Exhibit 1(a)
SWEPCo Capital Trust I
(a Delaware Statutory Trust)
Flexible Trust Preferred Securities
(Five Year Initial Fixed Rate Period)
(Liquidation Amount $1,000 Per Preferred Security)
UNDERWRITING AGREEMENT
September 26, 2003
AGREEMENT (the "Agreement") made between SWEPCo Capital Trust I (the
"Trust"), a statutory trust organized under the Statutory Trust Act (the
"Delaware Act") of the State of Delaware (Chapter 38, Title 12, of the Delaware
Code, 12 DEL. C. (ss.) 3801 ET SEQ.), and Southwestern Electric Power Company, a
Delaware corporation (the "Company" and, together with the Trust, the
"Offerors"), with you and the other Underwriters named in Schedule I hereto
(collectively, the "Underwriters"), for whom you are acting as representative
(in such capacity, you shall hereinafter be referred to as the
"Representative"), with respect to the sale by the Trust and the purchase by the
Underwriters, acting severally and not jointly, of the respective numbers of
Flexible Trust Preferred Securities (Five Year Initial Fixed Rate Period)
(Liquidation Amount $1,000 per Preferred Security) of the Trust (the "Preferred
Securities") set forth in Exhibit 1.
WITNESSETH:
WHEREAS, the Preferred Securities will be guaranteed by the Company
with respect to distributions and payments upon liquidation, redemption and
otherwise (the "Guarantee") pursuant to the Guarantee Agreement (the "Guarantee
Agreement"), to be dated as of September 1, 2003, between the Company and The
Bank of New York, a New York banking corporation, as trustee (the "Guarantee
Trustee")(the Preferred Securities and the related Guarantee are referred to
herein as the "Securities"); and
WHEREAS, the Offerors understand that the Underwriters propose to make
a public offering of the Preferred Securities as soon as the Representative
deems advisable after this Agreement has been executed and delivered; and
WHEREAS, the entire proceeds from the sale of the Securities will be
combined with the entire proceeds from the sale by the Trust to the Company of
its common securities (the "Common Securities") and will be used by the Trust to
purchase $113,403,000 aggregate principal amount of Series B Junior Subordinated
Debentures due October 1, 2043 (the "Junior Subordinated Debentures") to be
issued by the Company; and
WHEREAS, the Preferred Securities and the Common Securities will be
issued pursuant to an Amended and Restated Trust Agreement, to be dated as of
September 1, 2003 (the "Trust Agreement"), among the Company, as Depositor,
Geoffrey S. Chatas and Jeffrey D. Cross (the "Administrative Trustees"), The
Bank of New York (Delaware) (the "Delaware Trustee"), The Bank of New York, a
New York banking corporation (the
"Property Trustee" and, together with the Delaware Trustee and the
Administrative Trustees, the "Trustees"), and the holders from time to time of
undivided beneficial interests in the assets of the Trust; and
WHEREAS, the Junior Subordinated Debentures will be issued pursuant to
an indenture, dated as of September 1, 2003 (the "Base Indenture"), between the
Company and The Bank of New York, a New York banking corporation, as trustee
(the "Debt Trustee"), and a First Supplemental Indenture to the Base Indenture,
to be dated as of October 1, 2003 (the "Supplemental Indenture" and, together
with the Base Indenture and any other amendments or supplements thereto, the
"Indenture"), between the Company and the Debt Trustee; and
WHEREAS, the Company and the Trust will enter into an Agreement as to
Expenses and Liabilities to be dated as of September 1, 2003 (the "Agreement as
to Expenses and Liabilities") pursuant to which the Company will guarantee on a
subordinated basis to each person or entity to whom the Trust may be indebted or
liable, the full payment of such obligations; and
WHEREAS, the Company and the Trust will enter into a Remarketing
Agreement dated as of October 1, 2003 with Lehman Brothers Inc. (the
"Remarketing Agreement"), as remarketing agent (the "Remarketing Agent"),
providing, among other things, that the Remarketing Agent will follow certain
remarketing procedures relating to the Preferred Securities; and
WHEREAS, the Company and the Trust will enter into a Calculation Agent
Agreement, to be dated as of October 1, 2003 with The Bank of New York (the
"Calculation Agent Agreement"), as calculation agent (the "Calculation Agent"),
providing, among other things that the Calculation Agent will follow certain
procedures relating to the Preferred Securities; and
WHEREAS, the Offerors have prepared and filed, in accordance with the
provisions of the Securities Act of 1933, as amended (the Act), with the
Securities and Exchange Commission (the Commission), a registration statement
(File No. 333-108045) and a prospectus relating to $600,000,000 aggregate
principal amount of securities including the Securities and such registration
statement has become effective; and
WHEREAS, such registration statement, including the financial
statements, the documents incorporated or deemed incorporated therein by
reference, and the exhibits thereto, being herein called the Registration
Statement, and the prospectus, including the documents incorporated or deemed
incorporated therein by reference, constituting a part of such Registration
Statement, as it may be last amended or supplemented prior to the effectiveness
of this Agreement, but excluding any amendment or supplement relating solely to
securities other than the Securities, being herein called the Basic Prospectus,
and the Basic Prospectus, as supplemented by a preliminary prospectus supplement
and a final prospectus supplement (the Prospectus Supplement) to include
information relating to the Securities, including the names of the Underwriters,
the price and terms of the offering and
2
certain other information relating to the Securities, which will be filed with
the Commission pursuant to Rule 424(b) of the Commission's General Rules and
Regulations under the Act (the Rules), including all documents then incorporated
or deemed to have been incorporated therein by reference, being herein called
the Prospectus.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, it is agreed between the parties as follows:
1. PURCHASE AND SALE: Upon the basis of the warranties and
representations and on the terms and subject to the conditions herein set forth,
the Trust agrees to sell to the respective Underwriters named in Exhibit 1
hereto, severally and not jointly, and the respective Underwriters, severally
and not jointly, agree to purchase from the Trust, the respective number of
Preferred Securities set opposite their names in Exhibit 1 hereto, at a price
per security equal to the public offering price set forth in Exhibit 2 hereto.
