<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
:
In the Matter of :
:
SOUTHWESTERN ELECTRIC POWER COMPANY : CERTIFICATE
:
File No. 70-6977 : OF
:
(Public Utility Holding Company Act of 1935) : NOTIFICATION
:
_____________________________________________:
1. Southwestern Electric Power Company ("SWEPCO")
hereby certifies that on October 31, 1994, it consummated the new
Term Loan Agreement dated as of October 31, 1994, among The Bank
of New York, Credit Swiss, First Interstate Bank of Texas, N.A.
and the Yasuda Trust & Banking Co., Ltd., New York Branch, and
the Bank of New York, as agent, and the Company.
The transaction has been carried out in accordance with
the terms and conditions of, and for the purposes represented in,
the Form U-1 Declaration of SWEPCO in File No. 70-6977, and in
accordance with the terms and conditions of the Commission's
order dated October 17, 1994, permitting the Declaration, as
amended, to become effective.
The following exhibit is filed herewith:
Amended
Exhibit 5 - Final or "past tense" opinion of Milbank,
Tweed, Hadley & McCloy, counsel for the
Company.
Exhibit 8 - New Term Loan Agreement and form of
unsecured notes between the Company and the
Banks.
<PAGE> 2
S I G N A T U R E
- - - - - - - - -
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, as amended, the undersigned company
has duly caused this document to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: November 7, 1994
SOUTHWESTERN ELECTRIC POWER COMPANY
By: /s/ SHIRLEY BRIONES
Shirley Briones
Treasurer
<PAGE> 1
EXHIBIT INDEX
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
5 Final or "past tense" opinion of Electronic
Milbank, Tweed, Hadley & McCloy,
counsel for the Company (amended
exhibit).
8 New Term Loan Agreement and form Electronic
of unsecured notes between the
Company and the Banks.
<PAGE> 1
EXHIBIT 5
---------
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
November 7, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Southwestern Electric Power Company
Form U-1 Declaration (70-6977)
Dear Sirs:
We refer to the Form U-1 Declaration (File No. 70-6977)
(the "Declaration") under the Public Utility Holding Company Act
of 1935, as amended (the "1935 Act"), and the Certificate of
Notification relating thereto, filed by Southwestern Electric
Power Company (the "Company"), a Delaware corporation and a
wholly-owned electric utility subsidiary of Central and South
West Corporation ("CSW"), a Delaware corporation and a registered
holding company. The Declaration relates to the new Term Loan
Agreement dated October 31, 1994 which replaces a Term Loan
Agreement dated as of June 15, 1984, between The Bank of New York
and the Company. We have acted as special counsel for the
Company in connection with the Declaration, and, as such counsel,
we are familiar with the corporate proceedings taken by the
Company in connection with the new Term Loan Agreement which
replaced the Term Loan Agreement as described in the Declaration
and Certificate of Notification.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Company,
certificates of public officials, certificates of officers and
representatives of the Company and other documents as we have
deemed it necessary to require as a basis for the opinions
hereinafter expressed. In such examination we have assumed the
genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity with
the originals of all documents submitted to us as copies. As to
various questions of fact material to such opinions we have, when
relevant facts were not independently established, relied upon
certificates by officers of the Company and other appropriate
persons and statements contained in the Declaration.
<PAGE> 2
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion
that:
1. The Company is validly organized and duly existing
under the laws of the State of Delaware.
2. All state laws applicable to the new Term Loan
Agreement which replaced the Term Loan Agreement as
described in the Declaration have been complied with.
3. The Promissory Notes (the "Notes") issued under the
new Term Loan Agreement are valid and binding
obligations of the Company in accordance with their
terms.
4. The issuance and sale of the Notes as described in
the Declaration did not violate the legal rights of the
holders of any securities issued by the Company or any
associate company of the Company.
We hereby consent to the use of this opinion as an
exhibit to the Certificate of Notification.
Very truly yours,
/s/ MILBANK, TWEED, HADLEY & McCloy
Milbank, Tweed, Hadley & McCloy
RBW/RMG
<PAGE> 1
EXHIBIT 8
---------
=================================================================
SOUTHWESTERN ELECTRIC POWER COMPANY
TERM LOAN AGREEMENT
Dated as of October 31, 1994
THE BANK OF NEW YORK,
as Agent
=================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
1. The Loans. . . . . . . . . . . . . . . . . . . 1
2. The Notes. . . . . . . . . . . . . . . . . . . 2
3. Procedure for Borrowing. . . . . . . . . . . . 2
4. Change in Designation or
Continuation of Loans . . . . . . . . . . . . 3
5. Interest on the Notes. . . . . . . . . . . . . 4
6. Optional Prepayment. . . . . . . . . . . . . . 7
7. Pro Rata Treatment and
Payments. . . . . . . . . . . . . . . . . . . 7
8. Payments Not at End of
Interest Period . . . . . . . . . . . . . . . 8
9. Increased Cost of Loans. . . . . . . . . . . . 9
10. Illegality . . . . . . . . . . . . . . . . . . 12
11. Taxes. . . . . . . . . . . . . . . . . . . . . 13
12. Substitute Loan Basis. . . . . . . . . . . . . 16
13. Use of Proceeds. . . . . . . . . . . . . . . . 18
14. Representations. . . . . . . . . . . . . . . . 18
(a) Subsidiaries. . . . . . . . . . . . . . . 18
(b) Good Standing and Power . . . . . . . . . 18
(c) Business. . . . . . . . . . . . . . . . . 18
(d) Corporate Authority . . . . . . . . . . . 19
(e) Authorizations. . . . . . . . . . . . . . 19
(f) Binding Agreement . . . . . . . . . . . . 19
(g) Litigation. . . . . . . . . . . . . . . . 20
(h) No Conflicts. . . . . . . . . . . . . . . 20
i
<PAGE> 3
(i) Title to Properties . . . . . . . . . . . 20
(j) Financial Condition . . . . . . . . . . . 21
(k) Taxes . . . . . . . . . . . . . . . . . . 21
15. Conditions of Lending. . . . . . . . . . . . . 22
16. Affirmative Covenants. . . . . . . . . . . . . 24
(a) Financial Statements. . . . . . . . . . . 24
(b) Taxes . . . . . . . . . . . . . . . . . . 25
(c) Insurance . . . . . . . . . . . . . . . . 25
(d) Corporate Existence . . . . . . . . . . . 25
(e) Notice. . . . . . . . . . . . . . . . . . 26
17. Negative Covenants . . . . . . . . . . . . . . 26
(a) Mortgages and Pledges . . . . . . . . . . 27
(b) Merger, Acquisition or
Sale of Assets. . . . . . . . . . . . . 27
(c) Compliance with ERISA . . . . . . . . . . 28
18. Events of Default. . . . . . . . . . . . . . . 29
19. The Agent. . . . . . . . . . . . . . . . . . . 31
(a) Appointment . . . . . . . . . . . . . . . 31
(b) Nature of Duties. . . . . . . . . . . . . 32
(c) Lack of Reliance on
the Agent . . . . . . . . . . . . . . . 32
(d) Certain Rights of the
Agent . . . . . . . . . . . . . . . . . 34
(e) Reliance. . . . . . . . . . . . . . . . . 34
(f) Indemnification . . . . . . . . . . . . . 35
(g) The Agent in Its Individual
Capacity. . . . . . . . . . . . . . . . 35
ii
<PAGE> 4
(h) Holders of Notes. . . . . . . . . . . . . 36
20. Miscellaneous. . . . . . . . . . . . . . . . . 36
(a) Definitions . . . . . . . . . . . . . . . 36
(b) Expenses. . . . . . . . . . . . . . . . . 39
(c) Cumulative Rights and
No Waiver . . . . . . . . . . . . . . . 39
(d) Modification. . . . . . . . . . . . . . . 39
(e) Notices . . . . . . . . . . . . . . . . . 40
(f) Sharing of Payments . . . . . . . . . . . 40
(g) Counterparts. . . . . . . . . . . . . . . 42
(h) Applicable Law. . . . . . . . . . . . . . 42
(i) Capital Adequacy . . . . . . . . . . . . 42
(j) Assignments and Participations. . . . . . 44
Exhibit A Promissory Note (Alternate Base Rate)
Exhibit B Promissory Note (Eurodollar)
Exhibit C Opinion of Borrower's Counsel
Appendix I Mortgages or Other Security Interests
iii
<PAGE> 5
TERM LOAN AGREEMENT, dated as of October 31, 1994,
among Southwestern Electric Power Company, a Delaware corporation
(the "Company"), The Bank of New York, Credit Suisse, First
Interstate Bank of Texas, N.A. and The Yasuda Trust & Banking
Co., Ltd., New York Branch (each a "Bank" and collectively the
"Banks"), and The Bank of New York as agent for the Banks (the
"Agent").
