of the
several Underwriters of the Offered Securities registered in such names and
in such denominations as the Managers shall request in writing not less than
two full business days prior to the date of delivery. The Company agrees to
have the certificates representing the Offered Securities available for
inspection, checking and packaging by the Managers at the location indicated
in the Underwriting Agreement not later than 1:00 P.M. on the business day
next prior to the Closing Date. The time and date of such payment and
delivery with respect to the Offered Securities are herein referred to as
the "Closing Date".
8
3. Covenants of the Company.
The Company covenants and agrees with each of the Underwriters that:
(a) As soon as practicable after the acceptance of a proposal to
purchase the Offered Securities, the Company will file the Supplement with
the Commission pursuant to Rule 424(b) of the Securities Act. The Company
will not file at any time prior to the Closing Date any other amendment to
the Registration Statement or any supplement to the Prospectus, or any other
amended prospectus or any document that upon the filing thereof would become
an Incorporated Document of which Sidley & Austin ("Underwriters' Counsel")
shall not previously have been advised and furnished with a copy or to which
the Managers shall reasonably object in writing.
(b) The Company will advise the Managers immediately, and confirm such
advice promptly in writing, of the effectiveness of any amendment to the
Registration Statement.
(c) The Company will notify promptly each of the Underwriters in the
event of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or in the event of the
institution or notice of intended institution by the Commission of any
action or proceeding for that purpose. In the event the Commission shall
enter a stop order suspending the effectiveness of the Registration
Statement, whether before or after the Offered Securities have been
delivered to the Managers or the Underwriters and paid for as provided in
the Underwriting Agreement, the Company will make every reasonable effort to
obtain, as promptly as possible, the entry by the Commission of an order
setting aside any such stop order or otherwise reinstating the effectiveness
of the Registration Statement.
(d) The Company will deliver to the Managers, on or before the Closing
Date, one signed copy of the registration statement as originally filed and
of each amendment thereto (in each case including all exhibits thereto,
other than exhibits incorporated by reference), and will also deliver to the
Managers, for distribution to the Underwriters, a sufficient number of
conformed copies of each of the foregoing (but without exhibits) so that one
copy of each may be distributed to each of the Underwriters. The Company
will also send to the Managers or to the Underwriters, without expense to
them, as soon as practicable after the date hereof, and thereafter from time
to time during a period of nine months after such date, as many copies of
any preliminary prospectus and the Prospectus as the Managers may reasonably
request for the purposes contemplated by the Securities Act.
(e) The Company will use its best efforts, when and as requested by
the Managers, to furnish information and otherwise cooperate in qualifying
or registering the Offered Securities for offer and sale under the
securities or "blue sky" laws of such jurisdictions as the Managers may
designate, but the Company shall not thereby be obligated to qualify as a
foreign corporation in, or to execute or file any general consent to service
of process under the laws of, any jurisdiction. The Company will pay the
Underwriters' Counsel all reasonable fees (including counsel fees) and
expenses incurred by them in connection with such qualification or
registration of the Offered Securities for offer or sale, not exceeding,
however, $5,000 in the aggregate.
9
(f) If the Underwriting Agreement shall be terminated pursuant to the
provisions of Section 4 or 6(a), the Company will pay the reasonable fees
and disbursements of Underwriters' Counsel in connection with the
contemplated issue and sale of the Offered Securities, unless such
termination is caused by any default by the Managers or any of the
Underwriters in the performance of their respective obligations hereunder.
Except as provided in this subsection (f), the Underwriters shall pay the
fees of Underwriters' Counsel and reimburse such counsel for their
reasonable expenses paid or incurred in connection with the issue and sale
of the Offered Securities. The Company shall not in any event be liable to
any of the Underwriters for damages on account of loss of anticipated
profits.
(g) The Company will, so long as any of the Offered Securities shall
be outstanding, deliver to the Managers upon their request, and to each
other Underwriter who may so request, copies of all public reports and all
reports and financial statements furnished by the Company to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder.
