Contract
EXHIBIT
1(a)
APPALACHIAN
POWER COMPANY
Dated
March 19, 2008
AGREEMENT made between APPALACHIAN
POWER COMPANY, a corporation organized and existing under the laws of the
Commonwealth of Virginia (the Company), and the several persons, firms and
corporations (the Underwriters) named in Exhibit 1 hereto.
WITNESSETH:
WHEREAS, the Company proposes to issue
and sell $500,000,000 aggregate principal amount of its 7.00% Senior Notes,
Series Q, due 2038 (the Notes) to be issued pursuant to the Indenture dated as
of January 1, 1998, between the Company and The Bank of New York, as trustee
(the Trustee), as heretofore supplemented and amended and as to be further
supplemented and amended (said Indenture as so supplemented being hereafter
referred to as the Indenture); and
WHEREAS, the Underwriters have
designated the persons signing this Agreement (collectively, the Representative)
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, as
amended (the Act), with the Securities and Exchange Commission (the Commission),
a registration statement on Form S-3 (File No. 333-136432), which was effective
upon filing with the Commission, and a prospectus relating to, among other
securities, its Senior Notes; 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 Notes, being herein called the
Basic Prospectus, and the Basic Prospectus, as amended and supplemented,
including documents incorporated by reference therein, together with and the
Preliminary Prospectus Supplement dated March 19, 2008, immediately prior
to the Applicable Time (as defined below), being herein called the Pricing
Prospectus, and the Basic Prospectus included in the Registration Statement, as
it is to be supplemented by a final prospectus supplement (the Prospectus
Supplement) to include information relating to the Notes, including the names of
the Underwriters, the price and terms of the offering, the interest rate,
maturity date and certain other information relating to the Notes, 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.
For purposes of this Agreement, the
Applicable Time is 2:00 p.m. (NY Time) on the date of this Agreement and the
documents listed in Exhibit 3, taken together, collectively being herein called
the Pricing Disclosure Package.
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 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 principal amounts of the Notes set
opposite their names in Exhibit 1 hereto, together aggregating all of the Notes,
at a price equal to 98.465% of the principal amount thereof.
2. Payment and
Delivery: Payment for the Notes shall be made to the Company
in immediately available funds or in such other manner as the Company and the
Representative shall mutually agree upon in writing, upon the delivery of the
Notes 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 March 25, 2008 (or on such later business day, not
more than five business days subsequent to such day, as may be mutually agreed
upon by the Company and the Underwriters), unless postponed in accordance with
the provisions of Section 9 hereof, at the office of Xxxxx & XxXxxxx LLP,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as
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.
The delivery of the Notes 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 Company on the date hereof and at the Time of Purchase and to
the following other conditions:
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(a)
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That
all legal proceedings to be taken and all legal opinions to be rendered in
connection with the issue and sale of the Notes shall be satisfactory
in form and substance to Xxxxx & XxXxxxx LLP, counsel to the
Underwriters.
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(b)
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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 Xxxxx & XxXxxxx LLP, counsel to
the Underwriters
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(1)
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Opinion
of Xxxxxxx X. Xxxxx, Esq., Xxxxxx X. Xxxxxxxxxx, Esq., Xxxxxxx X. Xxxxxxx,
Esq., or Xxx X. Xxxx, Esq., counsel to the Company, substantially in the
form heretofore previously provided to the Underwriters;
and
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(2)
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Opinion
of Xxxxx & XxXxxxx LLP, counsel to the Underwriters, substantially in
the form heretofore previously provided to the
Underwriters.
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(c)
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That
the Representative shall have received on the date hereof and shall
receive at the Time of Purchase letters from Deloitte & Touche LLP
dated the date hereof and the day of the Time of Purchase, respectively,
in form and substance satisfactory to the Representative (which may refer
to the letters previously delivered to the Representative, as applicable)
(i) confirming that with respect to the Company they are an independent
registered public accounting firm within the meaning of the Act and the
applicable published rules and regulations of the Commission thereunder,
(ii) stating that in their opinion the consolidated financial statements
audited by them and included or incorporated by reference in the
Registration Statement, Pricing Prospectus and Prospectus, respectively,
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 more than three business days prior to the date of each such
letter, as applicable, such other matters as the Representative reasonably
requests.
