<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 16, 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------------
WASHINGTON NATURAL GAS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Washington 91-1005303
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
------------------------
815 Mercer Street, Seattle, Washington 98109
Telephone (206) 622-6767
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JAMES P. TORGERSON MARION V. LARSON
Senior Vice President -- Finance, RIDDELL, WILLIAMS, BULLITT &
Planning and Development WALKINSHAW
WASHINGTON NATURAL GAS COMPANY 1001 Fourth Avenue Plaza
815 Mercer Street Seattle, Washington 98154
Seattle, Washington 98109 Telephone: (206) 624-3600
Telephone: (206) 622-6767
(NAMES AND ADDRESSES OF AGENTS FOR SERVICE)
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Copies to:
DONALD R. CRAWSHAW
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE AS
DETERMINED BY MARKET CONDITIONS AND OTHER FACTORS.
------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Mortgage Bonds.............. $150,000,000 100% $150,000,000 $51,725
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</TABLE>
(1) Estimated pursuant to Rule 457(a) solely for the purpose of calculating the
registration fee.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1995
$150,000,000
WASHINGTON NATURAL GAS COMPANY
SECURED MEDIUM-TERM NOTES, SERIES C
(A SERIES OF FIRST MORTGAGE BONDS)
DUE AT VARYING MATURITIES
----------------------
Washington Natural Gas Company may from time to time offer a new series of
its first mortgage bonds, designated as Secured Medium-Term Notes, Series C, in
an aggregate principal amount of up to $150,000,000, as described herein. The
Notes will be offered at varying maturities and may be subject to redemption at
the option of the Company prior to maturity. Each Note will bear interest at a
fixed rate to be determined by the Company at or prior to the sale thereof. The
aggregate principal amount, issue price, interest rate, maturity date, and
optional redemption provisions for each Note will be established at the time of
issuance of such Note and will be set forth therein and in a pricing supplement
(a "Pricing Supplement") to this Prospectus. See "Description of First Mortgage
Bonds, Secured Medium-Term Notes, Series C".
Each Note will be issued as either a Book-Entry Note or a Certificated Note,
as set forth in the applicable Pricing Supplement. Book-Entry Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary (with respect to its participants) or by such
participants or persons that hold interests through such participants (with
respect to persons other than the Depositary's participants). Holders of
Book-Entry Notes will not be entitled to Certificated Notes except under the
limited circumstances described herein. See "Description of First Mortgage
Bonds, Secured Medium-Term Notes, Series C -- Book-Entry Notes".
Unless otherwise specified in a Pricing Supplement, the authorized
denominations of Notes will be $100,000 and any amount in excess thereof which
is an integral multiple of $1,000.
Interest on each Note will accrue from its date of issuance and will be
payable semi-annually on each December 15 and June 15, and at maturity or upon
earlier redemption.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------
<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO THE
PUBLIC(1) COMMISSION(2) COMPANY(2)(3)
--------- -------------- ---------------
<S> <C> <C> <C>
Per Note........................ 100% .125%-1.000% 99.000%-99.875%
Total........................... $150,000,000 $187,500-$1,500,000 $148,500,000-$149,812,500
</TABLE>
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(1) The Notes will be sold at 100% of their principal amount except as may be
provided in a Pricing Supplement hereto.
(2) The Company will pay to Goldman, Sachs & Co.; Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated; or Smith Barney Inc. (each, an
"Agent" and collectively, the "Agents"), a commission in the form of a
discount, ranging from .125% to 1.000% of the principal amount of any Note
sold through such Agent, depending upon the maturity of the Note. The
Company may also sell the Notes to any Agent for its own account or for
resale to one or more investors or other purchasers at varying prices
relating to prevailing market prices at the time of resale, as determined by
such Agent. See "Plan of Distribution of the Notes".
(3) Before deducting other expenses payable by the Company, estimated to be
$360,000 (including reimbursement of certain of the Agents' expenses). The
Company has agreed to indemnify each Agent against certain liabilities,
including liabilities under the Securities Act of 1933.
------------------------
The Notes are being offered on a continuous basis by the Company through the
Agents, each of whom has agreed to use its reasonable efforts to solicit offers
to purchase such Notes. In addition, the Notes may be sold to any Agent, as
principal, for resale to investors or other purchasers. The Notes will not be
listed on any securities exchange, and there can be no assurance that all or any
portion of the Notes offered hereby will be sold or that there will be a
secondary market for any of the Notes. The Company reserves the right to
withdraw, cancel or modify the offer made hereby without notice. The Company or
the Agent who solicits any offer may reject such offer in whole or in part. See
"Plan of Distribution of the Notes".
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
SMITH BARNEY INC.
----------------------
The date of this Prospectus is August , 1995.
<PAGE> 3
No person has been authorized to give any information or to make any
representation not contained in this Prospectus or any Pricing Supplement and,
if given or made, such information or representation must not be relied upon as
having been authorized. This Prospectus and any Pricing Supplement do not
constitute an offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of these securities in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or jurisdiction.
------------------------
AVAILABLE INFORMATION
Washington Natural Gas Company (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Such reports and other
information on file can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C.;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois; and 7
World Trade Center, Suite 1300, New York, New York. Copies of this material can
also be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission pursuant to
the Exchange Act by the Company (File No. 001-11271), are hereby incorporated
herein by reference as of their dates:
(a) The Annual Report on Form 10-K for the fiscal year ended September
30, 1994.
(b) Quarterly Report on Form 10-Q for the quarter ended December 31,
1994.
(c) Quarterly Report on Form 10-Q for the quarter ended March 31,
1995.
(d) Quarterly Report on Form 10-Q, as amended by Form 10-Q/A, for the
quarter ended June 30, 1995.
(e) Current Reports on Form 8-K dated November 8, 1994, February 2,
March 8, May 2, May 15 and May 17, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering or offerings of the first mortgage bonds, designated
as Secured Medium-Term Notes, Series C (the "Notes") offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner, upon the written
or oral request of any such person, a copy of any or all documents referred to
above which have been or may be incorporated by reference in this Prospectus,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such copies should
be directed to James P. Torgerson, Senior Vice President-Finance, Planning and
Development, by mail at Washington Natural Gas Company, P.O. Box 1869, 815
Mercer Street, Seattle, Washington 98111, or by telephone at (206) 622-6767.
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THE COMPANY
GENERAL
Washington Natural Gas Company, a Washington corporation, is a wholly-owned
subsidiary of Washington Energy Company, a Washington corporation. The Company
is engaged in the retail distribution and sale of natural gas to more than
465,000 customers in the Puget Sound area of the State of Washington. The
Company's executive office is located at 815 Mercer Street, Seattle, Washington
98109. The telephone number is (206) 622-6767.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges of the Company for the fiscal years
ending September 30, 1994, 1993, 1992, 1991 and 1990, were 0.54, 2.10, 1.61,
2.67 and 2.18, respectively, and for the nine months and twelve months ending
June 30, 1995, were 2.82 and 1.89, respectively. For the purpose of computing
the Company's ratios of earnings to fixed charges, "earnings" are defined as the
sum of the Company's net income from continuing operations, federal income taxes
and fixed charges. "Fixed charges" consist of interest on debt, amortization of
debt premium, discount and expense, and such portion of rentals as are estimated
to be representative of the interest factor in the particular case.
USE OF PROCEEDS
The net proceeds to be received by the Company from time to time from the
issuance and sale of the Notes will initially become part of the general funds
of the Company and will be used to repay all or a portion of the Company's
outstanding short-term borrowings incurred for the Company's construction
program or for sinking fund redemptions on, or payments due on maturity of, its
long-term debt securities and for other corporate purposes.
As of June 30, 1995, the Company had $10 million of short-term debt
outstanding at market rates and $330.2 million of long-term debt outstanding
consisting of first mortgage bonds maturing between 1995 and 2022, and bearing
interest rates ranging from 6.07% to 10.25%. Sinking fund requirements and
maturities of the Company's outstanding first mortgage bonds aggregate $65.3
million for the period July 1, 1995 through September 30, 1997.
The Company's construction program is primarily related to the addition of
new customers to the gas distribution system. Capital expenditures for the
fiscal years ending September 30, 1995 through September 30, 1997 are estimated
at approximately $80 million to $90 million each fiscal year, assuming the
average number of the Company's customers continues to grow at the rate of
approximately 4% per year.
DESCRIPTION OF FIRST MORTGAGE BONDS,
SECURED MEDIUM-TERM NOTES, SERIES C
The Notes are to be issued under an Indenture of First Mortgage (the
"Indenture") between the Company and Harris Trust and Savings Bank, Chicago,
Illinois, as trustee (the "Trustee"), dated as of April 1, 1957, as supplemented
and modified by twenty-nine supplemental indentures heretofore executed by the
Company, or its predecessor company, Washington Natural Gas Company, a Delaware
corporation, and as supplemented by a thirtieth supplemental indenture, dated as
of August 15, 1995 (the "Thirtieth Supplemental Indenture") (the Indenture as so
supplemented being referred to as the "Mortgage").
As described herein, first mortgage bonds, including the Notes now or
hereafter issued under the Mortgage, are sometimes referred to as the "Bonds".
The statements herein concerning the Notes, the Bonds and the Mortgage are
summaries, do not purport to be complete and are qualified in their entirety by
express reference to the Bonds and to the instruments constituting the Mortgage,
which are filed as
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exhibits to the registration statement of which this Prospectus is a part.
Reference is also made to the Mortgage for further information including
definitions of certain terms used herein. References herein to sections and
articles are to sections and articles of the Indenture unless otherwise
specified.
GENERAL DESCRIPTION OF THE NOTES
The Notes are limited to an aggregate principal amount of $150,000,000. The
Notes are to be issued as a series of Bonds under the Mortgage. The Notes will
be equally and ratably secured with other Bonds issued or to be issued under the
Mortgage.
Each Note will be issued initially as either a Global Note (as defined
below) or a Certificated Note, in either case in fully registered form without
coupons. Except as set forth below under the caption "Book-Entry Notes", holders
of Book-Entry Notes will not be entitled to individual Certificated Notes. See
"Book-Entry Notes".
The Notes will be offered on a continuous basis with varying maturities as
selected by the purchaser and agreed to by the Company. The Notes may be subject
to redemption prior to maturity at the price or prices specified in the
applicable Pricing Supplement. Each Note will bear interest at a fixed rate
specified in the applicable Pricing Supplement.
Unless otherwise specified in a Pricing Supplement, the authorized
denominations of the Notes will be $100,000 and any amount in excess thereof
which is an integral multiple of $1,000.
The Pricing Supplement relating to each Note will describe the following
terms: (1) the price (expressed as a percentage of the aggregate principal
amount thereof) at which such Note will be issued (the "Issue Price"); (2) the
date on which such Note will be issued (the "Original Issue Date"); (3) the date
on which such Note will mature (the "Maturity Date"); (4) the rate per annum at
which such Note will bear interest; and (5) provisions, if any, relating to the
optional redemption of such Note prior to the Maturity Date.
PAYMENT OF PRINCIPAL AND INTEREST ON THE NOTES
Until the Notes are paid or payment thereof is provided for, the Company
will, at all times, maintain a paying agent for the Notes. The Company has
initially appointed Harris Trust and Savings Bank, Chicago, Illinois, as its
Paying Agent. The Company will notify the holders of the Notes in accordance
with the Mortgage of any change in the Paying Agent or its address. Unless
otherwise specified in the applicable Pricing Supplement, principal and any
premium and interest payable at maturity or upon earlier redemption in respect
of any Note will be paid in immediately available funds upon surrender of such
Note at the office of the Paying Agent.
Any payment required to be made in respect of a Note on a date that is not
a business day need not be made on such date, but may be made on the next
succeeding business day with the same effect as if made on such date, and no
additional interest shall accrue as a result of such delayed payment.
Each Note will bear interest from its Original Issue Date at the rate per
annum stated on the face thereof until the principal amount thereof is paid or
made available for payment. Interest on each Note will be payable semi-annually
on each December 15 and June 15 (each an "Interest Payment Date") and at
maturity or upon earlier redemption; provided, however, that the first payment
of interest on any Note with an Original Issue Date between a Record Date (as
defined below) and an Interest Payment Date will be made on the second
succeeding Interest Payment Date after the Original Issue Date. Each payment of
interest on an Interest Payment Date shall include interest accrued to but
excluding such Interest Payment Date.
Interest payable on any Interest Payment Date will be paid to the person in
whose name a Note is registered at the close of business on the Record Date next
preceding such Interest Payment Date and shall be computed on the basis of a
360-day year of twelve 30-day months; provided, however, that interest payable
at maturity or upon earlier redemption will be payable to the person to whom
principal shall be payable. The "Record Date" with respect to any Interest
Payment Date shall mean (a) the close of business on the November 30 next
preceding a December 15 Interest Payment Date or the May 31
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<PAGE> 6
next preceding a June 15 Interest Payment Date as the case may be (or the
preceding business day if a holiday or other day on which the principal
corporate trust office of the Trustee is closed), or (b) in case of failure by
the Company to pay interest when due, a subsequent record date fixed by the
Company, by not less than 10 days' written notice to Bondholders, which is not
more than 30 days or less than 5 days prior to the date fixed for the payment of
such interest, for determination of holders entitled to payment of such
interest; provided, however, that such provision for establishment of a
subsequent record date shall in no way affect the rights of Bondholders or of
the Trustee consequent on any default.
REDEMPTION AND REPURCHASE OF THE NOTES
The Pricing Supplement relating to each Note will indicate whether and
under what circumstances such Note will be redeemable by the Company prior to
maturity and the redemption price or prices including premiums, if any,
applicable thereto. The Notes will not be subject to any sinking fund
requirements. The Company may redeem any of the Notes which by their terms are
redeemable either in whole or, from time to time, in part. If less than all of
the Notes with like tenor and terms are to be redeemed, the principal amount of
Notes to be redeemed shall be prorated in units of $100,000 each among the
holders of the Notes in the proportion that their respective holdings bear to
the aggregate principal amount of Notes outstanding on the date of selection
(Section 1.02 of the Thirtieth Supplemental Indenture).
The Notes must be redeemed as a whole at 100% of the principal amount
thereof, plus interest accrued thereon to the redemption date, by application of
cash deposited with the Trustee in connection with the sale or taking of all or
substantially all of the property of the Company by or pursuant to the direction
of any governmental entity (Sections 7.04 and 8.05 of the Indenture and Section
1.02 of the Thirtieth Supplemental Indenture).
The Notes may also be redeemed as a whole at any time, or in part from time
to time, at the option of the Company, upon payment of 100% of the principal
amount thereof, without premium, plus interest accrued thereon to the redemption
date, through the application of cash transferred to the Trustee for deposit
into the renewal fund established under the Mortgage (Section 4.04 of the
Indenture and Sections 1.02 and 1.03 of the Thirtieth Supplemental Indenture).
In the case of any redemption of Notes, notice thereof shall be given by
the Trustee to the holders of the Notes being redeemed not less than 30 days nor
more than 60 days prior to the date of such redemption.
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may be held or resold or, at the
discretion of the Company, may be surrendered to the Trustee for cancellation.
DIVIDEND RESTRICTIONS
So long as any of the Notes remain outstanding the Company shall not
directly or indirectly (1) declare or pay any dividend (other than dividends
payable in Common Stock of the Company) or declare or make any other
distribution on any shares of its Common Stock, or (2) make, or permit any
subsidiary to make, any expenditures for the purchase, redemption or other
retirement for a consideration of any shares of capital stock of the Company
(other than in exchange for, or from the net cash proceeds of, other new shares
of capital stock of the Company and other than any shares of any class of stock
ranking as to dividends or assets prior to the Common Stock of the Company
required to be purchased, redeemed or otherwise retired for any sinking fund or
purchase fund for such class of stock), if the aggregate amount of all such
dividends, distributions and expenditures made since September 30, 1994, would
exceed the aggregate amount of the net income of the Company accumulated after
September 30, 1994, plus the sum of $20,000,000. The Company also will not,
directly or indirectly, reclassify or otherwise convert its Common Stock into
any stock preferred over Common Stock as to dividends or upon liquidation
(Section 1.04 of the Thirtieth Supplemental Indenture).
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<PAGE> 7
BOOK-ENTRY NOTES
Notes may be issued as one or more global notes (each a "Global Note") each
of which will be deposited with, or on behalf of, The Depository Trust Company,
New York, New York ("DTC") or such other depositary as is specified in the
Pricing Supplement (the "Depositary") relating to such Notes, and registered in
the name of a nominee of the Depositary. Beneficial interests in such Global
Note are referred to herein as "Book-Entry Notes".
All Book-Entry Notes having the same Original Issue Date, Maturity Date,
redemption provisions, and interest rate will be represented by a single Global
Note. Book-Entry Notes will not otherwise be issuable in definitive form.
Upon the issuance of a Global Note, the Depositary for such Global Note or
its nominee will credit the accounts of persons held with it with the respective
principal amounts of the Book-Entry Notes represented by such Global Note. Such
amounts shall be designated by the Agents with respect to such Book-Entry Notes.
Ownership of Book-Entry Notes will be limited to persons that have accounts with
the Depositary or its nominee ("participants") or persons that may hold such
Book-Entry Notes through participants. Ownership of Book-Entry Notes will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary or its nominee (with respect to
participants) and on the records of participants (with respect to persons other
than participants). The laws of some states may require that certain purchasers
of securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer ownership of Book-Entry
Notes.
So long as the Depositary for a Global Note, or its nominee, is the
registered owner of such Global Note, such Depositary or such nominee, as the
case may be, will be considered the sole owner or holder of such Global Note for
all purposes under the Mortgage. Except as provided below, owners of Book-Entry
Notes will not be entitled to have Notes registered in their names, will not
receive or be entitled to receive physical delivery of Notes in definitive form,
will not be given notices by the Trustee and will not be considered the owners
or holders thereof under the Mortgage. DTC will be expected to forward (or cause
to be forwarded) any notice given to registered owners of the Notes by the
Trustee to the participants by DTC's usual procedures, and as appropriate such
participants may forward (or cause to be forwarded) the notices to the owners of
the Book-Entry Notes.
Principal, premium, if any, and interest payments on Book-Entry Notes
represented by a Global Note registered in the name of a Depositary or its
nominee will be made to the Depositary or its nominee, as the case may be, as
the registered owner of such Global Note.
Neither the Company, the Trustee, any authenticating agent nor any paying
agent will have any responsibility or liability for any aspect of the records or
notices relating to, or payments made on account of, Book-Entry Notes or for
maintaining, supervising or reviewing any records relating to such Book-Entry
Notes.
For every transfer and exchange of Global Notes, the owners of the related
Book-Entry Notes may be charged a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in relation thereto. The Company, the
Trustee and the Paying Agent cannot and do not give any assurances that DTC or
any other Depositary, the participants or others will distribute payments in
respect of Global Notes paid to DTC, any other Depositary or their respective
nominees, as the registered owners of such Global Notes, or give any redemption
or other notices, to the owners of Book-Entry Notes, or that they will do so on
a timely basis or that DTC or any other Depositary will serve and act in the
manner described in this Prospectus.