(h) During a period of nine months after the date of the Prospectus,
if any event relating to or affecting the Company or its subsidiaries, if
any, or of which the Company shall be advised in writing by the Managers
shall occur as a result of which it is necessary, in the opinion of counsel
for the Company, to supplement or amend the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser of Offered Securities from any of the
Underwriters, the Company will forthwith at its expense prepare and furnish
to the Managers or to the Underwriters a reasonable number of copies of a
supplement or supplements or an amendment or amendments to the Prospectus
(in form satisfactory to Underwriters' Counsel) which will supplement or
amend the Prospectus so that, as so supplemented or amended, it will not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances existing at the
time the Prospectus is delivered to such a purchaser, not misleading. In
case any of the Underwriters is required to deliver a prospectus descriptive
of the Offered Securities after the expiration of nine months after the date
of the Prospectus, the Company, upon the request of the Managers, will
furnish to the Managers, at the expense of such Underwriter, a reasonable
quantity of amendments or supplements to the Prospectus complying with
Section 10 of the Securities Act. For the purpose of this subsection (h),
the Company will furnish such information with respect to itself and its
subsidiaries, if any, as the Managers may from time to time reasonably
request, and during said nine-month period, the Company will prepare and
continue to file with the Commission all documents required to be filed
under the Exchange Act.
(i) The Company will make generally available to its security holders,
as soon as practicable, an earnings statement (which need not be audited)
covering a period of at least twelve months beginning not earlier than the
date of the Prospectus, which earnings statement shall satisfy the
requirements of Section 11(a) of the Securities Act.
10
4. Conditions of Underwriters' Obligations.
The obligations of the Underwriters to purchase and pay for the Offered
Securities shall be subject to the performance by the Company of its
obligations to be performed under the Underwriting Agreement at or prior to
the Closing Date, to the continued accuracy in all material respects of the
representations and warranties of the Company contained in the Underwriting
Agreement, and to the following conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
and in accordance with Section 1(a) of this Agreement; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the Securities Act, or proceedings therefor instituted or
threatened by the Commission, on or prior to the Closing Date.
(b) At or prior to the Closing Date the Underwriters shall have
received from Underwriters' Counsel an opinion (subject to the reservation
that they have relied upon the opinion of Vinson & Elkins L.L.P., Dallas,
Texas, counsel for the Company, as to all matters governed by Texas law), to
the effect that:
(i) the Company has been duly incorporated and is a validly
existing corporation under the laws of the State of Texas;
(ii) the issue and sale of the Offered Securities by the Company
in accordance with the terms of the Underwriting Agreement have been
duly authorized by the Company. The Offered Securities, when
certificates therefor have been duly executed, countersigned and
registered and delivered to and paid for by the Managers or the
Underwriters in accordance with the terms of the Underwriting
Agreement, will be validly issued, fully paid and nonassessable shares
of Preferred Stock of the Company;
(iii) the Offered Securities conform as to legal matters, in all
material respects, with the statements concerning them made in the
Prospectus under the caption "Description of the New Preferred Stock"
and in the Prospectus Supplement under the caption "Supplemental
Description of the New Preferred Stock," and such statements accurately
set forth, in all material respects, the matters respecting the Offered
Securities and the resolutions establishing such series of Preferred
Stock which are required to be set forth in the Prospectus, as
supplemented by the Prospectus Supplement, by the Securities Act and
the rules and regulations thereunder (other than the accounting
provisions thereof, with respect to the requirements of which such
counsel need express no opinion or belief);
(iv) the order of the Commission referred to in subsection (b) of
Section 1 of the Underwriting Agreement has been duly entered and, to
the knowledge of said counsel, is in full force and effect. Except for
the order of the Commission entered into with respect to the
Registration Statement as contemplated by paragraph (v) below, no
further approval, authorization, consent, certificate or order of any
Federal commission or regulatory authority is necessary with respect to
the issue and sale of the Offered Securities by the Company as
contemplated in the Underwriting Agreement;
11
(v) the Registration Statement has become effective under the
Securities Act, and, to the knowledge of said counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for such purpose have been instituted or are
pending or threatened under the Securities Act;
(vi) the Registration Statement, the Prospectus and the
Prospectus Supplement, in each case excluding the Incorporated
Documents (other than financial statements, financial data, statistical
data and supporting schedules included or incorporated by reference
therein, with respect to which such counsel need 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
Securities Act and the rules and regulations of the Commission
thereunder; and
(vii) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
Such counsel shall also state that while, except as otherwise required
or stated in said opinion, said counsel have not independently checked the
accuracy or completeness of, or otherwise verified, and accordingly are not
passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Prospectus or the Prospectus Supplement, and relying as to
materiality, to a large extent, upon the judgment of officers and
representatives of the Company, nothing has come to the attention of said
counsel which would lead said counsel to believe that the Registration
Statement relating to the Offered Securities or any amendment thereto (other
than financial statements, financial data, statistical data and supporting
schedules included or incorporated by reference therein, as to which said
counsel need express no opinion or 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 (with the foregoing exception) the
Prospectus, as supplemented by the Prospectus Supplement, as of the date of
such opinion includes any 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, in the light of the circumstances under which they were
made, not misleading.