2. PAYMENT AND DELIVERY: Payment for the Preferred Securities shall be
made to the Trust in immediately available funds or in such other manner as the
Trust, the Company and the Representative shall mutually agree upon in writing,
upon the delivery of the Preferred Securities to the Representative for the
respective accounts of the Underwriters against receipt therefor signed by the
Representative on behalf of itself and for the other Underwriters. Such delivery
shall be made at 10:00 A.M., New York Time, on October 1, 2003 (or on such later
business day, not more than five business days subsequent to such day, as may be
mutually agreed upon by the Trust, the Company and the Underwriters), unless
postponed in accordance with the provisions of Section 8 hereof, at the office
of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York
10017, or at such other place as the Trust, the Company and the Representative
shall mutually agree in writing. The time at which payment and delivery are to
be made is herein called the Time of Purchase.
As compensation to the Underwriters for their commitments
hereunder and in view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures of the
Company, the Company hereby agrees to pay at the Time of Purchase to the
Representative, for the accounts of the several Underwriters, a commission per
Preferred Security as set forth on Exhibit 2 for the Preferred Securities to be
delivered by the Trust hereunder at the Time of Purchase.
The delivery of the Preferred Securities shall be made in
fully registered form, registered in the name of CEDE & CO., to the offices of
The Depository Trust Company in New York, New York and the Underwriters shall
accept such delivery.
3. CONDITIONS OF UNDERWRITERS' OBLIGATIONS: The several obligations of
the Underwriters hereunder are subject to the accuracy of the warranties and
representations on the part of the Offerors on the date hereof and at the Time
of Purchase and to the following other conditions:
3
(a) That all legal proceedings to be taken and all legal
opinions to be rendered in connection with the issue
and sale of the Preferred Securities shall be
satisfactory in form and substance to Dewey
Ballantine LLP, counsel to the Underwriters.
(b) That, at the Time of Purchase, the Representative
shall be furnished with the following opinions, dated
the day of the Time of Purchase, with conformed
copies or signed counterparts thereof for the other
Underwriters, with such changes therein as may be
agreed upon by the Company and the Representative
with the approval of Dewey Ballantine LLP, counsel to
the Underwriters:
(1) Opinion of Simpson Thacher & Bartlett LLP and
either of Thomas G. Berkemeyer, Esq. or William
E. Johnson, Esq., counsel to the Offerors,
substantially in the forms attached hereto as
Exhibit 3; and
(2) Opinion of Richards, Layton & Finger, P.A.,
Delaware counsel to the Trust, substantially in
the form attached hereto as Exhibit 4; and
(3) Opinion of Richards, Layton & Finger, P.A.,
Delaware counsel to the Delaware Trustee,
substantially in the form attached hereto as
Exhibit 5; and
(4) Opinion of Pillsbury Winthrop LLP, counsel to
the Property Trustee, the Guarantee Trustee, the
Debt Trustee and the Calculation Agent,
substantially in the form attached hereto as
Exhibit 6; and
(5) Opinion of Dewey Ballantine LLP, counsel to the
Underwriters, substantially in the form attached
hereto as Exhibit 7.
(c) That the Representative shall have received a letter
from Deloitte & Touche LLP dated the day of the Time
of Purchase in form and substance satisfactory to the
Representative, (i) confirming that they are
independent certified public accountants within the
meaning of the Act and the applicable published rules
and regulations of the Commission thereunder; (ii)
stating that in their opinion the financial
statements audited by them and included or
incorporated by reference in the Registration
Statement complied as to form in all material
respects with the then applicable accounting
requirements of the Commission, including the
applicable published rules and regulations of the
Commission; and (iii) covering as of a date not
4
more than five business days prior to the day of the
Time of Purchase such other matters as the
Representative reasonably requests.
(d) That no amendment to the Registration Statement and
that no prospectus or prospectus supplement of the
Offerors (other than the prospectus or amendments,
prospectuses or prospectus supplements relating
solely to securities other than the Preferred
Securities) relating to the Preferred Securities and
no document which would be deemed incorporated in the
Prospectus by reference filed subsequent to the date
hereof and prior to the Time of Purchase shall
contain material information substantially different
from that contained in the Registration Statement
which is unsatisfactory in substance to the
Representative or unsatisfactory in form to Dewey
Ballantine LLP, counsel to the Underwriters.
(e) That, at the Time of Purchase, an appropriate order
of the Commission under the Public Utility Holding
Company Act of 1935 (the 1935 Act), necessary to
permit the issuance of the Common Securities, the
Junior Subordinated Debentures and Guarantee and the
sale of the Preferred Securities to the Underwriters,
shall be in effect; and that, prior to the Time of
Purchase, no stop order with respect to the
effectiveness of the Registration Statement shall
have been issued under the Act by the Commission or
proceedings therefor initiated.