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(d)
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The
pricing term sheet contemplated by Section 6(b) hereof, and any other
material required pursuant to Section 433(d), shall have been filed by the
Company with the Commission within the applicable time periods prescribed
by Rule 433.
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(e)
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That
no amendment to the Registration Statement and that no supplement to the
Pricing Prospectus or the Prospectus of the Company (other than the
Pricing Prospectus or amendments, prospectuses or prospectus supplements
relating solely to securities other than the Notes) relating to the Notes
and no document which would be deemed incorporated in the Pricing
Prospectus or 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 Pricing Prospectus
which is unsatisfactory in substance to the Representative or
unsatisfactory in form to Xxxxx & XxXxxxx LLP, counsel to the
Underwriters.
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(f)
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That,
at the Time of Purchase, appropriate orders of the Virginia State
Corporation Commission and the Tennessee Regulatory Authority, necessary
to permit the sale of the Notes 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.
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(g)
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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 Company from that set forth in the Pricing Prospectus
(other than changes referred to in or contemplated by the Pricing
Prospectus), and that the Company shall, at the Time of Purchase, have
delivered to the Representative 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.
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(h)
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That
the Company shall have performed such of its obligations under this
Agreement as are to be performed at or before the Time of Purchase by the
terms hereof.
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4. Certain Covenants of the
Company: In further consideration of the agreements of the
Underwriters herein contained, the Company covenants as follows:
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(a)
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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 and make any
other required filings pursuant to Rule 433; as soon as the Company is
advised thereof, to advise the Representative and confirm the advice in
writing of any request made by the Commission for amendments to the
Registration Statement, Pricing Prospectus or Prospectus or for additional
information with respect thereto or of the entry of an order suspending
the effectiveness of the Registration Statement or preventing or
suspending the use of the Pricing Prospectus or the Prospectus or of the
initiation or threat of any proceedings for that purpose and, if such an
order should be entered by the Commission, to make every reasonable effort
to obtain the prompt lifting or removal thereof.
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(b)
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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 (or
required to deliver but for Rule 172 under the Act), 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 Notes) 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.
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(c)
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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 Notes and, upon request, to furnish to the
Representative sufficient plain copies thereof (exclusive of exhibits) for
distribution to the other Underwriters.
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(d)
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For
such period of time (not exceeding nine months) after the date hereof as
they are required by law to deliver a prospectus (or required to deliver
but for Rule 172 under the Act), if any event shall have occurred as a
result of which it is necessary to amend or supplement the Pricing
Prospectus or the Prospectus in order to make the statements therein, in
the light of the circumstances when the Pricing Prospectus or 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 its own expense, to the
Underwriters and to dealers (whose names and addresses will be furnished
to the Company by the Representative) to whom principal amounts of the
Notes 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 Pricing Prospectus or the Prospectus or
supplements to the Pricing Prospectus or the
Prospectus.
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(e)
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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.
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(f)
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To
use its best efforts to qualify the Notes 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
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.
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(g)
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To
pay all expenses, fees and taxes (other than transfer taxes on resales of
the Notes by the respective Underwriters) in connection with the issuance
and delivery of the Notes, 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 counsel to the Underwriters, only in
the events provided in paragraph (h) of this Section 4 and paragraph (a)
of Section 8, the Underwriters hereby agreeing to pay such fees and
disbursements in any other event.
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(h)
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If
the Underwriters shall not take up and pay for the Notes 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 or 10 hereof, to pay the fees and
disbursements of counsel to the Underwriters, and, if the Underwriters
shall not take up and pay for the Notes due to the failure of the Company
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.
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(i)
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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 Notes ceases, as determined by the Representative in
its sole discretion, and (ii) the date which is 30 days after the Time of
Purchase, the Company agrees not to offer, sell, contract to sell or
otherwise dispose of any Notes of the Company or any substantially similar
securities of the Company (except for the concurrent offering of the
Company’s floating rate notes) without the consent of the
Representative.
