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EXHIBIT 1
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WEST TEXAS UTILITIES COMPANY
FIRST MORTGAGE BONDS
UNDERWRITING AGREEMENT
_____________ __ , 199_
West Texas Utilities Company
301 Cypress
Abilene, Texas 79601
Dear Sirs:
We (the "Managers") understand that West Texas Utilities Company, a Texas
corporation (the "Company"), proposes to issue and sell $___,___,___ aggregate
principal amount of its First Mortgage Bonds, Series ___ (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 principal amounts of such Offered Securities
set forth opposite their names in Schedule I hereto at ___% of their principal
amount plus accrued interest, if any, from __________ __, 199_ to the date of
payment and delivery.
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 ___________ __, 199_ or at such other
place and time, not later than ___________ __, 199_, 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:
Maturity: __________ __, ____
--------
Interest Rate: _____%
-------------
Mandatory and Optional
Sinking Fund Provisions: As described in the Prospectus and
----------------------- applicable Prospectus Supplement for
the Offered Securities
Optional Redemption Provisions: As described in the Prospectus and
------------------------------ applicable Prospectus Supplement for
the Offered Securities
Interest Payment Dates: __________ __ and __________ __,
---------------------- commencing ___________ __, 199_
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Address for Notices
to Managers under
Underwriting Agreement:
----------------------
Payment Method:
--------------
All the provisions contained in the document entitled West Texas
Utilities Company Underwriting Agreement Standard Provisions (Bonds-Shelf)
dated _______________ __, 199_, 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,
[LIST UNDERWRITERS]
By: [LEAD MANAGER]
By:______________________________
Title:___________________________
Accepted:
WEST TEXAS UTILITIES COMPANY
By:_______________________________
Title:____________________________
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Schedule I
----------
Principal
Amount of
Underwriters New Bonds
------------ ---------
-----------
Total $
===========
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WEST TEXAS UTILITIES COMPANY
UNDERWRITING AGREEMENT
STANDARD PROVISIONS (BONDS-SHELF)
Dated ___________ __, 199_
From time to time West Texas Utilities 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 First Mortgage Bonds
specified in the Underwriting Agreement (the "Offered Securities") pursuant to
the provisions of its Indenture dated August 1, 1943, as supplemented and as
the same may from time to time be amended or supplemented (the "Indenture"),
to Harris Trust and Savings Bank and J. Bartolini, as Trustees. The Offered
Securities will have the terms and rights, including the maturity, rate and
times of payment of interest, 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").
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[(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 by the Commission 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,
[such order being subject, however, to the condition, among other conditions,
that the Company comply with such supplemental order, if any, as the
Commission may enter thereunder]. 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 Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission under said
Acts, 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, to statements in the Form T-1 and Form T-2 filed by the Trustees
as exhibits to the Registration Statement 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
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"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.
(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) The Indenture adequately describes all or substantially all the
permanent fixed properties now owned by the Company, except certain property
excepted from the lien of the Indenture and property of the character
expressly excluded from such lien by the terms of the Indenture, and except
any property constructed or acquired by the Company subsequent to the date of
execution of the Supplemental Indenture creating and providing for the
issuance of the Offered Securities.
(g) 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.
(h) Arthur Andersen LLP 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 Offered Securities.
The Company is advised by the Managers that the Underwriters propose to
make a public offering of their respective portions 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.
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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
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".
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
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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.
(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
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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.