If a Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company shall execute and the Trustee, upon receipt of the Company
order for the authentication and delivery of Notes, shall authenticate and
deliver, Certificated Notes in exchange for outstanding Global Notes registered
in the name of such Depositary. Such Certificated Notes shall have the same
Original Issue Date, Maturity Date, interest rate,
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redemption provisions and all other terms as, and shall be in an aggregate
principal amount equal to the principal amount of, the Global Note in exchange
for which such Certificated Notes are being issued. Certificated Notes issued in
exchange for a Global Note shall be registered in such names and in such
authorized denominations as the Depositary for such Global Note, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee will deliver such authenticated Certificated
Notes to the Depositary for delivery to the persons in whose names such
Certificated Notes are so registered, or if the Depositary shall refuse or be
unable to deliver such Notes, the Trustee will deliver such Notes to the persons
in whose names such Notes are registered, unless otherwise agreed upon between
the Trustee and the Company. In any such instance, an owner of a beneficial
interest in such a Global Note will be entitled to physical delivery in
definitive form of Certificated Notes equal in principal amount to such
beneficial interest and to have such Certificated Notes registered in its name.
Further, if at any time the Company agrees with respect to any Book-Entry Notes,
an owner of Book-Entry Notes may, on terms acceptable to the Company and the
Depositary, receive Certificated Notes in definitive form in lieu of such
Book-Entry Notes.
DTC has advised the Company and the Agents as follows:
DTC will act as depositary for the Global Notes. The Global Notes will
be issued as fully-registered securities registered in the name of Cede &
Co. (DTC's partnership nominee).
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need
for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a number of
its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The Rules
applicable to DTC and its Participants are on file with the Securities and
Exchange Commission.
Purchases of Book-Entry Notes under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Book-Entry
Notes on DTC's records. The ownership interest of each actual purchaser of
each Book-Entry Note ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial
Owners are expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the Book-Entry
Notes are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Global Notes, except
in the event that use of the book-entry system for the Notes is
discontinued.
To facilitate subsequent transfers, all Global Notes deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Global Notes with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Book-Entry Notes; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Book-Entry Notes are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
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<PAGE> 9
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to Global
Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the
Company as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Book-Entry Notes are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Notes will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on the
payable date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment
on the payable date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
Participant and not of DTC, the Trustee, or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the
Company or the Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depositary
with respect to the Global Notes at any time by giving reasonable notice to
the Company or the Trustee. Under such circumstances, in the event that a
successor securities depositary is not obtained, Certificated Notes are
required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that
event, Certificated Notes will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from DTC and is believed by the Company to be reliable. The
Company takes no responsibility, however, for the accuracy thereof.
DESCRIPTION OF MORTGAGE
In addition to the information concerning the Notes described above under
the heading "DESCRIPTION OF FIRST MORTGAGE BONDS, SECURED MEDIUM-TERM NOTES,
SERIES C", the following information is applicable to the Notes as well as to
all other Bonds.
RENEWAL FUND
The Company will pay cash and/or deliver Bonds (taken at the principal
amount thereof) to the Trustee for deposit into a renewal fund on or before May
1 of each calendar year in an amount equal to the greater of,
(a) The aggregate amount of the minimum provision for depreciation
(i.e., an amount computed at the rate of 2% per annum, or such other rate
as may be permitted or required by the Washington Utilities and
Transportation Commission, currently 3.6% per annum, of the book value of
depreciable gas utility property subject to the lien of the Mortgage and
not to prior liens) from March 1, 1957, to the end of the next preceding
calendar year, or
(b) The aggregate amount of retirements for the same period,
8
<PAGE> 10
in excess of the greater of,
(c) The aggregate amounts for the minimum provision for depreciation
or retirements, whichever is greater, shown in the next preceding Renewal
Fund certificate filed with the Trustee pursuant to the requirements of
Section 4.04 of the Mortgage, or
(d) The aggregate amounts for the minimum provision for depreciation
or retirements, whichever is greater, shown in the latest certificate of
available net additions delivered to the Trustee pursuant to Section 2.01
of the Indenture,
less the aggregate amount of Bonds retired by sinking fund operations, not
theretofore used as a credit on account of the Renewal Fund in previous Renewal
Fund certificates. The Renewal Fund obligation may be satisfied in whole or in
part by credits consisting of unfunded property additions and/or unfunded Bond
credits.
Any cash deposited in the Renewal Fund, if and to the extent that the
Company at the time does not have property additions available for use as a
credit to satisfy such Renewal Fund obligation, may, upon the written order of
the Company, be applied by the Trustee to the redemption of Notes and
substantially all other Bonds or, if not so applied pursuant to the provisions
of the Mortgage, to the retirement of Bonds.
SECURITY AND PRIORITY
The Notes will be secured equally and ratably with all other Bonds issued
under the Mortgage by a valid and direct first Mortgage lien on all "gas utility
property" of the Company. As defined in the Mortgage, "gas utility property"
includes property owned and subsequently acquired by the Company which is
located in the State of Washington or any contiguous state and which is used by
or useful to the Company in the business of furnishing, purchasing, storing,
manufacturing, utilizing, transmitting, supplying, liquefying, distributing
and/or disposing of gas, whether manufactured, natural or liquefied petroleum
gases or a mixture of any of these, for heat, light, power, or refrigeration or
any other use, or in any business which is incidental thereto, including,
without limiting the generality of the foregoing, all properties necessary or
appropriate for furnishing, purchasing, storing, manufacturing, utilizing,
transmitting, supplying, liquefying, distributing, and/or disposing of gas,
together with betterments, improvements, additions, replacements, or alterations
of, upon and to such property of the Company and equipment and appliances
installed as a part of the operating property of the Company. The term "gas
utility property" does not include property excepted from the lien of the
Mortgage (further described below), gas rights in and under oil and/or gas
leases and rights and interests or royalties therein, all gas acreage and all
equipment, appliances and other property used for the drilling for and
production of natural gas, including rigs, drilling and cleaning equipment and
all pipe, casing, tubing and other materials in the gas wells inclusive of the
outlet valve connecting with the transmission system (Section 1.27). The direct
first Mortgage lien attaches to (i) substantially all of the properties (real,
personal and mixed) and franchises, permits and similar rights now owned or
hereafter acquired by the Company, and all renewals, replacements, additions,
improvements, developments, extensions and enlargements hereafter made,
constructed or acquired by the Company to, of or upon any or all such property,
and all property used thereby or useful therefor or incidental thereto or
connected therewith now or at any time hereafter subject to the lien of the
Mortgage, subject, however, to permitted encumbrances (Granting Clause VI and
Section 1.39) and certain minor exceptions (none of which permitted encumbrances
or minor exceptions, in the opinion of the Company, materially interferes with
the conduct of its business or materially affects the holders of the Bonds) and
(ii) the Company's gas purchase contracts (Section 9.14 of the Indenture and
Article Two of the Seventh Supplemental Indenture).
The term "permitted encumbrances" means any of the following: (1) liens for
taxes, assessments or governmental charges for the current year or not then
delinquent; liens for workmen's compensation awards and mechanics', laborers',
materialmen's and similar liens not then delinquent; and liens whose validity
the Company is contesting in good faith by appropriate legal proceedings, as
long as no forfeiture, of any part of the trust estate results therefrom; (2)
liens and charges incidental to
9
<PAGE> 11
construction or current operation which have not been asserted or the payment of
which has been adequately secured or which, in the opinion of counsel, are
insignificant in amount; (3) liens existing, securing obligations neither
assumed by the Company nor on account of which it customarily pays interest
directly or indirectly, upon or relating to real estate acquired by the Company
for substation or compressor station purposes, or transmission, distribution or
other right-of-way purposes; (4) any right which the United States of America or
any municipal or governmental body or agency may have by virtue of any
franchise, license, contract or statute to recapture or to purchase, or
designate a purchaser of, or order the sale of any property of the Company upon
payment of reasonable compensation therefor, or to terminate any franchise,
license or other rights before the expiration date thereof or to regulate the
property and business of the Company; (5) the lien of judgments covered by
insurance, or upon appeal and covered by supersedeas bond, or if not so covered
not exceeding $200,000 in the aggregate amount; (6) easements or reservations in
respect of any property of the Company for the purpose of roads, pipe lines, gas
transmission and distribution lines or other rights-of-way, zoning ordinances,
regulations, reservations, restrictions, covenants, party wall agreements,
conditions of record and other encumbrances (other than to secure the payment of
money), none of which in the opinion of counsel interfere with the proper
operation and development of the property affected thereby; (7) any lien or
encumbrance, moneys sufficient for the discharge of which have been deposited in
trust with irrevocable authority to the trustee to apply such money to the
discharge of such lien or encumbrance to the extent required for such purpose;
(8) any exceptions described in the legal description of the mortgaged property
originally conveyed to the Trustee under the Indenture, and, with respect to any
property acquired subsequent thereto, any terms conditions, agreements,
covenants, exceptions and reservations which, in the opinion of counsel, will
not materially adversely affect the trust estate or the operation thereof by the
Company; (9) any lien reserved as security for rent or for compliance with other
provisions of the lease in the case of any leasehold estate; and (10) the lien
of the Mortgage (Section 1.39).
The Mortgage permits the Company to acquire gas utility property subject to
prior liens, but such property shall not be deemed to be "property additions"
under the Mortgage unless and until such prior lien is paid. At such time as
title to such property shall vest in the Company free and clear of such prior
lien, then such property shall be subject to the lien of the Mortgage as a first
mortgage, subject only to the permitted encumbrances and minor exceptions
referred to above (Sections 1.28, 9.07 and 9.10). The Mortgage requires that
there shall be subjected to the lien thereof (except as to property of the
character expressly excepted and subject to certain limitations in cases of
mergers and consolidations) all property which the Company may hereafter acquire
(Granting Clauses and Sections 9.06 and 14.04).
At June 30, 1995, the Company had total assets of $878,640,000, of which
approximately 87% was comprised of "gas utility property" subject to the lien of
the Mortgage.
Notwithstanding the foregoing, there are excepted from the lien of the
Mortgage (1) cash, contracts (except contracts for the purchase of natural gas),
shares of stock, bonds, notes, evidences of indebtedness and other securities,
bills, notes and accounts receivable, other choses in action, conditional sales
contracts or agreements and appliance rental or lease agreements (other than any
of the foregoing which are by the express provisions of the Mortgage subjected
or required to be subjected to the lien thereof), (2) all gas or liquid
hydrocarbons in pipelines and in storage, (3) all equipment, pipe, materials and
supplies not installed as part of the fixed property of the Company, including
materials held for consumption in the Company's business, and supplies acquired
by the Company for use in the ordinary course and conduct of its business, (4)
all goods, wares, merchandise, appliances, gas and other products manufactured,
generated, produced, purchased or acquired for the purpose of sale, lease or
distribution in the ordinary course of business, and gas, oil, coal and other
minerals and other products, fuel and other personal property which are
consumable (otherwise than by ordinary wear
10
<PAGE> 12
and tear) in their use in the operation of the plants or systems of the Company,
(5) timber, oil, gas and other minerals lying or being on, within or under any
land subject to the lien of the Mortgage, (6) office furniture, equipment and
supplies, (7) aircraft, automobiles, trucks and similar vehicles together with
all equipment necessary to the operation and maintenance thereof, (8) the last
day of the term of each leasehold estate, whether falling within a general or
particular description of property in the Mortgage, (9) all leasehold interests,
permits, licenses, franchises and rights which are intended by the Mortgage to
be granted, conveyed, mortgaged, pledged, transferred or assigned, but as to
which grant, conveyance, mortgage, pledge, transfer or assignment (A) a consent
from another party is required and such consent is not, after reasonable effort,
secured, or (B) the Trustee would be subjected to a liability not otherwise
contemplated by the provisions of the Mortgage, (10) all other property which is
not gas utility property (unless specifically subjected or required to be
subjected to the lien of the Mortgage), and (11) all property owned by a
successor corporation immediately prior to the time of any consolidation,
merger, sale, conveyance or transfer of the Company's property to such successor
corporation, and/or any property owned by any other corporation merged or
consolidated into or with, or the property of other corporations which is sold,
conveyed or transferred to, such successor corporation, and/or property
thereafter acquired by the successor corporation, except substitutions,
replacements, additions, betterments, developments, extensions and enlargements
to, of or upon the property owned by the Company at the time of such
consolidation, merger, sale, conveyance or transfer (Granting Clauses and
Article XIV).
ISSUANCE OF ADDITIONAL BONDS AND WITHDRAWAL OF CASH DEPOSITED AGAINST SUCH
ISSUANCE
The principal amount of Bonds issuable under the Mortgage is not limited
except as restricted by provisions of the Mortgage or by law (Section 3.01).
Bonds may be issued in an aggregate principal amount not exceeding (1) 60% of
the amount of unfunded net additions being funded as the basis thereof (Section
5.03); (2) an amount of cash deposited with the Trustee equal to the aggregate
principal amount of the Bonds to be issued (Section 5.04); and/or (3) 100% of
unfunded Bond credits being funded as the basis thereof (Section 5.05). With
certain exceptions, the issuance of Bonds is subject to net earnings available
for interest being at least 2.0 times the aggregate of the annual interest
requirements on all Bonds and prior lien indebtedness to be outstanding (Section
1.41) and 1.75 times the aggregate of the annual interest charges on all
indebtedness of the Company to be outstanding immediately after such incurrence
(Section 1.05 of the Thirtieth Supplemental Indenture). Cash deposited with the
Trustee is withdrawable in an amount up to, but not exceeding 60% of unfunded
net additions in the case of moneys on deposit with the Trustee for the purpose
described in clause (2) of this paragraph, and 100% of the amount of unfunded
net additions being funded for such purpose, in the case of any other trust
moneys, and 100% of unfunded Bond credits being funded for such purpose
(Sections 8.02 and 8.03).
The amount of unfunded net additions available for the issuance of Bonds,
as of June 30, 1995, was $143,179,000.
MODIFICATIONS OF MORTGAGE
The Company and the Trustee with the consent of the holders of 66 2/3% of
the principal amount of Bonds outstanding, including 66 2/3% of each series
affected, may enter into supplemental indentures modifying the Mortgage;
provided, however, that no such supplemental indenture shall (1) without the
consent of the holder of each Bond affected, extend the maturity of, reduce the
rate or extend the time of payment of interest on, reduce the amount of
principal of or reduce any premium payable on redemption of, the Bonds or (2)
without the consent of the holders of all Bonds outstanding, permit the creation
of any lien, not otherwise permitted, prior to or on a parity with the lien of
the Mortgage, or alter the equal and proportionate security afforded by the lien
of the Mortgage or reduce the number or percentage of
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<PAGE> 13
the principal amount of Bonds the consent of the holders of which is required to
approve any supplemental indenture (Section 18.02).
THE TRUSTEE
The direction of the holders of not less than a majority in aggregate
principal amount of the Bonds outstanding is necessary to (1) require the
Trustee to proceed to enforce the lien of the Mortgage (in the case of an event
of default), either by suit at law or in equity for the enforcement of the
payment of the Bonds then outstanding and for the foreclosure of the Mortgage
and for the sale of the trust estate under the judgment or decree of a court of
competent jurisdiction, or at the election of the Trustee by exercise of its
powers with respect to entry or sale, and (2) direct and control the time,
method and place of conducting any and all proceedings for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee
under the Mortgage, but under certain circumstances the Trustee is not required
to act if it shall be advised by counsel that the action or proceeding so
directed may not be lawfully taken or if the Trustee in good faith shall by
responsible officers determine that the action or proceeding so directed would
involve it in personal liability or be unjustifiably prejudicial to the non-
assenting Bondholders, or that the Trustee will not be sufficiently indemnified
for any expenditures in such action or proceeding (Section 12.20).
DEFAULTS AND NOTICE
An event of default under the Mortgage is defined as (1) failure to pay the
principal and premium when due in respect of any Bond, (2) failure to pay
interest on any Bond for 10 days after becoming due, (3) failure to satisfy any
sinking, renewal, improvement, maintenance or depreciation fund obligation for
30 days after such obligation shall have become due, (4) failure for 30 days
after notice to observe other covenants, agreements or conditions contained in
the Mortgage or in any of the Bonds, (5) filing by the Company of a petition in
bankruptcy or for reorganization or for an arrangement or any composition,
readjustment, liquidation, dissolution or similar relief pursuant to federal
bankruptcy law or the law of any other jurisdiction, or the consent by the
Company to the appointment of or taking possession by a receiver, or other
similar official, of the Company or of all or any substantial part of its
property, or the making by the Company of an assignment for the benefit of its
creditors, or the admission by the Company in writing of its inability to pay
its debts generally as they become due or the taking by the Company of any
corporate action in furtherance of the foregoing, (6) filing of a petition or
answer proposing the adjudication of the Company as a bankrupt or its
reorganization or arrangement, or any composition, readjustment, liquidation,
dissolution or similar relief with respect to the Company pursuant to the
federal bankruptcy law or the law of any other jurisdiction, and the consent by
the Company to, or acquiescence by the Company in the filing thereof, or the
failure of such petition or answer to be discharged or denied within 60 days
after the filing thereof, (7) rendering by a court of a decree or order (i) for
the appointment of a receiver or similar official of the Company or of all or
any substantial part of its property, or for winding up or liquidation of its
affairs, and such decree is undischarged and unstayed for a period of 60 days,
or (ii) for the sequestration or attachment of any property of the Company
without its return to the possession of the Company or its release within 60
days thereafter, (8) failure to pay any part of the principal of, premium, if
any, or interest on, or any other payment of money due under any indebtedness
(other than the Bonds) of the Company in an aggregate outstanding amount of
$500,000 or more, or the failure by the Company to perform or observe any other
agreement, term or condition contained in any document evidencing or securing
such indebtedness, if the effect of such failure is to cause, or to permit the
holders of such indebtedness to cause, or permit any other party to such
indebtedness to cause, any payment in respect of such indebtedness to become due
prior to its due date, and (9) rendering of a judgment against the Company in
excess of $100,000 for any obligation of the Company and its continuance
unsatisfied or unstayed for 90 days (Section 12.01 and Article IV of the
Twenty-second Supplemental Indenture).
The Mortgage does not require the filing with the Trustee of any periodic
evidence as to the absence of default or as to compliance with the terms of the
Mortgage.
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REPORTS
The Mortgage requires periodic inspection and reports by an independent
engineer as to maintenance of all property subject to the lien of the Mortgage
(Section 9.08).
The Company is required to file with the Trustee annual statements of
income and earned surplus and balance sheets certified by an independent public
accountant or firm of independent accountants not later than 120 days after the
expiration of each fiscal year (Section 9.13).
PLAN OF DISTRIBUTION OF THE NOTES
The Notes are being offered on a continuous basis by the Company through
Goldman, Sachs & Co.; Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated; and Smith Barney Inc. (each, an "Agent", and collectively, the
"Agents"), each of whom has agreed to use its reasonable efforts to solicit
offers to purchase the Notes. The Company will pay each Agent a commission of
.125% to 1.000% of the principal amount of each Note sold through such Agent,
depending upon the maturity of the Note. The Company may sell Notes to any of
the Agents acting as principal, at a negotiated discount for resale to investors
or other purchasers at varying prices related to prevailing market prices at the
time of resale, to be determined by such Agent or, if so agreed, at a fixed
public offering price. The Company has agreed to reimburse the Agents for
certain expenses in connection with the offering of the Notes.
The Company will have the sole right to accept offers to purchase Notes and
may reject any proposed purchase of Notes in whole or in part. The Agents will
have the right, in their discretion reasonably exercised, to reject in whole or
in part any offer to purchase Notes received by them. The Company reserves the
right to withdraw, cancel or modify the offer without notice.
