AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of May 1, 1997, between Southwestern
Electric Power Company, a Delaware corporation ("SWEPCO"), and SWEPCO Capital I,
a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the
"Common Securities") to, and receive Debentures (as defined in the Trust
Agreement) from, SWEPCO and to issue and sell 7.875% Trust Preferred Securities,
Series A (the "Preferred Securities") with such powers, preferences and special
rights and restrictions as are set forth in the Amended and Restated Trust
Agreement of the Trust dated as of May 1, 1997 as the same may be amended from
time to time (the "Trust Agreement");
WHEREAS, SWEPCO will directly or indirectly own all of the
Common Securities of Trust and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each
holder of the Preferred Securities, which purchase SWEPCO hereby agrees shall
benefit SWEPCO and which purchase SWEPCO acknowledges will be made in reliance
upon the execution and delivery of this Agreement, SWEPCO, including in its
capacity as holder of the Common Securities, and the Trust hereby agree as
follows:
ARTICLE I
Section 1.1. Guarantee by SWEPCO.
Subject to the terms and conditions hereof, SWEPCO, including
in its capacity as holder of the Common Securities, hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment,
when and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust, other than obligations of the Trust to pay to holders
of any Preferred Securities or other similar interests in the Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. This Agreement is intended to be for the
benefit of, and to be enforceable by, all such Beneficiaries, whether or not
such Beneficiaries have received notice hereof.
Section 1.2. Term of Agreement.
This Agreement shall terminate and be of no further force and
effect upon the later of (a) the date on which full payment has been made of all
amounts payable to all holders of all the Preferred Securities (whether upon
redemption, liquidation, exchange or otherwise) and (b) the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Preferred Securities or any Beneficiary must restore payment
of any sums paid under the Preferred Securities, under any Obligation, under the
Guarantee Agreement dated the date hereof by SWEPCO and The Bank of New York as
guarantee trustee or under this Agreement for any reason whatsoever. This
Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.3. Waiver of Notice.
SWEPCO hereby waives notice of acceptance of this Agreement
and of any Obligation to which it applies or may apply, and SWEPCO hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
Section 1.4. No Impairment.
The obligations, covenants, agreements and duties of SWEPCO
under this Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, SWEPCO with respect to the happening of any of the foregoing.
Section 1.5. Enforcement.
A Beneficiary may enforce this Agreement directly against
SWEPCO and SWEPCO waives any right or remedy to require that any action be
brought against the Trust or any other person or entity before proceeding
against SWEPCO.
ARTICLE II
Section 2.1. Binding Effect.
All guarantees and agreements contained in this Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
SWEPCO and shall inure to the benefit of the Beneficiaries.
Section 2.2. Amendment.
So long as there remains any Beneficiary or any Preferred
Securities of any series are outstanding, this Agreement shall not be modified
or amended in any manner adverse to such Beneficiary or to the holders of the
Preferred Securities.
Section 2.3. Notices.
Any notice, request or other communication required or
permitted to be given hereunder shall be given in writing by delivering the same
against receipt therefor by facsimile transmission (confirmed by mail), telex or
by registered or certified mail, addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer-back, if sent by telex):
SWEPCO Capital I
x/x Xxx Xxxx xx Xxx Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No: (000) 000-0000
Attention: Corporate Trust Trustee Administration
Southwestern Electric Power Company
x/x Xxxxxxx xxx Xxxxx Xxxx Corporation
0000 Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile No: (000) 000-0000
Attention: Director, Finance
Section 2.4 This agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of New York (without
regard to conflict of laws principles).
THIS AGREEMENT is executed as of the day and year first above
written.
SOUTHWESTERN ELECTRIC POWER COMPANY
By:
Name: Xxxxx X. Xxxxxx
Title: Treasurer
SWEPCO CAPITAL I
By:
Name: Xxxxx X. Xxxxxx
Title: Administrative Trustee