1. The Loans. The Company agrees to borrow from the
Banks, and each Bank severally agrees to lend to the Company
(each Bank's loan, a "Loan"), the amount set opposite such Bank's
name in the following table on October 31, 1994.
Bank Amount
The Bank of New York $15,000,000
Credit Suisse 15,000,000
First Interstate
Bank of Texas, N.A. 10,000,000
The Yasuda Trust & Banking
Co., Ltd., New York Branch 10,000,000
-----------
Total: $50,000,000
Each Loan shall
mature on June 15, 2000 and shall bear interest in a manner and
for periods as determined pursuant to Sections 3 and 5. All
Loans shall be, from time to time, either Alternate Base Rate
Loans or Eurodollar Rate Loans, as determined by the Company and
notified to the Agent, subject to the following schedule of
availability and interest rates:
<PAGE> 6
From To and including Option
October 31, 1994 June 15, 1997 Alternate Base Rate, or
Eurodollar Rate plus
0.375%
June 16, 1997 June 15, 2000 Alternate Base Rate
"Alternate Base Rate" and "Eurodollar Rate" shall have the
definitions contained in Section 5, subject to the provisions of
Sections 9, 10, 11 and 12. The date of the making of each of the
Loans is hereinafter referred to as the "Borrowing Date."
2. The Notes. The obligation to repay each Loan shall
be evidenced by the Company's promissory note (each a "Note" and
collectively the "Notes") in substantially the form of Exhibit A
hereto attached for Alternate Base Rate Loans and in
substantially the form of Exhibit B hereto attached for
Eurodollar Rate Loans, each dated the date of the making of the
first Loans and payable to the order of each Bank on June 15,
2000. Each Note shall bear interest from its date until
maturity, payable at the rates and on the dates set forth in
Section 5 hereof.
3. Procedure for Borrowing. The Company shall give
the Agent irrevocable written, telex, telegraphic or telephonic
notice confirmed in writing at least one Domestic Business Days
before the Borrowing Date in the case of Alternate Base Rate
Loans and three Eurodollar Business Days before the Borrowing
Date in the case of the Eurodollar Rate Loans, requesting the
Banks to make the Loans on the Borrowing Date, and specifying
whether the Loans are to be Alternate Base Rate Loans or
<PAGE> 7
Eurodollar Rate Loans and, if the Loans are to be Eurodollar Rate
Loans, the duration of the first Interest Period applicable
thereto. Upon receipt of such notice the Agent shall promptly
notify each Bank thereof. Not later than 11:00 A.M. New York
City time on the Borrowing Date, each Bank shall make available
to the Agent, at its Domestic Lending Office in the case of
Alternate Base Rate Loans and at its Eurodollar Lending Office in
the case of Eurodollar Rate Loans, an amount equal to the amount
of its Loan in immediately available funds. The Borrowing Date
shall be a Domestic Business Day in the case of Alternate Base
Rate Loans and a Eurodollar Business Day in the case of
Eurodollar Rate Loans.
4. Change in Designation or Continuation of Loans.
Subject in each of the following cases to the schedule set forth
in Section 1:
(i) With respect to any Eurodollar Rate Loan, the
Company may (a) by irrevocable written, telex,
telegraphic or telephonic notice confirmed in writing
to the Agent five Eurodollar Business Days prior to the
termination of any Eurodollar Interest Period,
whichever is applicable, elect to extend the Eurodollar
Rate Loan by designating a new Interest Period
applicable thereto; or (b) at the end of the applicable
Interest Period convert a Eurodollar Rate Loan into an
Alternate Base Rate Loan.
<PAGE> 8
(ii) With respect to any Alternate Base Rate
Loan, the Company may convert such Loan into a
Eurodollar Rate Loan on five Eurodollar Business Days'
irrevocable written, telex, telegraphic or telephonic
notice confirmed in writing to the Agent.
(iii) Eurodollar Rate Loans as to which no timely
instructions are received shall at the end of the
applicable Interest Period be automatically converted
into Alternate Base Rate Loans.
5. Interest on the Notes. Interest on the Eurodollar
Rate Loans shall be computed on the basis of a year of 360 days
and actual days elapsed (including the first day but excluding
the last day) occurring in the period for which payable and
interest on the Alternate Base Rate Loans shall be computed on
the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable. Notwith-
standing the foregoing, for each day that the Alternate Base Rate
is calculated by reference to the Federal Funds Rate, interest on
the Alternate Base Rate Loans shall be computed on the basis of a
year of 360 days and actual days elapsed.
The "Alternate Base Rate" is, for any day, a rate per
annum equal to the higher of (i) the Prime Rate in effect on such
day and (ii) the Fed Funds Rate in effect on such day plus 1/2 of
1%.
<PAGE> 9
The "Prime Rate" is the prime commercial lending rate
of the Agent as publicly announced to be in effect from time to
time, such rate to be adjusted automatically, without notice, on
the effective date of any change in such rate.
The "Fed Funds Rate" is, for any day, the weighted
average of the rates on overnight Federal funds transactions for
the preceding night, with members of the Federal Reserve System
only, arranged by Federal funds brokers, as published as of such
day by the Federal Reserve Bank of New York, which rate shall
change as and when said rate shall change; provided that, for any
day that such a rate is not published, the Fed Funds Rate for
such day shall be equal to the Fed Funds Rate on the immediately
preceding day as determined hereunder.
The "Eurodollar Rate" is the rate per annum (rounded,
if necessary, upward to the nearest 1/100 of 1%) equal to the
rate at which dollar deposits in immediately available funds are
offered in the London Interbank Market to the London branch of
The Bank of New York by leading banks in the Eurodollar market at
approximately 11:00 A.M. London time two Eurodollar Business Days
prior to the commencement of the relevant Eurodollar Interest
Period for deposits in dollars approximately comparable in
principal amount to The Bank of New York's Eurodollar Rate Loan,
and for a period comparable to such Eurodollar Interest Period.
Each determination of the Eurodollar Rate shall be made by the
Agent and shall be conclusive absent manifest error.
<PAGE> 10
The Eurodollar Rate shall continue for the relevant
Interest Period.
Interest accrued on Alternate Base Rate Loans shall be
payable on the last day of each March, June, September and
December of each year, and at maturity, commencing on the first
such date to occur after an Alternate Base Rate Loan is made.
Interest accrued on Eurodollar Rate Loans shall be payable on the
last day of the Interest Period applicable thereto, provided that
if a Eurodollar Interest Period is for six months, interest
accrued shall also be payable at the end of the third month of
such Eurodollar Interest Period. After maturity of the Loans,
interest shall be payable on demand.
The rate of interest on any Loan shall increase to 1.0%
per annum in excess of the then applicable rate for Alternate
Base Rate Loans if any payment of interest thereon or principal
thereof is not made when due, and such higher rate shall remain
in effect during any period when any such unpaid payment has not
been made; in addition, to the extent permitted by law, past due
interest shall bear interest at the same rate as past due
principal.
6. Optional Prepayment. Except as provided in
Section 9, 10, 11, or 12, the Company shall have the right on not
less than five Domestic Business Days' irrevocable written,
telex, telegraphic or telephonic notice confirmed in writing to
the Agent to prepay the Loans in whole at any time or in part
from time to time in an amount of $5,000,000 or more without
<PAGE> 11
premium or penalty but with accrued interest on the principal
being paid to the date of prepayment, provided that Eurodollar
Rate Loans may be prepaid under this Section only on the last day
of the Interest Period pertaining hereto or as provided in
Section 8. Amounts prepaid may not be reborrowed.
7. Pro Rata Treatment and Payments. Except as
provided in Section 8, 9, 10, 11, or 12, each payment (including
each prepayment) by the Company on account of the principal of
and interest on the Notes, shall be made pro rata according to
the amounts of the Loans then outstanding. All payments
(including prepayments) by the Company on account of principal
and interest shall be made to the Agent for the account of the
Banks, at the Eurodollar Lending Office of the Agent in the case
of Eurodollar Rate Loans and at the Domestic Lending Office of
the Agent in the case of all Alternate Base Rate Loans, not later
than 12:00 Noon, New York City time, on the date when due, in
immediately available funds. If any payment (including any
prepayment) of principal of, or interest on, any Alternate Base
Rate Loan shall be payable on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to
the next succeeding Domestic Business Day. If any payment of
principal of, or interest on, any Eurodollar Rate Loan shall be
payable on a day which is not a Eurodollar Business Day, the date
for payment thereof shall be extended to the next succeeding
Eurodollar Business Day, unless such Eurodollar Business Day
<PAGE> 12
falls in another calendar month, in which case the date for
payment thereof shall be the next preceding Eurodollar Business
Day.
