EXHIBIT 1.01
2,500,000 Shares
Southwest Gas Corporation
Common Stock
PURCHASE AGREEMENT
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August 5, 1998
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
PaineWebber Incorporated
Smith Barney Inc.
Edward D. Jones & Co., L.P.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Southwest Gas Corporation, a California corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch") and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters," which term shall
also include any underwriter substituted as hereinafter provided in Section 7
hereof) for whom Merrill Lynch, PaineWebber Incorporated, Smith Barney Inc.
and Edward D. Jones & Co., L.P., are acting as representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of shares of Common Stock, par value $1.00
per share, of the Company ("Common Stock") set forth in said Schedule A, and
with respect to the grant by the Company to the Underwriters, acting severally
and not jointly, of the option described in Section 2(b) hereof to purchase
all or any part of 375,000 additional shares of Common Stock to cover over-
allotments, if any. The aforesaid 2,500,000 shares of Common Stock and the
purchase rights attached thereto (the "Rights") (collectively, the "Initial
Securities") to be purchased by the Underwriters and all or any part of the
375,000 shares of Common Stock and the Rights attached thereto subject to the
option described in Section 2(b) hereof (the "Option Securities") are
hereinafter called, collectively, the "Securities."
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended (the "1933 Act"), a registration statement on Form S-3 (No. 333-
14605) for the offering from time to time in accordance with Rule 415 of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") of its debt securities, preferred stock and/or common stock,
including the Securities, having an aggregate offering price of $250,000,000
($150,000,000 aggregate offering price of which remain unsold) and such
registration statement (as amended, if applicable) has become effective. Such
registration statement (as amended, if applicable) and the combined prospectus
constituting a part thereof pursuant to Rule 429 of the 1933 Act Regulations,
as supplemented by a prospectus supplement relating to the Securities (the
"Prospectus Supplement"), including all documents that are filed by the
Company with the Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or the rules and regulations of the Commission under
the 1934 Act (the "1934 Act Regulations") that are at any time incorporated or
deemed to be incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act (the "Incorporated Documents"), as from time to time
amended or supplemented by the filing of documents pursuant to the 1934 Act,
the 1934 Act Regulations, the 1933 Act, the 1933 Act Regulations or otherwise,
are referred to herein as the "Registration Statement" and the "Prospectus,"
respectively, except that if any revised prospectus shall be provided to the
Underwriters by the Company for use in connection with the offering of the
Securities, whether or not such revised prospectus is required to be filed by
the Company pursuant to Rule 424(b) of the 1933 Act Regulations, the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Underwriters for such use.
All references in this Agreement to financial statements and schedules
and other information that is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus supplement relating to the
Securities (each, a "preliminary prospectus") or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information that are or are
deemed to be incorporated by reference in the Registration Statement, any
preliminary prospectus or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement or the Prospectus shall be deemed to mean and include the filing of
any Incorporated Document after the time of execution of this Agreement;
provided, however, that any supplement to the combined prospectus constituting
a part of the Registration Statement pursuant to Rule 429 of the 1933 Act
Regulations filed with the Commission pursuant to Rule 424(b) of the 1933 Act
Regulations with respect to an offering of securities of the Company, other
than the Securities, shall not be deemed to be a supplement to, or a part of,
the Prospectus. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus or the Prospectus, as each
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may be amended or supplemented, shall be deemed to include the copy filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system.
1. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
and as of each Date of Delivery (if any), referred to in Section 2(b) hereof,
and agrees with each Underwriter, as follows:
(a) Requirements For Use of Form S-3; No Stop Orders. The Company
meets the requirements for the use of Form S-3 and Rule 415 of the 1933
Act Regulations and has filed with the Commission any preliminary
prospectus, and will file with the Commission the Prospectus Supplement,
in each case required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations. No stop order suspending the effectiveness of the
Registration Statement has been issued by the Commission, and no
proceedings for the issuance of such a stop order have been instituted
or, to the knowledge of the Company, threatened by the Commission, and
any request by the Commission for additional information has been
complied with.
(b) Registration Statement and Prospectus. The Registration
Statement, at the Effective Date, and any preliminary prospectus, when
delivered to the Underwriters for their use in marketing the Securities,
fully complied, and the Prospectus, when delivered to the Underwriters
for their use in making confirmations of sales of the Securities, at the
Closing Time and at each Date of Delivery, if any, will fully comply in
all material respects with the applicable provisions of the 1933 Act and
the 1933 Act Regulations, or pursuant to said rules and regulations did
or will be deemed to comply therewith. On the Effective Date, the
Registration Statement did 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. Any preliminary
prospectus, at the time that such preliminary prospectus was delivered to
the Underwriters for their use in marketing the Securities, did not, and
the Prospectus, at the time that it is delivered to the Underwriters for
their use in making confirmations of sales of the Securities, at the
Closing Time and at each Date of Delivery, if any, will not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
representations and warranties in this Section 1(b) shall not apply to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the
Underwriters specifically for use in connection with the preparation of
the Registration Statement or the Prospectus. As used herein, the term
"Effective Date" means the later of (i) the date that the Registration
Statement or the most recent post-effective amendment thereto was
declared effective by the Commission under the 1933 Act and (ii) the date
that the Company's Annual Report on Form 10-K for its most recently
completed fiscal year is filed with the Commission under the 1934 Act.
(c) Incorporated Documents. The Incorporated Documents heretofore
filed, when they were filed (or, if any amendment with respect to any
such document was filed, when such amendment was filed) with the
Commission pursuant to the 1934 Act and the 1934 Act Regulations,
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conformed in all material respects with the requirements of the 1934 Act
and the 1934 Act Regulations, and any further Incorporated Documents so
filed will, when they are filed, conform in all material respects with
the requirements of the 1934 Act and the 1934 Act Regulations; no such
Incorporated Document when it was filed (or, if an amendment with respect
to any such document was filed, when such amendment was filed) with the
Commission pursuant to the 1934 Act and the 1934 Act Regulations
contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
and such further Incorporated Documents, when filed with the Commission
pursuant to the 1934 Act and the 1934 Act Regulations, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) EDGAR Filing. Each preliminary prospectus delivered to the
Underwriters for use in connection with the offering of the Securities
and the Prospectus was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system, except to the extent permitted
by Regulation S-T.
(e) Common Stock. All the outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and nonassessable
and are free of any preemptive or similar rights; the Securities have
been duly authorized by all necessary corporate action on the part of the
Company and, when issued and delivered to the Underwriters pursuant to
this Agreement against payment therefor, the Common Stock comprising a
portion of the Securities will be validly issued, fully paid and
nonassessable and the Rights will have been duly and validly issued; the
issuance of the Securities is free of any preemptive or similar rights,
and no holder of the Securities will be subject to personal liability by
reason of being such a holder; and the capital stock of the Company
conforms to the description thereof in the Registration Statement and the
Prospectus.
