Exhibit 1.1
EXECUTION COPY
AMERICAN ELECTRIC POWER COMPANY, INC.
Underwriting Agreement
6,000,000 Equity Units*
Dated June 5, 2002
AGREEMENT made between AMERICAN ELECTRIC POWER COMPANY, INC., a
corporation organized and existing under the laws of the State of New York (the
"Company"), and the several persons, firms and corporations (the "Underwriters")
named in Exhibit 1 hereto.
WITNESSETH:
WHEREAS, the Company proposes to sell to the Underwriters 6,000,000 of
its 9.25% Equity Units. The Equity Units will initially consist of 6,000,000
units (the "Underwritten Securities") with a stated amount, per Equity Unit, of
$50 (the "Stated Amount"). Each Equity Unit will initially consist of (a) a
forward stock purchase contract (a "Forward Purchase Contract") under which (i)
the holder will agree to purchase from the Company on August 16, 2005 (the
"Forward Purchase Contract Settlement Date"), for an amount of cash equal to the
Stated Amount, shares of common stock, $6.50 par value, of the Company ("Common
Stock"), equal to the Settlement Rate (as defined in the Forward Purchase
Contract Agreement referred to below) and (ii) the Company will agree to pay to
the holder contract adjustment payments set forth in the Forward Purchase
Contract Agreement and (b) $50 principal amount of the Company's 5.75% senior
notes due August 16, 2007 (the "Notes") issued pursuant to the Indenture (as
defined below); and
WHEREAS, the Company also proposes to grant to the Underwriters an
option to purchase up to an additional 900,000 of its Equity Units to cover
over-allotments (the "Option Securities"; the Option Securities, together with
the Underwritten Securities, being hereinafter called the "Securities"). The
Notes that will initially constitute a component of the Equity Units are
hereinafter sometimes referred to as the "Underlying Notes". In accordance with
the terms of the Forward Purchase Contract Agreement, to be dated as of June 11,
2002 (the "Forward Purchase Contract Agreement"), between the Company and The
Bank of New York, as forward purchase contract agent (the "Forward Purchase
Contract Agent"), the Underlying Notes will be pledged by the Forward Purchase
Contract Agent, on behalf of the holders of the Equity Units, to The Bank of New
York, as collateral agent (the "Collateral Agent"), pursuant to the Pledge
Agreement, to be dated as of June 11, 2002 (the "Pledge Agreement"), among the
Company, the Forward Purchase Contract Agent and the Collateral Agent, to secure
the holders' obligations to
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* Plus an option to purchase from American Electric Power Company, Inc. up to
900,000 additional Equity Units to cover over-allotments.
purchase Common Stock under the Forward Purchase Contracts. The shares of Common
Stock issuable pursuant to the Forward Purchase Contracts are hereinafter called
the "Shares;" and
WHEREAS, the Notes are to be issued pursuant to an indenture dated as
of May 1, 2001 (the "Base Indenture"), between the Company and The Bank of New
York, as trustee (the "Trustee"), as amended and supplemented by a supplemental
indenture relating to the Notes constituting a part of the Securities (the
"Supplemental Indenture") between the Company and the Trustee (the "Base
Indenture", as supplemented and amended by the Supplemental Indenture, being
referred to as the "Indenture"). The Securities and the Indenture are more fully
described in the Prospectus referred to below; and
WHEREAS, pursuant to a Remarketing Agreement (the "Remarketing
Agreement") to be dated as of June 11, 2002, among the Company, the Forward
Purchase Contract Agent and Salomon Smith Barney Inc., as remarketing agent (the
"Remarketing Agent"), the Notes may be remarketed, subject to certain terms and
conditions; and
WHEREAS, as used in this Agreement, the term "Operative Documents"
means the Forward Purchase Contract Agreement (including the Forward Purchase
Contracts), the Pledge Agreement, the Remarketing Agreement, the Notes, the
Indenture and the Equity Units; and
WHEREAS, the Underwriters have designated the persons signing this
Agreement (collectively, the "Representatives") to execute this Agreement on
behalf of the respective Underwriters and to act for the respective Underwriters
in the manner provided in this Agreement; and
WHEREAS, the Company has prepared and filed, in accordance with the
provisions of the Securities Act of 1933 (the "Act"), with the Securities and
Exchange Commission (the "Commission"), a registration statement (File No.
333-86050) and a prospectus relating to $3,000,000,000 principal amount of its
securities, including the Equity Units, 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, 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, being herein called the Basic Prospectus, and the Basic Prospectus,
as supplemented by a preliminary prospectus supplement (the "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, the interest
rate, maturity date, the contract adjustment payments and 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:
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1. Purchase and Sale: (a) Upon the basis of the warranties and
representations and on the terms and subject to the conditions herein
set forth, the Company agrees to sell to the respective Underwriters
named in Exhibit 1 hereto, severally and not jointly, and the
respective Underwriters, severally and not jointly, agree to purchase
from the Company, the respective number of Underwritten Securities set
opposite their names in Exhibit 1 hereto, together aggregating all of
the Underwritten Securities, at a purchase price equal to $48.50 per
Security.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby
grants an option to the several Underwriters to purchase, severally and
not jointly, not more than 900,000 Option Securities at the same
purchase price per share as the Underwriters shall pay for the
Underwritten Securities. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Securities by the
Underwriters. Said option may be exercised one time, in whole or in
part, provided that the settlement of the Option Securities shall be no
later than the 13th day after the date of issuance of the Underwritten
Securities. Said option shall be exercised upon written or telegraphic
notice by the Representatives to the Company setting forth the number
of shares of the Option Securities as to which the several Underwriters
are exercising the option and the settlement date. The number of shares
of the Option Securities to be purchased by each Underwriter shall be
the same percentage of the total number of shares of the Option
Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to
such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
2. Payment and Delivery: Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option
provided for in Section 1(b) hereof shall have been exercised on or
before the third Business Day prior to the Closing Date) shall be made
at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York 10017, or at such other place as shall be agreed upon by
the Representatives and the Company, at 10:00 a.m., New York City time,
on June 11, 2002, or at such time on such later date not more than
three Business Days after the foregoing date as the Representatives
shall designate, which date and time may be postponed by agreement
between the Representatives and the Company or as provided in Section 8
hereof (such date and time of delivery and payment for the Securities
being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Representatives for the respective accounts of the
several Underwriters against payment by the several Underwriters
through the Representatives of the purchase price thereof to or upon
the order of the Company by wire transfer payable in same-day funds to
an account specified by the Company. Delivery of the Underwritten
Securities and the Option Securities shall be made through the
facilities of The Depository Trust Company unless the Representatives
shall otherwise instruct.