8. Payments Not at End of Interest Period. If the
Company makes any payment or prepayment of principal with respect
to any Eurodollar Rate Loan or converts any Eurodollar Rate Loan
pursuant to Section 9, 10, 11, or 12, on any day other than the
last day of the Interest Period applicable thereto, the Company
shall reimburse each Bank on demand for any loss incurred by it
as a result of the timing of such payment, including (without
limitation) any loss incurred in liquidating or employing
deposits from third parties, but excluding loss of profit for the
period after such payment, provided that such Bank shall have
delivered to the Company a certificate signed by a duly
authorized officer of such Bank providing calculations as to the
amount of such loss, which certificate shall be conclusive in the
absence of manifest error.
9. Increased Cost of Loans. (a) The Company shall
pay to each Bank on the last day of each Interest Period during
any part of which such Bank is required to maintain reserves
established by the Board of Governors of the Federal Reserve
System (the "Federal Reserve"), or any banking authorities for
Eurocurrency liabilities (such reserve requirements to include,
without limitation, those imposed under Regulation D of the
Federal Reserve (the "Reserves"), an additional amount
(determined by such Bank and notified to the Company by the
<PAGE> 13
Agent) equal to the product of the following for each Eurodollar
Rate Loan for each day during such Interest Period:
(i) the remainder of
(x) a fraction, the numerator of which is the
Eurodollar Rate for the relevant Interest Period
(expressed as a decimal) and the denominator of
which is the number one minus the effective rate
(expressed as a decimal) at which such reserve
requirements are imposed on such bank on such day;
minus
(y) such numerator;
(ii) the principal amount of such Bank's Eurodollar
Rate Loan outstanding on such day; and
(iii) 1/360.
The determination and allocation of Reserves by the
relevant Bank shall be conclusive, provided such calculation is
made on a reasonable basis and is mathematically correct.
(b) In the event of any change in any applicable law,
treaty or governmental regulation or in the interpretation or
application thereof, after the date of this Agreement, or
compliance by any Bank with any request or directive (whether or
not having the force of law) from any central bank or other
governmental authority made or issued after the date of this
Agreement, which:
(i) does or shall subject any Bank to any tax of
any kind whatsoever with respect to this Agreement, its
<PAGE> 14
Note or any Eurodollar Rate Loan, or change the basis of
taxation of payments to any Bank of principal, interest or
any other amount payable hereunder (except for (A) taxes on
or measured by the overall gross or net income or receipts
of, or assets or personnel of, such Bank, its Domestic
Lending Office or its Eurodollar Lending Office (or other
taxes in lieu of such taxes) and (B) taxes that the Company
is expressly not required to pay by the terms of Section 11
hereof);
(ii) does or shall impose, modify or hold
applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of a Bank
in excess, and without duplication, of those reserve
requirements taken into account to compute the
Eurodollar Rate; or
(iii) does or shall impose on any Bank any other
condition;
and the result of any of the foregoing is to increase the cost to
such Bank of making, renewing or maintaining Eurodollar Rate
Loans or to reduce any amount receivable hereunder with respect
to Eurodollar Rate Loans, then, in any such case, the Company
shall pay such Bank, upon written demand being made to the
Company by such Bank, such additional amount which will
<PAGE> 15
compensate such Bank for such increased cost or reduction as that
Bank reasonably deems to be material. Such demand shall be
accompanied by a certificate of a duly authorized officer of such
Bank, setting forth the amount of such payment and calculations
providing the basis therefor, which certificate shall be, in the
absence of manifest error, conclusive evidence of the amount of
such payment. Each Bank will give written notice to the Company
and to the Agent of any event occurring after the date hereof
which will entitle such Bank to compensation pursuant to this
Section as promptly as practicable after it obtains knowledge
thereof and determines to request such compensation, and will
designate a different Eurodollar Lending Office if such
designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the opinion of such Bank, be
disadvantageous to such Bank. In the event that any Bank shall
demand payment pursuant to this Section, the Company may, upon
irrevocable written, telex, telegraphic or telephonic notice
confirmed in writing to the Agent and such Bank, (a) prepay in
whole (but not in part) the affected Eurodollar Rate Loans of
such Bank, together with accrued interest to the date of
prepayment on the amount so prepaid, or (b) convert such
Eurodollar Rate Loans to Alternate Base Rate Loans, in either
case, should such prepayment or conversion occur on a day which
is not the last day of the applicable Interest Period, together
with the reimbursement required by Section 8. Such notice shall
<PAGE> 16
be given not later than five Eurodollar Business Days prior to
the prepayment or conversion date in the case of Eurodollar Rate
Loans.
10. Illegality. Notwithstanding anything herein
contained, if any Bank shall make a good faith determination, in
its sole discretion after consultation with the Agent and the
Company, that a change after the date hereof in any applicable
law or regulation or in the interpretation thereof by any
authority charged with the administration thereof shall make it
unlawful for such Bank to give effect to its obligation to make
or maintain its Eurodollar Rate Loan, or any portion thereof,
under this Agreement, the obligation of such Bank to make or
maintain its Eurodollar Rate Loan, or any portion thereof,
hereunder shall be suspended for the duration of such illegality
(provided that the Bank will designate a different Eurodollar
Lending Office if such designation will avoid the illegality and
will not, in the sole opinion of such Bank, be disadvantageous to
such Bank). Such Bank, by written notice to the Agent and the
Company, shall declare that such Bank's obligation shall be
suspended, and the Company shall, on the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan
or portion thereof or, if the Bank so requests, on such earlier
date as may be required by relevant law, either (a) prepay such
Eurodollar Rate Loans or portion thereof, together with accrued
interest to the date of prepayment on the amount so prepaid, or
(b) convert such Eurodollar Rate Loans to Alternate Base Rate
<PAGE> 17
Loans, in either case, should such prepayment or conversion occur
on a day which is not the last day of the applicable Interest
Period, together with the reimbursement required by Section 8.
11. Taxes. The Company agrees, subject to the
provisions of this Section 11, to pay to each Bank that is not a
U.S. Person such additional amounts as are necessary in order
that the net payment of any amount due to such non-U.S. Person
hereunder after deduction for or withholding in respect of any
U.S. Tax imposed with respect to such payment (or in lieu
thereof, payment of such U.S. tax by such non-U.S. Person), will
not be less than the amount stated herein to be then due and
payable. If any taxes in respect of which the Company is liable
hereunder shall be imposed or increased by virtue of any change
in law or otherwise subsequent to the making of a Loan by any
Bank hereunder, the Company may, upon at least five Eurodollar
Business Days' written, telex, or telegraphic or telephonic
notice confirmed in writing to the Agent and such Bank, prepay
the Loan of such Bank, together with accrued interest to the date
of prepayment on the amount so prepaid; and should the prepayment
be made for a Eurodollar Rate Loan and occur on a day which is
not the last day of the applicable Interest Period, together with
the reimbursement required by Section 8.
Each Bank not organized under the laws of the United
States or a state thereof shall deliver to the Company a Form
4224 or Form 1001 duly executed on behalf of such Bank in form
acceptable to the Company. The Company shall not be required to
<PAGE> 18
pay any amount by reason of this Section 11 with respect to any
United States income tax withholding (i) to any Bank that is not,
on the date hereof (or on the date it becomes a Bank pursuant to
Section 20(j) hereof) or on the date of any change in its
Domestic Lending Office or Eurodollar Lending Office, entitled to
submit either a Form 1001 (relating to such Bank and entitling it
to a complete exemption from withholding on all interest to be
received by it hereunder) or a Form 4224 (relating to all
interest to be received by it hereunder) or (ii) to any Bank if
such withholding would not have been imposed but for the failure
by such Bank to comply with applicable certification,
information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections
with the United States of such Bank if such compliance is
required by statute or regulation as a precondition to relief or
exemption from such withholding. For purposes of this Section
11, (i) "U.S. Person" shall mean a citizen, or resident of the
United States of America, a corporation, partnership or other
entity created or organized in or under any laws of the United
States of America, or any estate or trust that is subject to
Federal income taxation regardless of the source of its income;
(ii) "U.S. Tax" shall mean any present or future tax, assessment
or other charge or levy imposed by or on behalf of the United
States of America or any taxing authority thereof or therein;
(iii) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or
Reduced Rate Certificate) of the Department of the Treasury of
<PAGE> 19
the United States of America; and (iv) "Form 4224" shall mean
Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in
the United States) of the Department of the Treasury of the
United States of America (or, in either case, such successor and
related forms as may from time to time be adopted by the relevant
taxing authorities of the United States of America to document a
claim to which such form relates).