(f) That, from the date hereof to the Time of Purchase,
there shall not have been any material adverse change
in the business, properties or financial condition of
the Offerors from that set forth in the Prospectus
(other than changes referred to in or contemplated by
the Prospectus), and that the Company and the Trust
shall, at the Time of Purchase, have delivered to the
Representative a certificate of an executive officer
of the Company and of an Administrative Trustee of
the Trust to the effect that, to the best of his
knowledge, information and belief, there has been no
such change.
(g) That the Offerors shall have performed such of their
respective obligations under this Agreement as are to
be performed at or before the Time of Purchase by the
terms hereof.
4. CERTAIN COVENANTS OF THE OFFERORS: In further consideration of the
agreements of the Underwriters herein contained, the Offerors covenant as
follows:
(a) As soon as practicable, and in any event within the
time prescribed by Rule 424 under the Act, to file
the Prospectus with the Commission; as soon as either
Offeror is advised thereof, to advise the
Representative and confirm the advice in writing of
any request
5
made by the Commission for amendments to the
Registration Statement or Prospectus or for
additional information with respect thereto or of the
entry of a stop order suspending the effectiveness of
the Registration Statement or of the initiation or
threat of any proceedings for that purpose and, if
such a stop order should be entered by the
Commission, to make every reasonable effort to obtain
the prompt lifting or removal thereof.
(b) To deliver to the Underwriters, without charge, as
soon as practicable (and in any event within 24 hours
after the date hereof), and from time to time
thereafter during such period of time (not exceeding
nine months) after the date hereof as they are
required by law to deliver a prospectus, as many
copies of the Prospectus (as supplemented or amended
if the Offerors shall have made any supplements or
amendments thereto, other than supplements or
amendments relating solely to securities other than
the Preferred Securities) as the Representative may
reasonably request; and in case any Underwriter is
required to deliver a prospectus after the expiration
of nine months after the date hereof, to furnish to
any Underwriter, upon request, at the expense of such
Underwriter, a reasonable quantity of a supplemental
prospectus or of supplements to the Prospectus
complying with Section 10(a)(3) of the Act.
(c) To furnish to the Representative a copy, certified by
the Secretary or an Assistant Secretary of the
Company, of the Registration Statement as initially
filed with the Commission and of all amendments
thereto (exclusive of exhibits), other than
amendments relating solely to securities other than
the Preferred Securities and, upon request, to
furnish to the Representative sufficient plain copies
thereof (exclusive of exhibits) for distribution to
the other Underwriters.
(d) For such period of time (not exceeding nine months)
after the date hereof as they are required by law to
deliver a prospectus, if any event shall have
occurred as a result of which it is necessary to
amend or supplement the Prospectus in order to make
the statements therein, in the light of the
circumstances when the Prospectus is delivered to a
purchaser, not contain any untrue statement of a
material fact or not omit to state any material fact
required to be stated therein or necessary in order
to make the statements therein not misleading,
forthwith to prepare and furnish, at the expense of
the Offerors, to the Underwriters and to dealers
(whose names and addresses will be furnished to the
Offerors by the Representative) to whom Preferred
Securities may have been sold by the Representative
for the accounts of the Underwriters and, upon
request, to any other dealers making such request,
copies of such amendments to the Prospectus or
supplements to the Prospectus.
6
(e) As soon as practicable, the Company will make
generally available to its security holders and to
the Underwriters an earnings statement or statement
of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act
and Rule 158 under the Act.
(f) To use their best efforts to qualify the Preferred
Securities for offer and sale under the securities or
"blue sky" laws of such jurisdictions as the
Representative may designate within six months after
the date hereof and itself to pay, or to reimburse
the Underwriters and their counsel for, reasonable
filing fees and expenses in connection therewith in
an amount not exceeding $3,500 in the aggregate
(including filing fees and expenses paid and incurred
prior to the effective date hereof), provided,
however, that the Offerors shall not be required to
qualify as foreign corporations or to file consents
to service of process or to file annual reports or to
comply with any other requirements deemed by the
Offerors to be unduly burdensome.
(g) To pay all expenses, fees and taxes (other than
transfer taxes on resales of the Preferred Securities
by the respective Underwriters) in connection with
the issuance and delivery of the Preferred
Securities, except that the Offerors shall be
required to pay the fees and disbursements (other
than disbursements referred to in paragraph (f) of
this Section 4) of Dewey Ballantine LLP, counsel to
the Underwriters, only in the events provided in
paragraph (h) of this Section 4 and paragraph (a) of
Section 7, the Underwriters hereby agreeing to pay
such fees and disbursements in any other event.
(h) If the Underwriters shall not take up and pay for the
Preferred Securities due to the failure of the
Offerors to comply with any of the conditions
specified in Section 3 hereof, or, if this Agreement
shall be terminated in accordance with the provisions
of Section 8 or 9 hereof, to pay the fees and
disbursements of Dewey Ballantine LLP, counsel to the
Underwriters, and, if the Underwriters shall not take
up and pay for the Preferred Securities due to the
failure of the Offerors to comply with any of the
conditions specified in Section 3 hereof, to
reimburse the Underwriters for their reasonable
out-of-pocket expenses, in an aggregate amount not
exceeding a total of $10,000, incurred in connection
with the financing contemplated by this Agreement.