If the option provided for in Section 1(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will deliver
the Option Securities (at the expense of the Company) to the Representatives, at
388 Greenwich Street, New York, New York, on the date specified by the
Representatives (which shall be within three Business Days
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after exercise of said option) for the respective accounts of the several
Underwriters, against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. If settlement for the Option Securities occurs after the Closing
Date, the Company will deliver to the Representatives on the settlement date for
the Option Securities, and the obligation of the Underwriters to purchase the
Option Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 3 hereof. Any
settlement date for the Option Securities after the Closing Date shall be such
date as the Company and the Representatives may agree, but in no event shall
such date be sooner than the third Business Day following the exercise of the
option provided for in Section 1(b) hereof.
Certificates for the Securities shall be registered in such
names as the Underwriters may request in writing at least two full Business Days
before the Closing Date. The certificates for Securities will be made available
in New York City for examination by the Underwriters no later than 10:00 a.m.,
New York City time on the Business Day prior to the Closing Date.
3. Conditions of Underwriters' Obligations: The several
obligations of the Underwriters hereunder to purchase Underwritten
Securities and the Option Securities, as the case may be, are subject
to the accuracy of the warranties and representations on the part of
the Company on the date hereof and at the Closing Date, and if
applicable, the settlement date pursuant to Section 2 hereof, and to
the following other conditions:
(a) That all legal proceedings to be taken and all legal
opinions to be rendered in connection with the sale of the Securities
shall be satisfactory in form and substance to Dewey Ballantine LLP,
counsel to the Underwriters and the Company shall have furnished such
counsel all documents and information that it may reasonably request to
enable it to pass upon such matters.
(b) That, at the Closing Date, the Representatives shall be
furnished with the following opinions, dated the day of the Closing
Date, 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 Representatives with the approval of Dewey
Ballantine LLP, counsel to the Underwriters:
(i) Opinion of Simpson Thacher & Bartlett, substantially
in the form attached hereto as Exhibit A-1, and
either of Thomas G. Berkemeyer, Esq. or William E.
Johnson, Esq., counsel to the Company, substantially
in the form attached hereto as Exhibit A-2;
(ii) Opinion of Dewey Ballantine LLP, counsel to the
Underwriters, substantially in the form attached
hereto as Exhibit B;
(iii) Opinion of Pillsbury Winthrop LLP, counsel to the
Trustee, the Forward Purchase Contract Agent and the
Collateral Agent, Securities Intermediary and
Custodial Agent, substantially in the
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form attached hereto as Exhibit C;
(c) That the Representatives shall have received letters from:
(i) Arthur Andersen LLP in form and substance
satisfactory to the Representatives, dated as of May
24, 2002, (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 and (ii)
stating that in their opinion the financial
statements audited by them and 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
(ii) KPMG Audit plc in form and substance satisfactory to
the Representatives, dated as of the Closing Date,
(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 and (ii) stating that in
their opinion the financial statements audited by
them and 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) Deloitte & Touche LLP in form and substance
satisfactory to the Representatives, (A) dated as of
the date of this Agreement and substantially in the
form of Exhibit D hereto and (B) dated as of the
Closing Date, reaffirming the statements made in the
letter furnished pursuant to clause (A) above,
except that the specified date referred to shall be
a date not more than five business days prior to the
Closing Date.
(d) That no amendment to the Registration Statement and that
no prospectus or prospectus supplement of the Company (other than the
prospectus or amendments, prospectuses or prospectus supplements
relating solely to securities other than the Securities) relating to
the Securities and no document which would be deemed incorporated in
the Prospectus by reference filed subsequent to the date hereof and
prior to the Closing Date shall contain material information
substantially different from that contained in the Registration
Statement which is unsatisfactory in substance to the Representatives
or unsatisfactory in form to Dewey Ballantine LLP, counsel to the
Underwriters.
(e) That, at the Closing Date, an appropriate order of the
Commission under the Public Utility Holding Company Act of 1935, as
amended (the "1935 Act") necessary to permit the sale of the Securities
to the Underwriters, shall be in effect; and that, prior to the Closing
Date, no stop order with respect to the effectiveness of the
Registration Statement
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shall have been issued under the Act by the Commission or proceedings
therefor initiated.
(f) That, at the Closing Date, there shall not have been any material
adverse change in the business, properties or financial condition of the
Company from that set forth in the Prospectus (other than changes referred
to in or contemplated by the Prospectus), and that the Company shall, at
the Closing Date, have delivered to the Representatives a certificate of an
executive officer of the Company to the effect that, to the best of his
knowledge, information and belief, there has been no such change.