(c) At or prior to the Closing Date, the Underwriters shall have
received from Milbank, Tweed, Hadley & McCloy, counsel for the Company, an
opinion (subject to the same reservation as that expressed in subsection (b)
of this Section 4), in form and substance satisfactory to Underwriters'
Counsel, to the same effect, in general, with respect to all matters
enumerated in subsection (b) of this Section 4.
(d) At or prior to the Closing Date, the Underwriters shall have
received from Vinson & Elkins L.L.P., Dallas, Texas, special Texas counsel
for the Company, an opinion, in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) the Company is a corporation, duly incorporated and validly
existing under the laws of the State of Texas;
12
(ii) the Company is a public utility (as defined in the Public
Utility Regulatory Act ("PURA") of the State of Texas), duly authorized
by its Restated Articles of Incorporation, as amended and filed with
the Secretary of State of the State of Texas, through the date of such
opinion, to conduct the business of generating and supplying gas,
electric light and motor power to the public; the Company is authorized
under the laws of the State of Texas to operate as an electric utility
(as defined in PURA) in the areas of the State of Texas in which it
currently does so, except where the failure to be so authorized could
not reasonably be expected to result in a material adverse change in
the financial condition, results of operations or business of the
Company (a "Material Adverse Effect");
(iii) the Company has valid and subsisting municipal franchises,
licenses or permits authorizing it to operate as an electric utility in
all of the municipalities listed on an exhibit to such opinion (which
municipalities the Company has certified to such counsel are all the
municipalities served by it in which the Company derives a material
amount of electric operating revenues) wherein such a franchise,
license or permit is required;
(iv) except as set forth in the Prospectus, there is no
litigation or other legal proceedings pending to which the Company is a
party or to which property of the Company is subject that could
reasonably be expected to result in a Material Adverse Effect and, to
the best of such counsel's knowledge, no such litigation or proceedings
have been threatened;
(v) the Underwriting Agreement has been duly authorized, executed
and delivered by the Company;
(vi) the issuance and sale of the Offered Securities by the
Company in accordance with the terms of the Underwriting Agreement have
been duly authorized by the Company; the Offered Securities, when the
certificates therefor have been duly executed, countersigned and
registered and delivered to the Managers or to the Underwriters in the
manner set forth in the Underwriting Agreement, against payment to the
Company of the agreed consideration therefor, will be validly issued,
fully paid and nonassessable shares of Preferred Stock of the Company;
(vii) no approval, authorization, consent, certificate or order
of any commission or regulatory authority of the State of Texas (other
than in connection with the "blue sky" or securities laws or
regulations of the State of Texas, about which such counsel need
express no opinion) is necessary with respect to the issuance and sale
of the Offered Securities by the Company to the Underwriters as
contemplated by the Underwriting Agreement;
Such counsel shall also state that, in their role as special Texas
counsel to the Company in connection with the offering of the Offered
Securities, such counsel reviewed the Registration Statement and the
Prospectus (however, such counsel did not participate in their preparation)
and although such counsel has not independently verified, and does not
warrant or pass upon the accuracy or completeness of the statements
contained in the Registration Statement and the Prospectus (relying, with
13
respect to materiality, to the extent such counsel deems such reliance
proper, upon the opinions of officers and other representatives of the
Company) no facts have come to such counsel's attention as a result of the
foregoing review which lead such counsel to believe that either (i) the
Registration Statement at the time it became effective 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, or (ii) the Prospectus as of its date or as of the Closing Date
contained any untrue statement of a material fact or omitted 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.