(i) During the period from the date hereof and continuing
to and including the earlier of (i) the date which is
after the Time of Purchase on which the distribution
of the Preferred Securities ceases,
7
as determined by the Representative in its sole
discretion, and (ii) the date which is 30 days after
the Time of Purchase, the Offerors agree not to
offer, sell, contract to sell or otherwise dispose of
any Preferred Securities of the Trust or any
substantially similar securities of the Trust without
the consent of the Representative.
5. WARRANTIES OF THE OFFERORS: The Offerors jointly and severally
represent and warrant to, and agree with you, as set forth below:
(a) the Registration Statement on its effective date
complied with the applicable provisions of the Act
and the rules and regulations of the Commission and
the Registration Statement at its effective date did
not, and at the Time of Purchase will not, contain
any untrue statement of a material fact or omit to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading, and the Basic Prospectus on the date of
this Agreement and the Prospectus when first filed in
accordance with Rule 424(b) complies, and at the Time
of Purchase the Prospectus will comply, with the
applicable provisions of the Act and the Trust
Indenture Act of 1939, as amended (the 1939 Act), and
the rules and regulations of the Commission, the
Basic Prospectus on the date of this Agreement and
the Prospectus when first filed in accordance with
Rule 424(b) under the Act do not, and the Prospectus
at the Time of Purchase will not, contain any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein, in the
light of the circumstances under which they were
made, not misleading, except that the Offerors make
no warranty or representation to the Underwriters
with respect to any statements or omissions made in
the Registration Statement, the Basic Prospectus or
the Prospectus in reliance upon and in conformity
with information furnished in writing to the Offerors
by, or through the Representative on behalf of, any
Underwriter expressly for use in the Registration
Statement, the Basic Prospectus or Prospectus, or to
any statements in or omissions from that part of the
Registration Statement that shall constitute the
Statement of Eligibility under the 1939 Act of any
indenture or other trustee under an indenture, trust
or other agreement of either Offeror.
(b) As of the Time of Purchase, the Indenture will have
been duly authorized by the Company and duly
qualified under the 1939 Act and, when executed and
delivered by the Trustee and the Company, will
constitute a legal, valid and binding instrument
enforceable against the Company in accordance with
its terms and such Junior Subordinated Debentures
will have been duly authorized, executed,
authenticated and, when paid for by the purchasers
thereof, will constitute legal, valid and binding
obligations of the Company
8
entitled to the benefits of the Indenture, except as
the enforceability thereof may be limited by
bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors' rights in
general, and except as the availability of the remedy
of specific performance is subject to general
principles of equity (regardless of whether such
remedy is sought in a proceeding in equity or at
law), and by an implied covenant of good faith and
fair dealing (collectively, the "Enforceability
Exceptions").
(c) The documents incorporated by reference in the
Registration Statement or Prospectus, when they were
filed with the Commission, complied in all material
respects with the applicable provisions of the 1934
Act and the rules and regulations of the Commission
thereunder, and as of such time of filing, when read
together with the Prospectus, none of such documents
contained an untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary to make the statements
therein, in the light of the circumstances under
which they were made, not misleading.
(d) Since the respective dates as of which information is
given in the Registration Statement and the
Prospectus, except as otherwise referred to or
contemplated therein, there has been no material
adverse change in the business, properties or
financial condition of the Offerors.
(e) This Agreement has been duly authorized, executed and
delivered by the Offerors.
(f) The consolidated financial statements of the Company
and its consolidated subsidiaries together with the
notes thereto, included or incorporated by reference
in the Prospectus present fairly the financial
position of the Company at the dates or for the
periods indicated; said consolidated financial
statements have been prepared in accordance with
United States generally accepted accounting
principles applied, apart from reclassifications
disclosed therein, on a consistent basis throughout
the periods involved; and the selected consolidated
financial information of the Company included in the
Prospectus presents fairly the information shown
therein and has been compiled, apart from
reclassifications disclosed therein, on a basis
consistent with that of the audited financial
statements of the Company included or incorporated by
reference in the Prospectus.
(g) There is no pending action, suit, investigation,
litigation or proceeding, including, without
limitation, any environmental
9
action, affecting the Offerors before any court,
governmental agency or arbitration that is reasonably
likely to have a material adverse effect on the
business, properties, financial condition or results
of operations of the Offerors, except as disclosed in
the Prospectus.
(h) The Company has due corporate authority to enter into
and perform its obligations under the Trust Agreement
and the Guarantee Agreement and to purchase, own, and
hold the Common Securities issued by the Trust and to
issue and deliver the Guarantee.
(i) The Trust has been duly created and is validly
existing and in good standing as a statutory trust
under the Delaware Statutory Trust Act with the power
and authority to own property and to conduct its
business as described in the Registration Statement
and Prospectus and to enter into and perform its
obligations under this Agreement and the Trust
Agreement; the Trust is duly qualified to transact
business as a foreign company and is in good standing
in any other jurisdiction in which such qualification
is necessary, except to the extent that the failure
to so qualify or be in good standing would not have a
material adverse effect on the Trust; the Trust is
not a party to or otherwise bound by any agreement
other than those described in the Prospectus; the
Trust is and will be classified for United States
federal income tax purposes as a grantor trust and
not as an association taxable as a corporation; and
the Trust is and will be accounted for pursuant to
generally accepted accounting principles.