12. Substitute Loan Basis. In the event that the
Agent shall reasonably determine (which determination shall be
final and conclusive and binding upon the Company and the Banks)
at any time that (i) by reason of changes affecting the London
Interbank Market, adequate and fair means do not exist for
ascertaining the Eurodollar Rate or (ii) the continuation of the
Loans in Eurodollars has been made impracticable by the
occurrence of a contingency which materially and adversely
affects the London Interbank Market, then, and in any such event,
the Agent shall forthwith give notice to the Company and the
Banks and during the thirty Eurodollar Business Days following
the receipt of such notice, the Banks and the Company shall
negotiate in good faith with a view toward modifying this
Agreement to provide a substitute basis for the Eurodollar Rate
Loans which is financially a substantial equivalent of the basis
provided for herein. If, within such 30-day period, the Banks
and the Company shall agree in writing upon such substitute
basis, then such substitute basis shall be retroactive to, and
<PAGE> 20
effective from, the date of the aforesaid notice. If, within
such 30-day period, the Banks and the Company shall fail to agree
in writing upon such substitute basis, the Company agrees, within
three Eurodollar Business Days after the last day of such 30-day
period, either to (a) prepay the Eurodollar Rate Loans in full,
together with accrued interest to the date of prepayment on the
amount so prepaid, or (b) convert such Eurodollar Rate Loans to
Alternate Base Rate Loans, in either case, should such prepayment
or conversion occur on a day which is not the last day of the
applicable Interest Period, together with the reimbursement
required by Section 8, and will pay on demand to the Agent for
the account of each Bank interest on the principal amount of such
Eurodollar Rate Loans held by such Bank from the date of the
aforesaid notice to the date of such prepayment or conversion at
a rate equal to the cost to such Bank of maintaining such
Eurodollar Rate Loans during such period (the determination of
each Bank of such cost to be conclusive absent manifest error)
plus the amount in excess of the Eurodollar Rate called for in
the relevant year under Section 1.
13. Use of Proceeds. The proceeds of the Loans shall
be used by the Company to prepay in full the loans outstanding
under the Term Loan Agreement, dated as of June 15, 1984, as
amended, but in no event to acquire any stock registered under
Section 12 of the Securities Exchange Act of 1934.
14. Representations. The Company represents and
warrants to the Banks and the Agent that:
<PAGE> 21
(a) Subsidiaries. At the date hereof the Company has
the following subsidiary and no others: Southwest Arkansas
Utilities Corporation.
(b) Good Standing and Power. The Company is a
corporation, duly organized and existing, in good standing, under
the laws of the jurisdiction of its incorporation, and has the
corporate power to own its property and to carry on its business
as now being conducted and is duly qualified to do business and
is in good standing in each jurisdiction in which the character
of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary.
(c) Business. The Company's principal business is the
generation, transmission, distribution and sale of electric
power.
(d) Corporate Authority. The Company has full power
and authority to enter into this Agreement, to make the
borrowings hereunder, to execute and deliver the Notes and to
incur and perform the obligations provided for herein and in the
Notes, all of which have been duly authorized by all proper and
necessary corporate action. No consent or approval of
stockholders or of any governmental authority other than the
Securities and Exchange Commission (the "SEC") under the Public
Utility Holding Company Act of 1935 (the "1935 Act") is required
as a condition to the validity of this Agreement or the Notes or
the performance by the Company of its obligations hereunder and
under the Notes.
<PAGE> 22
(e) Authorizations. All authorizations, consents,
approvals, registrations, exemptions and licenses with or from
governmental authorities which are necessary for the borrowings,
the execution and delivery of the Agreement and the Notes, and
the performance by the Company of its obligations hereunder and
thereunder have been effected or obtained and are in full force
and effect.
(f) Binding Agreement. This Agreement constitutes,
and the Notes, when issued and delivered pursuant hereto for
value received, will constitute, the valid and legally binding
obligations of the Company enforceable in accordance with their
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity
principles.
(g) Litigation. Except as otherwise disclosed in the
quarterly report of the Company and its subsidiary filed with the
Securities and Exchange Commission on Form 10-Q for the second
calendar quarter of 1994 and the annual report on Form 10-K for
the calendar year 1993, there are no proceedings or
investigations pending or, so far as the officers of the Company
know, threatened before any court or arbitrator or before or by
any governmental (including any ratesetting) authority which, in
any one case or in the aggregate, if determined adversely to the
interests of the Company or its subsidiary, could have a material
and adverse effect on the business, properties, financial
<PAGE> 23
condition, results of operations or prospects of the Company or
its subsidiary.
(h) No Conflicts. There is no statute, regulation,
rule, order or judgment, no charter, by-law or preference stock
provision of the Company, and no provision of any mortgage,
indenture, contract or agreement binding on the Company or
affecting its property, which would prohibit, conflict with or in
any way prevent the execution, delivery, or carrying out of the
terms of this Agreement or of the Notes.
(i) Title to Properties. The Company has good and
marketable title to its properties and assets. Such properties
and assets are subject to no material lien, mortgage, pledge,
encumbrance, or charge, of any kind except as set forth on
Schedule 1 and as permitted by Section 17(a)(ii).
(j) Financial Condition. The quarterly report of the
Company and its subsidiary filed with the Securities and Exchange
Commission on Form 10-Q for the second calendar quarter of 1994
and the annual report on Form 10-K for the calendar year 1993,
heretofore delivered to the Agent, fairly present the financial
condition of the Company and its subsidiary and the results of
their operations and transactions in their surplus accounts as of
the dates and for the periods referred to and have been prepared
in accordance with generally accepted accounting principles
consistently maintained by the Company throughout the periods
involved. There are no liabilities, direct or indirect, fixed or
contingent, of the Company or its subsidiary as of the dates of
<PAGE> 24
such Forms 10-K and 10-Q which are not reflected therein or in
the notes thereto. There has been no material adverse change in
the business, properties, condition (financial or other) or
operations, present or prospective, of the Company or its
subsidiary since June 30, 1994.
(k) Taxes. Except for claims in respect of federal
taxes not in excess of $5,000,000:
(i) the Company has filed all tax returns which are
required to be filed by the Company and its subsidiary,
and has paid all local, state and federal taxes which
have become due pursuant to such returns or pursuant to
any assessment received by the Company or its
subsidiary; and
(ii) the Company is not aware of any tax liability
that has been asserted by the Internal Revenue Service
against the Company or its subsidiary for taxes in
excess of those already paid.
All tax liabilities of the Company and its subsidiary were, as of
June 30, 1994 and December 31, 1993, and are now, adequately
provided for on the books of the company.
15. Conditions of Lending. The obligation of each
Bank to make its Loan is subject to the following conditions
precedent:
(i) Opinion of Bank Counsel. The Agent shall
have received a favorable written opinion of Sullivan &
Cromwell, special counsel to the Banks, with respect to
documents received by the Banks.
<PAGE> 25
(ii) Compliance. At the time of the Loans (A)
the Company shall have complied and shall then be in
compliance with all the terms, covenants and conditions
of this Agreement which are binding upon it, (B) there
shall have occurred no event of default as defined in
Section 18 and no event which, with the giving of
notice or the lapse of time, or both, would constitute
such an event of default, (C) the representations and
warranties contained in Section 14 shall be true with
the same effect as though such representations and
warranties had been made at the time of the Loans, and
(D) the Banks shall have received a certificate dated
the date of the Loans and signed by the chief executive
officer, the chief financial officer, or the treasurer
of the Company to the foregoing effect.
(iii) Evidence of Corporate Action. The Banks
shall have received copies of all corporate action
taken by the Company to authorize this Agreement, the
Notes and the borrowings hereunder, certified the date
of the Loans, and such other papers as the Bank shall
reasonably require.
(iv) Evidence of Regulatory Approval. The Banks
shall have received evidence satisfactory to it that
all necessary governmental and regulatory approvals
required in connection with the Loans, including
without limitation approval of the SEC, have been
received.
<PAGE> 26
(v) Opinion of Company Counsel. The Banks shall
have received a favorable written opinion of counsel
for the Company, dated the date of the Loans, in
substantially the form of Exhibit C hereto attached.
16. Affirmative Covenants. So long as the Company may
borrow hereunder and until payment in full of the Notes and
performance of all other obligations of the Company hereunder,
the Company will:
(a) Financial Statements. Furnish to the Agent (with
sufficient copies for each of the Banks) (i) as soon as available
but in no event more than 60 days after the end of the first
three calendar quarters of each year, the quarterly report of the
Company and its subsidiary filed with the Securities and Exchange
Commission on Form 10-Q as of the close of such period; (ii) as
soon as available but in no event more than 120 days after the
close of each of the Company's fiscal years, the annual report of
the Company and its subsidiary filed with the Securities and
Exchange Commission on Form 10-K as of the end of such fiscal
year; (iii) as soon as available, copies of all financial
statements, reports, notices, and proxy statements sent by the
Company in a general mailing to all its preferred stockholders,
of final prospectuses filed pursuant to Rule 424(b) under the
Securities Act of 1933 and all other material information filed
by the Company with any securities exchange or with the SEC,
other than filings made pursuant to the 1935 Act, or any
<PAGE> 27
governmental authority succeeding to any or all of the functions
of said Commission; and (iv) such additional information, reports
or statements as any Bank may from time to time reasonably
request.