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 Wagstaff, Alvis, Stubbeman, Seamster &
Longacre, L.L.P., Abilene, 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 Indenture has been duly and validly authorized by the
necessary corporate action by the Company, has been duly and validly
executed and delivered by the Company, and is a valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, subject, as to enforcement, (i) to the fact that certain
of the remedial provisions of the Indenture may be limited or rendered
unenforceable by the laws of the States wherein the mortgaged property is
situated (but said laws do not, in the opinion of such counsel, make the
remedies afforded by the Indenture inadequate for the realization of the
benefits of the security provided thereby), and (ii) to bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting the enforcement of creditors' rights generally; to the
effects of the provisions of the Bankruptcy Reform Act of 1978, as
amended, on the validity of the lien of the Indenture with respect to the
property acquired or proceeds realized by the Company after the
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commencement of bankruptcy proceedings with respect to the Company; and
to the effects of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(iii) the issue and sale of the Offered Securities by the Company
in accordance with the terms of the Underwriting Agreement have been duly
and validly authorized by the Company. The Offered Securities, when duly
executed, authenticated and delivered to and paid for by the Managers or
the Underwriters, in accordance with the terms of the Underwriting
Agreement, will be valid and binding obligations of the Company, secured
by the lien of and entitled to the benefits of the Indenture, subject, as
to enforcement, (i) to the fact that certain of the remedial provisions
of the Indenture may be limited or rendered unenforceable by the laws of
the States wherein the mortgaged property is situated (but said laws do
not, in the opinion of such counsel, make the remedies afforded by the
Indenture inadequate for the realization of the benefits of the security
provided thereby), and (ii) to bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the enforcement
of creditors' rights generally; to the effects of the provisions of the
Bankruptcy Reform Act of 1978, as amended, on the validity of the lien of
the Indenture with respect to the property acquired or proceeds realized
by the Company after the commencement of bankruptcy proceedings with
respect to the Company; and to the effects of general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law);
(iv) the Offered Securities and the Indenture 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 Bonds,"
and in the Prospectus Supplement under the caption "Supplemental
Description of the New Bonds," and such statements accurately set forth,
in all material respects, the matters respecting the Offered Securities
and the Indenture which are required to be set forth in the Prospectus,
as supplemented by the Prospectus Supplement, by the Securities Act and
the Trust Indenture Act and the rules and regulations under said Acts
(other than the accounting provisions thereof, with respect to the
requirements of which such counsel need express no opinion or belief);
and the Indenture has been qualified under the Trust Indenture Act;
(v) 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 an
order of the Commission entered into with respect to the Registration
Statement as contemplated in paragraph (vi) below, no further approval,
authorization, consent, certificate or order of any Federal commission or
regulatory authority is necessary with respect to the execution and
delivery of the Indenture or the issue and sale of the Offered Securities
by the Company as contemplated in the Underwriting Agreement;
(vi) the Registration Statement on Form S-3 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;
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(vii) 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, as to which said
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 (or, where appropriate, the
Exchange Act) and the rules and regulations of the Commission thereunder;
and
(viii) 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 and have not
independently verified 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 Wagstaff, Alvis, Stubbeman, Seamster & Longacre, L.L.P.,
Abilene, Texas, counsel for the Company, an opinion, in form and substance
satisfactory to Underwriters' Counsel, 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
and validly authorized by the necessary corporate action; the Offered
Securities, when duly executed, authenticated and delivered to the
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Underwriters against payment to the Company of the agreed consideration
therefor, will be valid and binding obligations of the Company, secured
by the lien of and entitled to the benefits of the Indenture;
(iii) the Company is a public utility duly authorized by its
Restated Articles of Incorporation, as amended, to conduct the business
of generating and supplying electric light and power to the public and
conducts such business only in the State of Texas and the Company has the
legal right to function and operate as a public utility in the State of
Texas, supplying therein electric service;
(iv) the Company has good and sufficient title to all or
substantially all the permanent fixed electric utility properties now
owned by it, including those described or referred to in the Prospectus
and the Prospectus Supplement, except as otherwise indicated therein,
subject only to the lien of the Indenture and to permitted encumbrances
and liens and prepaid liens (as defined in the Indenture); the Indenture,
subject only to permitted encumbrances and liens and prepaid liens,
constitutes a valid, direct first mortgage lien upon all such fixed
properties of the Company (with the exception of the properties expressly
excepted or excluded from such lien); all permanent fixed property
hereafter acquired by the Company and situated in the State of Texas