(g) That the Company shall have performed such of its obligations
under this Agreement as are to be performed at or before the Closing Date
by the terms hereof.
(h) Subsequent to the date of this Agreement, there shall not have
been decreases in the ratings of the Company's senior unsecured debt
securities by both Moody's Investors Services, Inc. ("Moody's") and
Standard & Poor's Ratings Group ("S&P") as follows: (i) a decrease by
Moody's to a rating of Baa3 or below and (ii) a decrease by S&P to a rating
of BBB- or below.
(i) That, at the Closing Date, the Securities shall have been
approved for listing on the New York Stock Exchange, subject to official
notice of issuance, and satisfactory evidence of such actions shall have
been provided to the Representatives.
(j) That, at the Closing Date, each of the executive officers and
directors of the Company listed in Exhibit E shall have entered into an
agreement substantially in the form attached hereto as Exhibit F.
In case any of the conditions specified in this Section 3 shall not
have been fulfilled, this Agreement may be terminated by the Underwriters at any
time at or prior to the Closing Date upon 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 Section 4(f), Section 4(g) and Section 4(h)
hereof and except for any liability under Section 7 hereof.
4. Certain Covenants of the Company: In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:
(a) As soon as 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 the Company is advised thereof, to advise the
Representatives and confirm the advice in writing of any request 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
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law to deliver a prospectus, as many copies of the Prospectus (as
supplemented or amended if the Company shall have made any supplements or
amendments thereto, other than supplements or amendments relating solely to
securities other than the Securities) as the Representatives 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 Representatives, upon request, 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 Securities and, upon request, to
furnish to the Representatives sufficient plain copies thereof (exclusive
of exhibits) for distribution of one to the other Underwriters.
(d) For such period of time 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, immediately to notify the Underwriters of such
event and forthwith to prepare and furnish, at its own expense during the
period ending nine months from the date of this Agreement, and thereafter
at the Underwriters' expense, to the Underwriters and to dealers (whose
names and addresses are furnished to the Company by the Representatives) to
whom principal amounts of the Securities may have been sold by the
Representatives for the accounts of the Underwriters and, upon request, to
any other dealers making such request, copies of such amendments to the
Prospectus or supplements to the Prospectus.
(e) As soon as practicable, the Company will make generally available
to its security holders and to the Underwriters an 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 its best efforts to qualify the Securities for offer and
sale under the securities or "blue sky" laws of such jurisdictions as the
Representatives 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 Company shall not be required to qualify as a foreign corporation
or to file a consent to service of process or to file annual reports or to
comply with any other requirements deemed by the Company to be unduly
burdensome.
(g) To pay all expenses, fees and taxes (other than transfer taxes on
resales of the Securities by the respective Underwriters, but including all
amounts relating to (i) the
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Company's costs and expenses for travel, lodging and incidental expenses
relating to investor presentations on any "road show" undertaken in
connection with the marketing of the Securities; (ii) the listing of the
Securities on the New York Stock Exchange; (iii) the preparation of the
Registration Statement, the Preliminary Prospectus Supplement and the
Prospectus Supplement (and any amendments or supplements thereto); (iv) the
sale and delivery of the Securities; (v) the reasonable fees and
disbursements of counsel and accountants for the Company, the Trustee and
any paying agent, the Forward Purchase Contract Agent and the Collateral
Agent, Securities Intermediary and Custodial Agent and the Remarketing
Agent; and (vi) the printing and delivery of the Preliminary Prospectus
Supplement and the Prospectus Supplement) in connection with the sale and
delivery of the Securities, except that the Company shall be required to
pay the fees and disbursements (other than disbursements referred to in
paragraph (f) of this Section 4) of Dewey Ballantine LLP, counsel to the
Underwriters, only in the events provided in paragraph (h) of this Section
4, the Underwriters hereby agreeing to pay such fees and disbursements in
any other event.
(h) If the Underwriters shall not take up and pay for the Securities
due to the failure of the Company to comply with any of the conditions
specified in Section 3 hereof, or, if this Agreement shall be terminated in
accordance with the provisions of Section 9(b) or 13(ii) hereof, to pay the
fees and disbursements of Dewey Ballantine LLP, counsel to the
Underwriters, and, to reimburse the Underwriters for their reasonable
out-of-pocket expenses, in an aggregate amount not exceeding a total of
$50,000, incurred in connection with the financing contemplated by this
Agreement.
(i) To use its best efforts to cause the Securities to be accepted
for clearance and settlement through the facilities of The Depositary Trust
Company.
(j) The Company will timely file any certificate required by the 1935
Act in connection with the sale of the Securities.
(k) The Company will not, without the prior written consent of the
Representatives, offer, sell, contract to sell, pledge, or otherwise
dispose of, (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Rule 16a-1 under the 1934 Act,
any shares of Common Stock or any securities convertible into, or
exercisable, or exchangeable for, shares of Common Stock other than as
provided in this Agreement; or publicly announce an intention to effect any
such transaction, for a period of 90 days after the date of the
Underwriting Agreement, provided, however, that (i) the Company may issue
and sell up to 18,400,000 shares of its Common Stock in the concurrent
offering contemplated by the Prospectus and (ii) the Company may issue and
sell Common Stock pursuant to the terms of any employee stock option plan,
stock ownership plan, dividend reinvestment plan or any other similar plan
of the Company in effect as of the date hereof and the Company may
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issue Common Stock issuable upon the conversion of securities or the
exercise of warrants outstanding as of the date hereof.