(f) Due Incorporation and Qualification of the Company. The
Company is a corporation duly organized and validly existing in good
standing under the laws of the State of California with full corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business
and is in good standing in each jurisdiction or place where the nature of
its properties or the conduct of its business requires such registration
or qualification, except where the failure so to register or qualify does
not have a material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of operations of
the Company and the Subsidiaries (as defined herein) taken as a whole (a
"Material Adverse Effect").
(g) Due Incorporation and Qualification of the Subsidiaries.
Northern Pipeline Construction Co. and Paiute Pipeline Company
(collectively, the "Subsidiaries") are corporations duly organized and
validly existing in good standing under the laws of the State of Nevada
with full corporate power and authority to own, lease and operate their
properties and to conduct their businesses as described in the
Registration Statement and the Prospectus, and are duly registered and
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qualified to conduct their businesses and are in good standing in each
jurisdiction or place where the nature of their properties or the conduct
of their businesses requires such registration or qualification, except
where the failure so to register or qualify does not have a Material
Adverse Effect.
(h)Capital Stock of the Subsidiaries. All of the outstanding shares
of capital stock of each Subsidiary has been duly authorized and validly
issued, are fully paid and nonassessable, and are owned of record
directly by the Company free and clear of any perfected security
interest, or, to the knowledge of the Company after reasonable inquiry,
any other security interest, lien, adverse claim, equity or other
encumbrance.
(i) Subsidiaries. All of the Company's subsidiaries are listed in
an exhibit to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, which is incorporated by reference into the
Prospectus.
(j) Legal Proceedings; Contracts. There are no legal or
governmental proceedings pending or, to the knowledge of the Company,
threatened, against the Company or the Subsidiaries, or to which the
Company or the Subsidiaries is subject, or to which any of their
respective properties is subject, that are required to be described in
the Registration Statement or the Prospectus but are not described as
required that, singly or in the aggregate, might reasonably be expected
to result in a Material Adverse Effect, or that, singly or in the
aggregate, might reasonably be expected to materially or adversely affect
the properties or assets thereof or the consummation of the transactions
contemplated herein or the performance by the Company of its obligations
hereunder, and there are no agreements, contracts, indentures, leases or
other instruments that are required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement or any Incorporated Document that are not
described or filed as required by the 1933 Act, the 1933 Act Regulations,
the 1934 Act or the 1934 Act Regulations.
(k) No Defaults. Except as disclosed in the Prospectus, neither
the Company nor the Subsidiaries (i) is in violation of its charter or
bylaws, or of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or the Subsidiaries, the violation
of which would reasonably be expected to have a Material Adverse Effect,
or of any decree of any court or governmental agency or body having
jurisdiction over the Company or the Subsidiaries, or (ii) is in default
in any material respect in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other evidence
of indebtedness or in any material agreement, indenture, lease or other
instrument to which the Company or the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound.
(l) Regulatory Approvals; No Conflicts. Neither the issuance and
sale of the Securities, the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby requires any consent, approval,
authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental body,
agency or official (except such as have been obtained for the
registration of the Securities under the 1933 Act and the 1933 Act
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Regulations, such as may be required for compliance with the securities
or blue sky laws of various jurisdictions, such as may be required in
connection with the exercise of the Rights, and the authorizations of the
Public Utilities Commission of the State of California issued November 6,
1996 and May 6, 1997 (which authorizations are, to the best knowledge of
the Company, not the subject of any pending or threatened application for
rehearing or petition for modification)) or conflicts or will conflict
with or constitutes or will constitute a breach of, or a default under,
the charter or bylaws of the Company or the Subsidiaries or conflicts or
will conflict with or constitutes or will constitute a breach of, or a
default or a Repayment Event (as defined below) under, any agreement,
indenture, lease or other instrument to which the Company or the
Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or violates or will violate any
statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Company or the Subsidiaries or any of their
respective properties, or will result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or the Subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be
bound or to which any of the property or assets of any of them is
subject. As used herein, a "Repayment Event" means any event or
condition that gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any Subsidiary.
(m) Accountants. The independent certified public accountants,
Arthur Andersen LLP, who have audited the financial statements
incorporated by reference in the Registration Statement and the
Prospectus are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(n) Financial Statements. The financial statements, together with
related schedules and notes, included or incorporated by reference in the
Registration Statement and the Prospectus, present fairly the
consolidated financial position, results of operations and changes in
financial position of the Company and its subsidiaries on the basis
stated in the Registration Statement and the Prospectus at the respective
dates or for the respective periods to which they apply; such statements
and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein; the other financial
and statistical information and data included or incorporated by
reference in the Registration Statement and the Prospectus are accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company and its subsidiaries;
and any pro forma financial statements incorporated by reference in the
Registration Statement and the Prospectus present fairly the information
shown therein, comply in all material respects with Article 11 of
Regulation S-X under the 1933 Act, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein.
(o) Agreement. The execution and delivery of, and the performance
by the Company of its obligations under, this Agreement have been duly
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and validly authorized by the Company, and this Agreement has been duly
executed and delivered by the Company and constitutes the valid and
legally binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by applicable law and as limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or other
similar laws affecting creditors rights and general equitable principles
(whether considered in equity or law).
(p) Material Changes or Material Transactions. Except as disclosed
in the Registration Statement and the Prospectus, subsequent to the
respective dates as of which such information is given in the
Registration Statement and the Prospectus, (i) neither the Company nor
the Subsidiaries has incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course
of business, that is material to the Company and its subsidiaries taken
as a whole, and (ii) there has not been any change or development
involving the Company or the Subsidiaries which may reasonably be
expected to have a Material Adverse Effect.
(q) Offering Material. The Company has not distributed and, prior
to the later to occur of (i) the Closing Time and (ii) completion of the
distribution of the Securities, will not distribute, any offering
material in connection with the offering and sale of the Securities other
than the Registration Statement, any preliminary prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act and the
1933 Act Regulations.
(r) Licenses. Each of the Company and the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities (the "permits") as are necessary to own its
respective properties and to conduct its business in the manner described
in the Prospectus, except where the failure to fulfill or perform any
such obligation would not reasonably be expected to have a Material
Adverse Effect; to the best knowledge of the Company after due inquiry,
each of the Company and the Subsidiaries has fulfilled and performed all
its material obligations with respect to such permits, except where the
failure to fulfill or perform any such obligation would not reasonably be
expected to have a Material Adverse Effect; and no event has occurred
that allows, or after notice or lapse of time would allow, revocation or
termination of any material permits or results or would result in any
other material impairment of the rights of the holder of any such
material permits, subject in each case to such qualifications as may be
set forth in the Prospectus.
(s) No Registration. No holder of any security of the Company has
any right to require registration of any security of the Company because
of the filing of the Registration Statement or consummation of the
transactions contemplated by this Agreement.
(t) Public Utility Holding Company Act. Neither the Company nor
any of its subsidiaries is currently subject to regulation under the
Public Utility Holding Company Act of 1935, as amended (the "1935 Act").