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(j)
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If
at any time when the Notes remain unsold by the Underwriters, the Company
receives from the Commission a notice pursuant to Rule 401(g)(2) of the
Act or otherwise ceases to be eligible to use the automatic shelf
registration statement form, the Company will (i) promptly notify the
Representative, (ii) promptly file a new registration statement or
post-effective amendment on the proper form relating to the Notes, in a
form satisfactory to the Representative, (iii) use its reasonable best
efforts to cause such registration statement or post-effective amendment
to be declared effective and (iv) promptly notify the Representative of
such effectiveness. The Company will take all other reasonable action
necessary or appropriate to permit the public offering and sale of the
Notes to continue as contemplated in the registration statement that was
the subject of the Rule 401(g)(2) notice or for which the Company has
otherwise become ineligible. References herein to the Registration
Statement shall include such new registration statement or post-effective
amendment, as the case may be.
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5. Warranties of the
Company: The Company represents and warrants to, and agrees
with you, as set forth below:
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(a)
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the
Registration Statement on its effective date complied with the applicable
provisions of the Act and the rules and regulations of the Commission
thereunder and the Registration Statement at its effective date and as of
the Applicable Time 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, the Pricing Disclosure Package as of the Applicable Time
did not contain an untrue statement of a material fact necessary or omit
to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and the Basic Prospectus on the date of this Agreement and the
Prospectus as of its date 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 (Trust Indenture 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 Company makes no warranty
or representation to the Underwriters with respect to any statements or
omissions made in the Registration Statement, the Basic Prospectus, the
Pricing Prospectus, any Permitted Free Writing Prospectus or the
Prospectus in reliance upon and in conformity with information furnished
in writing to the Company by, or through the Representative on behalf of,
any Underwriter expressly for use in the Registration Statement, the Basic
Prospectus, the Pricing Prospectus, any Permitted Free Writing 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 any indenture trustee under an indenture
of the Company.
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(b)
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As
of the Time of Purchase, the Indenture will have been duly authorized by
the Company and duly qualified under the Trust Indenture 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 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.
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(c)
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The
documents incorporated by reference in the Registration Statement or
Pricing Prospectus, when they were filed with the Commission, complied in
all material respects with the applicable provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder, and as of such time of filing, when read together
with the Pricing Prospectus, the Permitted Free Writing Prospectuses and
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. The
information contained in a Permitted Free Writing Prospectus listed in
Exhibit 3 does not conflict with the information contained in the
Registration Statement, the Pricing Prospectus or the Prospectus and no
such Permitted Free Writing Prospectus, taken together with the remainder
of the Pricing Disclosure Package as of the Applicable Time, did contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not
misleading.
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(d)
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With
respect to the Registration Statement, (i) the Registration Statement is
an “automatic shelf registration statement” (as defined in Rule 405 under
the Act), (ii) the Company has not received from the Commission any notice
pursuant to Rule 401(g)(2) of the Act objecting to the use of the
automatic shelf registration statement and (iii) the conditions for use of
Form S-3, as set forth in the General Instructions thereof, have been
satisfied.
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(e)
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(A)
At the time of filing of the Registration Statement, (B) at the time of
the most recent amendment to the Registration Statement for the purposes
of complying with Section 10(a)(3) of the Act (whether such amendment was
by post-effective amendment, incorporated report filed pursuant to Section
13 or 15(d) of the 1934 Act or form of prospectus) and (C) at the time the
Company or any person acting on its behalf (within the meaning for this
clause only, of Rule 163(c) under the Act) made any offer relating to the
Notes in reliance on the exemption of Rule 163 under the Act, the Company
was a “well-known seasoned issuer” (as defined in Rule 405 under the
Act).
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(f)
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Since
the respective dates as of which information is given in the Registration
Statement and the Pricing 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.
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(g)
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This
Agreement has been duly authorized, executed and delivered by the
Company.
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(h)
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The
consummation by the Company of the transactions contemplated herein 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, government 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).
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(i)
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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 Notes or the transactions by the Company
contemplated in this Agreement, except (A) such as may be required under
the 1933 Act or the rules and regulations thereunder; (B) the
qualification of the Indenture under the Trust Indenture Act; (C) the
approval of the Virginia State Corporation Commission and the Tennessee
Regulatory Authority; and (D) such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or “Blue Sky” laws.
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(j)
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The
consolidated financial statements of the Company and its consolidated
subsidiaries together with the notes thereto, included or incorporated by
reference in the Pricing Prospectus and 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 Pricing Prospectus
and 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 Pricing Prospectus and the
Prospectus.