(l) To use its reasonable efforts to effect the listing of the
Securities on the New York Stock Exchange.
5. Representations and Warranties of by the Company: The Company
represents and warrants to, and agrees with each Underwriter, as set forth
below:
(a) The Registration Statement on its effective date complied, or was
deemed to comply, 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 Closing Date 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 Closing Date the Prospectus will comply, with the applicable
provisions of the Act and the Trust Indenture Act of 1939, as amended, 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 Closing
Date 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 Company makes 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 Company by, or through the Representatives 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 Trust Indenture Act of 1939 of any indenture trustee
under an indenture of the Company.
(b) 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.
(c) 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 Company.
(d) This Agreement has been duly authorized, executed and delivered by
the Company.
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(e) As of the Closing Date, the Indenture will have been duly
authorized by the Company and duly qualified under the Trust Indenture Act
of 1939, as amended, 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 the Notes
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 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.
(f) Each of the Forward Purchase Contract Agreement, the Pledge
Agreement and the Remarketing Agreement has been duly authorized by the
Company.
(g) The Equity Units have been duly authorized by the Company. The
Equity Units and the Shares have been duly registered under the Exchange
Act; and the issuance of the Equity Units is not subject to preemptive or
other similar rights.
(h) The execution, delivery and performance of this Agreement, the
Indenture and the other Operative Documents and the Securities and the
consummation by the Company of the transactions contemplated herein and
therein is not in violation of its charter or bylaws, will not result in
the violation of any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, governmental instrumentality or
court having jurisdiction over the Company or its properties 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 Company
under any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company is a party or by which
it may be bound or to which any of its properties may be subject (except
for conflicts, breaches or defaults which would not, individually or in the
aggregate, be materially adverse to the Company or materially adverse to
the transactions contemplated by this Agreement or the other Operative
Documents).
(i) The Shares of Common Stock to be issued and sold by the Company
upon settlement of the Forward Purchase Contracts have been duly authorized
and reserved for issuance and, when issued and delivered in accordance with
the provisions of the Forward Purchase Contracts, will be duly and validly
issued, fully paid and non-assessable and will not be subject to any
preemptive or similar rights.
(j) No authorization, approval, consent or order of any court or
governmental authority or agency is necessary in connection with the
issuance and sale by the Company of the Securities or the transactions by
the Company contemplated in this Agreement or in the other Operative
Documents, except (A) such as may be required under the 1933 Act or the
rules and regulations thereunder; (B) such as may be required under the
1935 Act; (C) the qualification of the Indenture under the 1939 Act; and
(D) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or
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Blue Sky laws.
(k) The Company and each "significant subsidiary" of the Company (as
such term is defined in Rule 1-02 of Regulation S-X promulgated under the
Act) has been duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation.
(l) 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 present fairly the information shown
therein and have 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.
(m) There is no pending action, suit, investigation, litigation or
proceeding, including, without limitation, any environmental action,
affecting the Company or any of its "significant subsidiaries" 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 Company, except as disclosed in the
Prospectus.
The Company's 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 Securities hereunder.
6. Warranties of Underwriters:
(a) Each Underwriter warrants and represents that the information
furnished in writing to the Company through the Representatives 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.
(b) Each of the Underwriters represents and agrees that it has not
and will not offer, sell or delivery any of the Securities directly or
indirectly, or distribute the Prospectus or any other offering material
relating to the Securities, in or from any jurisdiction except under
circumstances that will result in compliance with the applicable laws and
regulations thereof and in a manner that will not impose any obligations on
the Company except as set forth in this Agreement.
The warranties and representations of such Underwriter contained in
this Agreement, shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or other person, and shall
survive the delivery of and payment for the Securities hereunder.
11
7. Indemnification and Contribution:
(a) To the extent permitted by law, the Company agrees to indemnify
and hold you harmless 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 Company shall furnish or cause to be furnished to
you any amendments or any supplements to 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 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 Company deems 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 Company by or
through the Representatives 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 Trust
Indenture Act of any indenture trustee under an indenture of the Company,
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 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 Company (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
Company prior to the written confirmation of the sale involved. You agree
promptly after the receipt by you of written notice of the commencement of
any action in respect to which indemnity from the Company 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 Company in writing of the
commencement thereof, but your omission so to notify the Company of any
such action shall not release the Company 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 Company of the commencement thereof, as above provided,
the Company shall be entitled to participate in, and, to the extent that it
shall wish, including the selection of counsel (such
12
counsel to be reasonably acceptable to the indemnified party), to direct
the defense thereof at its own expense. In case the Company elects to
direct such defense and select such counsel (hereinafter, Company's
counsel), 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 Company has agreed in writing to
pay such fees and expenses or (ii) the named parties to any such action
(including any impleaded parties) include both you or any controlling
person and the Company and you or any controlling person shall have been
advised by your counsel that a conflict of interest between the Company and
you or any controlling person may arise (and the Company's counsel shall
have concurred in good faith with such advice) and for this reason it is
not desirable for the Company's counsel to represent both the indemnifying
party and the indemnified party (it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys
for 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, to
indemnify, hold harmless and reimburse the Company, its directors and such
of its officers as shall have signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15
of the Act, to the same extent and upon the same terms as the indemnity
agreement of the Company set forth in Section 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 Company by the Representatives on behalf of such
Underwriter expressly for use therein. The Company agrees 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 Company, or by any person
controlling the Company, to notify you in writing of the commencement
thereof, but the Company's omission so to notify you of any such action
shall not release you from any liability which you may have to the Company
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
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 Company
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
13
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 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 Securities 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 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 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 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
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 number of Securities
which it has agreed to purchase and pay for hereunder, and the number of
Securities which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the number of
the Securities, the other Underwriters shall be obligated severally in the
proportions which the amounts of Securities set forth opposite their names
in Exhibit 1 hereto bear to the number of Securities set forth opposite the
names of all such non-defaulting Underwriters, to purchase the 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 number of 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 number of Securities without
the written consent of such Underwriter. In the event of any such purchase,
(a) the non-defaulting Underwriters or the Company shall have the right to
fix as a postponed Closing Date a date not exceeding four full business
days after the date specified in Section 2 and (b) the
14
respective number of Securities to be purchased by the non-defaulting
Underwriters shall be taken as the basis of their respective underwriting
obligations for all purposes of this Agreement. If any Underwriter or
Underwriters shall fail or refuse to purchase Securities and the number of
Securities with respect to which such default occurs is more than one-tenth
of the number of the 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 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 Company shall not
be under any liability to any Underwriter (except to the extent, if any,
provided in Section 4(h) hereof), nor shall any Underwriter (other than an
Underwriter who shall have failed or refused to purchase the 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 Company or any other Underwriter.