(b) Taxes. Pay and discharge, and cause its
subsidiaries to pay and discharge, all taxes, assessments and
governmental charges upon it, its income and its properties prior
to the date on which penalties are attached thereto, unless and
to the extent only that (i) such taxes, assessments and
governmental charges shall be contested in good faith and by
appropriate proceedings by the Company or a subsidiary, as the
case may be, and (ii) the Company or such subsidiary shall set
aside on its books adequate reserves therefor.
(c) Insurance. Maintain, and cause its subsidiary to
maintain, insurance with responsible insurance companies against
such risks, on such properties and in such amounts as is
customarily maintained by similar businesses or, at the option of
the Company, by means of adequate insurance funds or other
adequate method or plan of protection created and maintained by
the Company.
(d) Corporate Existence.
(i) Maintain its corporate existence in good standing,
and qualify and remain qualified to do business as a foreign
corporation in each jurisdiction in which the character of
the properties owned or leased by it therein or in which the
transaction of its business makes such qualification neces-
sary, and cause its subsidiaries so to do.
<PAGE> 28
(ii) Maintain, remain or continue to engage in
substantially the same business as that in which it is
presently engaged and continue to own the properties it
presently owns, with the exception of properties sold
it the ordinary course of business and sales of
property made that will not affect adversely the
conduct of the Company's business.
(e) Notice. Give the Agent and the Banks prompt
notice of (i) any Event of Default or occurrence which upon
notice or lapse of time or both would constitute an Event of
Default, (ii) any action, suit or proceeding known to the Company
before any court or arbitrator or any governmental
instrumentality, or any other event, which, if adversely
determined, would materially affect the financial condition of
the Company or the ability of the Company to carry on its
business or to perform its obligations under this Agreement or
the Notes.
17. Negative Covenants. So long as the Company may
borrow hereunder and until payment in full of the Notes and
performance of all other obligations of the Company hereunder,
the Company will not:
(a) Mortgages and Pledges. Create, incur, assume or
suffer to exist any mortgage, pledge, lien or other encumbrance
of any kind (including the charge upon property purchased under
conditional sale or other title retention agreements) upon, or
any security interest in (collectively an "Encumbrance"), any of
<PAGE> 29
its property or assets, whether now owned or hereafter acquired,
or permit any subsidiary so to do, except (i) Encumbrances
existing on the date hereof; and (ii) Encumbrances that would not
result in a default under the Indenture, dated February 1, 1940,
between the Company and Continental Illinois National Bank and
Trust Company of Chicago and M.J. Kruger, as successor Trustees,
as amended by the indentures supplemental thereto.
(b) Merger, Acquisition or Sale of Assets. Enter into
any merger or consolidation in which the Company is not the
surviving entity; or permit any subsidiary to enter into any
merger or consolidation in which such subsidiary, a wholly owned
subsidiary of the Company or the Company is not the surviving
entity; or enter into any merger or consolidation or acquire the
assets of any person, firm, joint venture, corporation or other
entity, or permit any subsidiary so to do, unless in the ordinary
course of business or unless such entity merging into the Company
or such subsidiary or the assets being acquired are in the same
general line of business as the Company presently conducts; or
sell, lease, or otherwise dispose of 20% or more of the assets of
the Company and its consolidated subsidiaries in the aggregate,
or permit any subsidiary so to do.
(c) Compliance with ERISA. (i) Undertake any action
with respect to a multiemployer plan which results in the receipt
by the Company of a notice of withdrawal liability pursuant to
Section 4202 of the Employee Retirement Income Security Act of
1974 as amended by the Multi-Employer Pension Plan of 1980
<PAGE> 30
("ERISA") with respect to one or more such multiemployer plans in
an aggregate amount in excess of $500,000, (ii) engage in a
transaction or transactions which would subject the Company to a
tax or penalty imposed by either Section 4975 of the Internal
Revenue Code of 1954, as amended (the "Code"), or Section 502(i)
of ERISA in an amount exceeding in the aggregate $500,000 while
this Agreement remains in effect, or (iii) permit, with respect
to any employee benefit plan covered by Title IV of ERISA which
it maintains for the benefit of its employees, an accumulated
funding deficiency continued for 2 plan years and which, if not
corrected as provided under Section 4971 of the Code, would
subject the Company to a tax imposed by Section 4971 of the Code
in an aggregate amount in excess of $500,000.
18. Events of Default. If one or more of the
following events of default (each an "Event of Default") shall
occur:
(a) Default shall be made in the payment of principal
of any Note when due and payable, whether at maturity, by notice
of intention to prepay or otherwise; or
(b) Default shall be made in the payment of interest
upon any Note when due and payable, whether at maturity, by
notice of intention to prepay, or otherwise, and such default
shall have continued unremedied for a period of five days, or
(c) Default shall be made in the due observance or
performance of any term, covenant or agreement contained in
Sections 16 (excepting Section 16(a)) and 17 hereof; or
<PAGE> 31
(d) Default shall be made in the due observance or
performance of any other term, covenant or agreement contained in
this Agreement, and such default shall have continued unremedied
for a period of 30 days after any officer of the Company becomes
or should have become aware of such default; or
(e) Any representation or warranty made by the Company
herein or any statement or representation made in any
certificate, report or opinion delivered in connection herewith
shall prove to have been misleading or untrue in any material
respect when made; or
(f) Any obligations of the Company (other than its
obligation hereunder) or of any subsidiary for the payment of
Borrowed Money in excess of $1,000,000 in the aggregate at any
one time outstanding are not paid when due or become or are
declared to be due and payable prior to the expressed maturity
thereof, or there shall have occurred an event which, with the
giving of notice or lapse of time, or both, would cause such
obligations to become, or allow any such obligations to be
declared to be, due and payable, and, in each case, any
applicable grace period shall have expired; or
(g) The Company or any subsidiary makes an assignment
for the benefit of creditors, files a petition in bankruptcy, is
adjudicated insolvent or bankrupt, petitions or applies to any
tribunal for any receiver or custodian of or any trustee for the
Company or any subsidiary or any substantial part of its
property, commences any proceeding relating to the Company or any
<PAGE> 32
subsidiary under any reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or there is
commenced against the Company or any subsidiary any such
proceeding which remains undismissed for a period of 45 days, or
the Company or any subsidiary by any act indicates its consent
to, approval of or acquiescence in any such proceeding or the
appointment of any receiver or custodian of or any trustee for
the Company or any subsidiary or any substantial part of its
property, or suffers any such receivership, custodianship, or
trusteeship to continue undischarged for a period of 45 days, or
the Company is generally unable to pay its debts as they come
due, or takes any corporate action to accomplish any of the
foregoing; or
(h) one or more judgments against the Company or any
subsidiary or attachments against its property, which in the
aggregate exceed $1,000,000, or the operation or result of which
could be to interfere materially and adversely with the conduct
of the business of the Company or any subsidiary, remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a
period of 30 days, then, upon the happening of any of the
foregoing events of default which shall be continuing, the Notes
shall become and be immediately due and payable upon declaration
to that effect delivered by the Agent to the Company at the
direction of all of the Banks after a poll of all the Banks; pro-
vided, that upon the happening of any event specified in
<PAGE> 33
Section 18(g), the Notes shall be immediately due and payable
without declaration or other notice to the Company. The Company
expressly waives any presentment, demand, protest or other notice
of any kind.
19. The Agent.
(a) Appointment. The Banks hereby designate The Bank
of New York to act as Agent hereunder as herein specified. Each
Bank, hereby irrevocably authorizes, and each holder of any Note
by the acceptance of a Note shall be deemed irrevocably to
authorize, the Agent to take such action on its behalf under the
provisions of this Agreement and the Notes and any other
instruments and agreements referred to herein and to exercise
such powers and to perform such duties hereunder and thereunder
as are specifically delegated to or required to the Agent by the
terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent may perform any of its duties
hereunder by or through its agents or employees.