(j) The Common Securities have been duly authorized by
the Trust Agreement and, when issued and delivered by
the Trust to the Company against payment therefor as
described in the Registration Statement and
Prospectus, will be validly issued and (subject to
the terms of the Trust Agreement) fully paid and
non-assessable undivided beneficial interests in the
Trust and will conform in all material respects to
all statements relating thereto contained in the
Prospectus; the issuance of the Common Securities is
not subject to preemptive or other similar rights;
and, at the Time of Purchase, all of the issued and
outstanding Common Securities of the Trust will be
directly owned by the Company, free and clear of any
security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right.
(k) The Trust Agreement has been duly authorized by the
Company and, at the Time of Purchase, will have been
duly executed and delivered by the Company and the
Administrative Trustees, and assuming due
authorization, execution and delivery of the Trust
10
Agreement by the Delaware Trustee and the Property
Trustee, the Trust Agreement will, at the Time of
Purchase, be a valid and binding obligation of the
Company and the Administrative Trustees, enforceable
against the Company and the Administrative Trustees
in accordance with its terms, except to the extent
that enforcement thereof may be limited by the
Enforceability Exceptions and will conform in all
material respects to all statements relating thereto
in the Prospectus; and, at the Time of Purchase, the
Trust Agreement will have been duly qualified under
the 1939 Act.
(l) The Guarantee Agreement, the Remarketing Agreement,
the Calculation Agent Agreement and the Agreement as
to Expenses and Liabilities have been duly authorized
by the Company and, at the Time of Purchase, will
have been duly executed and delivered by the Company,
and, assuming due authorization, execution and
delivery of the Guarantee Agreement, the Remarketing
Agreement, the Calculation Agent Agreement and the
Agreement as to Expenses and Liabilities by the other
respective parties thereto, each of the Guarantee
Agreement, Remarketing Agreement, the Calculation
Agent Agreement and the Agreement as to Expenses and
Liabilities will, at the Time of Purchase, constitute
a valid and binding obligation of the Company,
enforceable against the Company in accordance with
their respective terms except to the extent that
enforcement thereof may be limited by the
Enforceability Exceptions, and each of the Guarantee,
the Guarantee Agreement, Remarketing Agreement, the
Calculation Agent Agreement and the Agreement as to
Expenses and Liabilities will conform in all material
respects to all statements relating thereto contained
in the Prospectus; and, at the Time of Purchase, the
Guarantee Agreement will have been duly qualified
under the 1939 Act.
(m) The Preferred Securities have been duly authorized by
the Trust Agreement and, when issued and delivered by
the Trust pursuant to this Agreement against payment
of the consideration set forth herein, will be
validly issued and (subject to the terms of the Trust
Agreement) fully paid and non-assessable undivided
beneficial interests in the assets of the Trust, will
be entitled to the benefits of the Trust Agreement
and will conform in all material respects to all
statements relating thereto contained in the
Prospectus; the issuance of the Preferred Securities
is not subject to preemptive or other similar rights;
(subject to the terms of the Trust Agreement) holders
of Preferred Securities will be entitled to the same
limitation of personal liability under Delaware law
as extended to stockholders of private corporations
for profit.
11
(n) The Company's obligations under the Guarantee (i) are
subordinate and junior in right of payment to all
liabilities of the Company, except those obligations
or liabilities made pari passu or subordinate by
their terms, (ii) are pari passu with the preferred
stock issued by the Company and (iii) are senior to
all common stock of the Company.
(o) The Junior Subordinated Debentures are subordinated
and junior in right of payment to all "Senior
Indebtedness" (as defined in the Indenture) of the
Company.
(p) Each of the Administrative Trustees of the Trust is
an officer of the Company and has been duly
authorized by the Company to execute and deliver the
Trust Agreement.
(q) Neither the Trust nor the Company nor any of the
Company's other subsidiaries is nor, after giving
effect to the offering and sale of the Preferred
Securities, will be an "investment company" or an
entity "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as
amended.
(r) The execution, delivery and performance by the
Offerors of this Agreement, the Remarketing
Agreement, the Calculation Agent Agreement, the
Preferred Securities and the Common Securities, by
the Company of the Indenture, the Junior Subordinated
Debentures, the Guarantee Agreement, the Trust
Agreement, the Guarantee and the Agreement as to
Expenses and Liabilities and the consummation by the
Offerors of the transactions contemplated herein and
therein and compliance by the Offerors with their
respective obligations hereunder and thereunder shall
have been duly authorized by all necessary action
(corporate or otherwise) on the part of the Offerors
and do not and will not result in any violation of
the charter or bylaws of the Company, or the Trust
Agreement or related Certificate of Trust and do not
and will not conflict with, or result in a breach of
any of the terms or provisions of, or constitute a
default under, or result in the creation or
imposition of any lien, charge or encumbrance upon
any property or assets of the Trust or the Company
under (A) any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or
instrument to which the Trust or the Company is a
party or by which either of them may be bound or to
which any of their properties may be subject (except
for conflicts, breaches or defaults which would not,
individually or in the aggregate, be materially
adverse to the Trust or the Company or materially
adverse to the transactions contemplated by this
Agreement), or
12
(B) any existing applicable law, rule, regulation,
judgment, order or decree of any government,
governmental instrumentality or court having
jurisdiction over the Trust or the Company, or any of
their respective properties.