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(u) Investment Company Act. Neither the Company nor any of its
subsidiaries is required to be registered under the Investment Company
Act of 1940, as amended.
Any certificate signed by any director or officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby on the date of such certificate.
2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions
herein set forth, the Company agrees to sell to each Underwriter and each
Underwriter, severally and not jointly, agrees to purchase from the
Company, at the price per share set forth in Schedule B hereto, the
number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms
and conditions herein set forth, the Company hereby grants an option to
the Underwriters, severally and not jointly, to purchase up to an
additional 375,000 shares of Common Stock and related Rights at the price
per share set forth in Schedule B, less an amount per share equal to any
dividends or distributions declared by the Company and payable on the
Initial Securities but not payable on the Option Securities. The option
hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the
offering and distribution of the Initial Securities upon notice by the
Representatives to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the
option and the time and date of payment and delivery for such Option
Securities. Any such time and date of payment and delivery (each, a
"Date of Delivery") shall be determined by the Representatives, but shall
not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time (as defined herein).
If the option is exercised as to all or any portion of the Option
Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Securities
then being purchased which the number of Initial Securities set forth in
Schedule A opposite the name of such Underwriter bears to the total
number of Initial Securities, subject in each case to such adjustments as
the Representatives in their discretion shall make to eliminate any sales
or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
O'Melveny & Myers LLP, Los Angeles, California, or at such other place as
shall be agreed upon by the Representatives and the Company, at 10:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs after
4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 7
hereof), or such other time not later than ten business days after such
date as shall be agreed upon by the Representatives and the Company (such
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time and date of payment and delivery being herein called the "Closing
Time").
In addition, in the event that any or all of the Option Securities
are purchased by the Underwriters, payment of the purchase price for, and
delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon
by the Representatives and the Company, on each Date of Delivery as
specified in the notice from the Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against
delivery to the Representatives for the respective accounts of the
Underwriters of certificates for the Securities to be purchased by them.
It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Initial Securities and the
Option Securities, if any, which it has agreed to purchase. Merrill
Lynch, individually and not as representative of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for
the Initial Securities or the Option Securities, if any, to be purchased
by any Underwriter whose funds have not been received by the Closing Time
or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such
denominations and registered in such names as the Representatives may
request in writing at least two full business days before the Closing
Time or the relevant Date of Delivery, as the case may be. The
certificates for the Initial Securities and the Option Securities, if
any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
3. Covenants of the Company. The Company covenants with each Underwriter
as follows:
(a) Notice of Certain Events. The Company will advise the
Underwriters promptly and, if requested by the Underwriters, will confirm
such advice in writing of: (i) the effectiveness of any amendment to the
Registration Statement; (ii) the transmittal to the Commission for filing
of any amendment or supplement to the Prospectus or any document to be
filed pursuant to the 1934 Act or the 1934 Act Regulations (other than
any amendment, supplement or document relating solely to securities other
than the Securities); (iii) the receipt of any comments from the
Commission with respect to the Registration Statement or the Prospectus;
(iv) any request by the Commission for an amendment to the Registration
Statement or the Prospectus or for additional information with respect
thereto; (v) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the suspension of
qualification of the Securities for offering or sale in any jurisdiction
or the initiation of any proceeding for such purpose; and (vi) during
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such period as a prospectus is required by law to be delivered in
connection with sales by any Underwriter or any dealer, any change in the
Company's condition (financial or other), business, prospects,
properties, net worth or results of operations, or of the happening of
any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectus untrue or which requires the
making of any additions to or changes in the Registration Statement or
the Prospectus in order to state a material fact required by the 1933 Act
or the 1933 Act Regulations to be stated therein or necessary in order to
make the statements therein not misleading, or of the necessity to amend
or supplement the Prospectus to comply with the 1933 Act, the 1933 Act
Regulations or any other law. If at any time the Commission shall issue
any stop order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.
(b) Copies of the Registration Statement, the Prospectus and the
Incorporated Documents. The Company will deliver to the Underwriters,
without charge (i) two copies of the Registration Statement certified by
an officer of the Company to be in the form originally filed with the
Commission and of each amendment thereto, including financial statements
and all exhibits to the Registration Statement, (ii) such number of
conformed copies of the Registration Statement as originally filed and of
each amendment thereto, but without exhibits, as the Underwriters may
reasonably request, (iii) such number of copies of the Incorporated
Documents, without exhibits, as the Underwriters may reasonably request,
(iv) one copy of the exhibits to the Incorporated Documents and (v) such
number of any preliminary prospectus and the Prospectus (as amended or
supplemented) as the Underwriters may reasonably request so long as any
Underwriter or any dealer is required by law to deliver a prospectus in
connection with sales of the Securities.
(c) Notice of Certain Proposed Filings. During such period as a
prospectus is required by law to be delivered in connection with sales of
the Securities by any Underwriter or any dealer, the Company will give
the Underwriters notice of its intention to file or prepare (i) any
amendment to the Registration Statement (including any post-effective
amendment thereto), (ii) any amendment or supplement to the Prospectus
(including any revised prospectus that the Company proposes for use by
the Underwriters in connection with the offering of the Securities that
differs from the prospectus on file at the Commission at the time the
Registration Statement became effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the 1933
Act Regulations), or (iii) any document that would as a result thereof be
an Incorporated Document, will furnish the Underwriters with copies of
any such amendment, supplement or other document a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will
not file any such amendment, supplement or other document or use any such
prospectus, in each case, to which the Underwriters or counsel for the
Underwriters shall reasonably object.
(d) Compliance with Securities Laws; Material Changes to
Prospectus. The Company will comply with the 1933 Act and the 1933 Act
Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Prospectus. The
Company consents to the use of the Prospectus (and of any amendment or
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supplement thereto) in accordance with the provisions of the 1933 Act,
the 1933 Act Regulations and with the securities or blue sky laws of the
jurisdictions in which the Securities are offered by the several
Underwriters and by all dealers to whom Securities may be sold, both in
connection with the offering and sale of the Securities and for such
period of time thereafter as a prospectus is required by law to be
delivered in connection with sales of the Securities by any Underwriter
or any dealer. If during such period of time, any event shall occur
that, in the opinion of counsel for the Underwriters, is required to be
set forth in the Prospectus (as then amended or supplemented) or should
be set forth therein in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it is necessary to supplement or amend the Prospectus (or to file
under the 1934 Act or the 1934 Act Regulations any document which, upon
filing, becomes an Incorporated Document) in order to comply with the
1933 Act, the 1933 Act Regulations or any other law, the Company will
forthwith prepare and, subject to the provisions of Section 3(c) hereof,
file with the Commission an appropriate supplement, amendment or
Incorporated Document, as the case may be, and will expeditiously furnish
to the Underwriters and any dealer a reasonable number of copies thereof.
In the event that the Company and the Underwriters agree that the
Prospectus should be amended or supplemented, the Company, if requested
by the Representatives, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or
supplement.