(b) Nature of Duties. The duties of the Agent shall
be mechanical and administrative in nature; the Agent shall not
have by reason of this Agreement a fiduciary relationship in
respect of any Bank; and nothing in this Agreement, express or
implied, is intended to or shall be so construed as to impose
upon the Agent any obligations in respect of this Agreement
except as expressly set forth herein. Neither the Agent nor any
of its officers, directors, employees or agents shall be liable
<PAGE> 34
for any action taken or omitted by them as such hereunder or in
connection herewith, except that the Agent shall be liable for
actions or omissions caused by its own gross negligence or wilful
misconduct.
(c) Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Bank has made and shall
continue to make (i) its own independent investigation of the
financial condition and affairs of the Company in connection with
the making and the continuance of the Loans hereunder and the
taking or not taking of any action in connection herewith; (ii)
its own appraisal of the creditworthiness of the Company; and
(iii) its own independent determination of its ability and the
ability of the Company, legal and otherwise, to enter into this
Agreement. The Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect hereto, whether
coming into its possession before the making of the Loans or at
any time or times thereafter. The Agent shall not be responsible
to any Bank for any recitals, statements, information,
representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this Agreement
or the Notes or the financial condition of the Company, or be
required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this
<PAGE> 35
Agreement or the Notes or the financial condition of the Company,
or the existence or possible existence of any event of default or
any condition, event or act which, with notice or lapse of time
or both, would constitute such an event of default or be
responsible to the Company or to any Bank for any matter relating
to the power or authority of any Bank or any action taken by a
Bank on its own behalf. The Agent may resign on thirty days'
written notice to each of the Banks and upon such resignation the
Majority Banks will designate a successor agent.
(d) Certain Rights of the Agent. If the Agent shall
request instructions from the Majority Banks with respect to any
act or action (including failure to act) in connection with this
Agreement, the Agent shall be entitled to refrain from such act
or taking such action unless and until the Agent shall have
received instructions from the Majority Banks; and the Agent
shall not incur liability to any person by reason of so
refraining. Without limiting the foregoing, no Bank shall have
any right of action whatsoever against the Agent as a result of
its acting or refraining from acting hereunder in accordance with
the instructions of the Majority Banks.
(e) Reliance. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing,
resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document or
telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity,
<PAGE> 36
and, with respect to all legal matters pertaining to this
Agreement and its duties hereunder, upon advice of counsel
selected by it (including, without limitation, special counsel to
the Banks).
(f) Indemnification. To the extent the Agent is not
reimbursed and indemnified by the Company, the Banks will
reimburse and indemnify the Agent in proportion to their
respective Loans under this Agreement (or, prior to the making of
any Loans, in proportion to their respective Commitments), for
and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in
performing its duties hereunder, or which in any way relate to or
arise out of this Agreement; provided that, no Bank shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
wilful misconduct.
(g) The Agent in Its Individual Capacity. With
respect to the Loans made by it and the Notes issued to it, the
Agent shall have the same rights and powers hereunder as any
other Bank as if it were not performing the duties as Agent
specified herein; and the terms "Banks" or "holders of Notes" or
any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The
<PAGE> 37
Agent and its affiliates may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other
business with the Company or any of its subsidiaries or any
affiliates of the Company as if it were not performing the duties
specified herein, and may accept fees and other consideration
from the Company or any of its subsidiaries for services in
connection with this Agreement and otherwise without having to
account for the same to the Banks.
(h) Holders of Notes. The Agent may deem and treat
the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any person or entity who, at the
time of making such request or giving such authority or consent,
is the holder of a Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any
Note issued in exchange therefor.
20. Miscellaneous.
(a) Definitions.
"Borrowed Money" means any obligation to repay money
borrowed, any indebtedness evidenced by notes, bonds, debentures
or similar obligations, any obligation under a conditional sale
or other title retention agreement and the net aggregate rentals
under any lease which under generally accepted accounting
principles would be capitalized on the books of the Company or
<PAGE> 38
which is the substantial equivalent of the financing of the
property so leased.
"Domestic Business Day" means any day except a
Saturday, Sunday or other legal holiday or days on which
commercial banks in New York City are generally authorized by law
to close.
"Domestic Lending Office" means, as to each Bank, its
office designated as such on the signature pages hereto or such
other office in the United States as such Bank may designate from
time to time as its Domestic Lending Office by notice to the
Company and the Agent, at which payments of Alternate Base Rate
Loans are to be made.
"Eurodollar Business Day" means any day on which
commercial banks are open for domestic and international business
(including dealings in dollar deposits) in London and New York
City.
"Eurodollar Lending Office" means, as to each Bank, its
office designated as such on the signature pages hereto or such
other office or branch as it may designate from time to time as
its Eurodollar Lending Office by notice to the Company and the
Agent, at which payments of Eurodollar Rate Loans are to be made.
"Interest Period" means, with respect to each
Eurodollar Rate Loan,
(i) initially, the period commencing on the date
of such Eurodollar Rate Loan and ending one, two, three
or six months thereafter, in each such case as the
Company may elect; and
<PAGE> 39
(ii) thereafter, each period commencing on the
last day of the next preceding Interest Period
applicable to such Loan and ending one, two, three or
six months thereafter, as the Company may elect;
provided that:
(a) any Eurodollar Interest Period which would
otherwise end on a day which is not a Eurodollar Business Day
shall be extended to the next succeeding Eurodollar Business Day
unless such Eurodollar Business Day falls in another calendar
month, in which case such Eurodollar Interest Period shall end on
the next preceding Eurodollar Business Day;
(b) any Interest Period for a Eurodollar Rate Loan
which begins on the last Eurodollar Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Eurodollar Business Day of
a calendar month; and
(c) no Interest Period shall extend beyond the
maturity dates of the Notes.
"Majority Banks" shall mean a Bank or group of Banks
which shall at the relevant time hold more than 50% of the
aggregate principal amount of all Notes outstanding hereunder (or
prior to the making of the Loans, more than 50% of the
commitments to make the Loans).
<PAGE> 40
The term "subsidiary" means any corporation the majority of
the voting shares of which at the time are owned directly or
indirectly by the Company and/or by one or more majority-owned
subsidiaries of the Company.
(b) Expenses. The Company (i) agrees to pay all
out-of-pocket expenses of the Agent (including the reasonable
fees and expenses of special counsel to the Agent) in connection
with the preparation of this Agreement and any amendments or
supplements, and all out-of-pocket expenses of the Agent and the
Banks (including the reasonable fees and expenses of their
special counsel) in connection with the enforcement of any
provision of this Agreement or any amendment or supplement and
the collection of the Notes; and (ii) shall pay and indemnify the
Banks against any liability for any taxes or charges now or
hereafter in effect with respect to the preparation, execution,
delivery, performance and enforcement of this Agreement, the
Notes and any other transactions contemplated hereby. If any of
the taxes specified in this Section are paid by the Bank, the
Company shall, upon demand of such Bank, promptly reimburse such
Bank for such payments.
(c) Cumulative Rights and No Waiver. Each and every
right granted to the Banks and the Agent hereunder or under any
other document delivered hereunder or in connection herewith, or
allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of any Bank
or the Agent to exercise, and no delay in exercising, any right
<PAGE> 41
shall operate as a waiver thereof, nor shall any single or
partial exercise by any Bank or the Agent of any right preclude
any other or future exercise thereof or the exercise of any other
right.
(d) Modification. No modification or waiver of any
provision of this Agreement or the Notes, nor consent to any
departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Majority Banks after a poll of all the Banks; provided, however,
that no such modification, waiver or consent shall (i) reduce the
interest rate payable on or the principal amount of the Notes,
(ii) extend the maturity of the Notes or the date for payment of
interest, (iii) extend or increase the obligations of the Banks
hereunder, (iv) amend the pro rata payment provisions of
Section 7, (v) waive any Event of Default or (vi) in any respect
modify this Section 20(d) or the definition of "Majority Banks",
unless the same shall be in writing and signed by all the Banks.
(e) Notices. Any communication, notice or demand to
be given hereunder, or on the Notes issued hereunder (except as
otherwise specifically provided herein), shall be duly given if
delivered or mailed by registered or certified mail or telexed to
the Agent and the Banks at their respective Domestic Lending
Offices as set forth on the signature pages hereof and to the
Company at its business address as set forth on the signature
pages hereof, or to such other address with respect to any party
as such party shall notify each of the other parties in writing.
<PAGE> 42
(f) Sharing of Payments. If any of the Banks shall
obtain any payment (whether voluntary, involuntary, by
application of set-off or otherwise) on or in respect of a Note
payable to it at a rate in excess of similar payments received by
any of the other Banks (except as such different rate shall
result from the operation of Section 8, 9, 10, 11, or 12), then
the Bank receiving such excess payment (the "Purchasing Bank")
shall purchase for cash an interest in the Notes payable to such
other Bank or Banks in such amounts as shall be necessary to
cause the Purchasing Bank to share the excess payment ratably
with such other Banks; provided, however, that, if after any such
purchases are made any such excess payment or any part thereof is
returned by the Purchasing Bank, such purchase or purchases shall
be rescinded pro tanto and the purchase price refunded without
interest; and provided, further, that no Bank shall be required
to make such purchases from any Bank which does not, to the
extent it may lawfully do so, set off the balance of all deposit
accounts maintained by the Company with such Bank against the
aggregate outstanding balance of the Notes held by such Bank.