(s) No authorization, approval, consent or order of any
court or governmental authority or agency is
necessary in connection with the issuance and sale of
the Common Securities or the offering of the
Preferred Securities, the Junior Subordinated
Debentures or the Guarantee or the transactions
contemplated in this Agreement, except (A) such as
may be required under the Act or the rules and
regulations thereunder; (B) such as may be required
under the 1935 Act; (C) the qualification of the
Trust Agreement, the Guarantee Agreement and the
Indenture under the 1939 Act; and (D) such consents,
approvals, authorizations, registrations or
qualifications as may be required under state
securities or "blue sky" laws.
The Offerors' covenants, warranties and representations contained in this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of any person, and shall survive the delivery of and
payment for the Preferred Securities hereunder.
6. WARRANTIES OF UNDERWRITERS: Each Underwriter warrants and represents
that the information furnished in writing to the Offerors through the
Representative for use in the Registration Statement, in the Basic Prospectus,
in the Prospectus, or in the Prospectus as amended or supplemented is correct as
to such Underwriter. The warranties and representations of such Underwriter
contained in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of the Offerors or other persons, and
shall survive the delivery of and payment for the Preferred Securities
hereunder.
7. INDEMNIFICATION AND CONTRIBUTION:
(a) To the extent permitted by law, the Offerors agree to
indemnify and hold you harmless, your officers and
directors and each person, if any, who controls you
within the meaning of Section 15 of the Act, against
any and all losses, claims, damages or liabilities,
joint or several, to which you, they or any of you or
them may become subject under the Act or otherwise,
and to reimburse you and such controlling person or
persons, if any, for any legal or other expenses
incurred by you or them in connection with defending
any action, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon
any alleged untrue statement or untrue statement of a
material fact contained in the Registration
Statement, in the Basic Prospectus (if used prior to
the effective date of this Agreement), or in the
Prospectus, or if the Offerors shall furnish or cause
to be furnished to you any amendments or any
supplements to
13
the Prospectus, in the Prospectus as so amended or
supplemented except to the extent that such
amendments or supplements relate solely to securities
other than the Preferred Securities (provided that if
such Prospectus or such Prospectus, as amended or
supplemented, is used after the period of time
referred to in Section 4(b) hereof, it shall contain
such amendments or supplements as the Offerors deem
necessary to comply with Section 10(a) of the Act),
or arise out of or are based upon any alleged
omission or omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, except insofar
as such losses, claims, damages, liabilities or
actions arise out of or are based upon any such
alleged untrue statement or omission, or untrue
statement or omission which was made in the
Registration Statement, in the Basic Prospectus or in
the Prospectus, or in the Prospectus as so amended or
supplemented, in reliance upon and in conformity with
information furnished in writing to the Offerors by
or through the Representative expressly for use
therein or with any statements in or omissions from
that part of the Registration Statement that shall
constitute the Statement of Eligibility under the
1939 Act of any trustee under any indenture, trust or
other agreement or obligation of the Trust or of the
Company with respect to the transactions contemplated
by this Agreement, and except that this indemnity
shall not inure to your benefit (or of any person
controlling you) on account of any losses, claims,
damages, liabilities or actions arising from the sale
of the Preferred Securities to any person if such
loss arises from the fact that a copy of the
Prospectus, as the same may then be supplemented or
amended to the extent such Prospectus was provided to
you by the Offerors (excluding, however, any document
then incorporated or deemed incorporated therein by
reference), was not sent or given by you to such
person with or prior to the written confirmation of
the sale involved and the alleged omission or alleged
untrue statement or omission or untrue statement was
corrected in the Prospectus as supplemented or
amended at the time of such confirmation, and such
Prospectus, as amended or supplemented, was timely
delivered to you by the Offerors. You agree promptly
after the receipt by you of written notice of the
commencement of any action in respect to which
indemnity from either Offeror on account of its
agreement contained in this Section 7(a) may be
sought by you, or by any person controlling you, to
notify the Offerors in writing of the commencement
thereof, but your omission so to notify the Offerors
of any such action shall not release either Offeror
from any liability which it may have to you or to
such controlling person otherwise than on account of
the indemnity agreement contained in this Section
7(a). In case any such action shall be brought
against you or any such person controlling you and
you shall notify the Offerors of the commencement
thereof, as above provided, the
14
Offerors shall be entitled to participate in, and, to
the extent that each shall wish, including the
selection of counsel (such counsel to be reasonably
acceptable to the indemnified party), to direct the
defense thereof at the expense of the Offerors. In
case the Offerors elect to direct such defense and
select such counsel (hereinafter, Offerors' counsel),
you or any controlling person shall have the right to
employ your own counsel, but, in any such case, the
fees and expenses of such counsel shall be at your
expense unless (i) the Offerors have agreed in
writing to pay such fees and expenses or (ii) the
named parties to any such action (including any
impleaded parties) include both you or any
controlling person and the Offerors and you or any
controlling person shall have been advised by your
counsel that a conflict of interest between the
Offerors and you or any controlling person may arise
(and the Offerors' counsel shall have concurred in
good faith with such advice) and for this reason it
is not desirable for the Offerors' counsel to
represent both the indemnifying party and the
indemnified party (it being understood, however, that
the Offerors shall not, in connection with any one
such action or separate but substantially similar or
related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more
than one separate firm of attorneys for you or any
controlling person (plus any local counsel retained
by you or any controlling person in their reasonable
judgment), which firm (or firms) shall be designated
in writing by you or any controlling person).