Notwithstanding the foregoing, such counsel need express no belief as to (a)
the financial statements and schedules and other financial and statistical
data included in the Registration Statement or the Prospectus or any
amendment or supplement thereto or (b) regulatory and other legal matters
not governed by the laws of the State of Texas.
(e) At or prior to the Closing Date, the Underwriters shall have
received from Arthur Andersen & Co. a letter confirming that they are
independent public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published rules and
regulations thereunder and that the answer to Item 10 of the Registration
Statement is correct insofar as it relates to them and stating in effect (1)
that in their opinion the financial statements and schedules of the Company
incorporated by reference in the Registration Statement and Prospectus and
which are stated therein to have been certified or audited by them, comply
as to form, in all material respects, with the applicable accounting
requirements of the Securities Act and the published rules and regulations
thereunder; (2) that nothing has come to their attention which causes them
to believe (A) that any unaudited dollar amounts or ratios which may appear
in the Registration Statement and the Prospectus under the caption "The
Company" were not determined on a basis substantially consistent with that
of the corresponding amounts in the audited financial statements
incorporated by reference in the Registration Statement and the Prospectus;
(B) that any unaudited condensed financial statements of the Company
included in any of the Company's Form 10-Q Quarterly Reports, which may be
incorporated by reference in the Registration Statement and the Prospectus,
do not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act and the applicable published
rules and regulations thereunder, or that material modifications should be
made to such unaudited financial statements for them to be in conformity
with generally accepted accounting principles; or (C) that, except in all
instances as set forth or contemplated in the Registration Statement or the
Prospectus, (i) at the date of the latest available unaudited financial
statements of the Company read by them and at a subsequent date, not more
than five business days before the Closing Date, there has been any change
in the capital stock or long-term debt of the Company, as compared with
amounts shown in the latest balance sheet of the Company included or
incorporated by reference in the Registration Statement and the Prospectus,
except for normally scheduled reductions in the Company's long-term debt,
(ii) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the date of the
latest available interim financial statements read by them and to the
aforementioned date not more than five business days prior to the Closing
Date there was any decrease, as compared with the corresponding period in
14
the preceding 12 month period, in the Company's operating revenues,
operating income or net income, or (iii) there was any decrease in the ratio
of earnings to combined fixed charges and preferred stock dividends for the
12 months ended the date of such latest available interim financial
statements as compared to such ratio for the twelve months ended the date of
the latest financial statements included or incorporated by reference in the
Prospectus, except as set forth in such letter, in which latter case the
letter shall be accompanied by an explanation by the Company as to the
significance thereof unless such explanation is not deemed necessary by the
Managers; and (3) that they have compared certain dollar amounts designated
by the Company disclosed in the Registration Statement and Prospectus with
such dollar amounts contained in the general accounting records of the
Company or derived directly from such records by analysis or computation,
and have found such dollar amounts to be in agreement therewith, except as
otherwise specified in such letter, in which latter case the letter shall be
accompanied by an explanation by the Company as to the significance thereof
unless such explanation is not deemed necessary by the Managers.
The form of letter shall reflect the inclusion of any subsequently
dated financial information, the incorporation by reference of any
subsequently filed Annual Report on Form 10-K or Quarterly Report on Form
10-Q and/or the inclusion in the Prospectus of any statistical or financial
information.
Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have been any
change or decrease specified in the letter required by this subsection (e)
which is, in the judgment of the Managers, so material and adverse as to
make it impractical or inadvisable to proceed with the offering or the
delivery of the Offered Securities as contemplated by the Registration
Statement and the Prospectus.