(e) Blue Sky Qualifications. The Company will cooperate with the
Underwriters and with counsel for the Underwriters in connection with the
registration or qualification of the Securities for offering and sale by
the Underwriters and by dealers under the securities or blue sky laws of
such jurisdictions as the Underwriters may designate and will file such
consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.
(f) Earning Statements. The Company will make generally available
to its security holders as soon as practicable but not later than 45 days
(unless such period corresponds to the Company's fiscal year, in which
case 90 days) after the close of the period covered thereby, an earning
statement of the Company (in form complying with the provisions of
Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day of
the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
(g) Use of Proceeds. The Company will apply the net proceeds from
the sale of the Securities substantially in accordance with the
description set forth in the Prospectus Supplement under the caption "Use
of Proceeds."
11
(h) Restriction on Sale of Common Stock. Except as provided in
this Agreement, the Company will not (i) directly or indirectly, offer,
pledge, sell, contract to sell or otherwise dispose of any share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under
the 1933 Act with respect to any of the foregoing, (ii) grant any
options, rights or warrants to purchase Common Stock, or (iii) enter into
any swap or any other agreement or any transactions that transfers, in
whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise for a period
of 90 days after the date of the Prospectus, without the prior written
consent of the Representatives; provided, however, that the Company may
issue and sell Common Stock and Rights (i) pursuant to the Company's
Employees' Investment Plan, 1996 Stock Incentive Plan and Dividend
Reinvestment and Stock Purchase Plan and the Company's Management
Incentive Plan in effect at the date of this Agreement, (ii) issuable
upon the conversion of securities or the exercise of warrants or options
outstanding at the date of this Agreement, (iii) to effectuate a stock
split or (iv) pursuant to the exercise of the Rights.
(i) Lock-Up. The Company will use its reasonable efforts to cause
each of its current executive officers and directors to refrain, for a
period of 90 days after the commencement of the public offering of the
Securities, without the prior written consent of the Underwriters, from
selling, offering to sell or otherwise disposing of any shares of Common
Stock or contracting to sell or otherwise disposing of any securities
convertible into or exercisable or exchangeable for Common Stock.
(j) No Stabilization. Except as stated in the Prospectus
Supplement, the Company has not taken, nor will it take, directly or
indirectly, any action designed to or that might reasonably be expected
to cause or result in stabilization or maintenance of the price of the
Securities.
(k) Listing. The Company will use its best efforts to have the
Securities listed, subject to notice of issuance, on the New York Stock
Exchange and the Pacific Stock Exchange on or before the Closing Time.
4. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company will
indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person, if any, who
controls each Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act from and against any and all losses,
claims, liabilities, expenses and damages (including any and all
investigative, legal, preparatory, defensive and other expenses
reasonably incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted, provided that,
subject to Section 4(d) below, any such settlement is effected with the
written consent of the Company (which consent shall not be unreasonably
withheld)), to which they, or any of them, may become subject under the
1933 Act, the 1934 Act or other federal or state statutory law or
12
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus or the Prospectus or
any amendment or supplement to the Registration Statement or the
Prospectus or in any Incorporated Documents (when read together with the
Prospectus), or the omission or alleged omission to state in such
document a material fact required to be stated in it or necessary to make
the statements in it not misleading, provided that the Company will not
be liable to the extent that such loss, claim, liability, expense or
damage arises from the sale of the Securities in the public offering to
any person by such Underwriter and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and
in conformity with information relating to such Underwriter furnished in
writing to the Company by such Underwriter expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus;
provided further that the Company will not be liable to any Underwriter
(or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, liability, expense or damage purchased
the Securities that are the subject thereof to the extent that the
Company shall sustain the burden of proving that any such loss, claim,
liability, expense or damage resulted from the failure of such person to
receive from such Underwriter a copy of the Prospectus (or the Prospectus
as amended or supplemented), if the Company shall have previously
furnished copies thereof to such Underwriter, at or prior to the
confirmation of the sale of such Securities to such person in any case
where such delivery is required by the 1933 Act or the 1933 Act
Regulations and the untrue statement or omission of a material fact
contained in any preliminary prospectus (or the Prospectus) was corrected
in the Prospectus (or the Prospectus as amended or supplemented). This
indemnity agreement will be in addition to any liability that the Company
might otherwise have.
(b) Indemnification of the Company. Each Underwriter will
indemnify and hold harmless the Company, each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, each director of the Company and each officer
of the Company who signed the Registration Statement to the same extent
as the foregoing indemnity from the Company to each Underwriter, but only
insofar as losses, claims, liabilities, expenses or damages arise out of
or are based on any untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with
information relating to such Underwriter furnished in writing to the
Company by such Underwriter expressly for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus. This indemnity
agreement will be in addition to any liability that each Underwriter
might otherwise have.
(c) General. Any party that proposes to assert the right to be
indemnified under this Section 4 will, promptly after receipt of notice
of commencement of any action against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section 4, notify each such indemnifying party of the commencement of
such action, enclosing a copy of all papers served, but the omission so
to notify such indemnifying party will not relieve it from any liability
that it may have to any indemnified party under the foregoing provisions
of this Section 4 unless, and only to the extent that, such omission
results in the forfeiture of or substantial prejudice to substantive
13
rights or defenses by the indemnifying party. In the case of parties
indemnified pursuant to Section 4(a) above, Merrill Lynch shall select
counsel to the indemnified parties, and in the case of parties
indemnified pursuant to Section 4(b) above, the Company shall select
counsel to the indemnified parties. If any such action is brought
against any indemnified party and it notifies the indemnifying party of
its commencement, the indemnifying party will be entitled to participate
in and, to the extent that it elects by delivering written notice to the
indemnified party promptly after receiving notice of the commencement of
the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the
action, with counsel satisfactory to the indemnified party, and after
notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable
to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the
defense. The indemnified party will have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such indemnified party unless (i)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (iii) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to
direct the defense of such action on behalf of the indemnified party) or
(iv) the indemnifying party has not in fact employed counsel to assume
the defense of such action within a reasonable time after receiving
notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that
the indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one
separate firm admitted to practice in such jurisdiction at any one time
for all such indemnified party or parties. All such fees, disbursements
and other charges will be reimbursed by the indemnifying party promptly
as they are incurred. Subject to Section 4(d) hereof, an indemnifying
party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be
unreasonably withheld). 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 4
(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 any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
14
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement
effected without its written consent if (i) such settlement is entered
into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such
settlement being entered into, and (iii) such indemnifying party shall
not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement; provided that an
indemnifying party shall not be liable for any such settlement effected
without its consent if such indemnifying party, prior to the date of such
settlement, (1) reimburses such indemnified party in accordance with such
request for the amount of such fees and expenses of counsel as the
indemnifying party believes in good faith to be reasonable, and (2)
provides written notice to the indemnified party that the indemnifying
party disputes in good faith the reasonableness of the unpaid balance of
such fees and expenses.