(b) Each Underwriter agrees, to the extent permitted by
law, severally and not jointly, to indemnify, hold
harmless and reimburse the Company, its directors and
such of its officers as shall have signed the
Registration Statement, the Trust and each person, if
any, who controls either Offeror within the meaning
of Section 15 of the Act, to the same extent and upon
the same terms as the indemnity agreement of the
Offerors set forth in Section 7(a) hereof, but only
with respect to untrue statements or alleged untrue
statements or omissions or alleged omissions made in
the Registration Statement, or in the Basic
Prospectus, or in the Prospectus, or in the
Prospectus as so amended or supplemented, in reliance
upon and in conformity with information furnished in
writing to the Offerors by the Representative on
behalf of such Underwriter expressly for use therein.
The Offerors agree promptly after the receipt by it
of written notice of the commencement of any action
in respect to which indemnity from you on account of
your agreement contained in this Section 7(b) may be
sought by the Offerors, or by any person controlling
the Offerors, to notify you in writing of the
commencement thereof, but the Offerors' omission so
to notify you of any such action shall not release
you from any liability which you
15
may have to the Offerors or to such controlling
person otherwise than on account of the indemnity
agreement contained in this Section 7(b).
(c) If recovery is not available or insufficient under
Section 7(a) or 7(b) hereof for any reason other than
as specified therein, the indemnified party shall be
entitled to contribution for any and all losses,
claims, damages, liabilities and expenses for which
such indemnification is so unavailable or
insufficient under this Section 7(c). In determining
the amount of contribution to which such indemnified
party is entitled, there shall be considered the
portion of the proceeds of the offering of the
Preferred Securities realized, the relative knowledge
and access to information concerning the matter with
respect to which the claim was asserted, the
opportunity to correct and prevent any statement or
omission, and any equitable considerations
appropriate under the circumstances. The Offerors and
the Underwriters agree that it would not be equitable
if the amount of such contribution were determined by
pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such
purpose) without reference to the considerations
called for in the previous sentence. No Underwriter
or any person controlling such Underwriter shall be
obligated to contribute any amount or amounts
hereunder which in the aggregate exceeds the total
price of the Preferred Securities purchased by such
Underwriter under this Agreement, less the aggregate
amount of any damages which such Underwriter and its
controlling persons have otherwise been required to
pay in respect of the same claim or any substantially
similar claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. An Underwriter's obligation to
contribute under this Section 7 is in proportion to
its purchase obligation and not joint with any other
Underwriter.
(d) No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment
with respect to any litigation, or any investigation
or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution
could be sought under this Section 7 (whether or not
the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise
or consent (i) includes an unconditional release of
each indemnified party from all liability arising out
of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or
16
an admission of fault, culpability or a failure to
act by or on behalf of such indemnified party.
(e) In no event shall any indemnifying party have any
liability or responsibility in respect of the
settlement or compromise of, or consent to the entry
of any judgment with respect to, any pending or
threatened action or claim effected without its prior
written consent.
The agreements contained in this Section 7 hereof shall remain in full
force and effect regardless of any investigation made by or on behalf of any
person, and shall survive the delivery of and payment for the Preferred
Securities hereunder.
8. DEFAULT OF UNDERWRITERS: If any Underwriter under this Agreement
shall fail or refuse (otherwise than for some reason sufficient to justify, in
accordance with the terms hereof, the cancellation or termination of its
obligations hereunder) to purchase and pay for the aggregate number of Preferred
Securities which it has agreed to purchase and pay for hereunder, and the
aggregate number of Preferred Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Preferred Securities, the other Underwriters
shall be obligated severally in the proportions which the aggregate number of
Preferred Securities set forth opposite their names in Exhibit 1 hereto bear to
the aggregate number of Preferred Securities set forth opposite the names of all
such non-defaulting Underwriters, to purchase the Preferred Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on the terms set forth herein; provided that in no event shall the
aggregate number of Preferred Securities which any Underwriter has agreed to
purchase pursuant to Section 1 hereof be increased pursuant to this Section 8 by
an amount in excess of one-ninth of such aggregate number of Preferred
Securities without the written consent of such Underwriter. If any Underwriter
or Underwriters shall fail or refuse to purchase Preferred Securities and the
aggregate number of Preferred Securities with respect to which such default
occurs is more than one-tenth of the aggregate number of the Preferred
Securities then this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter; provided, however, that the non-defaulting
Underwriters may agree, in their sole discretion, to purchase the Preferred
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on the terms set forth herein. In the event of any such
termination, the Offerors shall not be under any liability to any Underwriter
(except to the extent, if any, provided in Section 4(h) hereof), nor shall any
Underwriter (other than an Underwriter who shall have failed or refused to
purchase the Preferred Securities without some reason sufficient to justify, in
accordance with the terms hereof, its termination of its obligations hereunder)
be under any liability to the Offerors or any other Underwriter.
Nothing herein contained shall release any defaulting Underwriter from
its liability to the Offeror or any non-defaulting Underwriter for damages
occasioned by its default hereunder.