(f) At the Closing Date the Managers shall have received a
certificate, dated as of the Closing Date, signed by the President or a Vice
President and the Treasurer or the Secretary of the Company, to the effect
that (i) to the best of the knowledge of the signers, no stop order
suspending the effectiveness of the Registration Statement has been issued
under the Securities Act and no proceedings therefor have been instituted or
threatened by the Commission, (ii) the order of the Commission referred to
in subsection (b) of Section 1 of the Underwriting Agreement is, to the best
of the knowledge of the signers, in full force and effect, and (iii) since
the respective dates as of which information is given in the Registration
Statement or Prospectus, there has been no (A) material adverse change in
the condition, financial or otherwise, or in the earnings of the Company or
(B) adverse development concerning the Company's business or assets which
would result in a material adverse change in its prospective financial
condition or results of operations, except such changes as are set forth or
contemplated in the Registration Statement or the Prospectus (including
financial statements and notes thereto contained in the Incorporated
Documents).
15
(g) All proceedings to be taken in connection with the issuance and
sale of the Offered Securities by the Company as contemplated in the
Underwriting Agreement shall be satisfactory in form and substance to
Underwriters' Counsel.
In case any of the conditions specified in this Section 4 shall not
have been fulfilled, the Underwriting Agreement may be terminated by the
Managers with the consent of Underwriters who have agreed to purchase in the
aggregate more than fifty percent of the total numbers of shares of the
Offered Securities upon delivering written notice thereof to the Company.
Any such termination shall be without liability of any party to any other
party except as otherwise provided in subsection (f) of Section 3 of the
Underwriting Agreement.
5. Indemnification
(a) The Company agrees to indemnify and hold harmless each of the
Underwriters and each person, if any, who controls any of the Underwriters
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 (1) the Registration
Statement, the Basic Prospectus, any preliminary prospectus, or the
Prospectus or any amendment to the Registration Statement or amendment or
supplement to the Prospectus, 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, or (2) the Prospectus or the
Prospectus as amended or supplemented, if such losses, claims, damages or
liabilities arise out of or are based upon the use of the Prospectus or the
Prospectus as amended or supplemented after the Company shall have amended
or supplemented the Prospectus, or any omission or alleged omission to state
therein a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, 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 Company 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 Managers) a copy of the Prospectus
(excluding the Incorporated Documents), or of the Prospectus as amended or
supplemented after it shall have been amended or supplemented by the Company
(excluding the Incorporated Documents), to any person to whom a copy of any
preliminary prospectus shall have been delivered by or on behalf of such
Underwriter to whom any Offered 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.
16
(b) Each of the Underwriters agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement, each of
its directors, each person who controls the Company 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 any 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 Company 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 to deliver (either directly or through the
Managers) a copy of the Prospectus (excluding the Incorporated Documents),
or of the Prospectus as amended or supplemented after it shall have been
amended or supplemented by the Company (excluding the Incorporated
Documents), 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
Offered 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.
(c) Promptly after receipt by a party indemnified under this Section 5
(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 5 (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 5. 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 hereunder), with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert
and conduct such legal defenses and to otherwise participate in the defense
of such action on behalf of such indemnified party or parties. Upon receipt
of notice from the indemnifying party to such indemnified party of its
17
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 5 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 connection with the assertion of legal defenses 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, approved by the Managers in the
case of subsection (a), representing the indemnified parties under
subsection (a) who are parties to such action), (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel referred to in such
clause (i) or (iii).
(d) If the indemnification provided for in this Section 5 shall be
unenforceable under applicable law by an indemnified party, the Company
agrees 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 5 shall be unenforceable, in such proportion as
shall be appropriate to reflect the relative fault of the Company on the one
hand and the indemnified party on the other 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 Company if the Company 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
Company 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 Company 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 indemnity and contribution agreements contained in this
Section 5 and the representations and warranties of the Company 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 Company, its directors or officers or
any person controlling the Company and (iii) delivery of and payment for any
of the Offered Securities.