(e) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in the foregoing paragraphs of this Section 4 is applicable in accordance
with its terms but for any reason is held to be unavailable from the
Company or the Underwriters, the Company and the Underwriters will
contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted, but after deducting any
contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, officers of
the Company who signed the Registration Statement and directors of the
Company, who also may be liable for contribution) to which the Company
and any one or more of the Underwriters may be subject in such proportion
as shall be appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other. The relative
benefits received by the Company on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover
page of the Prospectus Supplement. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law,
the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one
hand, and the Underwriters, on the other, with respect to the statements
or omissions that resulted in such loss, claim, liability, expense or
damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative
fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or
the Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section
4(e) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
15
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section
4(e) shall be deemed to include, for purposes of this Section 4(e), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4(e), no Underwriter shall
be required to contribute any amount in excess of the underwriting
discounts and commissions received by it, and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 4(e) are several in
proportion to their respective underwriting obligations and not joint.
For purposes of this Section 4(e), any person who controls a party to
this Agreement within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act will have the same rights to contribution as
that party, and each officer of the Company who signed the Registration
Statement will have the same rights to contribution as the Company,
subject in each case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim for contribution
may be made under this Section 4(e), will notify any such party or
parties from whom contribution may be sought, but the omission so to
notify will not relieve the party or parties from whom contribution may
be sought from any other obligation it or they may have under this
Section 4(e). No party will be liable for contribution with respect to
any action or claim settled without its written consent (which consent
will not be unreasonably withheld).
5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company herein and to the accuracy of
the statements of the Company's directors or officers made in any certificate
furnished pursuant to the provisions hereof, to the performance and observance
by the Company of all its covenants and agreements herein contained at or
prior to the Closing Time or a Date of Delivery, as applicable, and to the
following additional conditions precedent:
(a) Effectiveness of Registration Statement. If, at the time this
Agreement is executed and delivered, it is necessary for a post-effective
amendment to the Registration Statement to be declared effective before
the offering of the Securities may commence, such post-effective
amendment shall have become effective not later than 5:30 P.M., Eastern
time, on the date hereof, or at such later date and time as shall be
consented to in writing by the Representatives; filing of the Prospectus
pursuant to Rule 424(b) of the 1933 Act Regulations shall have been made
within the time period required by such Rule; and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been instituted
or, to the knowledge of the Company or the Underwriters, threatened by
the Commission.
(b) No Litigation. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there shall have been no litigation or other proceeding instituted
against the Company or the Subsidiaries or any of their respective
officers or directors in their capacities as such, before or by any
federal, state or local court, commission, regulatory body,
16
administrative agency or other governmental body, domestic or foreign, in
which litigation or proceeding an unfavorable ruling, decision or finding
would reasonably be expected to have a Material Adverse Effect.
(c) Opinion of Counsel for the Company. The Representatives shall
have received at the Closing Time, an opinion of O'Melveny & Myers LLP,
counsel for the Company, dated as of the Closing Time and addressed to
the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly existing
in good standing under the laws of the State of California, with
corporate power to own and lease its properties, to carry on its
business as described in the Prospectus and to enter into this
Agreement and to issue and deliver the Securities to the
Underwriters as provided therein.
(ii) The statements in the Prospectus under the caption
"Description of Common Stock" insofar as such statements constitute
a summary of the Articles of Incorporation and bylaws of the Company
and the provisions of California or federal law applicable to the
Company, fairly present the information required by Form S-3.
(iii) The Initial Securities (and any Option Securities) have been
duly authorized by all necessary corporate action on the part of the
Company, and, upon payment for and delivery of the Initial
Securities (and any Option Securities) in accordance with this
Agreement and the countersigning of the certificate(s) representing
the Common Stock comprising a portion of the Initial Securities (and
any Option Securities) by an officer of the Company duly authorized
to act as registrar for the Company's Common Stock, will be validly
issued, fully paid and nonassessable; and the related Rights will be
validly issued.
(iv) The form of the certificate for the Initial Securities (and
any Option Securities) conforms to the requirements of the
California Corporations Code.
(v) Holders of the outstanding capital stock of the Company are
not entitled to any statutory preemptive right or to any right under
its Articles of Incorporation to subscribe to any additional issues
of the Company's capital stock.
(vi) The Registration Statement has been declared effective under
the 1933 Act and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued or threatened by the Commission, and, to the knowledge of
such counsel, no proceedings for that purpose have been instituted
or threatened by the Commission.
(vii) The execution, delivery and performance of this Agreement have
been duly and validly authorized by all necessary corporate action
on the part of the Company and this Agreement has been duly executed
and delivered by the Company.
17
(viii) No consent, approval, authorization or order of any
federal or California governmental authority is required on the part
of the Company for the issuance and sale of the Initial Securities
(and any Option Securities) as contemplated by this Agreement,
except (i) such as may have been obtained under the 1933 Act or the
1933 Act Regulations, (ii) the authorization of the Public Utilities
Commission of the State of California referred to in Section 1(l) of
this Agreement which has been obtained, remains in full force and
effect and is, to the knowledge of such counsel, not the subject of
any pending or threatened application for rehearing or petition for
modification, (iii) such as may be required under state securities
or blue sky laws and (iv) such as may be required in connection with
the exercise of the Rights.
(ix) The Company's execution, delivery and performance of this
Agreement and the issuance of the Initial Securities (and any Option
Securities) do not violate the Company's Articles of Incorporation,
bylaws or any applicable California law, ordinance, administrative
or governmental rule or regulation.
(x) The Registration Statement, at the Effective Date, and the
Prospectus, at the date it was filed with the Commission pursuant to
Rule 424(b) of the 1933 Act Regulations, appeared on their face to
comply in all material respects with the requirements as to form
under the 1933 Act and the 1933 Act Regulations in effect at the
date of filing, except that such counsel need express no opinion
concerning the financial statements and other financial information
contained or incorporated by reference therein. The Incorporated
Documents, on the respective dates they were filed with the
Commission pursuant to the 1934 Act and the 1934 Act Regulations,
appeared on their face to comply in all material respects with the
requirements as to form for reports on Form 10-K, Form 10-Q and Form
8-K, as the case may be, under the 1934 Act and the 1934 Act
Regulations in effect at the respective dates of their filing,
except that such counsel need express no opinion concerning the
financial statements and other financial information contained or
incorporated by reference therein.
(xi) Neither the Company nor any of its subsidiaries is a "holding
company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of such a "subsidiary company"
within the meaning of the 1935 Act.