In addition, the Agents may offer Notes they have purchased as principal to
other dealers. The Agents may sell Notes to any dealer at a discount and, unless
otherwise specified in an applicable Pricing Supplement, such discount allowed
to any dealer will not be in excess of the discount to be received by such Agent
from the Company. Unless otherwise indicated in an applicable Pricing
Supplement, any Note sold to an Agent as principal will be purchased by such
Agent at a price equal to 100% of the principal amount thereof less a percentage
equal to the commission applicable to any agency sale of a Note of identical
maturity, and may be resold by the Agent to investors and other purchasers from
time to time as described above. After the initial public offering of Notes to
be resold to investors and other purchasers, the public offering price (in the
case of a fixed price public offering), concession and discount may be changed.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in New York, New York on the date of settlement.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended. The Company has agreed to indemnify the
Agents against certain liabilities, including liabilities under such Act, or to
contribute to payments the Agents may be required to make in respect thereof.
Each of the Agents may from time to time purchase and sell Notes in the
secondary market, but is not obligated to do so, and there can be no assurance
that there will be a secondary market for the Notes or liquidity in the
secondary market if one develops. From time to time, each of the Agents may make
a market in the Notes. The Notes will not be listed for trading on any
securities exchange.
The Agents and affiliates thereof engage in transactions with and perform
services for the Company in the ordinary course of business.
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VALIDITY OF THE NOTES
The validity of the Notes to be offered will be passed upon for the Company
by Riddell, Williams, Bullitt & Walkinshaw, Seattle, Washington, and for the
Agents by Sullivan & Cromwell, New York, New York. Sullivan & Cromwell will rely
as to all matters of Washington law upon the opinion of Riddell, Williams,
Bullitt & Walkinshaw. The opinions of Riddell, Williams, Bullitt & Walkinshaw
and Sullivan & Cromwell will be conditioned upon, and subject to certain
assumptions regarding, future action required to be taken by the Company and the
Trustee in connection with the issuance and sale of any particular Note, the
specific terms of Notes and other matters which may affect the validity of Notes
but which cannot be ascertained on the date of such opinions.
EXPERTS
The financial statements and schedules included in the Company's Annual
Report on Form 10-K for the year ended September 30, 1994, incorporated by
reference in this prospectus, and the financial statements from which the
five-year selected financial data included in that Annual Report have been
derived, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto. Such financial
statements, schedules and five-year selected financial data incorporated in this
prospectus have been incorporated by reference herein in reliance upon the
authority of said firm as experts in matters of accounting and auditing in
giving said report.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS (INCLUDING ANY ACCOMPANYING PRICING SUPPLEMENT) IN CONNECTION WITH
THE OFFER CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY ANY OF THE AGENTS. THIS PROSPECTUS (INCLUDING ANY ACCOMPANYING PRICING
SUPPLEMENT) DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS (INCLUDING ANY
ACCOMPANYING PRICING SUPPLEMENT) NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
The Company.......................... 3
Ratio of Earnings to Fixed Charges... 3
Use of Proceeds...................... 3
Description of First Mortgage Bonds,
Secured Medium-Term Notes, Series
B.................................. 3
Description of Mortgage.............. 8
Plan of Distribution of the Notes.... 13
Validity of the Notes................ 14
Experts.............................. 14
</TABLE>
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$150,000,000
WASHINGTON NATURAL
GAS COMPANY
SECURED MEDIUM-TERM NOTES, SERIES C
(A SERIES OF FIRST MORTGAGE BONDS)
DUE AT VARYING MATURITIES
FROM DATE OF ISSUE
-----------------------
PROSPECTUS
-----------------------
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
SMITH BARNEY INC.
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<PAGE> 17
WASHINGTON NATURAL GAS COMPANY
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Securities and Exchange Commission fees.......................... $ 51,725
Printing fees.................................................... 50,000
Trustee fees (including counsel fees)............................ 10,000
Legal fees and expenses.......................................... 130,000
Blue Sky fees and expenses....................................... 10,000
Rating agencies fees............................................. 50,000
Independent public accountants fees.............................. 50,000
Miscellaneous.................................................... 8,275
--------
Total.................................................. $360,000
========
</TABLE>
---------------
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Washington Business Corporation Act (Title 23B RCW, Chapter 165, Laws
of 1989) (the "Act") provides that under certain circumstances a corporation may
indemnify any person for any judgment, settlement, penalty, fine and reasonable
expenses (including attorneys' fees) incurred in connection with a threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative in which such person is made, or threatened to
be made, a defendant or respondent by reason of the fact that he or she is or
was a director, officer, employee or agent of the corporation.
Article IX of the Company's Bylaws provides that the Company shall
indemnify each person that was, is, or is threatened to be made a party to, or
is otherwise involved in any actual or threatened proceeding by reason of the
fact that he or she is or was a director or officer of the Company, against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes and penalties and amounts to be paid in settlement) actually and
reasonably incurred or suffered in connection with such participation or
involvement, provided that no such indemnification is permitted if the Company
is prohibited from paying such indemnification by the applicable provisions of
the Act or any other applicable law then in effect. The Bylaws further provide
that the right of indemnification includes the right to be paid by the Company
for the expenses incurred in defending any proceeding in advance of its final
disposition, provided that (1) the person seeking indemnification submits an
agreement to repay all amounts so advanced if it shall be ultimately determined
that he or she is not entitled to be indemnified, and (2) such person either
delivers a written affirmation that he or she has met the standard of conduct
necessary for indemnification or a determination that he or she has met such
standard of conduct, as may be permitted or required by the Act or other
applicable law.
Under Section 23B.08.510 of the Act, a corporation generally has the power
to indemnify a director (or former director) if (a) he or she conducted himself
in good faith and (1) in the case of conduct in his or her own official capacity
with the corporation, he or she reasonably believed his or her conduct to be in
the corporation's best interest, or (2) in all other cases, he or she reasonably
believed his or her conduct to be at least not opposed to the corporation's best
interests; and (b) in the case of any criminal proceeding, he or she had no
reasonable cause to believe his or her conduct was unlawful. The Act further
provides that a director shall not be indemnified in connection with a
proceeding by or in the right of the corporation in which he or she was adjudged
liable to the corporation, or with respect to any other proceeding charging
improper personal benefit to the director, whether or not involving action in
his or her
II-1
<PAGE> 18
official capacity, in which he or she shall have been adjudged to be liable on
the basis that he or she improperly received personal benefit. In the case of a
proceeding by or in the right of the corporation, indemnification is limited by
the Act to reasonable expenses incurred in connection with the proceeding. The
Act further provides that no indemnification of a director or former director
shall be made by the corporation under Section 23B.08.510 of the Act unless
authorized in a specific case after a determination that indemnification of the
director is permissible in the circumstances because he or she has met the
standard of conduct set forth in such section. This determination is to be made
(a) by the board of directors by a majority vote of a quorum consisting of
directors not at the time parties to the proceeding in question; (b) if such a
quorum cannot be obtained, then by a majority vote of a committee of the board
consisting solely of two or more directors not at the time parties to such
proceeding; (c) in the opinion of special legal counsel; or (d) by the
shareholders.
The Act further provides that, unless limited by the Company's Articles of
Incorporation, the Company shall indemnify a director who was wholly successful,
on the merits or otherwise, in the defense of any proceeding to which he or she
was a party because of being a director of the corporation against reasonable
expenses incurred by the director in connection with the proceeding. The
Company's Articles of Incorporation do not limit the application of this section
of the Act.
Under certain circumstances a court may order indemnification of a director
by a corporation even though the standards set forth above may not have been
met.
The Act further provides that a corporation has the power to indemnify an
officer who is not a director (as well as employees and agents of the
corporation who are not directors) to the same extent that it may indemnify
directors and to such further extent, consistent with law, as may be provided by
its articles of incorporation, bylaws, general or specific action of its board
of directors, or contract. Therefore, indemnification of officers who are not
directors under the Company's Bylaws is not subject to the same specific
limitations and standards of conduct as set forth above with respect to
indemnification of directors.
If a corporation indemnifies or advances expenses to a director under
certain sections of the Act in connection with a proceeding by or in the right
of the Company, the Company shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting.
Officers and directors of the Company are covered by a policy of insurance
maintained by the Company which (with certain exceptions and within certain
limitations) indemnifies them against loss and liabilities arising from any
alleged "wrongful act" including an alleged error or misstatement or misleading
statement or wrongful act or omission or neglect or breach of duty.
The Company's Amended and Restated Articles of Incorporation provide, as
permitted by the Act, that a director of the Company shall not be personally
liable to the Company or its shareholders for monetary damages for conduct as a
director, except for liability for (1) any acts or omissions that involve
intentional misconduct by the director or a knowing violation of law by the
director; (2) any conduct that violates Section 23B.08.310 of the Act
(pertaining to unpermitted distributions to shareholders or loans to directors);
or (3) any transaction from which the director will personally receive a benefit
in money, property or services to which the director is not legally entitled.
ITEM 16. LIST OF EXHIBITS
See Exhibit Index on page II-6.
II-2
<PAGE> 19
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 and incorporated by reference in this registration
statement;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement, unless such information required to be included in
such post-effective amendment is contained in a periodic report filed by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 and incorporated herein by reference; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in
this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration, by means of a post-effective amendment,
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions described under Item 15 above,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 20
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned in his or her
capacity as director or officer, or both, as the case may be, of Washington
Natural Gas Company, does hereby appoint William P. Vititoe, James P. Torgerson
and Marion V. Larson, and each of them severally, his or her true and lawful
attorneys or attorney to execute in his or her name, place and stead, in his or
her capacity as a director or officer or both, as the case may be, of said
Company, this Registration Statement and any and all amendments and
post-effective amendments thereto and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission. Each of said attorneys shall have the power to act hereunder with or
without any other of said attorneys, and shall have full power of substitution
and resubstitution. Each of said attorneys shall have full power and authority
to do and perform in the name and on behalf of each of the undersigned, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises, as fully and to all intents and purposes as each of the
undersigned might or could do in person, and each of the undersigned hereby
ratifies and approves the act of said attorneys and each of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Washington
Natural Gas Company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Seattle, State of Washington, on the 16th day of
August, 1995.
WASHINGTON NATURAL GAS COMPANY
By /s/ WILLIAM P. VITITOE
--------------------------------------
(William P. Vititoe,
Chairman of the Board,
President and Chief Executive
Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WILLIAM P. VITITOE Chairman of the Board of August 16, 1995
-------------------------------------------- Directors (Principal
William P. Vititoe Executive Officer),
President and Director
/s/ JAMES P. TORGERSON Senior Vice President -- August 16, 1995
-------------------------------------------- Finance, Planning and
James P. Torgerson Development (Principal
Financial Officer)
/s/ ALLYN P. HEBNER Vice President and August 16, 1995
-------------------------------------------- Assistant Treasurer
Allyn P. Hebner (Principal Accounting
Officer)
/s/ VIRGINIA ANDERSON Director August 16, 1995
--------------------------------------------
Virginia Anderson
/s/ ROBERT F. BAILEY Director August 16, 1995
--------------------------------------------
Robert F. Bailey
</TABLE>
II-4
<PAGE> 21
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DONALD J. COVEY Director August 16, 1995
------------------------------------------
Donald J. Covey
/s/ JOHN W. CREIGHTON, JR. Director August 16, 1995
------------------------------------------
John W. Creighton, Jr.
------------------------------------------ Director August , 1995
Robert L. Dryden
/s/ TOMIO MORIGUCHI Director August 16, 1995
------------------------------------------
Tomio Moriguchi
/s/ SALLY G. NARODICK Director August 16, 1995
------------------------------------------
Sally G. Narodick
</TABLE>
II-5
<PAGE> 22
EXHIBIT INDEX
Certain of the following exhibits are filed herewith. Certain other of the
following exhibits have been filed heretofore with the Commission and are
incorporated herein by reference.
<TABLE>
<S> <C> <C>
*1-A Form of Agency Agreement...................................
*4-A Form of Thirtieth Supplemental Indenture related to First
Mortgage Bonds, Secured Medium-Term Notes, Series C........
4-A.1 Indenture of First Mortgage dated as of April 1, 1957
(incorporated herein by reference to Washington Natural Gas
Company Exhibit 4-B, Registration No. 2-14307).............
4-A.3 Sixth Supplemental Indenture dated as of August 1, 1966
(incorporated herein by reference to Washington Natural Gas
Company Exhibit to Form 8-K for month of August 1966, File
No. 0-951).................................................
4-A.4 Seventh Supplemental Indenture dated as of February 1, 1967
(incorporated herein by reference to Washington Natural Gas
Company Exhibit 4-M, Registration No. 2-27093).............
4-A.7 Twelfth Supplemental Indenture dated as of November 1, 1972
(incorporated herein by reference to Washington Natural Gas
Company Exhibit to Form 8-K for November 1972, File No.
0-951).....................................................
4-A.10 Seventeenth Supplemental Indenture dated as of August 9,
1978 (incorporated herein by reference to Washington Energy
Company Exhibit 5-K.18, Registration No. 2-64428)..........
4-A.12 Twenty-second Supplemental Indenture dated as of July 15,
1986 (incorporated herein by reference to Washington
Natural Gas Company Exhibit 4-B.20, Form 10-K, for the year
ended September 30, 1986, File No. 0-951)..................
4-A.14 Twenty-fourth Supplemental Indenture dated as of December
15, 1987 (incorporated herein by reference to Washington
Natural Gas Company Exhibit 4-B.21, Form 10-K, for the year
ended September 30, 1988, File No. 0-951)..................
4-A.15 Twenty-fifth Supplemental Indenture dated as of August 15,
1988 (incorporated herein by reference to Washington
Natural Gas Company Exhibit 4-B.22, Form 10-K, for the year
ended September 30, 1988, File No. 0-951)..................
4-A.16 Twenty-sixth Supplemental Indenture dated as of September
1, 1990 (incorporated herein by reference to Washington
Natural Gas Company Exhibit 4-B.19, Form 10-K, for the year
ended September 30, 1990, File No. 0-951)..................
4-A.17 Twenty-seventh Supplemental Indenture dated as of September
1, 1990 (incorporated herein by reference to Washington
Natural Gas Company Exhibit 4-B.20, Form 10-K, for the year
ended September 30, 1990, File No. 0-951)..................
4-A.18 Twenty-eighth Supplemental Indenture dated as of July 1,
1991 (incorporated by reference to Washington Natural Gas
Company Exhibit 4-A, Form 10-Q, for the quarter ended March
31, 1993, File No. 0-951)..................................
4-A.19 Twenty-ninth Supplemental Indenture dated as of June 1,
1993 (incorporated herein by reference to Exhibit 4-14 of
Washington Natural Gas Company's S-3 Registration
Statement, Registration No. 33-4959).......................
*5 Opinion of Riddell, Williams, Bullitt & Walkinshaw,
including consent..........................................
*12 Statement setting forth computations of ratio of earnings
to fixed charges...........................................
*23.1 Consent of Arthur Andersen LLP, independent public
accountants................................................
*23.2 Consent of Riddell, Williams, Bullitt & Walkinshaw
(included in opinion filed as Exhibit 5 to this
Registration Statement)....................................
</TABLE>
II-6
<PAGE> 23
<TABLE>
<S> <C> <C>
*24.1 Power of Attorney (set forth on page II-4 of this
Registration Statement)....................................
*24.2 Certified copy of resolutions of the Board of Directors
authorizing signature......................................
*25.1 Statement of Eligibility of Trustee on Form T-1............
</TABLE>
---------------
* Filed herewith
II-7
<PAGE> 1
EXHIBIT 1-A
$150,000,000
WASHINGTON NATURAL GAS COMPANY
SECURED MEDIUM-TERM NOTES, SERIES C
AGENCY AGREEMENT
----------------
, 1995
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
World Financial Center
New York, New York 10281
SMITH BARNEY INC.
390 Greenwich Street
New York, New York 10013
Dear Sirs:
Washington Natural Gas Company, a Washington corporation (the "Company"),
confirms its agreement with each of you (individually, an "Agent" and
collectively, the "Agents") (which term shall, for all purposes of this
Agreement, include Goldman, Sachs & Co.) with respect to the issue and sale by
the Company of up to $150,000,000 aggregate principal amount of its First
Mortgage Bonds designated as Secured Medium-Term Notes, Series C (the "Notes").
The Notes are to be issued from time to time under and secured by an Indenture
of First Mortgage, dated as of April 1, 1957 (hereinafter called the "Original
Indenture"), executed and delivered by the Company to Harris Trust and Savings
Bank, as Trustee (hereinafter called the "Trustee"), as amended and supplemented
by twenty-nine indentures supplemental thereto (including a Sixth Supplemental
Indenture, dated as of August 1, 1966, a Seventh Supplemental Indenture, dated
as of February 1, 1967, a Sixteenth Supplemental Indenture, dated as of June 1,
1977, from the Company to the Trustee and R.G. Mason as co-trustee (the
"Co-Trustee"), a Seventeenth Supplemental Indenture, dated as of August 9, 1978,
a Twenty-second Supplemental Indenture, dated as of July 15, 1986, a
Twenty-eighth Supplemental Indenture, dated as of July 1, 1991 and a
Twenty-ninth Supplemental Indenture, dated as of June 1, 1993) and as to be
supplemented by a Thirtieth Supplemental Indenture, to be dated as of August 15,
1995, from the Company to the Trustee (hereinafter called the "Supplemental
Indenture") (the Co-Trustee having resigned and no replacement having been
appointed). The Original Indenture as heretofore amended, modified and
supplemented and as amended, modified and supplemented by the Supplemental
Indenture is hereinafter called the "Indenture".
The Notes shall have the maturity ranges, annual interest rates, redemption
provisions and other terms set forth in the Prospectus referred to in Section
1(a) as it may be amended or supplemented from time to time, including any
supplement providing only for the interest rate, maturity, redemption
provisions, if any, and any other terms of any Note (a "Pricing Supplement").
The Notes will be issued, and the terms thereof established, from time to time,
by the Company in accordance with the Indenture and the Procedures referred to
below. This Agreement shall only apply to sales of the Notes and not to sales of
any other securities or evidences of indebtedness of the Company and only on the
specific terms set forth herein.
1
<PAGE> 2
SECTION 1. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to each Agent as of the date hereof, as
of the Closing Date (defined herein) and as of the times referred to in Sections
6(a) and 6(b) hereof (the Closing Date and each such time being hereinafter
sometimes referred to as a "Representation Date"), as follows:
(a) General. A registration statement on Form S-3 (File No. 33- )
with respect to the Notes has been prepared and filed by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder, and
has become effective under the Act. No other document with respect to such
registration statement or document incorporated by reference therein has
heretofore been filed or transmitted for filing with the Commission (other
than the prospectuses filed pursuant to Rule 424(b) of the Rules and
Regulations, each in the form heretofore delivered to the Agents). The
Indenture has been qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). As used in this Agreement, (i)
"Registration Statement" means such registration statement when it became
effective under the Act, and as from time to time amended or supplemented
thereafter, including any documents incorporated by reference therein and
all information deemed to be a part thereof; (ii) "Basic Prospectus" means
the prospectus (including all documents incorporated therein by reference)
included in the Registration Statement; and (iii) "Prospectus" means the
Basic Prospectus (together with all documents incorporated therein by
reference) and any amendments or supplements (including the applicable
Pricing Supplement) relating to the Notes, as filed with the Commission
pursuant to paragraph (b) of Rule 424 of the Rules and Regulations. Any
reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed pursuant to
Section 13(a) or 15(d) of the Exchange Act (hereinafter defined) after the
effective date of the Registration Statement that is incorporated by
reference in the Registration Statement. The Commission has not issued any
order preventing or suspending the use of the Prospectus and has not
initiated or to the knowledge of the Company threatened any proceeding for
that purpose.