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(k)
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There
is no pending action, suit, investigation, litigation or proceeding,
including, without limitation, any environmental action, affecting the
Company 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 Pricing Prospectus
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(l)
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At
the determination date for purposes of the Notes within the meaning of
Rule 164(h) under the Act, the Company was not an “ineligible issuer” as
defined in Rule 405 under the Act.
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(m)
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The
Company has not made any filings pursuant to the Securities Exchange Act
of 1934, as amended, or the rules and regulations thereunder, within 24
hours preceding the Applicable
Time.
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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 Notes hereunder.
6. Free Writing
Prospectuses:
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(a)
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The
Company represents and agrees that, without the prior consent of the
Representative, it has not made and will not make any offer relating to
the Notes that would constitute a “free writing prospectus” as defined in
Rule 405 under the Act, other than a Permitted Free Writing Prospectus;
each Underwriter, severally and not jointly, represents and agrees that,
without the prior consent of the Company and the Representative, it has
not made and will not make any offer relating to the Notes that would
constitute a “free writing prospectus,” as defined in Rule 405 under the
Act, other than a Permitted Free Writing Prospectus or one or more free
writing prospectuses that contains only preliminary or final terms of the
Notes (which may include prices of bonds from comparable issuers) and is
not required to be filed by the Company pursuant to Rule 433 or
one or more free writing prospectuses that contains information
substantially the same as the information contained in Exhibit 2 hereto
(an “Underwriter Free Writing Prospectus”); any such free writing
prospectus the use of which has been consented to by the Company and the
Representative (which shall include the pricing term sheet discussed in
Section 6(b)) is listed in Exhibit 3 and herein called a “Permitted Free
Writing Prospectus.”
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(b)
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The
Company agrees to prepare a pricing term sheet, substantially in the form
of Exhibit 2 hereto and approved by the Representative, and to file such
pricing term sheet pursuant to Rule 433(d) under the Securities Act within
the time period prescribed by such Rule.
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(c)
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The
Company and each Underwriter has complied and will comply with the
requirements of Rule 433 applicable to any other Permitted Free Writing
Prospectus, including timely Commission filing where required and
legending.
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(d)
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The
Company and each Underwriter agrees that if at any time following issuance
of a Permitted Free Writing Prospectus any event occurred or occurs as a
result of which such Permitted Free Writing Prospectus would conflict in
any material respect with the information in the Registration Statement,
the Pricing Prospectus or the Prospectus or include an untrue statement of
a material fact or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances then
prevailing, not misleading, then (i) the party that first becomes aware of
the foregoing will give prompt notice thereof to the Representative and/
or the Company, as applicable, and, (ii) if requested by the
Representative or the Company, as applicable, the Company will prepare and
furnish without charge a Permitted Free Writing Prospectus or other
document which will correct such conflict, statement or
omission.
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(e)
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Each
Underwriter agrees that (i) no information that is conveyed to investors
by such Underwriter has been or will be inconsistent with the information
contained in the Pricing Disclosure Package, and (ii) if an Underwriter
shall use an Underwriter Free Writing Prospectus that contains information
in addition to, or in conflict with, the Pricing Disclosure Package, the
liability arising from the use of such additional or conflicting
information shall be the sole responsibility of the Underwriter using such
Underwriter Free Writing Prospectus; provided, however, that, for the
avoidance of doubt, this clause 6(e)(ii) shall not be interpreted as
tantamount to the indemnification obligations contained in Section 8(b)
hereof.
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7. Warranties of
Underwriters: Each Underwriter warrants and represents that the
information furnished in writing to the Company through the Representative for
use in the Registration Statement, in the Basic Prospectus, in any Permitted
Free Writing Prospectus, in the Pricing 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 Company or other
person, and shall survive the delivery of and payment for the Notes
hereunder.