In connection with such counsel's participation in conferences in
connection with the preparation of the Registration Statement and the
Prospectus (excluding the summary financial statements or other financial
information contained in the Form 8-Ks dated February 10, 1998, April 29,
1998 and July 27, 1998 incorporated by reference therein), such counsel
need not independently verify the accuracy, completeness or fairness of
the statements contained or incorporated therein, and the limitations
inherent in the examination made by such counsel and the knowledge
available to it are such that such counsel need not assume any
responsibility for such accuracy, completeness or fairness (except as
otherwise specifically stated in paragraph (ii) above). However, on the
basis of such counsel's review of the Registration Statement, the
Prospectus and the Incorporated Documents and such counsel's
18
participation in conferences in connection with the preparation of the
Registration Statement and the Prospectus (excluding the summary
financial statements and other financial information contained in the
Form 8-Ks dated February 10, 1998, April 29, 1998 and July 27, 1998
incorporated by reference therein), and relying as to materiality to a
large extent upon opinions of officers of the Company and the
Subsidiaries, such counsel does not believe that the Registration
Statement and the Incorporated Documents, as of the Effective Date,
considered as a whole as of such date, 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 not misleading, and
such counsel does not believe that the Prospectus and the Incorporated
Documents, at the time the Prospectus was filed with the Commission
pursuant to Rule 424(b) of the 1933 Act Regulations and on the date of
such opinion (in each case considered as a whole as of such dates),
contained or contains any untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. However, such counsel need not express any
opinion or belief as to the financial statements and other financial data
included or incorporated by reference in the Registration Statement, the
Prospectus or the Incorporated Documents.
(d) Opinion of Assistant General Counsel of the Company. The
Representatives shall have received at the Closing Time, an opinion of
Robert M. Johnson, Assistant General Counsel of the Company, dated as of
the Closing Time and addressed to the Representatives, to the effect
that:
(i) The Subsidiaries have been duly incorporated and are validly
existing in good standing under the laws of the State of Nevada,
with corporate power to own and lease their respective properties
and to carry on their respective businesses as described in the
Prospectus.
(ii) The Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of the States of
Nevada and Arizona and neither the Company nor Paiute Pipeline
Company own or lease material properties or conduct material
business in any other jurisdiction which would require such
qualification. All the outstanding shares of capital stock of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, and are owned of record directly by the
Company free and clear of any perfected security interest, or, to
the best knowledge of such counsel after reasonable inquiry, any
other security interest, lien, adverse claim, equity or other
encumbrance.
(iii) The outstanding shares of the capital stock of the Company
have been duly authorized by all necessary corporate action on the
part of the Company and are validly issued, fully paid and
nonassessable. The statements in the Prospectus under the caption
"Description of Common Stock" insofar as such statements constitute
a summary of the provisions of Arizona and Nevada law applicable to
the Company, fairly present the information required by Form S-3.
19
(iv) To the best knowledge of such counsel after reasonable
inquiry, neither the Company nor the Subsidiaries is in violation of
or is in default in the performance of any obligation contained in
any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture, lease or other instrument to
which the Company or the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound which
violation or default could reasonably be expected to have a Material
Adverse Effect.
(v) To the best knowledge of such counsel, after reasonable
inquiry, there are no rights that entitle or will entitle any person
to acquire any security of the Company upon the issuance of the
Initial Securities (and any Option Securities) by the Company; to
the best knowledge of such counsel after reasonable inquiry, there
is no holder of any security of the Company or any other person who
has the right, contractual or otherwise, to cause the Company to
sell or otherwise issue to them, or to permit them to underwrite the
sale of, the Initial Securities (and any Option Securities) or the
right to have any Common Stock or other securities of the Company
included in the Registration Statement or the right, as a result of
the filing of the Registration Statement, to require the
registration under the 1933 Act of any shares of Common Stock or
other securities of the Company.
(vi) The Company's execution, delivery and performance of this
Agreement, and the issuance and sale of the Initial Securities (and
any Option Securities) do not (i) violate, breach, or result in a
default or a Repayment Event under, any existing obligation of the
Company under any agreement, indenture, lease or other instrument to
which the Company is a party or by which it or any of its properties
is bound that is an exhibit to the Registration Statement or to any
Incorporated Document or any other material agreement, indenture,
lease or other instrument known to such counsel after reasonable
inquiry, (ii) breach or otherwise violate any existing obligation of
the Company under any order, judgment or decree of any Arizona,
California or Nevada or federal court or governmental authority
binding on the Company, or (iii) violate any applicable Arizona or
Nevada law, ordinance, administrative or governmental rule or
regulation.
(vii) No consent, approval, authorization or order of, or filing
with, any federal, California, Arizona or Nevada governmental
authority is required on the part of the Company for the issuance
and sale of the Initial Securities (and any Option Securities) as
contemplated by this Agreement, except (i) such as have been
obtained under the 1933 Act and the 1933 Act Regulations, (ii) the
authorizations of the Public Utilities Commission of the State of
California referred to in Section 1(l) of this Agreement, which have
been obtained, remain in full force and effect and are, to the
knowledge of such counsel, not the subject of any pending or
threatened application for rehearing or petition for modification,
and the filing or filings required to be made with such Commission
after the issuance and sale of the Initial Securities (and any
Option Securities), (iii) such as may be required under state
securities or blue sky laws and (iv) such as may be required in
connection with the exercise of the Rights.
20
(viii) To the best knowledge of such counsel after reasonable
inquiry, other than as described or contemplated in the Prospectus,
there are no legal or governmental proceedings pending or threatened
against the Company or the Subsidiaries, or to which the Company or
the Subsidiaries, or any of their property, is subject, which are
required to be described in the Registration Statement or Prospectus
and are not so described as required that, singly or in the
aggregate, might reasonably be expected to result in a Material
Adverse Effect.
In addition, such counsel shall include in his opinion a statement
substantially to the effect set forth in the last paragraph of Section
5(c) hereof, except that such statement shall not be made in reliance as
to materiality to a large extent upon opinions of officers of the Company
and the Subsidiaries.
In rendering their opinions under Section 5(c) hereof and this
Section 5(d), counsel for the Company may rely upon an opinion or
opinions, each dated as of the Closing Time, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United
States or (x) in the case of O'Melveny & Myers LLP, the State of
California and (y) in the case of Robert M. Johnson, Esq., the States of
Arizona, California and Nevada, provided that (1) such reliance is
expressly authorized by each opinion so relied upon, (2) a signed copy of
each such opinion is furnished to the Representatives that states that
the Underwriters may rely thereon and is otherwise in form and substance
satisfactory to them and their counsel, and (3) counsel shall state in
their opinion that they believe that they and the Underwriters are
justified in relying thereon.
(e) Opinion of Counsel for the Underwriters. The Representatives
shall have received at the Closing Time from Winthrop, Stimson, Putnam &
Roberts, counsel for the Underwriters, an opinion, dated as of the
Closing Time and addressed to the Representatives, with respect to the
issuance and sale of the Initial Securities (and any Option Securities),
the Registration Statement and the Prospectus and other related matters
as the Underwriters may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purposes
of enabling them to pass upon such matters.