(b) Registration Statement, Prospectus and Indenture: Contents. The
Registration Statement and each Prospectus contain, and the Registration
Statement and each Prospectus will contain as of the applicable
Representation Date and at all times during each period during which, in
the opinion of counsel for the Agents, a prospectus relating to the Notes
is required to be delivered under the Act (each a "Marketing Period"), all
statements which are required by the Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Trust Indenture Act, and the
rules and regulations of the Commission under such Acts; the Indenture,
including any amendments and supplements thereto, conforms with the
requirements of the Trust Indenture Act and the rules and regulations of
the Commission thereunder; and the Registration Statement and each
Prospectus do not, and will not as of the applicable Representation Date
and at all times during each Marketing Period, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the Company makes no representation or warranty as
to information contained in or omitted from the Registration Statement or
any Prospectus in reliance upon and in conformity with written information
furnished to the Company by the Agents specifically for inclusion therein
or to any statements in or omissions from the statement of eligibility and
qualification on Form T-1 (the "Form T-1") of the Trustee under the Trust
Indenture Act.
(c) No Defaults; Authorization. The Company is not in violation of its
restated articles of incorporation, as amended, or restated by-laws as
amended or in default under any agreement, indenture or instrument, the
effect of which violation or default would be material to the Company; the
execution, delivery and performance of this Agreement, the Indenture and
each applicable Purchase Agreement (as defined in Section 11), if any, and
compliance by the Company with the provisions of the Notes and the
Indenture have been duly authorized by all necessary corporate action and
will not conflict with, result in the creation or imposition of any lien,
charge or
2
<PAGE> 3
encumbrance upon any of the assets of the Company (except for the lien of
the Indenture) pursuant to the terms of, or constitute a default under, any
agreement, indenture or instrument, or result in a violation of the
restated articles of incorporation, as amended, or restated by-laws, as
amended, of the Company or any law, order, rule or regulation of any court
or governmental agency having jurisdiction over the Company or its
properties. The Company has no subsidiaries within the meaning of Rule 405
of the Rules and Regulations.
(d) Material Changes or Material Transactions. Except as described in
the Registration Statement and each Prospectus, (i) there has not been any
material adverse change in, or any adverse development which materially
affects, the business, properties, condition (financial or other), results
of operations, prospects, net worth or assets of the Company, and (ii)
there has been no material transaction entered into by the Company other
than those in the ordinary course of business.
(e) Accountants. Arthur Andersen LLP, whose report appears in the
Company's most recent Annual Report on Form 10-K, which is incorporated by
reference in each Prospectus, are independent public accountants with
respect to the Company as required by the Act and the Rules and
Regulations.
(f) Validity of the Indenture and the Notes. (i) The Indenture has
been duly authorized, executed and delivered by the Company and constitutes
the valid and legally binding obligation of the Company, enforceable in
accordance with its terms except that certain of the remedial provisions
thereof may be limited by the laws of the State of Washington (but such
laws do not make the remedies afforded inadequate for the realization of
the benefits of the security provided thereby) and except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and other laws relating to or affecting
creditors' rights generally and by general equity principles; (ii) the
Notes have been duly authorized for issuance and sale pursuant to this
Agreement and, when the terms of the Notes and of their issue and sale have
been duly established in accordance with the Indenture and this Agreement
and when the Notes have been delivered and paid for as provided in this
Agreement and the Indenture, the Notes will have been duly executed,
authenticated, validly issued and outstanding and will constitute valid and
legally binding obligations of the Company entitled to the benefits of the
Indenture and the security afforded thereby and enforceable in accordance
with their terms except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and
other laws relating to or affecting creditors' rights generally and by
general equity principles; and (iii) the Notes and the Indenture conform to
the descriptions thereof contained in each Prospectus.
(g) Due Incorporation and Qualification. The Company has been duly
incorporated, is validly existing and in good standing under the laws of
the State of Washington, the only state in which it operates, and has all
requisite power and authority (corporate and other) necessary to own or
hold its properties and to conduct the business in which it is engaged, as
described in each Prospectus. Neither the character of the properties owned
by the Company nor the nature of the business it transacts makes necessary
its licensing or qualification as a foreign corporation in any other state
or jurisdiction. All of the shares of issued and outstanding common stock
of the Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned by Washington Energy Company, a
Washington corporation (together with its successors and assigns, the
"Parent").
(h) Legal Proceedings. Except as described in each Prospectus, there
is no litigation or governmental proceeding pending or, to the knowledge of
the Company, threatened against the Company which in any case or in the
aggregate might result in any material adverse change in the condition
(financial or other), results of operations, business, property, prospects,
net worth or assets of the Company or which is required to be disclosed in
the Registration Statement.
(i) Financial Statements. The audited financial statements included or
incorporated by reference in each Prospectus present and will present as of
the applicable Representation Date and at all
3
<PAGE> 4
times during each Marketing Period, fairly, the financial condition, the
results of operations and cash flows of the Company, at the dates and for
the periods indicated, and have been, and will be as of the applicable
Representation Date and at all times during each Marketing Period, prepared
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the period or periods involved except as may
otherwise be stated therein; and the supporting schedules included or
incorporated by reference in each Prospectus present, and will present as
of the applicable Representation Date and at all times during each
Marketing Period, fairly, the information required to be stated therein.
The unaudited financial statements of the Company, if any, and the related
notes, included or incorporated by reference in each Prospectus are, and
will be, as of the applicable Representation Date and at all times during
each Marketing Period, true, complete and correct, subject to normally
recurring changes resulting from year-end audit adjustments, and prepared
in accordance with the instructions to Form 10-Q.
(j) Documents Incorporated by Reference. The documents incorporated by
reference into any Prospectus have been, and will be as of the applicable
Representation Date and at all times during each Marketing Period, prepared
by the Company in conformity with the applicable requirements of the Act
and the Rules and Regulations and the Exchange Act and the rules and
regulations of the Commission thereunder; and such documents have been, or
will be, as of the applicable Representation Date and at all times during
each Marketing Period, timely filed as required thereby.
(k) Exhibits to Registration Statement. There are no contracts or
other documents which are required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations, or which
were required to be filed as exhibits to any document incorporated by
reference in any Prospectus by the Exchange Act or the rules and
regulations of the Commission thereunder, which have not been filed as
exhibits to the Registration Statement or to such document incorporated
therein by reference as permitted by the Rules and Regulations or the rules
and regulations of the Commission under the Exchange Act, as the case may
be.
(l) Franchises. The company has such valid and sufficient franchises,
licenses, permits, operating rights, certificates of convenience and
necessity, easements and rights-of-way as are necessary for the operation
and maintenance of its business and properties as a whole as presently
conducted and as presently proposed to be conducted, without any known
material conflict with the rights of others, and free from burdensome
restrictions or conditions of an unusual character except that (i) the
Company from time to time makes minor extensions of its system prior to the
time a related franchise, certificate, license or permit is procured, and
(ii) from time to time communities already being served by the Company
become incorporated and considerable time may elapse before a new or
substituted franchise is procured; provided, however, that none of the
occurrences of the type described in (i) or (ii) would in any case or in
the aggregate materially adversely affect the business, operations,
affairs, condition (financial or otherwise), prospects, net worth, profits,
or assets of the Company taken as a whole. To the best of the Company's
knowledge after due inquiry, the Company is not in violation of the terms
and conditions of any franchise, license, permit, operating right, or
certificates of convenience and necessity, which violation, in any case or
in aggregate with other such violations, might materially adversely affect
the business, operations, affairs, condition (financial or otherwise),
prospects, net worth, profits, or assets of the Company.
(m) Properties. As of the applicable Representation Date and at all
times during each Marketing Period, all properties then owned or held by
the Company (except such as are specifically excepted from the lien of the
Indenture) will have been validly subjected to the lien of the Indenture
and adequately described or referred to therein, and the Company will have
good and marketable title in fee simple to all such real property and good
and marketable title to all such personal property, free and clear of all
liens and encumbrances, except for (i) the lien of the Indenture, (ii)
"permitted encumbrances" as defined in the Indenture, and (iii) minor
leases, defects, irregularities and deficiencies in titles of properties
and rights-of-way and other grants which, in the opinion of counsel to the
Company, do not in any case or in the aggregate, materially impair the use
4
<PAGE> 5
of such properties, rights-of-way or other grants for the purposes for
which they are held by the Company.
(n) Holding Company Status. The Company is not and, after giving
effect to the offering and sale of the Notes, will not be a "subsidiary
company" of a registered holding company nor a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended (the
"Holding Company Act"). The Parent is a "holding company" as defined in the
Holding Company Act by reason of its ownership of all of the outstanding
shares of common stock of the Company, but the Parent and the Company are
each exempt from the Holding Company Act, except for the provisions of
Section 9(a)(2) thereof, by virtue of Section 3(a)(1) thereof and Rule 2
thereunder. The Company is not subject to the jurisdiction of the Federal
Energy Regulatory Commission ("FERC") with respect to the issue and sale of
the Notes.
(o) Investment Company Act. The Company is not and, after giving
effect to the offering and sale of the Notes, will not be an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(p) Governmental Consents. The Company has complied in all respects
with the requirements of Section 80.08.040 Revised Code of Washington
("R.C.W. 80.08.040") in connection with the issuance and sale from time to
time of the Notes contemplated hereby, and has made a filing with the
Washington Utilities and Transportation Commission (the "WUTC") pursuant to
R.C.W. 80.08.040 on , 1995. Except such as have been made or
obtained under the Act, the Trust Indenture Act, the Exchange Act,
applicable state securities laws and R.C.W. 80.08.040, no other
authorization, approval, consent, filing, registration or qualification of
any other court or governmental regulatory authority is required for the
due execution, delivery or performance of this Agreement, each applicable
Purchase Agreement, if any, or the Indenture, or the valid authorization,
issuance or sale of the Notes in the manner herein and therein
contemplated.
(q) Lien of Original Indenture. The Original Indenture as heretofore
amended, modified and supplemented has been duly filed for record as a
mortgage of real property and security interest in the personal property in
all counties in which the Company owns property, has been filed in the
office of the Uniform Commercial Code Division of the Department of
Licensing of the State of Washington pursuant to the Uniform Commercial
Code of the State of Washington, and constitutes a valid, direct first
mortgage lien of record upon the real properties and a valid, direct first
priority perfected security interest in the personal property of the
Company presently owned by it and described or referred to therein as being
subject to the lien thereof, subject to certain "permitted encumbrances",
as defined in the Indenture, and to liens, if any, existing or placed
thereon at the time of acquisition thereof by the Company, and, with
respect to real property acquired subsequent to the recordation of any
given supplemental indenture, liens, if any, arising prior to recordation
of a supplemental indenture legally describing such after acquired real
property; the descriptions contained in the Indenture of the property of
the Company therein specifically described are in all respects sufficient
descriptions of such property for all the purposes of the Indenture; all
property, rights, privileges and franchises of the character described in
the granting clauses of the Original Indenture (other than "excepted
property", as such term is defined in the Indenture) acquired by the
Company after the date of the Twenty-ninth Supplemental Indenture, dated as
of June 1, 1993, to the Original Indenture has, to the extent heretofore
acquired, and will, upon such acquisition, become subject to the lien of
the Indenture, subject to no lien prior to or pari passu with the lien of
the Indenture except as otherwise expressly stated therein or permitted
thereby, and liens, if any, existing or placed thereon at the time of the
acquisition thereof by the Company, and, with respect to real property
acquired subsequent to the recordation of any given supplemental indenture,
liens, if any, arising prior to recordation of a supplemental indenture
legally describing such after-acquired real property; and no re-recording
or refiling of the Indenture is, or will under existing laws be, necessary
to maintain, preserve and protect the lien of the Indenture as a mortgage
of the real property and grant of a
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<PAGE> 6
security interest in the personal property intended to be covered thereby
except the recordation of a supplemental indenture legally describing any
after-acquired real property.
(r) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes.
(s) Immediately after any sale of Notes by the Company hereunder or
under any Purchase Agreement, the aggregate amount of Notes which shall
have been issued and sold by the Company hereunder or under any Purchase
Agreement and of any debt securities of the Company (other than such Notes)
that shall have been issued and sold pursuant to the Registration Statement
will not exceed the amount of debt securities registered under the
Registration Statement.
SECTION 2. SOLICITATIONS AS AGENT.
(a) Appointment. Subject to the terms and conditions stated herein,
the Company hereby appoints each of the Agents as the exclusive agents of
the Company for the purpose of soliciting or receiving offers to purchase
the Notes from the Company by others. On the basis of the representations
and warranties contained herein, but subject to the terms and conditions
herein set forth, each Agent agrees, as the exclusive agents of the
Company, to use its reasonable efforts to solicit offers to purchase the
Notes upon the terms and conditions set forth in the Prospectus. Except as
otherwise provided herein, so long as this Agreement shall remain in effect
with respect to any Agent, the Company shall not, without the consent of
each such Agent, solicit or accept offers to purchase Notes otherwise than
through one of the Agents.
(b) Suspension of Solicitation. The Company reserves the right, in its
sole discretion, to suspend solicitation of offers to purchase the Notes
commencing at any time for any period of time or permanently. Upon receipt
of at least one business day's prior written notice from the Company, the
Agents will forthwith suspend solicitation of offers to purchase Notes from
the Company until such time as the Company has advised the Agents that such
solicitation may be resumed. For the purpose of the foregoing sentence,
"business day" shall mean any day which is not a Saturday or Sunday and
which in New York City is not a day on which banking institutions are
generally authorized or obligated by law to close.
(c) Agent's Commission. Promptly upon the closing of the sale of any
Notes sold by the Company as a result of a solicitation made by an Agent,
the Company agrees to pay such Agent a commission in accordance with the
schedule set forth in Exhibit A hereto.
(d) Solicitation of Offers. The Agents are authorized to solicit
offers to purchase the Notes only in denominations of $100,000 or any
amount in excess thereof which is an integral multiple of $1,000, at a
purchase price equal to 100% of the principal amount thereof. Each Agent
shall communicate to the Company, orally or in writing, each reasonable
offer to purchase Notes received by it as an Agent. The Company shall have
the sole right to accept offers to purchase the Notes and may reject any
such offer in whole or in part. Each Agent shall have the right, in its
discretion reasonably exercised without advising the Company, to reject any
offer to purchase the Notes received by it, in whole or in part, and any
such rejection shall not be deemed a breach of its agreement contained
herein.
(e) Administrative Procedures. Administrative procedures respecting
the sale of Notes (the "Procedures") are set forth in Exhibit B hereto and
may be amended in writing from time to time by the Agents and the Company.
Each Agent and the Company agree to perform the respective duties and
obligations specifically provided to be performed by each of them herein
and in the Procedures.
(f) Delivery of Documents. The documents required to be delivered by
Section 5 hereof shall be delivered at the offices of Sullivan & Cromwell,
125 Broad Street, New York, New York 10004, not later than 10:00 a.m., New
York City time, on the date of this Agreement or at such later time as may
be mutually agreed upon by the Company and the Agents, which in no event
shall be later than the
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<PAGE> 7
day prior to the date on which the Agents commence solicitation of offers
to purchase Notes hereunder (the "Closing Date").
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants and agrees:
(a) Delivery of Signed Registration Statement and Prospectus. To
furnish promptly to the Agents and to their counsel a signed copy of the
Registration Statement as originally filed and each amendment or supplement
thereto, all documents incorporated therein by reference and all consents
and exhibits filed therewith;
(b) Delivery of Other Documents. To deliver promptly to the Agents,
and in such number as they may reasonably request, each of the following
documents: (i) conformed copies of the Registration Statement (excluding
exhibits other than the computation of the ratio of earnings to fixed
charges, the Indenture and this Agreement), (ii) the Basic Prospectus,
(iii) each Prospectus and (iv) any documents incorporated by reference in
the Prospectus;
(c) Revisions to Prospectus -- Material Changes. If, during any
Marketing Period, any event occurs as a result of which the Prospectus
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made when such Prospectus was
delivered, not misleading, or if it is necessary at any time to amend or
supplement any Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus to comply with the Act, the
Exchange Act or the Trust Indenture Act, to notify the Agents promptly, in
writing, to suspend solicitation of purchases of the Notes; and if the
Company shall decide to amend or supplement the Registration Statement or
any Prospectus, to promptly advise the Agents by telephone (with
confirmation in writing) and to promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance; provided,
however, that if during the period referred to above any Agent shall own
any Notes which it has purchased from the Company as principal with the
intention of reselling them or any Agent is otherwise required to deliver a
Prospectus in respect of transactions in the Notes, the Company shall
promptly prepare and timely file with the Commission any amendment or
supplement to the Registration Statement or any Prospectus that may, in the
judgment of the Company or the Agents, be required by the Act or requested
by the Commission;
(d) Commission Filings. To timely file with the Commission during any
Marketing Period, all documents (and any amendments to previously filed
documents) required to be filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act;
(e) Copies of Filings with Commission. Prior to filing with the
Commission during any Marketing Period, (i) any amendment or supplement to
the Registration Statement, (ii) any amendment or supplement to any
Prospectus or (iii) any document incorporated by reference in any of the
foregoing or any amendment of or supplement to any such incorporated
document, to furnish a copy thereof to the Agents sufficiently in advance
so as to afford the Agents a reasonable opportunity to comment on any such
proposed amendment or supplement;
(f) Amendments or Supplements to Registration Statement or
Prospectus. (i) To make no amendment or supplement to the Registration
Statement or the Prospectus (A) prior to the Closing Date which shall be
disapproved by any Agent promptly after reasonable notice thereof or (B)
after the date of any Purchase Agreement or other agreement by an Agent to
purchase Notes as principal and prior to the time of delivery of the Notes
thereunder which shall be disapproved by any Agent purchasing as principal
promptly after reasonable notice thereof; (ii) to prepare, with respect to
any Notes to be sold through or to such Agent pursuant to this Agreement, a
Pricing Supplement with respect to such Notes in a form previously approved
by such Agent and to file such Pricing Supplement pursuant to Rule
424(b)(3) under the Act not later that the close of business of the
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<PAGE> 8
Commission on the fifth business day after the date on which such Pricing
Supplement is first used; (iii) to make no amendment or supplement to the
Registration Statement or Prospectus, other than any Pricing Supplement, at
any time prior to having afforded each Agent a reasonable opportunity to
review and comment thereon;
(g) Notice to Agents of Certain Events. To advise the Agents
immediately (i) when any post-effective amendment to the Registration
Statement relating to or covering the Notes becomes effective or any
amendment or supplement to the Prospectus has been filed, (ii) of any
request or proposed request by the Commission for an amendment or
supplement to the Registration Statement, to any Prospectus, to any
document incorporated by reference in any of the foregoing or for any
additional information (and to afford the Agents a reasonable opportunity
to comment on any such proposed amendment or supplement), (iii) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or any part thereof or any order directed to
any Prospectus or any document incorporated therein by reference or the
initiation or threat of any stop order proceeding or of any challenge to
the accuracy or adequacy of any document incorporated by reference in any
Prospectus, (iv) of receipt by the Company of any notification with respect
to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threat of any proceeding for that
purpose, (v) of any downgrading in the rating of the Notes or any other
debt securities of the Company, or any public announcement that the rating
of the Notes or any other debt securities of the Company is under
surveillance or review (other than an announcement with positive
implications of a possible upgrading, and no implications of a possible
downgrading, of such rating), by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Act), as soon as the Company learns of any such downgrading or proposal to
downgrade and (vi) of the happening of any event which makes untrue any
statement of a material fact made in the Registration Statement or any
Prospectus or which requires the making of a change in the Registration
Statement or any Prospectus in order to make any material statement therein
not misleading;
(h) Stop Orders. If, during any Marketing Period, the Commission shall
issue a stop order suspending the effectiveness of the Registration
Statement or any part thereof or an order directed to any Prospectus or any
document incorporated by reference or an order suspending the qualification
of the Notes for sale in any jurisdiction, to make every reasonable effort
to obtain the lifting of that order at the earliest possible time;
(i) Earning Statements. To make generally available to its
securityholders as soon as practicable, but in any event not later than
eighteen months after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Act), an earnings statement of the Company
(which need not be audited) complying with Section 11(a) of the Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(j) Copies of Reports, Releases and Financial Statements. So long as
any of the Notes are outstanding, to furnish to the Agents, not later than
the time the Company makes the same available to the public, copies of all
public reports or releases and all reports and financial statements
furnished by the Company to any securities exchange on which the Notes are
listed pursuant to requirements of or agreements with such exchange or to
the Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder and such additional information concerning the
business and financial condition of the Company as such Agent may from time
to time reasonably request;
(k) Blue Sky Qualifications. To endeavor, in cooperation with the
Agents, to qualify the Notes for offering and sale under the securities
laws of such jurisdictions as the Agents may designate, and to maintain
such qualifications in effect for as long as may be required for the
distribution of the Notes; and to file such statements and reports as may
be required by the laws of each jurisdiction in which the Notes have been
qualified as above provided; provided, however, 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
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<PAGE> 9
to take any action which would subject it to general service of process in
any jurisdiction where it is not now so subject; and
(l) Use of Proceeds. To apply the net proceeds from the sale of the
Notes as set forth in the Prospectus.