8. Indemnification and
Contribution:
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(a)
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To
the extent permitted by law, the Company agrees 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), in the Pricing Prospectus, in any
Permitted Free Writing Prospectus, in any “issuer free writing prospectus”
(as defined in Rule 433 under the Act) or in the Prospectus, or if the
Company shall furnish or cause to be furnished to you any amendments or
any supplements to the Pricing Prospectus or the Prospectus, in the
Pricing Prospectus or the Prospectus as so amended or supplemented except
to the extent that such amendments or supplements relate solely to
securities other than the Notes (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, in the Pricing Prospectus, in any Permitted Free Writing
Prospectus, in any “issuer free writing prospectus” (as defined in Rule
433 under the Act) 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
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 Trust Indenture Act of
any indenture trustee under an indenture of the Company. 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 8(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 8(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 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, 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, 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 8(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 Pricing Prospectus, or in
any Permitted Free Writing 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
Representative 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
8(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 8(b).
|
|
|
(c)
|
If
recovery is not available or insufficient under Section 8(a) or 8(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 8(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 Notes realized by the Company on the one hand and the
Underwriters on the other hand, 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 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 Notes 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 8 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 8 (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.
|
|
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(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 8 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 Notes hereunder.
9. 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 principal amount of Notes
which it has agreed to purchase and pay for hereunder, and the aggregate
principal amount of Notes which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate principal amount of the Notes, the other Underwriters shall be
obligated severally in the proportions which the amounts of Notes set forth
opposite their names in Exhibit 1 hereto bear to the aggregate principal amount
of Notes set forth opposite the names of all such non-defaulting Underwriters,
to purchase the Notes 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 principal amount of Notes which any Underwriter has agreed
to purchase pursuant to Section 1 hereof be increased pursuant to this Section 9
by an amount in excess of one-ninth of such principal amount of Notes without
the written consent of such Underwriter. If any Underwriter or
Underwriters shall fail or refuse to purchase Notes and the aggregate principal
amount of Notes with respect to which such default occurs is more than one-tenth
of the aggregate principal amount of the Notes 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 Notes 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 Notes 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.
10. 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
Notes shall have been materially adversely affected because:
|
(i)
|
|||
|
(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 Xxxxx'x Investors Services, Inc. (Moody's) or Standard &
Poor's Ratings Group (S&P) or either Moody's or S&P shall publicly
announce that it has such debt securities under consideration for possible
further downgrade.
|
If the Representative elects to
terminate this Agreement, as provided in this Section 10, the Representative
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 Notes 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 extent provided in Section 4(h)
hereof) and the Underwriters shall be under no liability to the Company nor be
under any liability under this Agreement to one another.
11. 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 Barclays Capital Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Fixed Income Syndicate,
Facsimile: 000-000-0000; X.X. Xxxxxx Securities Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: High Grade Syndicate
Desk 9th Floor,
Facsimile, 000-000-0000 and Greenwich Capital Markets, Inc., 000 Xxxxxxxxx Xxxx,
Xxxxxxxxx, XX 00000, Attention: Debt Capital Markets
Syndicate, Facsimile, 000-000-0000 and, if to the Company, to Appalachian Power
Company, c/o American Electric Power Service Corporation, 0 Xxxxxxxxx Xxxxx,
Xxxxxxxx, Xxxx 00000, Attention: General Counsel (fax
614/000-0000).
12. 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 8 hereof,
and their respective successors, assigns, executors and administrators, and,
except as expressly otherwise provided in Section 9 hereof, no other person
shall acquire or have any right under or by the virtue of this
Agreement. The Company acknowledges and agrees that in connection
with all aspects of each transaction contemplated by this Underwriting
Agreement, the Company and the Underwriters have an arms length business
relationship that creates no fiduciary duty on the part of any party and each
expressly disclaims any fiduciary relationship.
13. 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 9 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
Notes from any of the respective Underwriters.
14. Conditions of the Company's
Obligations: The obligations of the Company 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
appropriate orders, and such orders shall remain in full force and effect,
authorizing the transactions contemplated hereby.
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.
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.
|
APPALACHIAN
POWER COMPANY
|
||
|
By:
|
/s/
Xxxxx X. Xxxxxxx
|
|
|
Name: Xxxxx
X. Xxxxxxx
|
||
|
Title: Assistant
Treasurer
|
||
BARCLAYS
CAPITAL INC.
X.X.
XXXXXX SECURITIES INC.