Nothing herein contained shall release any defaulting Underwriter from
its liability to the Company or any non-defaulting Underwriter for damages
occasioned by its default hereunder.
9. Termination of Agreement by the Underwriters: This Agreement may
be terminated at any time prior to the Closing Date by the Representatives
if, after the execution and delivery of this Agreement and prior to the
Closing Date, in the Representatives' reasonable judgment, the
Underwriters' ability to market the Securities shall have been materially
adversely affected because:
(a) 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
(b) trading in the securities of the Company shall have been
suspended by the New York Stock Exchange, or
(c) 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
(d) a general banking moratorium shall have been declared by Federal
or New York State authorities.
If the Representatives elect to terminate this Agreement, as provided
in this Section 9, the Representatives will promptly notify the Company by
telephone or by telex or facsimile transmission, confirmed in writing. If this
Agreement shall not be carried out by any Underwriter for any reason permitted
hereunder, or if the sale of the Securities to the Underwriters as herein
contemplated shall not be carried out because the Company is not able to comply
with the terms hereof, the Company shall not be under any obligation under this
Agreement and shall not be liable to any Underwriter or to any member of any
selling group for the loss of anticipated profits from the transactions
contemplated by this Agreement (except that the Company shall remain liable to
the
15
extent provided in Sections 4(g), 4(h) and 7 hereof) and the Underwriters shall
be under no liability to the Company 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 Representatives at the
following firms:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Registration Department
J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Attention: Syndicate Desk
Salomon Smith Barney Inc.
388 Greenwich Avenue
New York, New York 10013
Attention: Syndicate Department
and, if to the Company, to American Electric Power Company, Inc., c/o American
Electric Power Service Corporation, 1 Riverside Plaza, Columbus, Ohio 43215,
Attention: A. A. Pena, Treasurer, (fax 614/223-1687).
11. Parties in Interest: The agreement herein set forth has been and
is made solely for the benefit of the Underwriters, the Company (including
the directors thereof and such of the officers thereof as shall have signed
the Registration Statement), the controlling persons, if any, referred to
in 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 Representatives 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 Securities from any
of the respective Underwriters.
16
13. Conditions of the Company's Obligations: The obligations of the
Company hereunder are subject to (i) the Underwriters' performance of their
obligations hereunder; and (ii) that at the Closing Date the Commission
shall have issued an appropriate order under the Act and 1935 Act, and such
orders shall remain in full force and effect, authorizing the transactions
contemplated hereby. In case these conditions shall not have been
fulfilled, this Agreement may be terminated by the Company upon notice
thereof to the Underwriters. Any such termination shall be without
liability of any party to any other party except as otherwise provided in
Sections 4(g), 4(h) and 7 hereof.
14. Offering by Underwriters: It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set
forth in the Prospectus.
15. Applicable Law: This Agreement will be governed and construed in
accordance with the laws of the State of New York.
16. 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.
17
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.
AMERICAN ELECTRIC POWER COMPANY, INC.
By: /s/ Geoffrey S. Chatas
-----------------------------------------
Name: Geoffrey S. Chatas
Title: Assistant Treasurer
18
GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
----------------------------------
Name: Alan Levande
J.P. MORGAN SECURITIES INC.
By: /s/ Michael Tiedemann
----------------------------------
Name: Michael Tiedemann
SALOMON SMITH BARNEY INC.
By: /s/ Henry A. Clark
----------------------------------
Name: Henry A. Clark
as Representatives
and on behalf of the Underwriters
named in Exhibit 1 hereto
19
EXHIBIT 1
Name of Underwriter Number of Underwritten Securities
- ------------------- ---------------------------------
to be Purchased
---------------
Goldman, Sachs & Co. 1,350,000
J.P. Morgan Securities Inc. 1,350,000
Salomon Smith Barney Inc. 1,350,000
Banc of America Securities LLC 240,000
Credit Suisse First Boston Corporation 240,000
Lehman Brothers Inc. 240,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 240,000
UBS Warburg LLC 240,000
A.G. Edwards & Sons, Inc. 125,000
Danske Securities (US), Inc. 125,000
Edward D. Jones & Co., L.P. 125,000
McDonald Investments Inc. 125,000
TD Securities (USA) Inc. 125,000
The Williams Capital Group, L.P. 125,000
TOTAL ..................................................... 6,000,000
=========
EXHIBIT A-1
OPINION OF SIMPSON THACHER & BARTLETT
(a) The Company has been duly incorporated and is validly existing
and in good standing as a corporation under the laws of the State of New
York and has full corporate power and authority to conduct its business
as described in the Registration Statement and Prospectus.