SECTION 4. PAYMENT OF EXPENSES.
The Company will pay:
(i) the costs incident to the authorization, preparation, issuance,
sale and delivery of the Notes (including the cost of printing, producing
or reproducing this Agreement, any Purchase Agreement, any Indenture, any
closing documents and any other documents in connection with the issuance,
sale and delivery of the Notes) and any taxes payable in that connection,
(ii) the costs incident to the preparation, printing and filing under
the Act of the Registration Statement and any amendments and exhibits
thereto,
(iii) the costs incident to the preparation, printing and filing of
any document and any amendments and exhibits thereto required to be filed
by the Company under the Exchange Act,
(iv) the costs of distributing the Registration Statement, as
originally filed, and each amendment and post-effective amendment thereof
(including exhibits), the Basic Prospectus, each Prospectus, any supplement
or amendment to any Prospectus and any documents incorporated by reference
in any of the foregoing documents,
(v) the fees and disbursements of the Trustee, any paying agent, and
any other agents appointed by the Company, and their respective counsel,
(vi) the costs and fees in connection with the listing of the Notes on
any securities exchange,
(vii) the cost of any filings with the National Association of
Securities Dealers, Inc. (including the fees and expenses of counsel for
the Agents in connection therewith),
(viii) the fees and disbursements of counsel to the Company and
counsel to the Agents,
(ix) the fees paid to rating agencies in connection with the rating of
the Notes,
(x) the fees and expenses of qualifying the Notes under the securities
laws of the several jurisdictions as provided in Section 3(k) hereof and of
preparing and printing a Blue Sky Memorandum and any memorandum concerning
the legality of the Notes as an investment (including fees and expenses of
counsel for the Agents in connection therewith),
(xi) all advertising expenses in connection with the offering of the
Notes incurred with the consent of the Company, and
(xii) all other costs and expenses incident to the performance of the
Company's obligations under this Agreement.
SECTION 5. CONDITIONS OF OBLIGATIONS OF AGENT.
The obligation of the Agents, as agents of the Company, under this
Agreement to solicit offers to purchase the Notes, the obligation of any person
who has agreed to purchase Notes to make payment for and take delivery thereof,
and the obligation of any Agent to purchase Notes, pursuant to any Purchase
Agreement or otherwise, are subject to the accuracy, on each Representation
Date, of the representations and warranties of the Company contained herein, to
the accuracy of the statements of the Company's officers made in any certificate
furnished pursuant to the provisions hereof, to the perform-
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<PAGE> 10
ance by the Company of its obligations hereunder, and to each of the following
additional terms and conditions:
(a) Registration Statement. No stop order suspending the effectiveness
of the Registration Statement or any part thereof nor any order directed to
any document incorporated by reference in any Prospectus shall have been
issued and no stop order proceeding shall have been initiated or threatened
by the Commission and no challenge shall have been made to the accuracy or
adequacy of any document incorporated by reference in any Prospectus; any
request of the Commission for inclusion of additional information in the
Registration Statement or any Prospectus or otherwise shall have been
complied with; and the Company shall have filed with the Commission any
amendment or supplement to the Registration Statement or any Prospectus (or
any document incorporated by reference therein) as required under the Act,
the Rules and Regulations, the Exchange Act and the rules and regulations
of the Commission thereunder and in accordance with Section 3(f) hereof.
(b) No Suspension of Sale of the Notes. No order suspending the sale
of the Notes in any jurisdiction designated by the Agents pursuant to
Section 3(k) hereof shall have been issued, and no proceeding for that
purpose shall have been initiated or threatened.
(c) No Material Omissions or Untrue Statements. The Agents shall not
have discovered and disclosed to the Company that the Registration
Statement or any Prospectus contains an untrue statement of a fact which,
in the opinion of counsel for the Agents, is material or that the
Registration Statement or any Prospectus omits to state a fact which, in
the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(d) Opinion of Counsel for the Agents. Sullivan & Cromwell, counsel to
the Agents shall have furnished to the Agents (A) such opinion or opinions,
dated the Closing Date, with respect to the incorporation of the Company,
the validity of the Indenture, the Notes, the Registration Statement, the
Prospectus and other related matters as such Agent may reasonably request,
and (B) if and to the extent requested by such Agent, with respect to each
applicable date referred to in Section 6(d) hereof that has passed, an
opinion or opinions, dated such applicable date, to the effect that such
Agent may rely on the opinion or opinions which were last furnished to such
Agent pursuant to this Section 5(d) to the same extent as though it or they
were dated the date of such letter authorizing reliance (except that the
statements in such last opinion or opinions shall be deemed to relate to
the Registration Statement and the Prospectus as amended and supplemented
to such date) or, in any case, in lieu of such an opinion or opinions, an
opinion or opinions of the same tenor as the opinion or opinions referred
to in clause (A) but modified to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date; and in each case
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters.
(e) Opinion of Company Counsel. At the Closing Date, the Agents shall
have received the opinion, addressed to the Agents and dated the Closing
Date, of Riddell, Williams, Bullitt & Walkinshaw, counsel for the Company,
in form and substance satisfactory to the Agents and its counsel, to the
effect that:
(i) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the State of
Washington, has full corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus, is
not required to qualify to do business as a foreign corporation in any
jurisdiction, and has and holds all licenses, certificates and permits
from governmental authorities necessary for the conduct of its business
as described in the Prospectus except where the failure to obtain the
same, in any case or in the aggregate, will not have a material adverse
effect on the Company;
(ii) This Agreement and any applicable Purchase Agreement have been
duly authorized, executed and delivered by the Company;
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<PAGE> 11
(iii) The execution, delivery and performance by the Company of
this Agreement, each Purchase Agreement, if any, the Indenture and the
Notes will not contravene any provision of applicable law or the amended
and restated articles of incorporation or amended and restated by-laws
of the Company or any agreement or other instrument binding upon the
Company of which such counsel has knowledge after due inquiry;
(iv) The Company is not, nor with the giving of notice or lapse of
time or both would be, in violation of or in default under, nor will the
execution or delivery of this Agreement, each Purchase Agreement, if
any, the Indenture or the Notes, or consummation of the transactions
contemplated hereby or thereby result in a violation of, or constitute a
default under, the amended and restated articles of incorporation or
amended and restated by-laws of the Company, or any agreement, indenture
or other instrument to which the Company is a party or by which it is or
may be bound and of which such counsel has knowledge after due inquiry,
or to which any of its properties is subject, nor will the performance
by the Company of its obligations hereunder or thereunder violate any
law, rule or administrative regulation, or any decree of which such
counsel has knowledge after due inquiry, of any court or any
governmental agency or body having jurisdiction over the Company or any
of its properties, or, to the best knowledge of such counsel after due
inquiry, result in the creation or imposition of any lien, charge, claim
or encumbrance upon the properties or assets of the Company (except the
lien of the Indenture) which, in any case or in the aggregate, would be
material to the Company;
(v) The Indenture has been duly authorized by the Company and duly
executed and delivered by the Company, and is a valid and binding
instrument enforceable in accordance with its terms except that certain
of the remedial provisions thereof may be limited by the laws of the
State of Washington (but such laws do not make the remedies afforded
inadequate for the realization of the benefits of the security provided
thereby) and except as limited by bankruptcy, insolvency, moratorium,
reorganization, fraudulent transfer or other similar laws affecting the
rights of creditors generally from time to time in effect and by general
principles of equity (regardless of whether considered in a proceeding
in equity or at law), and the Indenture has been duly qualified under
the Trust Indenture Act;
(vi) The Indenture has been duly filed for record as a mortgage of
real property and security interest in personal property of the Company
in all counties in which the Company owns property, has been filed in
the office of the Uniform Commercial Code Division of the Department of
Licensing of the State of Washington pursuant to the Uniform Commercial
Code of the State of Washington, and constitutes a valid direct first
mortgage lien of record upon the real properties and a valid direct
first priority perfected security interest in the personal properties of
the Company presently owned by it and described or referred to therein
as being subject to the lien thereof, subject, in each case, to certain
"permitted encumbrances", as defined in the Indenture, and to liens, if
any, existing or placed thereon at the time of acquisition thereof by
the Company, and, with respect to real property acquired subsequent to
the recordation of any given supplemental indenture, liens, if any,
arising prior to recordation of any supplemental indenture legally
describing such after-acquired real property; the descriptions contained
in the Indenture of the property of the Company therein specifically
described are in all respects sufficient descriptions of such property
for all the purposes of the Indenture; all property, rights, privileges
and franchises of the character described in the granting clauses of the
Original Indenture (other than "excepted property", as such term is
defined in the Indenture) acquired by the Company after the date of the
Supplemental Indenture will upon such acquisition become subject to the
lien of the Indenture, subject to no lien prior to or pari passu with
the lien of the Indenture except as otherwise expressly stated therein
or permitted thereby and liens, if any, existing or placed thereon at
the time of the acquisition thereof by the Company, and, with respect to
real property acquired subsequent to the recordation of any given
supplemental indenture, liens, if any, arising prior to recordation of a
supplemental indenture legally describing such after-acquired real
property; and no re-recording or refiling of the Indenture is, or will
under
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<PAGE> 12
existing laws be, necessary to maintain, preserve and protect the lien
of the Indenture as a mortgage of the real property and security
interest in the personal property intended to be covered thereby except
the recordation of a supplemental indenture legally describing any
after-acquired real property;
(vii) The Notes are in a form contemplated by the Indenture and
have been duly authorized by all necessary corporate action and, when
the terms of the Notes and of their issue and sale have been duly
established in accordance with the Indenture and this Agreement, and
when the Notes have been duly executed and authenticated as specified in
the Indenture and delivered against payment therefor in accordance with
this Agreement, the Notes will be legal, valid and binding obligations
of the Company enforceable in accordance with their terms except that,
to the extent that the Notes incorporate the provisions of the
Indenture, certain of the remedial provisions thereof may be limited by
the laws of the State of Washington (but such laws do not make the
remedies afforded inadequate for the realization of the benefits of the
security provided thereby) and except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting the rights of
creditors generally from time to time in effect and by general
principles of equity (regardless of whether considered in a proceeding
in equity or at law), and the Notes will be entitled to the benefits of
the Indenture and the security afforded thereby equally and ratably with
all bonds issued thereunder;
(viii) No taxes (as distinguished from filing and recording fees)
are payable to any state or subdivision or agency thereof in connection
with the execution, delivery or filing of the Indenture, or the
recordation of the Indenture, or the execution, authentication, issue or
delivery of the Notes; and all filing and recording fees in connection
with such matters have been paid;
(ix) The Company has good and marketable fee title to all the real
properties presently owned by it and good title to all the other
properties presently owned by it and described or referred to in the
Indenture as being subject to the lien thereof, subject to no lien prior
to, or pari passu with, the lien of the Indenture, except (i) as
otherwise expressly stated therein, (ii) "permitted encumbrances" as
defined in the Indenture, and (iii) minor leases, defects,
irregularities and deficiencies in titles of properties and
rights-of-way and other grants which, in the opinion of such counsel, do
not in any case or in the aggregate materially impair the use of such
properties, rights-of-way or other grants for the purposes for which
they are held by the Company;
(x) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending before or, to the best knowledge of such
counsel, contemplated by the Commission; the Registration Statement and
the Prospectus, and any amendment or supplement thereto, as of their
respective effective dates comply in all material respects with the
requirements of the Act and the Rules and Regulations and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder; and any document that was filed by the Company under the
Exchange Act and was deemed to be incorporated by reference into the
Prospectus complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission
thereunder (it being understood that such counsel need express no
opinion on the financial statements or other financial data included
therein); and such counsel has no reason to believe that the
Registration Statement or any amendment thereto at the time such
Registration Statement or amendment thereto became effective contained
any 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, or that on the date of such opinion, the
Prospectus or any supplement thereto contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such
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<PAGE> 13
counsel need express no opinion with respect to the financial statements
or other financial data included in the Registration Statement and the
Prospectus, or with respect to that part of the Registration Statement
which constitutes the Form T-1); and such counsel does not know of any
amendment to the Registration Statement required to be filed or any
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be incorporated by
reference into the Prospectus as amended or supplemented or required to
be described in the Registration Statement or the Prospectus as amended
or supplemented which are not filed or incorporated by reference or
described as required;
(xi) After due inquiry, such counsel does not know of any legal or
governmental proceeding pending or threatened to which the Company is a
party or to which any of its properties is subject that is required to
be described in the Registration Statement or the Prospectus and is not
so described, or of any contract or other document that is required to
be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement that is not so
described or filed;
(xii) The statements made (A) in the Registration Statement and the
Prospectus under the captions "Description of First Mortgage Bonds,
Secured Medium-Term Notes, Series C" and "Description of Mortgage", (B)
in Item 15 in Part II of the Registration Statement and (C) in the
Company's Annual Report on Form 10-K for the year ended September 30,
1994 under the captions "Business -- (c) Description of
Business -- Washington Natural Gas Company -(5) Franchises" at page 6,
"-- (6) Environmental Matters" at page 7, "-- (7) Gas Supply" at page 8,
"-- (8) Regulation and Rates" at page 10 and "Legal Proceedings" at page
18, insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly present
the information required by the Act and the Rules and Regulations with
respect to such legal matters, documents and proceedings;
(xiii) To the knowledge of such counsel, no order directed to any
document incorporated by reference in the Prospectus has been issued and
no challenge has been made to the accuracy or adequacy of any such
document;
(xiv) The Notes and the Indenture conform to the statements
concerning each of them in the Registration Statement and the
Prospectus;
(xv) On , 1995, the Company filed with the WUTC the
information required, in form and substance, by R.C.W. 80.08.040 in
respect of the issue and sale of the Notes from time to time as
contemplated hereby. No other authorization, approval, consent, filing,
registration or qualification of any court or governmental regulatory
authority is required in connection with such issue and sale thereof or
the execution and delivery of this Agreement and each Purchase
Agreement, if any, or the Indenture except such as have been made or
obtained under the Act, the Trust Indenture Act, the Exchange Act,
applicable state securities laws or R.C.W. 80.08.040;
(xvi) The franchises, licenses, permits and certificates of
convenience and necessity held by the Company are validly held by the
Company and give to the Company all necessary authority for the
operation and maintenance of its business and property as now conducted
without any known conflict with the rights of others, and are free from
burdensome restrictions or conditions of an unusual character, except
that (i) the Company from time to time makes minor extensions of its
system prior to the time a related franchise, certificate, license or
permit is procured, and (ii) from time to time communities already being
served by the Company become incorporated and considerable time may
elapse before a new or substituted franchise is procured; and, to such
counsel's current actual knowledge, the Company is not in violation of
the terms and conditions of any such franchises, certificates of
convenience and necessity, licenses and permits, which violation might,
in any case or in aggregate with other such violations, materially
adversely affect the business, operations, affairs, condition (financial
or otherwise), prospects, net worth, profits, or assets of the Company
taken as a whole;
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(xvii) The Company is neither a "subsidiary company" of a
registered holding company nor a "holding company" within the meaning of
the Holding Company Act. The Parent is a "holding company" as defined in
such Act by reason of its ownership of all of the outstanding shares of
common stock of the Company, but the Parent and the Company are each
exempt from such Act, except for the provisions of Section 9 (a) (2)
thereof, by virtue of Section 3 (a) (1) thereof and Rule 2 thereunder.
The Company is not subject to the jurisdiction of the Federal Energy
Regulatory Commission with respect to the issue and sale of the Notes;
(xviii) The Company has an authorized capitalization as set forth
in the Prospectus as amended or supplemented and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable; and
(xix) The Company is not and, after giving effect to the offering
and sale of the Notes, will not be an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act.
In rendering the foregoing opinion, such counsel may rely, as to matters of
fact, upon certificates of officers of the Company and certificates of
public officials. Certificates so relied upon shall be furnished to the
Agents. In rendering such opinion, such counsel shall state that Sullivan &
Cromwell may rely upon such opinion as to all matters of Washington law.
(f) Officers' Certificate. There shall have been furnished to the
Agents a certificate, dated the Closing Date, signed by the Chairman of the
Board or the President and the Senior Vice President -- Finance, Planning
and Development or the Treasurer of the Company to the effect that: (i) to
the best of the knowledge of the signers, the representations and
warranties of the Company contained in this Agreement are true and correct,
as if made at and as of the date of such certificate, and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the date of such
certificate; (ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of the knowledge
of the signers, no proceedings for that purpose have been initiated or
threatened; (iii) the signers of said certificate have carefully examined
the Registration Statement and the Prospectus, and any amendments or
supplements thereto (including all documents filed under the Exchange Act
and deemed to be incorporated by reference in the Prospectus), and, to the
best of the knowledge of the signers, such documents contain all statements
and information required to be included therein, and do not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading; (iv) subsequent to the date of the most recent financial
statements incorporated by reference in the Prospectus there has been no
material adverse change in the condition (financial or other), results of
operations, business, prospects, net worth or assets of the Company, except
as set forth in the Registration Statement and the Prospectus; (v) since
the effective date of the Registration Statement, there has occurred no
event required to be set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not been so set forth;
and (vi) since the effective date of the Registration Statement, the
Company shall not have sustained any loss by fire, flood, accident or other
calamity (whether or not insured) of such a character as to interfere
materially with the conduct of the business and operations of the Company.