GREENWICH
CAPITAL MARKETS, INC.
|
as
Representatives
and
on behalf of the Underwriters
named
in Exhibit 1 hereto
|
|
BARCLAYS
CAPITAL INC.
|
||
|
By:
|
/s/
Xxxxxx Xxxxxxx
|
|
|
Name: Xxxxxx
Xxxxxxx
|
||
|
Title: Director
|
||
|
X.X.
XXXXXX SECURITIES INC.
|
||
|
By:
|
/s/
Xxxxxx Xxxxxxxxx
|
|
|
Name: Xxxxxx
Xxxxxxxxx
|
||
|
Title: Vice
President
|
||
|
GREENWICH
CAPITAL MARKETS, INC.
|
||
|
By:
|
/s/
Xxxxxxxx Xxxxxxx
|
|
|
Name: Xxxxxxxx
Xxxxxxx
|
||
|
Title: Senior
Vice President
|
||
EXHIBIT
1
|
|
Underwriters:
|
|
Name
|
Principal Amount of
Notes
|
|
Barclays
Capital Inc.
|
$127,500,000
|
|
X.X.
Xxxxxx Securities Inc.
|
127,500,000
|
|
Greenwich
Capital Markets, Inc.
|
127,500,000
|
|
Calyon
Securities (USA) Inc.
|
87,500,000
|
|
Lazard
Capital Markets LLC
|
10,000,000
|
|
Mizuho
Securities USA Inc.
|
10,000,000
|
|
UBS
Securities LLC
|
10,000,000
|
|
TOTAL
|
$500,000,000
|
EXHIBIT
2
PRICING
TERM SHEET
Underwriting
Agreement dated March 19, 2008
Series
Q Notes
|
Issuer:
|
Appalachian
Power Company
|
|
Security:
|
7.00%
Senior Notes, Series Q, due 2038
|
|
Principal
Amount:
|
$500,000,000
|
|
Maturity:
|
April
1, 2038
|
|
Coupon:
|
7.00%
|
|
Interest
Payment Dates:
|
April
1 and October 1 of each year
|
|
First
Interest Payment Date:
|
October
1, 2008
|
|
Treasury
Benchmark:
|
5.00%
due May 15, 2037
|
|
Treasury
Price:
|
112-13
|
|
Treasury
Yield:
|
4.253%
|
|
Reoffer
Spread:
|
280
basis points
|
|
Yield
to Maturity:
|
7.053%
|
|
Price
to Public:
|
99.34%
|
|
Redemption
Terms:
|
|
|
Make-whole call:
|
At
any time at a discount rate of the Treasury Rate plus 50 basis
points
|
|
Joint
Book-Running Managers:
|
Barclays
Capital Inc.
X.X.
Xxxxxx Securities Inc.
Greenwich
Capital Markets, Inc.
|
|
Settlement
Date:
|
March
25, 2008 (T+3)
|
|
CUSIP:
|
037735
CM7
|
|
Ratings:
|
Baa2
(negative outlook) by Xxxxx’x Investors Service, Inc.
BBB
(stable outlook) by Standard & Poor’s Ratings Services
BBB+
(stable outlook) by Fitch Ratings
Ltd.
|
Note: A securities rating is
not a recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time.
The
issuer has filed a registration statement (including a prospectus) with the SEC
for the offering to which this communication relates. Before you
invest, you should read the prospectus in that registration statement and other
documents the issuer has filed with the SEC for more complete information about
the issuer and this offering. You may get these documents for free by
visiting XXXXX on the SEC Web site at xxx.xxx.xxx. Alternatively, the
issuer, any underwriter or any dealer participating in the offering will arrange
to send you the prospectus if you request it by calling Barclays Capital Inc.
toll free at 1-888-227-2275 ext. 2663, X.X. Xxxxxx Securities Inc. at
0-000-000-0000 or Greenwich Capital Markets, Inc. toll free at
0-000-000-0000.
EXHIBIT
3
PRICING
DISCLOSURE PACKAGE
|
1)
|
Prospectus
dated August 9, 2006
|
|
2)
|
Preliminary
Prospectus Supplement dated March 19, 2008 (including
Incorporated Documents)
|
|
3)
|
Permitted
Free Writing Prospectus
|
|
a) Pricing
Term Sheet attached as Exhibit 2
hereto
|