Each Bank will notify the Agent (which will inform the other
Banks) of any set-off taken by such Bank hereunder. The Company
agrees that any Bank so purchasing a participation from another
Bank pursuant to this Section may exercise all its rights of
payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor
of the Company in the amount of such participation.
<PAGE> 43
(g) Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto in
separate counterparts, and shall become effective when
counterparts are executed by all the parties hereto and
telephonic notification thereof has been received by the Company
and the Agent. Upon such execution and notification, each of
such counterparts shall be deemed to be an original but all such
counterparts taken together shall constitute one and the same
instrument.
(h) Applicable Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by the
laws of the State of New York, both in interpretation and
performance. The Company hereby waives, in any action relating
to or arising from this Agreement or the Notes, any objection to
jurisdiction and venue in any state or federal court in New York
City. Service of process will be effective if mailed to the
Company at its address set forth on the signature pages hereto.
(i) Capital Adequacy. In the event that any Bank
shall have determined that any applicable law, rule, regulation
or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by such Bank (or lending office of such Bank) with any
request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
<PAGE> 44
comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital as a consequence of its
obligations hereunder to a level below that which such Bank could
have achieved but for such adoption, change or compliance (taking
into consideration such Bank's policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then,
from time to time, the Company shall pay upon demand to such Bank
such additional amount or amounts as will compensate such Bank
for such reduction; provided that the Company shall only be
required to pay any such additional amount or amounts to the
extent relating to a change in, or the issuance or promulgation
of, any law, rule, regulation, guideline, interpretation,
administration, request or directive after the date hereof (no
such change being deemed to take place for purposes of this
proviso to the extent such change is scheduled to occur pursuant
to any law, rule, regulation, guideline, interpretation,
administration, request or directive as in effect on the date
hereof). In determining such amount or amounts, a Bank may use
any reasonable averaging and attribution methods. The protection
of this Section 20(i) shall be available to the Banks regardless
of any possible contention of invalidity or inapplicability of
the law, regulation or condition which shall have been imposed.
A certificate of a Bank setting forth such amount or
amounts shall be necessary to compensate such Bank as specified
in this Section 20(i) shall be delivered to the Company and shall
be conclusive absent manifest error.
<PAGE> 45
The obligations of the Company under this Section 20(i)
shall survive termination of this Agreement and the payment of
the Notes and the Loans provided that any demand for compensation
under this Section 20(i) shall have been made prior to the
payment in full of the Notes and the Loans.
(j) Assignments and Participations.
(i) This Agreement shall be binding upon and inure to
the benefit of the Company and the Banks and their
respective successors and assigns, except that the Company
may not assign any of its rights hereunder without the prior
written consent of the Banks.
(ii) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in all or a portion of its Loan;
provided that any grant of a participation to an institution
other than a commercial bank shall be made only with the
prior written consent of the Company. In the event of any
such grant by a Bank of a participating interest to a
Participant, whether or not upon notice to the Company and
the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Company
and the Agent shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and
obligations under this Agreement. Any agreement pursuant to
which any Bank may grant such a participating interest shall
provide that such Bank shall retain the sole right and
<PAGE> 46
responsibility to enforce the obligations of the Company
hereunder including, without limitation, the right to
approve any amendment, modification or waiver of any
provision of this Agreement; provided that such
participation agreement may provide that such Bank will not
agree to any modification, amendment or waiver of this
Agreement described in clause (i), (ii), (iii), (iv), (v) or
(vi) of Section 20(d) without the consent of the
Participant. The Company agrees that each Participant shall
be entitled to the benefits of Sections 9, 11 and 20(i) with
respect to its participating interest.
(iii) Any Bank may at any time assign to one or more
banks or other financial institutions (each an "Assignee")
all, or a proportionate part of all, of its rights and
obligations under this Agreement and its Note, and such
Assignee shall assume such rights and obligations, pursuant
to an instrument executed by such Assignee and such
transferor Bank, with (and subject to) the signed consent of
the Company and the Agent (which consent shall not be
unreasonably withheld); provided that the foregoing consent
requirement shall not be applicable in the case of, and this
subclause (iii) shall not restrict, an assignment or other
transfer by any Bank to an affiliate of such Bank or to a
Federal Reserve Bank or Federal Home Loan Bank. Upon (x)
execution and delivery of such an instrument, (y) payment by
such Assignee to such transferor Bank of an amount equal to
<PAGE> 47
the purchase price agreed between such transferor Bank and
such Assignee, and (z) payment by the transferor Bank and/or
the Assignee to the Agent of an assignment fee in the amount
of $2,500, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a
Bank and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required.
Upon the consummation of any assignment pursuant to this
subclause (iii), the transferor Bank, the Agent and the
Company shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee in exchange
for the existing Note of the assigning Bank.
(iv) No Assignee, Participant or other transferee of
any Bank's rights shall be entitled to receive any greater
payment under Section 9, 11 or 20(i) than such Bank would
have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's
prior written consent or by reason of the provisions of
Section 11 requiring such Bank to designate a different
Eurodollar Lending Office under certain circumstances; and
no transferor Bank shall be entitled to any compensation
under Section 9, 11 or 20(i) hereof in respect of any
portion of any Loan or Note transferred by it by assignment,
participation or otherwise, unless the transferor Bank and
the transferee Bank agree otherwise, in which event the
<PAGE> 48
total amount of compensation to which such Banks are
entitled pursuant to such sections shall be limited to the
amount to which the transferor Bank would have been entitled
if such transfer had not taken place.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed as of the date first above written.
SOUTHWESTERN ELECTRIC POWER COMPANY
c/o Central & Southwest Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Shirley B. Briones
Treasurer
Telephone: (918) 594-2188
Facsimile: (918) 594-3814
By:__________________________
Shirley B. Briones
Treasurer
THE BANK OF NEW YORK,
Individually and as Agent
Domestic and Eurodollar Lending
Office:
48 Wall Street,
New York, New York 10015
Attention: Nathan Howard
Vice President
Telephone: (212) 635-7916
Facsimile: (212) 635-7923
By: /s/ NATHAN S. HOWARD
Nathan Howard
Vice President
<PAGE> 49
CREDIT SUISSE
Domestic and Eurodollar Lending
Office:
12 East 49th Street
New York, New York 10017
Attention: Hazel Leslie
Telephone: (212) 238-5218
Facsimile: (212) 238-5245
By: /s/ WILLIAM P. MURRAY
MEMBER OF SENIOR MANAGEMENT
By: /s/ KRISTINN R. KRISTINSSON
ASSOCIATE
FIRST INTERSTATE BANK OF CALIFORNIA
Domestic and Eurodollar Lending
Office:
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
Attention: Connor J. Duffey
Vice President
Telephone: (214) 740-1561
Facsimile: (214) 740-1543
By:__________________________
Connor J. Duffey
Vice President
<PAGE> 50
CREDIT SUISSE
Domestic and Eurodollar Lending
Office:
12 East 49th Street
New York, New York 10017
Attention: Hazel Leslie
Telephone: (212) 238-5218
Facsimile: (212) 238-5245
By:__________________________
By:__________________________
FIRST INTERSTATE BANK OF TEXAS,
N.A.
Domestic and Eurodollar Lending
Office:
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
Attention: Connor J. Duffey
Vice President
Telephone: (214) 740-1561
Facsimile: (214) 740-1543
By: /s/ CONNOR J. DUFFEY
Connor J. Duffey
Vice President
<PAGE> 51
THE YASUDA TRUST AND BANKING CO.,
LTD., NEW YORK BRANCH
Domestic and Eurodollar Lending
Office:
666 Fifth Avenue
8th Floor
New York, New York 10103
Attention: Michael G. Haggarty
Vice President
Telephone: (212) 373-5722
Facsimile: (212) 373-5796
By: /s/ MICHAEL G. HAGGARTY
Michael G. Haggarty
Vice President
<PAGE> 52
Schedule 1
MORTGAGES, SECURITY INTERESTS AND CERTAIN OTHER OBLIGATIONS
Indenture of Mortgage, dated February 1, 1940, between the
Company and Continental Bank, National Association and M. J.