(other than property of the character of that expressly excepted or
excluded from the lien of the Indenture), will, upon such acquisition,
become subject to the lien of the Indenture, subject, however, to such
permitted encumbrances and liens and prepaid liens, any liens existing or
placed on such property at the time of the acquisition thereof by the
Company, and any liens thereon which might intervene prior to the filing
for record of the instrument by which title to such property is acquired
by the Company and except as provisions of the Bankruptcy Code may affect
the validity of the lien of the Indenture with respect to property
acquired, and proceeds, products, rents, issue or profits of the property
subject to such lien realized, after commencement of a case under such
Code; and the Indenture has been duly and validly authorized by the
necessary corporate action by the Company, has been duly and validly
executed and delivered by the Company and is a valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except as set forth in the preceding clause, and subject
as to enforcement to bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the enforcement of
creditors rights generally and to the effects of general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and except as enforcement of provisions
thereof may be limited by the laws of the State of Texas affecting the
remedies for the enforcement of the security provided for in the
Indenture (which state laws do not, in the opinion of such counsel, make
such remedies inadequate for the realization of the benefits of such
security);
(v) the Indenture has been duly recorded as a utility security
instrument in the office of the Secretary of the State of Texas and
notices of utility security instrument affecting real property have
heretofore been duly filed in each of the counties in the State of Texas
in which property owned by the Company and subject to the lien of the
Indenture is situated, in such manner as to make effective the lien
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intended to be created by the Indenture; and such recordation and filings
constitute all of the action required under the laws of the State of
Texas to give notice of the lien of the Indenture;
(vi) the Company has valid and subsisting franchises, licenses and
permits authorizing it to carry on its electric utility business in all
municipalities served by it where required, with such minor exceptions
(if any) as may be indicated in such opinion;
(vii) no approval, authorization, consent, certificate or order of
any commission or regulatory authority of the State of Texas (other than
in connection or in compliance with the securities or "blue sky" laws or
regulations of the State of Texas) is necessary with respect to the
execution and delivery of the Indenture or the issuance and sale of the
Offered Securities by the Company to the Underwriters as contemplated by
the Underwriting Agreement;
(viii) except as set forth in the Prospectus or the Prospectus
Supplement, there is no material litigation or other legal proceeding
pending to which the Company is a party or of which property of the
Company is the subject, and, to the best of the knowledge of said
counsel, no such litigation or proceedings are contemplated; there may be
excepted various routine litigation, claims and other proceedings, which
are common or incident to the business in which the Company is engaged
but which, in the aggregate, are not significant (in the opinion of said
counsel) from the standpoint of the total assets and overall operations
of the Company;
(ix) the sale by the Company of the Offered Securities has been
duly authorized by the necessary corporate action; the Underwriting
Agreement has been duly authorized, executed and delivered by the
Company; and
(x) the statements made in the Prospectus and the Prospectus
Supplement, if any, which are stated therein to have been made on the
authority of such counsel have been reviewed by such counsel and, as to
matters of law or legal conclusions, are correct.
(e) At or prior to the Closing Date, the Underwriters shall have
received from Arthur Andersen LLP 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
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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 the preceding twelve
month period, in the Company's operating revenues, operating income or net
income, (iii) there was any decrease in the ratio of earnings to fixed charges
for the twelve 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 and 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
16
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).
(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 principal amount 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,
17
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, (ii) any
statement made in the Form T-1 or Form T-2 filed by the Trustees as exhibits
to the Registration Statement or (iii) 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.
(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
18
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 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
19
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.
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 principal
amount 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 amount of Offered Securities set forth
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 amount of
Offered Securities which the defaulting Underwriter or Underwriters agreed but
20
failed to purchase (less such aggregate amount 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 amount 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 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. Notices.
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 in care of Central and South West Corporation, 1616 Woodall
Rodgers Freeway, P.O. Box 660164, Dallas, Texas 75202, attention of Stephen D.
Wise, in each case with written confirmation of such communication sent to
Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York
10005, attention Robert B. Williams, 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.