(f) Officers' Certificate. At the date hereof, the Representatives
shall have received a certificate of the Chief Executive Officer,
President or Vice President and the principal financial officer or
principal accounting officer of the Company, dated as of the date hereof,
to the effect that (i) since the respective dates as of which information
is given in the Prospectus, there has not been any material adverse
change in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business, (ii) the representations and warranties of the
Company contained in Section 1 hereof are true and correct with the same
force and effect as though expressly made at and as of the date of such
certificate, (iii) the Company has performed or complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the date of such certificate, (iv) no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or
21
threatened by the Commission, and (v) the authorizations of the Public
Utilities Commission of the State of California referred to in Section
1(l) of this Agreement are in full force and effect, to the knowledge of
such officer, are not the subject of any pending or threatened
application for rehearing or petition for modification and are sufficient
to authorize the issuance and sale of the Initial Securities (and any
Option Securities). As used in this Section 5(f), the term "Prospectus"
means the Prospectus in the form first provided to the Underwriters for
use in confirming sales of the Securities.
(g) Comfort Letter of Arthur Andersen LLP. On the date hereof, the
Representatives shall have received a letter from Arthur Andersen LLP,
dated as of the date hereof, addressed to the Representatives and in form
and substance satisfactory to the Underwriters, to the effect that:
(i) They are independent certified public accountants with respect
to the Company within the meaning of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations.
(ii) It is their opinion that the consolidated financial statements
of the Company and its subsidiaries and incorporated by reference in
the Registration Statement and the Prospectus and audited by them
and covered by their opinions therein comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations.
(iii) They have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in SAS No. 71, Interim Financial
Information, not constituting an audit, including a reading of the
latest available interim financial statements of the Company and its
subsidiaries, a reading of the minute books of the Company and such
subsidiaries since the end of the most recent fiscal year with
respect to which an audit report has been issued, inquiries of and
discussions with certain officials of the Company and such
subsidiaries responsible for financial and accounting matters with
respect to the unaudited consolidated financial statements
incorporated by reference in the Registration Statement and
Prospectus and the latest available interim unaudited financial
statements of the Company and its subsidiaries, and such other
inquiries and procedures as may be specified in such letter, and on
the basis of such inquiries and procedures, nothing came to their
attention that caused them to believe that: (A) any material
modifications should be made to the unaudited consolidated financial
statements of the Company and its subsidiaries incorporated by
reference in the Registration Statement and Prospectus for them to
be in conformity with generally accepted accounting principles in
the United States, (B) the unaudited consolidated financial
statements of the Company and its subsidiaries incorporated by
reference in the Registration Statement and Prospectus do not comply
as to form in all material respects with the applicable accounting
requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act
and the 1934 Act Regulations, or (C) at a specified date not more
than five days prior to the date of such letter, there was any
decrease in stockholders' equity, excluding the net income component
22
of retained earnings, or increase in long-term debt, including
current maturities, of the Company and its subsidiaries, in each
case as compared with the amounts shown on the most recent
consolidated balance sheet of the Company and its subsidiaries
included or incorporated by reference in the Registration Statement
and Prospectus, except in all instances for increases or decreases
that the Registration Statement and Prospectus disclose have
occurred or may occur or except for such exceptions enumerated in
such letter as shall have been agreed to by the Representatives and
the Company.
(iv) Any pro forma financial statements included or incorporated by
reference in the Registration Statement and the Prospectus comply as
to form with the applicable accounting requirements of Article 11 of
Regulation S-X under the 1933 Act.
(v) In addition to the audit referred to in their opinions and the
limited procedures referred to in clause (iii) above, they have
carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial
information which are included or incorporated by reference in the
Registration Statement and the Prospectus and that are specified by
the Representatives, and have found such amounts, percentages and
financial information to be in agreement with the relevant
accounting, financial and other records of the Company and its
subsidiaries identified in such letter.
(h) Bring-Down Comfort Letter of Arthur Andersen LLP. At the
Closing Time, Arthur Andersen LLP shall have furnished to the
Representatives a letter, dated as of the Closing Time and addressed to
the Representatives, which shall confirm, on the basis of a review in
accordance with the procedures set forth in the letter referred to in
Section 5(g) hereof, that nothing has come to their attention during the
period from the date of the letter referred to in Section 5(g) hereof to
a specified date not more than five days prior to the Closing Time that
would require any change in their letter dated the date hereof if it were
required to be dated and delivered as of the Closing Time.
(i) Listing. Prior to the Closing Time, the Securities shall have
been listed, subject only to notice of issuance, on the New York Stock
Exchange and the Pacific Stock Exchange.
(j) Additional Documents. The Company shall have furnished or
caused to be furnished to the Underwriters such further certificates and
documents as the Underwriters shall have reasonably requested.
(k) Conditions to Purchase of Option Securities. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities and the relevant
Date of Delivery is not the Closing Time, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company hereunder shall be true and correct
as of each Date of Delivery and, at the relevant Date of Delivery, the
Representatives shall have received:
23
(i) A certificate, dated such Date of Delivery, of the Chief
Executive Officer, President or Vice President and the principal
financial officer or principal accounting officer of the Company
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(f) hereof remains true and correct as of such
Date of Delivery.
(ii) The favorable opinion of O'Melveny & Myers LLP, counsel for
the Company, together with the favorable opinion of Robert M.
Johnson, Assistant General Counsel of the Company, each in form and
substance satisfactory to the Representatives, each dated such Date
of Delivery and addressed to the Representatives, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinions required by Sections
5(c) and 5(d) hereof.
(iii) The favorable opinion of Winthrop, Stimson, Putnam & Roberts,
counsel for the Underwriters, dated such Date of Delivery and
addressed to the Representatives, relating to the Option Securities
to be purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(e) hereof.
(iv) A letter from Arthur Andersen LLP, in form and substance
satisfactory to the Representatives, dated such Date of Delivery and
addressed to the Representatives, substantially in the same form and
substance as the letter furnished to the Representatives pursuant to
Section 5(h) hereof, except that the "specified date" in the letter
furnished pursuant to this Section 5(k)(iv) shall be a date not more
than five days prior to such Date of Delivery.
If any of the conditions specified in this Section 5 shall not have been
fulfilled, this Agreement may be terminated by the Representatives or, in the
case of any condition to the purchase of Option Securities on a Date of
Delivery which is after the Closing Time, the obligations of the several
Underwriters to purchase the relevant Option Securities may be terminated by
the Representatives, in each case upon notice thereof to the Company at any
time at or prior to the Closing Time or such Date of Delivery, as the case may
be. Any such termination shall be without liability of any party to any other
party, except as otherwise provided in Section 8(b) hereof.