(b) An appropriate order of the Commission legally required for the
issuance and sale of the Securities by the Company under the Public
Utility Holding Company Act of 1935 has been obtained; such order is
sufficient for the issuance and sale of the Securities by the Company;
and no other order, consent or other authorization or approval of any
United States federal or New York State governmental body (other than in
connection or in compliance with the previsions of the securities or
"blue sky" laws of any jurisdiction, as to which we express no opinion)
not already obtained is legally required for the issuance and sale of
the Securities by the Company in accordance with the terms of the
Underwriting Agreement, the performance by the Company of its
obligations with respect to the Securities and under the Underwriting
Agreement and the Indenture.
(c) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(d) The Indenture has been duly authorized, executed and delivered by
the Company and duly qualified under the Trust Indenture Act and,
assuming that the Indenture is the valid and legally binding obligation
of the Trustee, constitutes a valid and legally binding obligation of
the Company enforceable against the Company in accordance with its
terms.
(e) The Forward Purchase Contract Agreement has been duly authorized
by the Company and, when validly executed and delivered by the Company,
and assuming that the Forward Purchase Contract Agreement is the valid
and legally binding obligation of the Forward Purchase Contract Agent,
the Forward Purchase Contract Agreement constitutes a valid and legally
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(f) The Pledge Agreement has been duly authorized by the Company and,
when validly executed and delivered by the Company, and assuming that
the Pledge Agreement is the valid and legally binding obligation of each
of the Collateral Agent and the Forward Purchase Contract Agent, the
Pledge Agreement constitutes a valid and legally binding obligation of
the Company, enforceable against the Company in accordance with its
terms.
(g) The Remarketing Agreement has been duly authorized by the Company
and, when validly executed and delivered by the Company, and assuming
that the Remarketing Agreement is the valid and legally binding
obligation of the Remarketing Agent, constitutes a valid and binding
obligation of the Company enforceable against the Company in
A-1-1
accordance with its terms.
(h) The Notes have been duly authorized and executed and issued by
the Company and, assuming due authentication thereof by the Trustee and
upon payment and delivery in accordance with the Underwriting Agreement,
will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture.
(i) The shares of Common Stock to be issued and sold by the Company
pursuant to the Forward Purchase Contract Agreement have been duly
authorized and reserved for issuance upon settlement of the Forward
Purchase Contracts and, when issued and delivered in accordance with the
provisions of the Forward Purchase Contract Agreement, will be validly
issued, fully paid and non-assessable. There are no preemptive rights
under federal or New York law to subscribe for or to purchase such
shares of Common Stock; there are no preemptive or other rights to
subscribe for or to purchase such shares of Common Stock pursuant to the
Restated Certificate of Incorporation or By-Laws of the Company.
(j) The Equity Units have been duly authorized, and, upon payment and
delivery in accordance with the Underwriting Agreement, the Equity Units
will be validly issued, and, assuming that the Forward Purchase
Contracts and the Forward Purchase Contract Agreement are the valid and
legally binding obligations of the Forward Purchase Contract Agent and
the Forward Purchase Contracts have been duly authenticated by the
Forward Purchase Contract Agent, the Forward Purchase Contracts will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Forward Purchase Contract Agreement;
there are no preemptive rights under federal or New York law or under
the Delaware General Corporation Law to subscribe for or to purchase
Equity Units; there are no preemptive or other rights to subscribe for
or to purchase Equity Units pursuant to the Restated Certificate of
Incorporation or By-Laws of the Company.
(k) The issue and sale of the Securities by the Company and the
compliance by the Company with all of the provisions of the Underwriting
Agreement and the other Operative Documents will not violate any Federal
or New York statute or any order known to us issued pursuant to any
Federal or New York statute by any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties (except that various consents of, and filings with
governmental authorities of, the State of New York may be required to be
obtained or made, as the case may be, in connection or compliance with
the provisions of the securities or "blue sky" laws of the State of New
York).
(l) The statements made in the Prospectus under the captions
"Description of the Equity Units," "Description of the Senior Notes" and
"Description of the Stock Purchase Contracts and the Stock Purchase
Units," insofar as they purport to constitute summaries of certain terms
of documents referred to therein, constitute accurate summaries of the
terms of such documents in all material respects.
A-1-2
(m) Subject to the qualifications, exceptions, assumptions and
limitations therein, the statements set forth in the Prospectus under
the caption "United States Federal Income Tax Consequences," insofar as
they purport to constitute summaries of matters of United States federal
tax laws and regulations or legal conclusions with respect thereto,
constitute accurate summaries of the matters described therein in all
material respects.
Our opinions set forth in paragraphs (d) - (h) above are subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing. In
addition, our opinion in paragraph (g) is further limited by considerations of
public policy.
Our opinion set forth in paragraph (m) above is based upon the
Internal Revenue Code of 1986, as amended, the Treasury regulations promulgated
thereunder and other relevant authorities and law, all as in effect on the date
hereof. Consequently, future changes in the law may cause the tax treatment of
the transactions referred to herein to be materially different from that
described above.