Kruger as successor Trustees, as supplemented:
Series U 9-1/8% due November 1, 2019
Series V 7-3/4% due June 1, 2004
Series W 6-1/8% due September 1, 1999
Series X 7 % due September 1, 2007
Series Y 6-5/8% due February 1, 2003
Series Z 7-1/4% due July 1, 2023
Series AA 5-1/4% due April 1, 2000
Series BB 6-7/8% due October 1, 2025
1976 Series A 6.20 % due November 1, 2006
1976 Series B 6.20 % due November 1, 2006
Railcar lease and conditional sales obligations
Finance Agreement dated as of January 1, 1979 among
Mercantile - Safe Deposit and Trust Company, SWEPCO, the
Greenwich Savings Bank and Cason Car Corporation covering
242 100 Ton steel gondola coal cars.
Finance Agreement dated as of July 1, 1979 among Mercantile
- Safe Deposit and Trust Company, SWEPCO, various Investors
and Cason Car Corporation covering 363 100 Ton steel gondola
coal cars.
Finance Agreement among SWEPCO, Mercantile - Safe Deposit
and Trust Company and various Investors dated as of October
15, 1977 covering 242 100-Ton Open Top High - Side 60' Coal
Gondola Cars.
Participation Agreement dated as of August 1, 1976 among
City Island Coal Company and Southwestern Electric Power
Company, as guarantor and Metropolitan Life Insurance
Company.
Installment sales obligations relating to Pollution Control
Bonds:
Pollution Control Revenue Refunding Bonds issued pursuant to
a Trust Indenture, dated November 1, 1974, between Titus County
Fresh Water Supply District No. 1 and Manufacturers Hanover Trust
Company as Trustee, as supplemented:
1978 Series A 6 % due January 1, 2008
1991 Series A 8.20% due August 1, 2011
<PAGE> 53
Pollution Control Revenue Refunding Bonds, issued pursuant
to a Trust Indenture, dated July 1, 1991 between Titus County
Fresh Water Supply District No. 1 and Manufacturers Hanover Trust
Company as Trustee:
1991 Series B 6.9 % due November 1, 2004
Pollution Control Revenue Bonds issued pursuant to a Trust
Indenture, dated July 1, 1991, between Parish of DeSoto, State of
Louisiana and The Bank of New York as Trustee:
Series 1992 7.6 % due January 1, 2019
Pollution Control Revenue Refunding Bonds issued pursuant to
a Trust Indenture, dated October 15, 1981, between Sabine River
Authority of Texas and Republic Bank Dallas, National Association
as Trustee, as supplemented:
Series 1986 8.2 % due July 1, 2014
<PAGE> 54
EXHIBIT A
PROMISSORY NOTE
$__________________ _________ __, 1994
Southwestern Electric Power Company, a Delaware
corporation (the "Company"), for value received, hereby promises
to pay on June 15, 2000, to the order of ___________ (the "Bank")
at its office, _____________, in lawful money of the United
States in immediately available funds, the principal sum of
________ Dollars, or, if less than such principal amount, the
aggregate unpaid principal amount of all Alternate Base Rate
Loans (as defined in the Agreement referred to below) made by the
Bank to the Company pursuant to the Agreement. This Note shall
bear interest, payable on the dates and at the rates set forth in
the Term Loan Agreement, dated as of _________ __, 1994 (the
"Agreement"), among the Company, the Bank, the other banks party
thereto and The Bank of New York as agent for the banks.
This Note is one of the Notes referred to in the
Agreement, and is subject to prepayment and its maturity is
subject to acceleration, upon the terms provided in the
Agreement.
SOUTHWESTERN ELECTRIC POWER COMPANY
By_________________________________
<PAGE> 55
EXHIBIT B
PROMISSORY NOTE
$_______________________ _________ __, 1994
Southwestern Electric Power Company, a Delaware
corporation (the "Company"), for value received, hereby promises
to pay on June 15, 2000, to the order of ____________________
(the "Bank") at its [Eurodollar lending office],
____________________, in lawful money of the United States in
immediately available funds, the principal sum of
________________________________ Dollars, or if less than such
principal amount, the aggregate unpaid principal amount of all
Eurodollar Rate Loans (as defined in the Agreement referred to
below) made by the Bank to the Company pursuant to the Agreement.
This Note shall bear interest, payable on the dates and at the
rates set forth in the Term Loan Agreement, dated as of
_________ __, 1994 (the "Agreement"), among the Company, the
Bank, the other banks party thereto and The Bank of New York as
agent for the banks.
This Note is one of the Notes referred to in the
Agreement, and is subject to prepayment and its maturity is
subject to acceleration, upon the terms provided in the
Agreement.
SOUTHWESTERN ELECTRIC POWER COMPANY
By_________________________________
<PAGE> 56
EXHIBIT C
October 31, 1994
The Bank of New York, as Agent
One Wall Street
New York, New York 10286
Dear Sirs:
We have acted as counsel for Southwestern Electric
Power Company (the "Company") in connection with the Term Loan
Agreement dated as of October 31, 1994, (the "Agreement"),
between the Company, the lending banks (the "Banks") and The Bank
of New York as Agent for the Banks. Terms defined in the
Agreement are used herein as therein defined.
In rendering the opinions expressed below, we have
examined the originals or conformed copies of such corporate
records, agreements and instruments of the Company, certificates
of public officials and of officers of the Company, and such
other documents and records, and such matters of law, as we have
deemed appropriate as a basis for such opinions. In such
examination we have assumed the genuineness of all signatures,
the authenticity of documents submitted to us as originals, the
conformity with the originals of all documents submitted to us as
certified or photostatic copies, and the authenticity of the
originals of such latter documents. As to questions of fact
material to such opinions we have relied upon statements of
governmental officials and upon representations and certificates
of the Company and its officers. We have assumed, with respect
to all of the documents referred to in this opinion letter, that
(except, to the extent set forth in the opinions expressed below,
as to the Company):
(i) such documents have been duly authorized by,
have been duly executed and delivered by, and
constitute legal, valid, binding and enforceable
obligations of, all of the parties to such
documents;
(ii) all signatories to such documents have been duly
authorized; and
(iii) all of the parties to such documents are duly
organized and validly existing and have the
power and authority (corporate or other) to
execute, deliver and perform such documents.
<PAGE> 57
Based upon the foregoing, and subject to the comments
and qualifications set forth below, we are of the opinion that:
1. The Company is a corporation validly existing and
in good standing under the laws of the State of Delaware. The
Company has the corporate power to own its property and to carry
on its business as now being conducted as described in the
Company's Form 10-K for its fiscal year ended December 31, 1993.
2. The Company has full corporate power and authority
to enter into the Agreement, to make the borrowings under the
Agreement to execute and deliver the Notes under Sections 2 and
15 of the Agreement and to incur the obligations provided for
therein, all of which have been duly authorized by all proper and
necessary corporate action. No consent or approval of
stockholders or of any governmental authority of the United
States (other than the Securities and Exchange Commission) or the
State of New York is required as a condition to the validity of
the Agreement or the Notes.
3. All authorizations, consents, approvals,
registrations, exemptions and licenses with or from governmental
authorities of the United States and the State of New York which
are necessary for the borrowings under the Agreement, the
execution and delivery of the Agreement and the Notes, and the
performance by the Company of its obligations thereunder have
been effected or obtained and are in full force and effect.
4. The Agreement and the Notes constitute the valid
and legally binding obligations of the Company enforceable in
accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors
generally and except as the enforceability of the Agreement and
the Notes are subject to the application of general principles of
equity (regardless of whether considered in a proceeding in
equity or at law), including without limitation, (a) the possible
unavailability of specific performance, injunctive relief or any
other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
5. The execution, delivery and performance by the
Company of the Agreement and the Notes do not violate any law or
regulation applicable to the Company, the charter or by-laws of
the Company or any judgment, order or decree known to us binding
on the Company, or breach, or constitute a default or require any
consent under, any mortgage, indenture, contract or agreement
known to us governing or evidencing Borrowed Money to which the
Company is a party or by which the Company or its properties may
be bound.
<PAGE> 58
In connection with paragraph 4 above, we express no
opinion as to (i) the last sentence of Section 20(f) or the
second sentence of Section 20(h) of the Agreement, (ii) the
effect of the law of any jurisdiction (other than the State of
New York) wherein any Bank (including its Domestic Lending Office
and its Eurodollar Lending Office) may be located which limits
rates of interest which may be charged or collected by such Bank
and (iii) whether a Federal or state court outside of the State
of New York would give effect to the choice of New York law
provided for in the Agreement or the Notes. We also wish to
point out that the enforceability of provisions in the Agreement
to the effect that terms may not be waived or modified except in
writing may be limited under certain circumstances.
We do not herein intend to express any opinion as to
any matters governed by any laws other than the General
Corporation Law of the State of Delaware, the law of the State of
New York and the Federal laws of the United States of America.
Very respectfully yours,