6. Expenses. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated: (a) the
preparation, printing or reproduction and filing with the Commission of the
Registration Statement (including financial statements and exhibits thereto),
each preliminary prospectus, if any, the Prospectus, and each amendment or
supplement to any of them; (b) the printing (or reproduction) and delivery to
the Underwriters (including postage, air freight charges and charges for
counting and packaging) of such copies of the Registration Statement, each
preliminary prospectus, if any, the Prospectus, the Incorporated Documents,
and all amendments or supplements to any of them, as may be reasonably
requested by the Underwriters for use in connection with the offering and sale
of the Securities; (c) the preparation, printing, issuance and delivery of
certificates for the Securities to the Underwriters; (d) the printing (or
24
reproduction) and delivery to the Underwriters of the blue sky survey and all
other agreements or documents printed (or reproduced) and delivered, including
the Agreement, in connection with the offering of the Securities; (e) the
registration or qualification of the Securities for offer and sale under the
securities or blue sky laws of the several states as provided in Section 3(e)
hereof (including the reasonable fees, expenses and disbursements of counsel
for the Underwriters relating to such registration and qualification and the
preparation of the blue sky survey); (f) the listing of the Securities on the
New York Stock Exchange and the Pacific Stock Exchange; (g) the transportation
and other expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the Securities; (h)
the fees and disbursements of the Company's accountants and counsel; and (i)
any advertising and other out of pocket expenses of the Underwriters incurred
with the approval of the Company. If this Agreement shall terminate or shall
be terminated after execution pursuant to any provisions hereof (otherwise
than pursuant to Section 7 hereof) or if this Agreement shall be terminated by
the Underwriters because of any failure or refusal on the part of the Company
to comply with the terms or fulfill any of the conditions of this Agreement,
the Company agrees to reimburse the Underwriters for all out-of-pocket
expenses (including fees and expenses of counsel for the Underwriters)
incurred by the Underwriters in connection herewith.
7. Defaulting Underwriters. If one or more of the Underwriters shall
fail at Closing Time or a Date of Delivery to purchase the Securities which it
or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Securities in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Securities to be purchased on such date, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations
of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the Underwriters to purchase and of the Company to sell the
Option Securities to be purchased and sold on such Date of Delivery,
shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section 7 shall relieve any defaulting
Underwriter from liability in respect of its default. In the event of any
such default which does not result in a termination of this Agreement or, in
the case of a Date of Delivery which is after the Closing Time, which does not
result in a termination of the obligation of the Underwriters to purchase and
the Company to sell the relevant Option Securities, as the case may be, either
the Representatives or the Company shall have the right to postpone the
Closing Time or the relevant Date of Delivery, as the case may be, for a
period not exceeding seven days in order to effect any required changes in the
25
Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 7.
8. Termination of Agreement.
(a) General. The Representatives, by notice to the Company,
may terminate this Agreement at any time at or prior to the Closing Time
or may terminate the obligations of the several Underwriters to purchase
the relevant Option Securities, at or prior to a Date of Delivery which
is after the Closing Time, if (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
(1) there has been a material adverse change in the condition (financial
or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole whether
or not arising from transactions in the ordinary course of business, in
each case other than as set forth in or contemplated by the Prospectus or
(2) the Company or the Subsidiaries has sustained any loss or
interference with its business or properties from fire, explosion, flood
or other casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order
or decree, which is not set forth in the Registration Statement and the
Prospectus and that is material to the Company and the Subsidiaries taken
as a whole, if, with respect to clause (1) or (2), in the judgment of the
Underwriters any such development makes it impracticable or inadvisable
to consummate the sale and delivery of the Securities by the
Representatives at the initial public offering price, (ii) there has
occurred any material adverse change in the financial markets in the
United States or any outbreak of hostilities or escalation thereof or
other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to make
it, in the judgment of the Representatives, impracticable to market the
Securities or to enforce contracts for the sale of the Securities, (iii)
trading in any securities of the Company has been suspended or limited by
the Commission, the New York Stock Exchange or the Pacific Stock
Exchange, or if trading generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market has been
suspended or limited, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices have been required, by either of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental
authority or (iv) a banking moratorium has been declared by either
Federal, Nevada, Arizona, California or New York authorities. Any
termination pursuant to this Section 8 shall be without liability of any
party to any other party, except as otherwise provided in Section 8(b)
hereof.
(b) Liabilities. Section 4 and Section 6 hereof and the
representations and warranties of the Company contained in this Agreement
shall remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Underwriters, (ii) acceptance
of any of the Securities and payment therefor or (iii) any termination of
this Agreement.
26
9. Information Furnished by the Underwriters. The statements set forth
in the last paragraph on the cover page, the stabilization legend on the
inside front cover, and the statements in the second, fifth, sixth, seventh
and eighth paragraphs under the caption "Underwriting" in the Prospectus
Supplement and in any preliminary prospectus constitute the only information
furnished by the Underwriters as such information is referred to in Sections
1(b) and 4 hereof.
10. Miscellaneous. Except as otherwise provided in Sections 3, 7 and 8
hereof, notice given pursuant to any provision of this Agreement shall be
deemed to have been duly given if mailed or transmitted by any standard form
of telecommunication and shall be delivered (i) if to the Company, at the
office of the Company at 5241 Spring Mountain Road, Las Vegas, Nevada,
Attention: Chief Financial Officer or (ii) if to the several Underwriters,
care of Merrill Lynch, World Financial Center, North Tower, New York, New York
10281-1201. This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 4 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement. Neither
the term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from either Underwriter of any of the
Securities in his or her status as such purchaser.
11. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York. This
Agreement may be signed in various counterparts which together constitute one
and the same instrument. If signed in counterparts, this Agreement shall not
become effective unless at least one counterpart hereof shall have been
executed and delivered on behalf of each party hereto.
27
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
Southwest Gas Corporation
By /S/ JEFFREY W. SHAW
-------------------------------
Name: JEFFREY W. SHAW
Title: VICE PRESIDENT/TREASURER
CONFIRMED AND ACCEPTED,
as of the date first above written:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
PaineWebber Incorporated
Smith Barney Inc.
Edward D. Jones & Co., L.P.
By: Merrill Lynch, Pierce, Fenner & Smith Incorporated
By /s/ JAMES D. HEMPSTEAD
--------------------------------------------------
Authorized Signatory
For themselves and as Representatives of the other
Underwriters named in Schedule A hereto.
SCHEDULE A
Number of
Name of Underwriter Initial Securities
------------------- ------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated ... 450,000
PaineWebber Incorporated ............................. 450,000
Smith Barney Inc...................................... 450,000
Edward D. Jones & Co., L.P............................ 450,000
A.G. Edwards & Sons, Inc. ............................ 100,000
Morgan Stanley & Co. Incorporated .................... 100,000
NationsBanc Montgomery Securities LLC ................ 100,000
Prudential Securities Incorporated ................... 100,000
Dain Rauscher Wessels ................................ 50,000
EVEREN Securities, Inc. .............................. 50,000
Gabelli & Company, Inc. .............................. 50,000
Gaines, Berland Inc. ................................. 50,000
Legg Mason Wood Walker, Incorporated ................. 50,000
Sutro & Co. Incorporated ............................. 50,000
------------------
Total ............................................ 2,500,000
==================
A-1
SCHEDULE B
2,500,000 Shares of Common Stock
(Par Value $1.00 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in Section 2, shall be $23.25.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $22.47 per share, being an amount equal to the
initial public offering price set forth above less $.78 per share; provided that
the purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial Securities but not payable on the Option
Securities.
B-1