We have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement, the
Prospectus or the Exchange Act Documents and take no responsibility therefor,
except as and to the extent set forth in paragraphs (l) and (m) above. In the
course of the preparation by the Company of the Registration Statement and the
Prospectus (excluding the Exchange Act Documents), we participated in
conferences with certain officers and employees of the Company, with your
representatives, with Underwriters' counsel, Dewey Ballantine LLP, with
representatives of Deloitte & Touche LLP and with other counsel to the Company.
We did not prepare the Exchange Act Documents; however, we reviewed the Annual
Report on Form 10-K for the Company for the fiscal year ended December 31, 2001
prior to its filing with the Commission. Based upon our examination of the
Registration Statement, the Prospectus and the Exchange Act Documents, our
investigations made in connection with the preparation of the Registration
Statement and the Prospectus (excluding the Exchange Act Documents) and our
participation in the conferences referred to above, (i) we are of the opinion
that the Registration Statement, as of its effective date, and the Prospectus,
as of June 5, 2002, complied as to form in all material respects with the
requirements of the Act, the Trust Indenture Act and the applicable rules and
regulations of the Commission thereunder and that the Exchange Act Documents
complied as to form when filed in all material respects with the requirements of
the Exchange Act and the applicable rules and regulations of the Commission
thereunder, except that in each case we express no opinion with respect to the
financial statements or other financial or statistical data contained or
incorporated by reference in the Registration Statement, the Prospectus or the
Exchange Act Documents, and (ii) we have no reason to believe that the
Registration Statement, as of its effective date (including the Exchange Act
Documents on file with the Commission on such effective date), contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading or that the Prospectus (including the Exchange Act
Documents) contained as of June 5, 2002 or contains any untrue statement of a
material fact or omitted as June 5, 2002 or omits to state any material
A-1-3
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that in each
case we express no belief with respect to the financial statements or other
financial or statistical data contained or incorporated by reference in the
Registration Statement, the Prospectus or the Exchange Act Documents.
A-1-4
EXHIBIT A-2
OPINION OF THOMAS G. BERKEMEYER, ESQ.
(a) The execution, delivery and performance by the Company of the
Underwriting Agreement and the Indenture and the other Operative
Documents and the consummation by the Company of the transactions
contemplated therein and compliance by the Company with their
obligations thereunder do not and will not result in any violation of
the charter or bylaws of the Company, will not result in the violation
of any applicable law, statute, rule, regulation, judgment, order, writ
or decree of any government, governmental instrumentality or court
having jurisdiction over the Company or its properties or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company 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 any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which the
Company is a party or by which it may be bound or to which any of its
properties may be subject (except for conflicts, breaches or defaults
which would not, individually or in the aggregate, be materially adverse
to the Company or materially adverse to the transactions contemplated by
the Underwriting Agreement or the other Operative Documents).
(b) The Company has full power and authority to execute and deliver
the Indenture and the Supplemental Indenture, and the Indenture and the
Supplemental Indenture have been duly authorized, executed and delivered
by the Company and, assuming due authorization, execution and delivery
thereof by the Trustee, constitutes a valid and legally binding
obligation of the Company.
(c) The Company has full power and authority to execute and deliver
the Notes, and the Notes have been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery thereof by the Trustee, constitute valid and legally binding
obligations of the Company.
(d) The Company has full power and authority to execute and deliver
the Equity Units, and the Equity Units have been duly authorized,
executed and delivered by the Company and, assuming due authorization,
execution and delivery thereof by the Forward Purchase Contract Agent,
constitute valid and legally binding obligations of the Company.
(e) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(f) An appropriate order of the Commission legally required for the
issuance and sale of the Securities by the Company under the Public
Utility Holding Company Act of 1935, as amended, has been obtained; such
order is sufficient for the issuance and sale of the Securities by the
Company; and the Commission has issued an appropriate order under the
Securities Act of 1933, as amended, with respect to the sale of the
Securities. No other approval or consent of any governmental body is
required for the issuance and sale of the Securities to you or the
performance by the Company of its obligations under the
A-2-1
Underwriting Agreement, the Indenture or the Supplemental Indenture. I
have not considered whether any approval or consent is required under
the blue sky laws of any jurisdiction.
A-2-2
EXHIBIT B
OPINION OF DEWEY BALLANTINE LLP
(a) The Company has been duly incorporated and is validly existing
and in good standing as a corporation under the laws of the State of New
York and has full corporate power and authority to conduct its business
as described in the Registration Statement and Prospectus.
(b) An appropriate order of the Commission legally required for the
issuance and sale of the Securities by the Company under the Public
Utility Holding Company Act of 1935 has been obtained; such order is
sufficient for the issuance and sale of the Securities by the Company;
and no other order, consent or other authorization or approval of any
United States federal or New York State governmental body (other than in
connection or in compliance with the previsions of the securities or
"blue sky" laws of any jurisdiction, as to which we express no opinion)
not already obtained is legally required for the issuance and sale of
the Securities by the Company in accordance with the terms of the
Underwriting Agreement, the performance by the Company of its
obligations with respect to the Securities and under the Underwriting
Agreement and the Indenture.
(c) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(d) The Indenture has been duly authorized, executed and delivered by
the Company and duly qualified under the Trust Indenture Act and,
assuming that the Indenture is the valid and legally binding obligation
of the Trustee, constitutes a valid and legally binding obligation of
the Company enforceable against the Company in accordance with its
terms.