(g) Accountant's Letter. The Agents shall have received on the Closing
Date a letter of Arthur Andersen LLP, dated the Closing Date, and addressed
to the Agents, confirming that they are independent certified public
accountants within the meaning of the Act and the applicable published
Rules and Regulations, and stating, as of the date of such letter (or, with
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given or incorporated
in the Prospectus, as of a date not more than five days prior to the date
of such letter), the conclusions and findings of such firm with respect to
the financial information and other matters requested to be covered by such
letter.
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(h) Internal Accounting Controls. The Agents shall have received from
the Parent a copy of the letter from Arthur Andersen & Co. relating to the
study made of the Parent's internal accounting controls in connection with
their examination of the Parent's financial statements for the fiscal year
ended September 30, 1994.
(i) Additional Conditions. There shall not have occurred: (i) any
change, or any development involving a prospective change, in or affecting
primarily the business, properties, condition (financial or other), results
of operations or prospects of the Company which materially impairs the
investment quality of the Notes; (ii) a suspension or material limitation
in trading in securities generally or the Company's securities specifically
on the New York Stock Exchange or the establishment of minimum prices on
such exchange; (iii) a general moratorium on commercial banking activities
declared by Federal, Washington State or New York State authorities; (iv)
any downgrading in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act or
any public announcement that any such organization has under surveillance
or review its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implications of a possible downgrading, of such rating); (v) any outbreak
or escalation of hostilities in which the United States is involved, any
declaration of war by the United States or any other national calamity or
emergency; or (vi) any material adverse change in the existing financial,
political or economic conditions in the United States, including any effect
of international conditions on the financial markets in the United States,
that in the judgment of the Agents, with respect to any of clauses (iv),
(v) and (vi) above, makes it impracticable or inadvisable to proceed with
the solicitation of offers to purchase Notes or the purchase of Notes from
the Company, as the case may be on the terms and in the manner contemplated
in the Prospectus.
(j) The Company shall not have sustained since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus as amended or supplemented prior to the date of the applicable
Pricing Supplement, which in the case of any purchase of Notes by an Agent
as a principal shall be the Pricing Supplement relating to the Notes to be
delivered pursuant to the purchase by the Agent, any loss or interference
with its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented prior to the date
of the applicable Pricing Supplement, which in the case of any purchase of
Notes by an Agent as a principal shall be the Pricing Supplement relating
to the Notes to be delivered pursuant to the purchase by the Agent, and
(ii) since the respective dates as of which information is given in the
Prospectus as amended or supplemented prior to the date of the applicable
Pricing Supplement, which in the case of any purchase of Notes by an Agent
as a principal shall be the Pricing Supplement relating to the Notes to be
delivered pursuant to the purchase by the Agent, there shall not have been
any change in the capital stock or long-term debt of the Company or any
change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, shareholders' equity
or results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented prior to the date
of the applicable Pricing Supplement, which in the case of any purchase of
Notes by an Agent as a principal shall be the Pricing Supplement relating
to the Notes to be delivered pursuant to the purchase by the Agent, the
effect of which, in any such case described in Clause (i) or (ii), is in
the judgment of the Agents so material and adverse as to make is
impracticable or inadvisable to proceed with the solicitation by the Agents
of offers to purchase Notes from the Company or the purchase by the Agents
of Notes from the Company as principal, as the case may be, on the terms
and in the manner contemplated in the Prospectus as amended or supplemented
prior to the date of the applicable Pricing Supplement, which in the case
of any purchase of Notes by an Agent as a principal shall be the Pricing
Supplement relating to the Notes to be delivered pursuant to the purchase
by the Agent.
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<PAGE> 16
(k) Other Information and Documentation. Prior to the Closing Date,
the company shall have furnished to the Agents such further information,
certificates and documents as the Agents or counsel to the Agents may
reasonably request.
(l) Governmental Consent. The WUTC shall not have issued any legally
binding objection to, prohibition of or disapproval of the issuance and
sale of the Notes in the manner contemplated by this Agreement, which
objection, prohibition or disapproval shall not have been withdrawn or
otherwise shall no longer be outstanding, and no proceeding for such
objection, prohibition or disapproval shall have been initiated or
threatened.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in the form and substance satisfactory
to counsel for the Agents.
SECTION 6. ADDITIONAL COVENANTS OF THE COMPANY.
The Company covenants and agrees that:
(a) Acceptance of Offer Affirms Representations Warranties. Each
acceptance by it of an offer for the purchase of Notes shall be deemed to
be an affirmation that the representations and warranties of the Company
contained in this Agreement and in any certificate theretofore given to the
Agents pursuant hereto (as the same may be modified by any subsequent
certificate) are true and correct at the time of such acceptance, and an
undertaking that such representations and warranties will be true and
correct at the time of delivery to the purchaser or his agent of the Notes
relating to such acceptance as though made at and as of each such time (and
it is understood that such representations and warranties shall relate to
the Registration Statement and the Prospectus as amended or supplemented to
each such time).
(b) Subsequent Delivery of Officers' Certificates. The Company agrees
that during each Marketing Period, each time that the Registration
Statement or any Prospectus shall be amended or supplemented (other than by
a Pricing Supplement providing solely for the interest rates or maturities
of the Notes or the principal amount of Notes remaining to be sold or
similar changes) or the Company files with the Commission any document
incorporated by reference into any Prospectus, or the Company sells Notes
to such Agent as principal and the applicable Purchase Agreement specifies
the delivery of a certificate under Section 5(f) as a condition to the
purchase of Notes pursuant to such Purchase Agreement, the Company shall,
absent the submission of a certificate as provided below, be deemed to have
represented to the Agents, (i) as of the date of such amendment, supplement
or filing or delivery of Notes pursuant to such sale or (ii) if such
amendment, supplement or, filing was not filed during a Marketing Period,
as of the first day of the next succeeding Marketing Period, that the
statements contained in the certificate referred to in Section 5(f) hereof
which was last furnished to the Agents are true and correct at the time of
such amendment, supplement or filing, as the case may be, as though made at
and as of such time (except that such statements shall be deemed to relate
to the Registration Statement and each Prospectus as amended and
supplemented to such time) or, in lieu of such representation, the Company
may submit to the Agents a certificate of the same tenor as the certificate
referred to in said Section 5(f), modified as necessary to relate to the
Registration Statement and each Prospectus as amended and supplemented to
the time of delivery of such certificate.
(c) Subsequent Delivery of Legal Opinions. The Company agrees that
during each Marketing Period, each time that the Registration Statement or
any Prospectus shall be amended or supplemented (other than by a Pricing
Supplement providing solely for the interest rates or maturities of the
Notes or the principal amount of Notes remaining to be sold or similar
changes) or the Company files with the Commission any document incorporated
by reference into any Prospectus or the Company sells Notes to such Agent
as principal pursuant to a Purchase Agreement and such Purchase Agreement
specifies the delivery of an opinion under Section 5(e) as a condition to
the purchase of Notes pursuant to such Purchase Agreement, the Company
shall, (A) concurrently
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<PAGE> 17
with such amendment, supplement or filing or delivery of Notes pursuant to
such sale or (B) if such amendment, supplement or filing was not filed
during a Marketing Period, on the first day of the next succeeding
Marketing Period, furnish the Agents and their counsel with the written
opinion of Riddell, Williams, Bullitt & Walkinshaw, counsel for the
Company, addressed to the Agents and dated the date of delivery of such
opinion, in form satisfactory to the Agents, to the same effect as the
opinion referred to in Section 5(e) hereof, but modified, as necessary, to
relate to the Registration Statement and each Prospectus as amended or
supplemented to the time of delivery of such opinion; provided, however,
that in lieu of such opinion, such counsel may furnish the Agents with a
letter to the effect that the Agents may rely on such prior opinion to the
same extent as though it was dated the date of such letter authorizing
reliance (except that statements in such prior opinion shall be deemed to
relate to the Registration Statement and each Prospectus as amended or
supplemented to the time of delivery of such letter authorizing
reliance).
(d) Subsequent Delivery of Information to Agents' Counsel. That
reasonably in advance of each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a Pricing
Supplement), each time a document filed under the Act or the Exchange Act
is incorporated by reference into the Prospectus, and each time the Company
sells Notes to such Agent as principal pursuant to a Purchase Agreement and
such Purchase Agreement specifies the delivery of an opinion or opinions by
Sullivan & Cromwell, counsel to the Agents, as a condition to the purchase
of Notes pursuant to such Purchase Agreement, the Company shall furnish to
such counsel such papers and information as they may reasonably request to
enable them to furnish to such Agent the opinion or opinions referred to in
Section 5(d) hereof;
(e) On any settlement date for the sale of Notes, the Company shall,
if requested by the Agent that solicited or received the offer to purchase
any Notes being delivered on such settlement date, furnish such Agent with
a written opinion of Riddell, Williams, Bullitt & Walkinshaw, counsel for
the Company, dated such settlement date, in form satisfactory to such
Agent, to the effect set forth in Section 5 (e) hereof, but modified, as
necessary, to relate to the Prospectus relating to the Notes to be
delivered on such settlement date; provided, however, that in lieu of such
opinion, such counsel may furnish such Agent with a letter to the effect
that such Agent may rely on such prior opinion to the same extent as though
it was dated such settlement date (except that statements in such prior
opinion shall be deemed to relate to the Registration Statement and such
Prospectus as amended or supplemented to the time of delivery of such
letter authorizing reliance).
(f) Subsequent Delivery of Accountant's Letters. The Company agrees
that during each Marketing Period, each time that the Registration
Statement or any Prospectus shall be amended or supplemented to include
additional financial information or the Company files with the Commission
any document incorporated by reference into any Prospectus which contains
additional financial information or each time the Company sells Notes to
such Agent as principal pursuant to a Purchase Agreement and such Purchase
Agreement specifies the delivery of a letter under Section 5(g) as a
condition to the purchase of Notes pursuant to such Purchase Agreement, the
Company shall cause Arthur Andersen LLP (or other independent accountants
of the Company of recognized national standing) to furnish the Agents, (i)
concurrently with such amendment, supplement or filing or delivery of Notes
pursuant to such sale or (ii) if such amendment, supplement or filing was
not filed during a Marketing Period, on the first day of the next
succeeding Marketing Period, a letter, addressed to the Agents and dated
the date of delivery of such letter, in form and substance reasonably
satisfactory to the Agents, to the same effect as the letter referred to in
Section 5(g) hereof but modified to relate to the Registration Statement
and each Prospectus, as amended or supplemented to the date of such letter,
with such changes as may be necessary to reflect changes in the financial
statements and other information derived from the accounting records of the
company; provided, however, that if the Registration Statement or any
Prospectus is amended or supplemented solely to include financial
information as of and for a fiscal quarter, such accountants may limit the
scope of such letter to the unaudited financial statements included in such
amendment or supplement unless there is contained therein any other
accounting, financial or statistical
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information that, in the reasonable judgment of the Agents, should be
covered by such letter, in which event such letter shall also cover such
other information.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each Agent and each
person, if any, who controls any Agent within the meaning of the Act from
and against any loss, claim, damage or liability, joint or several, and any
action in respect thereof, to which such Agent or controlling person may
become subject, under the Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus or any
preliminary prospectus filed with the Commission, or any amendment or
supplement thereto, or, arises out of, or is based upon, the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
shall reimburse each Agent and controlling person for any legal and other
expenses reasonably incurred by such Agent or controlling person in
investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out
of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement or the
Prospectus or any preliminary prospectus filed with the Commission, or any
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by the Agents specifically for
inclusion therein. The foregoing indemnity agreement is in addition to any
liability which the company may otherwise have to any Agent or controlling
person.
(b) Each Agent shall indemnify and hold harmless the Company, each of
its directors, each of its officers who signed the Registration Statement
and any person who controls the Company within the meaning of the Act, from
and against any loss, claim, damage or liability, joint or several, and any
action in respect thereof, to which the Company or any such director,
officer or controlling person may become subject, under the Act, the
Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
or the Prospectus or any preliminary prospectus filed with the Commission,
or any amendment or supplement thereto, or arises out of, or is based upon,
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such Agent specifically for inclusion therein, and shall
reimburse the Company or any such director, officer or controlling person
for any legal and other expenses reasonably incurred by such indemnified
party in investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which each
Agent may otherwise have to the Company or any of its directors, officers
or controlling persons. The statements with respect to the public offering
of the Notes and the manner of distribution thereof and with respect to the
Agents set forth on the last sentence in the last paragraph of the cover
page of the Prospectus and in the second sentence of the second paragraph,
the third paragraph and the sixth paragraph (except the last sentence)
under the heading "Plan of Distribution" in the Prospectus constitute the
only information furnished in writing by the Agents for inclusion in the
Registration Statement and the Prospectus, and you, as the Agents, confirm
that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section
of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be
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made against the indemnifying party under this Section, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under Section 7(a) or 7(b), as applicable.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel satisfactory to the indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party). After notice from the indemnifying
party to the indemnified party of its election to assume the defense of
such claim or action, the indemnifying party shall not be liable to the
indemnified party under this Section for any legal expenses of other
counsel or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Agents shall have the right to
employ counsel to represent the Agents who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Agents against the Company under this Section if, in the reasonable
judgment of the Agents, it is advisable for the Agents to be represented by
separate counsel, and in that event the fees and expenses of such counsel
shall be paid by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent,
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement (i) includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding and (ii) does not include a statement as
to, or an admission of, fault, culpability or failure to act, by or on
behalf of any indemnified party.
(d) If the indemnification provided for in this Section 7 shall for
any reason be unavailable or insufficient to hold harmless an indemnified
party under Section 7(a) or 7(b) hereof in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand
and any Agent on the other from the offering of the Notes to which such
loss, claim, damage or liability, or action in respect thereof, relates or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and any Agent on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and any Agent on the other with respect to an
offering of Notes shall be deemed to be in the same proportion as the total
net proceeds from such offering of the Notes (before deducting expenses)
received by the Company bears to the total commissions received by such
Agent with respect, to such offering. The 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 any Agent, the intent of
the parties and their
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<PAGE> 20
relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Agents agree that
it would not be just and equitable if contributions pursuant to this
Section 7(d) were to be determined by pro rata or per capita allocation
(even if the Agents were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7 (d) shall be
deemed to include, for purposes of this Section 7 (d), 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 7(d), no Agent shall be required to contribute
any amount in excess of the amount by which the total price at which the
Notes sold through such Agent and distributed to the public were offered to
the public exceeds the amount of any damages which such Agent has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 8. STATUS OF EACH AGENT.
In soliciting offers to purchase the Notes from the Company pursuant to
this Agreement (other than offers to purchase pursuant to Section 11 hereof),
each Agent is acting solely as agent for the Company and not as principal. Each
Agent will make reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Notes from the Company has
been solicited by such Agent and accepted by the Company but such Agent shall
have no liability to the Company in the event any such purchase is not
consummated for any reason. If the Company shall default in its obligations to
deliver Notes to a purchaser whose offer it has accepted, the Company shall (i)
hold the Agents harmless against any loss, claim or damage arising from or as a
result of such default by the Company and (ii), in particular, pay to the Agents
any commission to which they would be entitled in connection with such sale.
SECTION 9. REPRESENTATIONS AND WARRANTIES TO SURVIVE DELIVERY.
All representations and warranties of the Company contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of the termination or cancellation of this Agreement or any investigation made
by or on behalf of any Agent or any person controlling such Agent or by or on
behalf of the Company, and shall survive each delivery of and payment for any of
the Notes.
SECTION 10. TERMINATION.
This Agreement may be terminated for any reason with respect to any party
hereto, at any time, by any party hereto upon the giving of one day's written
notice of such termination to the other parties hereto; provided, however, in
the event of such termination with respect to any Agent, this Agreement shall
remain in full force and effect with respect to any Agent as to which such
termination has not occurred. If, at the time of a termination, an offer to
purchase any of the Notes has been accepted by the Company but the time of
delivery to the purchaser has not occurred, the provisions of Sections 2(c),
3(c), 3(j) and (k) hereof shall remain in effect until such Notes are delivered.
The provisions of Sections 3(d), 3(i), 4, 7, 8, 9, 12, 13 and 14 hereof shall
survive any such termination.
SECTION 11. PURCHASES AS PRINCIPAL.
From time to time any Agent may agree with the Company to purchase Notes
from the Company as principal, in which case such purchase shall be made in
accordance with the terms of this Agreement and (unless the Company and such
Agent shall otherwise agree) a separate agreement (a "Purchase Agreement") to be
entered into between such Agent and the Company in the form attached hereto as
Exhibit C. A Purchase Agreement, to the extent set forth therein, may
incorporate by reference specified
20
<PAGE> 21
provisions of this Agreement. Each Purchase Agreement shall be substantially in
the form of Exhibit C hereto but an agreement with the Company by an Agent to
purchase as a principal may take the form of an exchange of any form of oral or
written telecommunication between the Agent and the Company. The Agent's
commitment to purchase Notes as principal, whether pursuant to a Purchase
Agreement or otherwise, shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth.
For each sale of Notes to an Agent as principal that is not made pursuant
to a Purchase Agreement, the procedural details relating to the issue and
delivery of such Notes and payment therefor shall be as set forth in the
Procedures. For each such sale of Notes to an Agent as principal that is not
made pursuant to a Purchase Agreement, the Company agrees to pay such Agent a
commission (or grant an equivalent discount) in accordance with the schedule set
forth in Exhibit A hereto.
SECTION 12. NOTICES.
Except as otherwise provided herein, all notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed by registered mail or transmitted by any standard form of
telecommunication. Notices to the Agents shall be directed to it as follows:
Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Facsimile
Transmission No. (212) 363-7609, attention: Credit Department; Merrill Lynch &
Co., Merrill Lynch World Headquarters, World Financial Center, North Tower, 250
Vesey Street, 23rd Floor, New York, New York 10281-1323, Attention: MTN Product
Management; and Smith Barney Inc., 390 Greenwich Street - 4th Floor, New York,
New York 10013, Facsimile Transmission No. (212) 723-8854, attention: MTN
Product Management/Origination - Mark R. Meyer; with a copy to Donald R.
Crawshaw, Esq., Sullivan & Cromwell, 125 Broad Street, New York, New York 10004;
notices to the Company shall be directed to it as follows: Washington Natural
Gas Company, 815 Mercer Street, P.O. Box 1869, Seattle, Washington 98111,
Attention: Senior Vice President -- Finance, Planning and Development, with a
copy to Marion V. Larson, Esq., Riddell, Williams, Bullitt & Walkinshaw, Suite
4400, 1001 Fourth Avenue Plaza, Seattle, Washington 98154.
SECTION 13. BINDING EFFECT; BENEFITS.
This Agreement shall be binding upon each Agent, the Company, and their
respective successors. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except that (a) the representations,
warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any Agent within the meaning of Section 15 of the Act, and
(b) the indemnity agreement of the Agents contained in Section 7 hereof shall be
deemed to be for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement and any person controlling
the Company within the meaning of Section 15 of the Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
person referred to in this Section, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
SECTION 14. GOVERNING LAW; COUNTERPARTS.
This Agreement shall be governed by and construed in accordance with the
laws of New York. This Agreement may be executed in counterparts and the
executed counterparts shall together constitute a single instrument.
SECTION 15. PARAGRAPH HEADINGS.