17
9. TERMINATION OF AGREEMENT BY THE UNDERWRITERS: This Agreement may be
terminated at any time prior to the Time of Purchase by the Representative if,
after the execution and delivery of this Agreement and prior to the Time of
Purchase, in the Representative's reasonable judgment, the Underwriters' ability
to market the Preferred Securities shall have been materially adversely affected
because:
(i) trading in securities on the New York Stock
Exchange shall have been generally suspended by the Commission or by
the New York Stock Exchange or trading in the securities of the Company
shall have been suspended by the New York Stock Exchange, or
(ii) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a
national emergency or war or other national or international calamity
or crisis, or
(iii) a general banking moratorium shall have been
declared by Federal or New York State authorities, or
(iv) there shall have been any decrease in the
ratings of the Company's debt securities by Moody's Investors Services,
Inc. (Moody's) or Standard & Poor's Ratings Services (S&P) or either
Moody's or S&P shall publicly announce that it has such debt securities
under consideration for possible further downgrade other than what has
been announced.
If the Representative elects to terminate this Agreement, as
provided in this Section 9, the Representative will promptly notify the Offerors
by telephone or by telex or facsimile transmission, confirmed in writing. If
this Agreement shall not be carried out by any Underwriter for any reason
permitted hereunder, or if the sale of the Preferred Securities to the
Underwriters as herein contemplated shall not be carried out because the
Offerors are not able to comply with the terms hereof, the Offerors shall not be
under any obligation under this Agreement and shall not be liable to any
Underwriter or to any member of any selling group for the loss of anticipated
profits from the transactions contemplated by this Agreement (except that the
Offerors shall remain liable to the extent provided in Section 4(h) hereof) and
the Underwriters shall be under no liability to the Offerors nor be under any
liability under this Agreement to one another.
10. NOTICES: All notices hereunder shall, unless otherwise expressly
provided, be in writing and be delivered at or mailed to the following addresses
or by telex or facsimile transmission confirmed in writing to the following
addresses: if to the Underwriters, to the Representative at 745 Seventh Avenue,
New York, New York 10019 Attention: Preferred Stock/Hybrid Capital Group (fax
212/526-0943), and, if to the Offerors, to Southwestern Electric Power Company,
c/o American Electric Power Service Corporation, 1 Riverside Plaza, Columbus,
Ohio 43215, Attention: General Counsel (fax 614/716-1687).
18
11. PARTIES IN INTEREST: The agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Offerors (including the
directors thereof and such of the officers thereof as shall have signed the
Registration Statement), the controlling persons, if any, referred to in Section
7 hereof, and their respective successors, assigns, executors and
administrators, and, except as expressly otherwise provided in Section 8 hereof,
no other person shall acquire or have any right under or by the virtue of this
Agreement.
12. DEFINITION OF CERTAIN TERMS: If there be two or more persons, firms
or corporations named in Exhibit 1 hereto, the term "Underwriters", as used
herein, shall be deemed to mean the several persons, firms or corporations, so
named (including the Representative herein mentioned, if so named) and any party
or parties substituted pursuant to Section 8 hereof, and the term
"Representative", as used herein, shall be deemed to mean the representative or
representatives designated by, or in the manner authorized by, the Underwriters.
All obligations of the Underwriters hereunder are several and not joint. If
there shall be only one person, firm or corporation named in Exhibit 1 hereto,
the term "Underwriters" and the term "Representative", as used herein, shall
mean such person, firm or corporation. The term "successors" as used in this
Agreement shall not include any purchaser, as such purchaser, of any of the
Preferred Securities from any of the respective Underwriters.
13. CONDITIONS OF THE OFFERORS' OBLIGATIONS: The obligations of the
Offerors hereunder are subject to the Underwriters' performance of their
obligations hereunder, and the further condition that at the Time of Purchase
the Commission shall have issued an appropriate order, and such order shall
remain in full force and effect, authorizing the transactions contemplated
hereby.
14. APPLICABLE LAW: This Agreement will be governed and construed in
accordance with the laws of the State of New York.
15. EXECUTION OF COUNTERPARTS: This Agreement may be executed in
several counterparts, each of which shall be regarded as an original and all of
which shall constitute one and the same document.
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, on the date
first above written.
SOUTHWESTERN ELECTRIC POWER COMPANY
By:
-------------------------------
Name: Wendy G. Hargus
Title: Assistant Treasurer
SWEPCo CAPITAL TRUST I
By: Southwestern Electric Power Company, as Depositor
By:
-------------------------------
Name: Wendy G. Hargus
Title: Assistant Treasurer
LEHMAN BROTHERS INC.
as Representative
and on behalf of the Underwriters
named in Exhibit 1 hereto
By:
----------------------------------
Name:
Title:
20
EXHIBIT 1
NAME OF UNDERWRITER NUMBER OF PREFERRED SECURITIES
- ------------------- ------------------------------
Lehman Brothers Inc. 86,900
Danske Markets Inc. 7,700
Mellon Financial Markets, LLC 7,700
TD Securities (USA) Inc. 7,700
--------
TOTAL 110,000
========
21
EXHIBIT 2
Initial public offering price per
Preferred Security (and purchase
price per security to be paid by
the several Underwriters): $996.40
Compensation per Preferred Security
to be paid by the Company to the
several Underwriters in respect of
their commitments: $10.00 per
Preferred Security