(e) The Forward Purchase Contract Agreement has been duly authorized
by the Company and, when validly executed and delivered by the Company,
and assuming that the Forward Purchase Contract Agreement is the valid
and legally binding obligation of the Forward Purchase Contract Agent,
the Forward Purchase Contract Agreement constitutes a valid and legally
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(f) The Pledge Agreement has been duly authorized by the Company and,
when validly executed and delivered by the Company, and assuming that
the Pledge Agreement is the valid and legally binding obligation of each
of the Collateral Agent and the Forward Purchase Contract Agent, the
Pledge Agreement constitutes a valid and legally binding obligation of
the Company, enforceable against the Company in accordance with its
terms.
(g) The Remarketing Agreement has been duly authorized by the Company
and, when validly executed and delivered by the Company, and assuming
that the Remarketing Agreement is the valid and legally binding
obligation of the Remarketing Agent, constitutes a valid and binding
obligation of the Company enforceable against the Company in
B-1
accordance with its terms.
(h) The Notes have been duly authorized and executed and issued by
the Company and, assuming due authentication thereof by the Trustee and
upon payment and delivery in accordance with the Underwriting Agreement,
will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture.
(i) The shares of Common Stock to be issued and sold by the Company
pursuant to the Forward Purchase Contract Agreement have been duly
authorized and reserved for issuance upon settlement of the Forward
Purchase Contracts and, when issued and delivered in accordance with the
provisions of the Forward Purchase Contract Agreement, will be validly
issued, fully paid and non-assessable. There are no preemptive rights
under federal or New York law to subscribe for or to purchase such
shares of Common Stock; there are no preemptive or other rights to
subscribe for or to purchase such shares of Common Stock pursuant to the
Restated Certificate of Incorporation or By-Laws of the Company.
(j) The Equity Units have been duly authorized, and, upon payment and
delivery in accordance with the Underwriting Agreement, the Equity Units
will be validly issued, and, assuming that the Forward Purchase
Contracts and the Forward Purchase Contract Agreement are the valid and
legally binding obligations of the Forward Purchase Contract Agent and
the Forward Purchase Contracts have been duly authenticated by the
Forward Purchase Contract Agent, the Forward Purchase Contracts will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Forward Purchase Contract Agreement;
there are no preemptive rights under federal or New York law or under
the Delaware General Corporation Law to subscribe for or to purchase
Equity Units; there are no preemptive or other rights to subscribe for
or to purchase Equity Units pursuant to the Restated Certificate of
Incorporation or By-Laws of the Company.
(k) The statements made in the Prospectus under the captions
"Description of the Equity Units," "Description of the Senior Notes" and
"Description of the Stock Purchase Contracts and the Stock Purchase
Units," insofar as they purport to constitute summaries of certain terms
of documents referred to therein, constitute accurate summaries of the
terms of such documents in all material respects.
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EXHIBIT C
OPINION OF PILLSBURY WINTHROP LLP
(a) The Bank of New York is a banking corporation validly existing
under the laws of the State of New York with corporate power and
authority to enter into and perform its obligations under the Indenture,
Forward Purchase Contract Agreement and Pledge Agreement.
(b) Each of the Indenture, Forward Purchase Contract Agreement and
Pledge Agreement has been duly authorized, executed and delivered by The
Bank of New York and constitutes a valid and binding agreement of The
Bank of New York enforceable against The Bank of New York in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general
equitable principles (whether considered in a proceeding in equity or at
law) and by an implied covenant of good faith and fair dealing.
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EXHIBIT D
LETTER FROM DELOITTE & TOUCHE
DATED AS OF THE DATE OF THIS AGREEMENT
D-1
EXHIBIT E
E.R. Brooks
Donald M. Carlton
John P. DesBarres
E. Linn Draper
Henry W. Fayne
Robert W. Fri
William R. Howell
Lester A. Hudson, Jr.
Leonard J. Kujawa
Robert P. Powers
Richard L. Sandor
Thomas V. Shockley, III
Donald G. Smith
Linda Gillespie Stuntz
Kathryn D. Sullivan
Susan Tomasky
Joseph H. Vipperman
E-1
EXHIBIT F
AMERICAN ELECTRIC POWER COMPANY, INC.
Lock-Up Agreement
June 5, 2002
Goldman, Sachs & Co.
J.P. Morgan Securities Inc.
Salomon Smith Barney Inc.
As Representatives of the several Underwriters
Ladies and Gentlemen:
This letter is being delivered to you in connection with (i) the
proposed Underwriting Agreement (the "Equity Units Underwriting Agreement"),
between American Electric Power Company, a New York corporation (the "Company"),
and each of you as representatives of a group of Underwriters named therein,
relating to an underwritten public offering of up to 6,900,000 9.25% Equity
Units (the "Equity Units") of the Company and (ii) the proposed Underwriting
Agreement (the "Common Stock Underwriting Agreement" and together with the
Equity Units Underwriting Agreement, the "Underwriting Agreements"), between the
Company and each of you as representatives of a group of Underwriters named
therein, relating to an underwritten public offering of up to 18,240,000 shares
of Common Stock, $6.50 par value (the "Shares") of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreements, the undersigned will not, without the prior written
consent of the Representatives, offer, sell, contract to sell, pledge or
otherwise dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 90 days after the date
of this Agreement, other than shares of Common Stock disposed of as bona fide
gifts approved by the Representatives.
F-1
If for any reason the Underwriting Agreements shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreements), the agreement
set forth above shall likewise be terminated.
The undersigned understands that the Company and the Underwriters are
relying on this Lock-Up Agreement in proceeding with the offering of the Equity
Units and the offering of the shares. The undersigned understands that this
Lock-Up Agreement is irrevocable and shall be binding on the undersigned's
heirs, legal representatives, successors and assigns.
Yours very truly,
[Signature of officer or director]
[Name of executive officer or director]
F-2