The paragraph headings used in this Agreement are for convenience of
reference only, and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
21
<PAGE> 22
If the foregoing correctly sets forth our agreement, please indicate your
acceptance hereof in the space provided for that purpose below.
Very truly yours,
WASHINGTON NATURAL GAS COMPANY
By:
----------------------------------
Senior Vice President --
Finance, Planning and Development
Accepted in New York, New York,
as of the date hereof:
By:
-----------------------------------
(Goldman, Sachs & Co.)
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-----------------------------------
SMITH BARNEY INC.
BY:
-----------------------------------
22
<PAGE> 23
EXHIBIT A
WASHINGTON NATURAL GAS COMPANY
SECURED MEDIUM-TERM NOTES, SERIES C
SCHEDULE OF PAYMENTS
The Company agrees to pay each Agent a commission equal to the following
percentage of the aggregate U.S. dollar equivalent of the principal amount of
Notes:
<TABLE>
<CAPTION>
TERM COMMISSION RATE
------ ---------------
<S> <C>
9 months to less than 12 months............................. .125%
12 months to less than 18 months............................ .150%
18 months to less than 2 years.............................. .200%
2 years to less than 3 years................................ .250%
3 years to less than 4 years................................ .350%
4 years to less than 5 years................................ .450%
5 years to less than 6 years................................ .500%
6 years to less than 7 years................................ .550%
7 years to less than 10 years............................... .600%
10 years to less than 15 years.............................. .625%
15 years to less than 20 years.............................. .675%
20 years to 30 years........................................ .750%
greater than 30 years to less than 50 years................. .875%
50 years and more........................................... 1.000%
</TABLE>
A-1
<PAGE> 24
EXHIBIT B
WASHINGTON NATURAL GAS COMPANY
SECURED MEDIUM-TERM NOTES, SERIES C
ADMINISTRATIVE PROCEDURES
First Mortgage Bonds, Secured Medium-Term Notes, Series C, due at varying
maturities (the "Notes") are to be offered on a continuing basis by Washington
Natural Gas Company (the "Company"). Goldman, Sachs & Co., Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Smith Barney Inc., as
agents (each an "Agent" and collectively, the "Agents"), have each agreed to use
their reasonable efforts to solicit offers to purchase the Notes. The Notes are
being sold pursuant to an Agency Agreement between the Company and the Agents
dated , 1995 (as it may be supplemented or amended from time to
time, the "Agency Agreement") to which these administrative procedures are
attached as an exhibit. The Notes will be issued from time to time under and
secured by an Indenture of First Mortgage, dated as of April 1, 1957
(hereinafter called the "Original Indenture"), executed and delivered by the
Company to Harris Trust and Savings Bank, as Trustee (hereinafter called the
"Trustee"), as amended and supplemented by twenty-nine indentures supplemental
thereto (including a Sixth Supplemental Indenture, dated as of August 1, 1966, a
Seventh Supplemental Indenture, dated as of February 1, 1967, a Sixteenth
Supplemental Indenture, dated as of June 1, 1977, from the Company to the
Trustee and R.G. Mason as co-trustee (the "Co-Trustee"), a Seventeenth
Supplemental Indenture, dated as of August 9, 1978, and a Twenty-second
Supplemental Indenture, dated as of July 15, 1986, a Twenty-ninth Supplemental
Indenture, dated as of June 1, 1993), and as to be supplemented by a Thirtieth
Supplemental Indenture, to be dated as of August 15, 1995 from the Company to
the Trustee (hereinafter called the "Supplemental Indenture") (the Co-Trustee
having resigned and no replacement therefor having been appointed). The Original
Indenture as heretofore amended, modified and supplemented and as amended,
modified and supplemented by the Supplemental Indenture is hereinafter called
the "Indenture". The Notes will rank equally with all other First Mortgage Bonds
of the Company and will have been registered with the Securities and Exchange
Commission (the "Commission"). Terms defined in the Prospectus relating to the
Notes (the "Prospectus") and in the Agency Agreement shall have the same meaning
when used in this exhibit. Special administrative procedures for Global
Securities relating to Book-Entry Notes follow these administrative procedures.
Administrative responsibilities, document control and record-keeping
functions to be performed by the Company will be performed by its Treasurer or
Assistant Treasurer. Administrative procedures for the offering are explained
below.
PRICE TO PUBLIC
Each Note will be issued at 100% of principal amount thereof.
DATE OF ISSUANCE
Each Note will be dated and issued as of the date of its authentication by
the Trustee.
MATURITIES
Each Note will mature on a Business Day (as defined below) selected by the
purchaser and agreed upon by the Company, such date being at least nine months
but not more than 40 years from the date of issuance; provided, however, that
Notes having the same date of maturity shall be identical as to rate of interest
and terms of redemption if redeemable.
"Business Day" shall mean any day which is not a Saturday or Sunday and
which is not a day on which banking institutions are generally authorized or
obligated by law to close in either New York, New York or Chicago, Illinois.
B-1
<PAGE> 25
REGISTRATION
Notes will be issued only in fully registered form as either a Book-Entry
Note or a Certificated Note. Certificated Notes may be presented for
registration of transfer or exchange at the Trustee's New York office.
DENOMINATIONS
The Notes (other than Notes represented by Global Securities) will be
issued and payable in U.S. dollars in the denomination of $100,000 and any
larger denomination which is an integral multiple of $1,000.
INTEREST PAYMENTS
Each Note will bear interest from its issue date at the annual rate stated
on the face thereof, payable on December 15 and June 15 of each year (each an
"Interest Payment Date") and at Stated Maturity or upon redemption, if
applicable.
Interest on Notes will be calculated and paid on the basis of a 360-day
year of twelve 30-day months. Interest will be payable to the person in whose
name such Note is registered at the close of business on the November 30 or May
31 (whether or not a Business Day) (the "Record Dates") next preceding the
respective Interest Payment Date; provided, however, that interest payable at
Stated Maturity will be payable to the person to whom principal shall be
payable. Any payment of principal and interest on such Note required to be paid
on an Interest Payment Date or at Stated Maturity or upon redemption, if
applicable, which is not a Business Day shall be postponed to the next day which
is a Business Day. The first payment of interest on any Note originally issued
between a Record Date and an Interest Payment Date will be made on the Interest
Payment Date following the next succeeding Record Date. All interest payments,
excluding interest payments made at Stated Maturity or upon redemption, if
applicable, will be made by check mailed to the person entitled thereto as
provided above, or, at the option of the Company, by wire transfer to an account
maintained by such person with a bank located in the United States.
Notwithstanding the foregoing, the holder of $1 million or more in aggregate
principal amount of Notes with the same Interest Payment Date may request
payment by wire transfers.
On the fifth Business Day immediately preceding each Interest Payment Date,
the Trustee will furnish the Company with the total amount of the interest
payments to be made on such Interest Payment Date. The Trustee (or any duly
selected paying agent) will provide monthly to the Company a list of the
principal and interest to be paid on Notes maturing in the next succeeding
month. The Company will provide to the Trustee not later than the payment date
sufficient moneys to pay in full all principal and interest payments due on such
payment date. The Trustee will assume responsibility for withholding taxes on
interest paid as required by law.
ACCEPTANCE AND REJECTION OF OFFERS
The Company shall have the sole right to accept offers to purchase Notes
and may reject any such offer in whole or in part. Each Agent shall promptly
communicate to the Company, orally or in writing, each reasonable offer to
purchase Notes from the Company received by it other than those rejected by such
Agent. Each Agent shall have the right, in its discretion reasonably exercised
without advising the Company, to reject any offers in whole or in part.
The Company will promptly notify the Agents of its acceptance or rejection
of an offer to purchase Notes. If the Company accepts an offer to purchase
Notes, it will confirm such acceptance in writing to the Agents and the Trustee.
SETTLEMENT
The receipt of immediately available funds in U.S. Dollars by the Company
in payment for a Note (less the applicable commission) and the authentication
and issuance of such Note shall, with respect to
B-2
<PAGE> 26
such Note, constitute "Settlement". All offers accepted by the Company will be
settled from one to three Business Days from the date of acceptance by the
Company pursuant to the timetable for Settlement set forth below unless the
Company and the purchaser agree to Settlement on a later date; provided,
however, that the Company will so notify the Trustee of any such later date on
or before the Business Day immediately prior to the Settlement date.
SETTLEMENT PROCEDURES
In the event of a purchase of Notes by an Agent, as principal, appropriate
Settlement details will be set forth in the applicable Purchase Agreement to be
entered into between such Agent and the Company pursuant to the Agency
Agreement.
Settlement procedures with regard to each Note sold through each Agent
shall be as follows:
A. Such Agent (the "Presenting Agent") will advise the Company by
telephone, telex or facsimile, of the following Settlement information:
1. Exact name in which the Note is to be registered ("Registered
Owner").
2. Exact address of the Registered Owner and address for payment of
principal and interest, if any.
3. Taxpayer identification number of the Registered Owner.
4. Principal amount of the Note (and, if multiple Notes are to be
issued, denominations thereof).
5. Settlement date.
6. Stated Maturity.
7. Issue Price.
8. Trade Date/Original Issue Date.
9. Interest rate:
i) interest rate
ii) overdue rate, if any.
10. The date on or after which the Notes are redeemable at the option of
the Company, and additional redemption or repurchase provisions, if
any.
11. Wire transfer information.
12. Presenting Agent's Commission (to be paid in the form of a discount
from the proceeds remitted to the Company upon Settlement).
B. The Company will confirm the above Settlement information to the
Trustee by telephone, telex or facsimile, and the Trustee will assign a
Note number to the transaction.
C. The Trustee will complete the first page of the preprinted 4-ply
Note packet [Note: Such a packet need not be prepared if the Company is
utilizing the book-entry system, see procedures below], the form of which
was previously approved by the Company, the Agents and the Trustee.
D. The Trustee will deliver the Note (with the attached white
confirmation) and the yellow and blue stubs to the Agent. The Presenting
Agent will acknowledge receipt of the Note by completing the yellow stub
and returning it to the Trustee.
E. The Presenting Agent will cause to be wire transferred to a bank
account designated by the Company immediately available funds in U.S.
dollars in the amount of the principal amount of the Note, less the
applicable commission or discount, if any, provided that the Presenting
Agent
B-3
<PAGE> 27
reserves the right to withhold payment for which it has not received funds
from the purchaser. The Company shall not use any proceeds advanced by a
Presenting Agent to acquire securities.
F. The Presenting Agent will deliver the Note (with the attached
white confirmation) to the purchaser against payment in immediately
available funds in the amount of the principal amount of the Note. The
Presenting Agent will deliver to the purchaser a copy of the most recent
Prospectus applicable to the Note with or prior to any written offer of
Notes, delivery of the Note and the confirmation and payment by the
purchaser for the Note.
G. The Presenting Agent will obtain the acknowledgement of receipt
for the Note and Prospectus by the purchaser through the purchaser's
completion of the blue stub.
H. The Trustee will mail the pink stub to the Company's Treasurer.
SETTLEMENT PROCEDURES TIMETABLE
For offers accepted by the Company, Settlement procedures "A" through "H"
set forth above shall be completed on or before the respective times set forth
below:
<TABLE>
<CAPTION>
SETTLEMENT
PROCEDURE TIME (NEW YORK)
---------- ---------------
<C> <S>
A 5 P.M. on date of order
B 3 P.M. on the Business Day prior to Settlement date, unless
the Settlement Date is the date of acceptance by the Company
of the offer to purchase Notes, in which case 11:00 A.M. on
the Settlement date
C-D 12 noon on the Settlement date
E 2:15 P.M. on the Settlement date
F-G 3 P.M. on the Settlement date
H 5 P.M. on Business Day after the Settlement date
</TABLE>
FAILS
In the event that a purchaser of a Note shall either fail to accept
delivery of or make payment for such Note on the date fixed by the Company for
Settlement, the Presenting Agent will immediately notify the Trustee and the
Company's Treasurer by telephone, confirmed in writing, of such failure and
return the Note to the Trustee. Upon the Trustee's receipt of the Note from the
Presenting Agent, the Company will immediately return to the Presenting Agent an
amount of immediately available funds in U.S. dollars equal to any amount
previously transferred to the Company in respect of the Note pursuant to
advances made by the Agent. The Company will reimburse the Presenting Agent on
an equitable basis for its loss of the use of the funds during the period when
the funds were credited to the account of the Company. Upon receipt of the Note
in respect of which the default occurred, the Trustee will mark the Note
"cancelled", make appropriate entries in its records and deliver the Note to the
Company with an appropriate debit advice. The Presenting Agent will not be
entitled to any commission with respect to any Note which the purchaser does not
accept or make payment for.
PRICING REDEMPTION
Except as otherwise specified in the applicable Pricing Supplement and on
the Notes, the Notes will not be redeemable prior to their Stated Maturity. If
so specified in a Pricing Supplement and on the Note, such Note will be subject
to redemption by the Company, at any time on or after the date set forth on such
supplement and the Note, in whole or from time to time in part, at the option of
the Company, at the redemption price set forth therein, together with interest
accrued thereon to the date of redemption.
Notice of redemption shall be given by first-class mail postage prepaid,
mailed not less than 30 days nor more than 90 days prior to the date of
redemption, to each holder of Notes to be redeemed, in the manner and in
accordance with the Indenture. In the event of redemption in part of any Note, a
new Note
B-4
<PAGE> 28
for the amount of the unredeemed portion shall be issued in the name of the
Holder upon cancellation of the redeemed Note.
MATURITY
Upon presentation of each Note at Maturity the Trustee (or any duly
appointed Paying Agent) will pay the principal amount thereof, together with
accrued interest through the date of redemption. Such payment shall be made in
immediately available funds in U.S. dollars, provided that the Note is presented
to the Trustee (or any such Paying Agent) in time for the Trustee (or such
Paying Agent) to make payments in such funds in accordance with its normal
procedures. The Company will provide the Trustee (and any such Paying Agent)
with funds available for immediate use for such purpose. Notes presented at
Maturity will be cancelled by the Trustee as provided in the Indenture.
PROCEDURES FOR ESTABLISHING THE TERMS OF THE NOTES
The Company and the Agents will discuss from time to time the rates to be
borne by the Notes that may be sold as a result of the solicitation of offers by
the Agents. Once any Agent has recorded any indication of interest in Notes upon
certain terms, and communicated with the Company, if the Company accepts an
offer to purchase Notes upon such terms, it will prepare a Pricing Supplement in
the form previously approved by the Agents, reflecting the terms of such Notes
and, after approval from the Presenting Agent, will arrange to have 10 copies of
such Pricing Supplement (together with the Prospectus, if amended or
supplemented) filed with the Commission not later than the close of business of
the Commission or the fifth Business Day following the date on which such
Pricing Supplement is first used and will supply at least 10 copies of the
Prospectus, as then amended or supplemented, together with such Pricing
Supplement, to the Presenting Agent. See "Delivery of Prospectus". No
settlements with respect to Notes upon such terms may occur prior to such filing
and the Presenting Agent will not, prior to such filing, mail confirmations to
customers who have offered to purchase Notes upon such terms. After such filing,
sales, mailing of confirmations and settlements may occur with respect to Notes
upon such terms, subject to the provisions of "Delivery of Prospectus" below.
If the Company decides to post rates and a decision has been reached to
change interest rates, the Company will promptly notify each Agent. Each Agent
will forthwith suspend solicitation of purchases. At that time, the Agents will
recommend and the Company will establish rates to be so "posted".
Following establishment of posted rates and prior to the filing described
in the following sentence, the Agents may only record indications of interest in
purchasing Notes at the posted rates. Once any Agent has recorded any indication
of interest in Notes at the posted rates and communicated with the Company, if
the Company plans to accept an offer at the posted rate, it will prepare a
Pricing Supplement reflecting such posted rates and, after approval from the
Presenting Agent, will arrange to have 10 copies of such Pricing Supplement
(together with the Prospectus if amended or supplemented) filed with the
commission within the time required by the Rules and Regulations and will supply
at least 10 copies of the Prospectus, as then amended or supplemented, to the
Presenting Agent. See "Delivery of Prospectus". No settlements at the posted
rates may occur prior to such filing and the Presenting Agent will not, prior to
such filing, mail confirmations to customers who have offered to purchase Notes
at the posted rates. After such filing, sales, mailing of confirmations and
settlements may resume, subject to the provisions of "Delivery of Prospectus"
below.
SUSPENSION OF SOLICITATION: AMENDMENT OR SUPPLEMENT
In the event that at the time the Agents, at the direction of the Company,
suspend solicitation of offers to purchase from the Company there shall be any
orders outstanding which have not been settled, the Company will promptly advise
the Agents and the Trustee whether such orders may be settled and whether copies
of the Prospectus as theretofore amended and/or supplemented as in effect at the
time of the suspension may be delivered in connection with the settlement of
such orders. The Company will have the sole responsibility for such decision and
for any arrangements which may be made in the event
B-5
<PAGE> 29
that the Company determines that such orders may not be settled or that copies
of such Prospectus may not be so delivered.
DELIVERY OF PROSPECTUS AND NOTES
A copy of the Prospectus as most recently amended or supplemented on the
date of delivery thereof, together with the applicable Pricing Supplement, must
be delivered to a purchaser prior to or together with the earlier of the
delivery of (i) the written confirmation of a sale sent to a purchaser or his
agent and (ii) any Note purchased by such purchaser. The Company shall ensure
that the Presenting Agent receives copies of the Prospectus and each amendment
or supplement thereto (including the applicable Pricing Supplement) in such
quantities (in any case, at least 10 copies) and within such time limits (in any
case, no later than 5:00 p.m. New York City time, on the Business Day following
the Trade Date, or if the Company and the purchaser agrees to settlement on the
date of acceptance of such offer, no later than noon, New York City time, on
such date) as will enable the Presenting Agent to deliver such confirmation or
Note to a purchaser as contemplated by these procedures and in compliance with
the preceding sentence. Copies of the Prospectus, Pricing Supplements and Notes
should be delivered to Goldman, Sachs & Co., 85 Broad Street, New York, New York
10004, Attention: Credit Department, Telecopy: (212) 902-3000; Merrill Lynch &
Co., Tritech Services, 4 Corporate Place, Corporate Park 287, Piscataway, New
Jersey 08854, Attention: Nachman Kimerling, Telecopy: (201) 878-6530; Smith
Barney Inc., 390 Greenwich Street -- 4th Floor, New York, New York 10013,
Attention: MTN Product Management/Origination -- Mark R. Meyer, and by facsimile
to: Smith Barney Inc., 388 Greenwich Street -- 34th Floor, New York, New York
10013, Attention: Legal Compliance -- Adrienne Garofalo, Telecopy: (212)
816-7912. If, since the date of acceptance of a purchaser's offer, the
Prospectus shall have been supplemented solely to reflect any sale of Notes on
terms different from those agreed to between the Company and such purchaser or a
change in posted rates not applicable to such purchaser, such purchaser shall
not receive the Prospectus as supplemented by such new supplement, but shall
receive the Prospectus as supplemented to reflect the terms of the Notes being
purchased by such purchaser and otherwise as most recently amended or
supplemented on the date of delivery of the Prospectus. If Merrill Lynch & Co.
is the Presenting Agent in connection with the sale of a Note, such Note shall
be delivered to the Presenting Agent at the following address: Merrill Lynch,
Pierce Fenner & Smith Incorporated, Money Market Clearance -- MTNs, One Liberty
Plaza, 165 Broadway, Concourse Level, New York, New York 10080, Attention: David
Alavarces.