18
6. Termination.
(a) If the Offered Securities are being purchased for the purpose of
resale, the Underwriting Agreement may be terminated, at any time prior to
the Closing Date, by the Managers with the consent of Underwriters who have
agreed to purchase in the aggregate more than fifty percent of the total
number of shares of the Offered Securities, if (a) there shall have occurred
any general suspension or material limitation on trading in securities on
the New York Stock Exchange or by the Commission or by any federal or state
agency or by the decision of any court any limitation on prices for such
trading or any restrictions on the distribution of securities, (b) trading
in any securities of the Company shall have been suspended by the Commission
or a national securities exchange, (c) a general banking moratorium on
commercial banking activities in New York shall have been declared either by
federal or New York State authorities, (d) the rating assigned by any
nationally recognized securities rating agency to any securities of the
Company as of the date of the Underwriting Agreement shall have been lowered
since that date or (e) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis, the effect of which
on the financial markets of the United States is such as to make it, in the
judgment of the Managers, impracticable to market the Offered Securities.
(b) Any termination of the Underwriting Agreement pursuant to this
Section 6 shall be without liability of any party to any other party except
as otherwise provided in subsection (f) of Section 3.
7. Default by an Underwriter.
If any one or more Underwriters shall fail to purchase and pay for any
of the Offered Securities agreed to be purchased by such Underwriter or
Underwriters hereunder and such failure to purchase shall constitute a
default in the performance of its or their obligations under the
Underwriting Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of Offered Securities set forth opposite their names in Schedule I to
the Underwriting Agreement bears to the aggregate number of Offered
Securities set opposite the names of all the remaining Underwriters) the
Offered Securities which the defaulting Underwriter or Underwriters agreed
but failed to purchase; provided, however, that in the event that the
aggregate number of Offered Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase (less such aggregate number of
Offered Securities as are purchased by substituted underwriters selected by
the Managers with the approval of the Company or selected by the Company
with the approval of the Managers) shall exceed 10% of the aggregate number
of Offered Securities set forth in such Schedule I, the remaining
Underwriters shall have the right to purchase all, but shall not be under
any obligation to purchase any, of the Offered Securities, and if such
nondefaulting Underwriters do not purchase all the Offered Securities, the
Underwriting Agreement will terminate without liability to any nondefaulting
Underwriter or the Company (except as otherwise provided in subsection (f)
of Section 3). In the event of a default by an Underwriter as set forth in
this Section 7, the Closing Date shall be postponed for such period, not
exceeding seven calendar days, as the Company and the Managers shall
19
determine in order that the required changes in the Registration Statement
and the Prospectus or in any other documents or arrangements may be
effected. Nothing contained in the Underwriting Agreement shall relieve any
defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default thereunder.
8. Notice.
All communications under the Underwriting Agreement will be effective
only on receipt, and, if sent to the Managers, will be mailed, delivered or
telegraphed and confirmed to them, at the address, or telephoned to them at
the number, specified in the Underwriting Agreement and to Sidley & Austin,
One First National Plaza, Chicago, Illinois 60603, attention: Wilbur C.
Delp, Jr.; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 539 North Carancahua Street, Corpus
Christi, Texas 78401-2802, attention of the Treasurer or telephoned to it at
(512) 881-5300 attention of the Treasurer, in each case with written
confirmation of such communication sent to the Company in care of Central
and South West Corporation, 1616 Woodall Rodgers Freeway, P.O. Box 660164,
Dallas, Texas 75202, attention of the Treasurer and to Milbank, Tweed,
Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005,
attention George J. Forsyth, Esq..
9. Successors.
The Underwriting Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 5 of the
Underwriting Agreement, and no other person will have any right or
obligation hereunder and no other person (including a purchaser, as a
purchaser, from any Underwriter of any of the Offered Securities) shall
acquire or have any rights under or by virtue of the Underwriting Agreement.
10. Governing Law.
The Underwriting Agreement shall be governed by and construed in
accordance with the laws of the State of New York.