AUTHENTICITY OF SIGNATURES
The Company will cause the Trustee to furnish the Agents from time to time
with the specimen signatures of each of the Trustee's officers, employees and
agents who have been authorized by the Trustee to authenticate Notes, but the
Agents will have no obligation or liability to the Company or the Trustee in
respect of the authenticity of the signature of any officer, employee or agent
of the Company or the Trustee on any Note.
ADVERTISING COSTS
The Company will determine with the Agents the amount and nature of
advertising that may be appropriate in offering the Notes. Advertising expenses
incurred with the consent of the Company will be paid by the Company.
SPECIAL ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
Each Note will be represented by either a Global Security delivered to the
Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in the
book-entry system maintained by DTC or a certificate delivered to the Holder
thereof or a Person designated by such Holder. An owner of a Book-Entry Note
will not be entitled to receive a certificate representing such Note. In
connection with the qualification of the Book-Entry Notes for eligibility in the
book-entry system maintained by DTC, the
B-6
<PAGE> 30
Trustee will perform the custodial, document control and administrative
functions described below, in accordance with its respective obligations under a
Letter of Representations from the Company and the Trustee to DTC and a
Medium-Term Note Certificate Agreement previously entered into between the
Trustee and DTC, and its obligations as a participant in DTC, including DTC's
Same-Day Funds Settlement System ("SDFS"). Except as otherwise set forth in this
Exhibit B, Book-Entry Notes will be issued in accordance with the administrative
procedures set forth below.
ISSUANCE................On any date of settlement (as defined under "Settlement"
below) for one or more Book-Entry Notes, the Company
will issue a single Global Security in fully registered
form without coupons representing up to $150,000,000
principal amount of all of such Notes that have the same
original issuance date, interest rate and Stated
Maturity. Each Global Security will be dated and issued
as of the date of its authentication by the Trustee.
Each Global Security will have an interest accrual date
(the "Interest Accrual Date"), which will be (i) with
respect to an original Global Security (or any portion
thereof), its original issuance date and (ii) with
respect to any Global Security (or portion thereof)
issued subsequently upon exchange of a Global Security
or in lieu of a destroyed, lost or stolen Global
Security, the most recent Interest Payment Date to which
interest has been paid or duly provided for on the
predecessor Global Security or Securities (or if no such
payment or provision has been made, the original
issuance date of the predecessor Global Security),
regardless of the date of authentication of such
subsequently issued Global Security. No Global Security
will represent any Certificated Note.
IDENTIFICATION
NUMBERS.................The Company will arrange, on or prior to commencement of
a program for the offering of Book-Entry Notes, with the
CUSIP Service Bureau of Standard & Poor's Corporation
(the "CUSIP Service Bureau") for the reservation of a
series of CUSIP numbers (including tranche numbers),
consisting of approximately 900 CUSIP numbers and
relating to Global Securities representing the
Book-Entry Notes. The Trustee has or will obtain from
the CUSIP Service Bureau a written list of such series
of reserved CUSIP numbers and will deliver to the
Company and DTC such written list of 900 CUSIP numbers
of such series. The Company will assign CUSIP numbers to
Global Securities as described below under Settlement
Procedure "B". DTC will notify the CUSIP Service Bureau
periodically of the CUSIP numbers that the Company has
assigned to Global Securities. The Trustee will notify
the Company at any time when fewer than 100 of the
reserved CUSIP numbers remain unassigned to Global
Securities, and if it deems necessary, the Company will
reserve additional CUSIP numbers for assignment to
Global Securities representing ing Book-Entry Notes.
Upon obtaining such additional CUSIP numbers the Trustee
shall deliver such additional CUSIP numbers to the
Company and DTC.
REGISTRATION............Each Global Security will be registered in the name of
Cede & Co., as nominee for DTC, on the Securities
Register maintained under the Indenture. The beneficial
owner of a Book-Entry Note (or one or more indirect
participants in DTC designated by such owner) will
designate one or more participants in DTC (with respect
to such Note, the "Participants") to act as agent or
agents for such owner in connection with the book-entry
system maintained by DTC, and DTC will record in
book-entry form, in accordance with instructions
provided by such Participants, a credit balance with
respect to such Note in the account of such
Participants. The ownership interest of such beneficial
owner in such Note will be recorded
B-7
<PAGE> 31
through the records of such Participants or through the
separate records of such Participants and one or more
indirect participants in DTC.
TRANSFERS...............Transfers of a Book-Entry Note will be accomplished by
book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect participants
in DTC) acting on behalf of beneficial transferors and
transferors of such Note.
CONSOLIDATION AND
EXCHANGE..............The Trustee may deliver to DTC and the CUSIP Service
Bureau at any time a written notice of consolidation
specifying (i) the CUSIP numbers of two or more
Outstanding Global Securities that represent Book-Entry
Notes having the same original issuance date, interest
rate and Stated Maturity and with respect to which
interest has been paid to the same date; (ii) a date,
occurring at least thirty days after such written notice
is delivered and at least thirty days before the next
Interest Payment Date for such Book-Entry Notes, on
which such Global Securities shall be exchanged for a
single replacement Global Security; and (iii) a new
CUSIP number, obtained from the Company, to be assigned
to such replacement Global Security. Upon receipt of
such a notice, DTC will send to its participants
(including the Trustee) a written reorganization notice
to the effect that such exchange will occur on such
date. Prior to the specified exchange date, the Trustee
will deliver to the CUSIP Service Bureau a written
notice setting forth such exchange date and the new
CUSIP number and stating that, as of such exchange date,
the CUSIP numbers of the Global Securities to be
exchanged will no longer be valid. On the specified
exchange date, the Trustee will exchange such Global
Securities for a single Global Security bearing the new
CUSIP number and a new Interest Accrual Date, and the
CUSIP numbers of the exchanged Global Securities will,
in accordance with CUSIP Service Bureau procedures, be
cancelled and not immediately reassigned.
Notwithstanding the foregoing, if the Global Securities
to be exchanged exceed $150,000,000 in aggregate
principal amount, one Global Security will be
authenticated and issued to represent each $150,000,000
of principal amount of the exchanged Global Securities
and an additional Global Security will be authenticated
and issued to represent any remaining principal amount
of such Global Securities (see "Denominations" below).
MATURITIES..............Each Book-Entry Note will mature on a date not less than
nine months or more than 40 years after the settlement
date for such Note.
DENOMINATIONS...........Book-Entry Notes will be issued in principal amounts of
$100,000 or any amount in excess thereof that is an
integral multiple of $1,000. Global Securities
representing one or more Book-Entry Notes will be
denominated in principal amounts not in excess of
$150,000,000. If one or more Book-Entry Notes having an
aggregate principal amount in excess of $150,000,000
would, but for the preceding sentence, be represented by
a single Global Security, then one Global Security will
be issued to represent each $150,000,000 principal
amount of such Book-Entry Note or Notes and an
additional Global Security will be issued to represent
any remaining principal amount of such Book-Entry Note
or Notes. In such a case, each of the Global Securities
representing such Book-Entry Note or Notes shall be
assigned the same CUSIP number.
B-8
<PAGE> 32
INTEREST................General. Interest on each Book-Entry Note will accrue
from the Interest Accrual Date of the Global Security
representing such Note. Each payment of interest on a
Book-Entry Note will include interest accrued through
the day preceding, as the case may be, the Interest
Payment Date or Maturity. Interest payable at the
Maturity of a Book-Entry Note will be payable to the
Person to whom the principal of such Note is payable.
Standard & Poor's Corporation will use the information
received in the pending deposit message described under
Settlement Procedure "C" below in order to include the
amount of any interest payable and certain other
information regarding the related Global Security in the
appropriate weekly bond report published by Standard &
Poor's Corporation.
PAYMENTS OF PRINCIPAL
AND INTEREST..........Payments of Interest Only. Promptly after each Regular
Record Date, the Trustee will deliver to the Company and
DTC a written notice specifying by CUSIP number the
amount of interest to be paid on each Global Security on
the following Interest Payment Date (other than an
Interest Payment Date coinciding with Maturity) and the
total of such amounts. DTC will confirm the amount
payable on each Global Security on such Interest Payment
Date by reference to the daily bond reports published by
Standard & Poor's Corporation. The Company will pay to
the Trustee, as paying agent, the total amount of
interest due on such Interest Payment Date (other than
at Maturity), and the Trustee will pay such amount to
DTC at the times and in the manner set forth below under
"Manner of Payment".
Payments at Maturity. On or about the first Business Day
of each month, the Trustee will deliver to the Company
and DTC a written list of principal and interest to be
paid on each Global Security maturing in the following
month. The Company and DTC will confirm the amounts of
such principal and interest payments with respect to
each such Global Security on or about the fifth Business
Day preceding the Maturity of such Global Security. The
Company will pay to the Trustee, as the paying agent,
the principal amount of such Global Security, together
with interest due at such Maturity. The Trustee will pay
such amount to DTC at the times and in the manner set
forth below under "Manner of Payment".
Promptly after payment to DTC of the principal and
interest due at the Maturity of such Global Security,
the Trustee will cancel such Global Security and deliver
it to the Company with an appropriate debit advice. On
the first Business Day of each month, the Trustee will
prepare a written statement indicating the total
principal amount of Outstanding Global Securities for
which it serves as trustee as of the immediately
preceding Business Day.
Manner of Payment. The total amount of any principal and
interest due on Global Securities on any Interest
Payment Date or at Maturity shall be paid by the Company
to the Trustee in funds available for use by the Trustee
as of 11:00 A.M. (New York City time) on such date. The
Company will make such payment on such Global Securities
by instructing the Trustee to withdraw funds from an
account maintained by the Company at the Trustee. The
Company will confirm such instructions in writing to the
Trustee. For maturity, redemption or any other principal
payments: prior to 10 A.M. (New York City time) on such
date or as soon as possible thereafter, the Trustee will
make such payments to DTC in same day funds in
accordance with DTC's Same Day Funds Settlement Paying
Agent
B-9
<PAGE> 33
Operating Procedures. For interest payments: the Trustee
will make such payments to DTC in accordance with
existing arrangements between DTC and the Trustee. DTC
will allocate such payments to its participants in
accordance with its existing operating procedures.
Neither the Company (either as issuer or as Paying
Agent) nor the Trustee shall have any direct
responsibility or liability for the payment by DTC to
such Participants of the principal of and interest on
the Book-Entry Notes.
The amount of any taxes required under applicable law to
be withheld from any interest payment on a Book-Entry
Note will be determined and withheld by the Participant,
indirect participant in DTC or other Person responsible
for forwarding payments and materials directly to the
beneficial owner of such Note.
SETTLEMENT PROCEDURES...Settlement Procedures with regard to each Book-Entry
Note sold by the Company through an Agent, as agent,
shall be as follows:
A. The Presenting Agent will advise the Company by
telephone, telex or facsimile, of the following
settlement information:
1. Exact name in which Note is to be registered
("Registered Owner").
2. Exact address of the Registered Owner and
address for payments of principal and interest,
if any.
3. Taxpayer identification number of the Registered
Owner.
4. Principal amount of the Note (and, if multiple
Notes are to be issued, denominations thereof).
5. Settlement date.
6. Stated maturity.
7. Issue Price.
8. Trade date.
9. The DTC Participant account number of such
Agent.
10. Interest rate:
i) interest rate
ii) overdue rate, if any.
11. The date on or after which the Notes are
redeemable at the option of the Company, and
additional redemption or repurchase provisions,
if any.
12. Wire transfer information.
13. Presenting Agent's commission (to be paid in the
form of a discount from the proceeds remitted to
the Company upon settlement).
B. The company will assign a CUSIP number to the Global
Security representing such Note and then advise the
Trustee by telephone (confirmed in writing at any
time on the same date) or electronic transmission of
the information set forth in Settlement Procedure
"A" above, such CUSIP number and the name of such
Agent.
B-10
<PAGE> 34
C. The Trustee will enter a pending deposit message
through DTC's Participant Terminal System, providing
the following settlement information to DTC, the
Presenting Agent and Standard & Poor's Corporation:
1. The information set forth in Settlement Procedure
"A".
2. Initial Interest Payment Date for such Note,
number of days by which such date succeeds the
related "DTC Record Date" (which term means the
Regular Record Date) and amount of interest
payable on such Interest Payment Date.
3. CUSIP number of the Global Security representing
such Note.
4. Whether such Global Security will represent any
other Book-Entry Note (to the extent known at
such time).
D. The Trustee will complete and authenticate the note
certificate evidencing the Global Security
representing such Book-Entry Note.
E. DTC will credit such Note to the Trustee's
participant account at DTC.
F. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such Note
to the Presenting Agent's participant account and
(ii) debit the Presenting Agent's settlement
account and credit the Trustee's settlement account
for an amount equal to the price of such Note less
the Presenting Agent's commission.
G. The Presenting Agent will enter an SDFS deliver
order through DTC's Participant Terminal System
instructing DTC (i) to debit such Note to the
Presenting Agent's participant account and credit
such Note to the participant accounts of the
Participants with respect to such Note and (ii) to
debit the settlement accounts of such Participants
and credit the settlement account of the Presenting
Agent for an amount equal to the price of such
Note.
H. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "F" and
"G" will be settled in accordance with SDFS
operating procedures in effect on the settlement
date.
I. The Trustee will credit to an account of the
Company maintained at the Trustee funds available
for immediate use in the amount transferred to the
Trustee in accordance with Settlement Procedure
"F".
J. The Presenting Agent will deliver to the purchaser
a copy of the most recent Prospectus applicable to
the Note with or prior to any written offer of
Notes and the confirmation and payment by the
purchaser of the Note.
The Presenting Agent will confirm the purchase of
such Note to the purchaser either by transmitting to
the Participants with respect to such Note a
confirmation order or orders through DTC's
institutional delivery system or by mailing a
written confirmation to such purchaser.
SETTLEMENT PROCEDURES
TIMETABLE.............For orders of Book-Entry Notes solicited by an Agent, as
agent, and accepted by the Company for settlement,
Settlement Procedures "A"
B-11
<PAGE> 35
through "J" set forth above shall be completed as soon
as possible but not later than the respective times set
forth below:
<TABLE>
<CAPTION>
SETTLEMENT
PROCEDURE TIME (NEW YORK)
----------- ------------------------------------------------------
<S> <C>
A-B 11:00 A.M. on the sale date
C 2:00 P.M. on the sale date
D 3:00 P.M. on the day before settlement date
E 10: 00 A.M. on settlement date
F-G 2:00 P.M. on settlement date
H 4:45 P.M. on settlement date
I-J 5:00 P.M. on settlement date
</TABLE>
If a sale is to be settled more than one Business Day
after the sale date, Settlement Procedures "A", "B" and
"C" shall be completed as soon as practicable but no
later than 11:00 A.M. and 2:00 P.M., as the case may be,
on the first Business Day after the sale date.
Settlement Procedure "I" is subject to extension in
accordance with any extension of Fedwire closing
deadlines and in the other events specified in the SDFS
operating procedures in effect on the settlement date.
If settlement of a Book-Entry Note is rescheduled or
cancelled, the Trustee will deliver to DTC, through
DTC's Participant Terminal System, a cancellation
message to such effect by no later than 2:00 P.M. on the
Business Day immediately preceding the scheduled
settlement date.
FAILURE TO SETTLE.......If the Trustee fails to enter an SDFS deliver order with
respect to a Book-Entry Note pursuant to Settlement
Procedure "F", the Trustee may deliver to DTC, through
DTC's Participant Terminal System, as soon as
practicable a withdrawal message instructing DTC to
debit such Note to the Trustee's participant account.
DTC will process the withdrawal message, provided that
the Trustee's participant account contains a principal
amount of the Global Security representing such Note
that is at least equal to the principal amount to be
debited. If a withdrawal message is processed with
respect to all the Book-Entry Notes represented by a
Global Security, the Trustee will mark such Global
Security "cancelled", make appropriate entries in the
Trustee's records and send such cancelled Global
Security to the Company. The CUSIP number assigned to
such Global Security shall, in accordance with CUSIP
Service Bureau procedures, be cancelled and not
immediately reassigned. If a withdrawal message is
processed with respect to one or more, but not all, of
the Book-Entry Notes represented by a Global Security,
the Trustee will exchange such Global Security for two
Global Securities, one of which shall represent such
Book-Entry Note or Notes and shall be cancelled
immediately after issuance and the other of which shall
represent the other Book-Entry Notes previously
represented by the surrendered Global Security and shall
bear the CUSIP number of the surrendered Global
Security.
If the purchase price for any Book-Entry Note is not
timely paid to the Participants with respect to such
Note by the beneficial purchaser thereof (or a Person,
including an indirect participant in DTC, acting on
behalf of such purchaser), such Participants and, in
turn, the Agent for such Note may enter SDFS deliver
orders through DTC's Participant Terminal System
reversing the orders entered pursuant to Settlement
Procedures "F" and
B-12
<PAGE> 36
"G", respectively. Thereafter, the Trustee will deliver
the withdrawal message and take the related actions
described in the preceding paragraph.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
any actions in accordance with its SDFS operating
procedures then in effect. In the event of a failure to
settle with respect to one or more, but not all, of the
Book-Entry Notes to have been represented by a Global
Security, the Trustee will provide, in accordance with
Settlement Procedure "D", for the authentication and
issuance of a Global Security representing the other
Book-Entry Notes to have been represented by such Global
Security and will make appropriate entries in its
records.
B-13
<PAGE> 37
EXHIBIT C
PURCHASE AGREEMENT
WASHINGTON NATURAL GAS COMPANY , 19
815 Mercer Street
Seattle, Washington 98109
Attention: Treasurer
The undersigned agrees to purchase the following principal amount of the
Notes described in the Agency Agreement dated , 1995 (as it may be
supplemented or amended from time to time, the "Agency Agreement"):
<TABLE>
<S> <C>
Principal Amount........................................ $
Interest Rate........................................... %
Maturity Date
% of
Discount................................................ Principal Amount
Aggregate Price to be paid to Company (in immediately
available funds)...................................... $
Settlement Date
Other Terms
</TABLE>
Each of the provisions of the Agency Agreement not specifically related to
the solicitation by the Agents, as agents of the Company, of offer to purchase
Notes is incorporated herein by reference in its entirety, and shall be deemed
to be part of this Purchase Agreement to the same extent as if such provisions
had been set forth in full herein. Nothing contained herein or in the Agency
Agreement shall make any party hereto an agent of the Company or make such party
subject to the provisions therein relating to the solicitation of offers to
purchase Notes from the Company, solely by virtue of its execution of this
Purchase Agreement.
Our obligation to purchase Notes hereunder is subject (i) to the continued
accuracy of your representations and warranties contained in the Agency
Agreement, and you hereby affirm that such representations and warranties are
true and correct as of the date hereof as though made at and as of the date
hereof and undertake that such representations and warranties will be true and
correct as of the time delivery to us of the Notes as though made at and as of
such time, and (ii) to your performance and observance of all applicable
covenants and agreements contained therein, including, without limitation, your
obligations pursuant to Sections 6 and 7 thereof. Our obligation hereunder is
subject to the further condition that we shall receive (a) the opinion required
to be delivered pursuant to Section 5(e) of the Agency Agreement, (b) the
certificate required to be delivered pursuant to Section 5(f) of the Agency
Agreement, (c) the letter referred to in Section 5 (g) of the Agency Agreement
in each case dated as of the above Settlement Date and (d) [insert other
conditions as appropriate].
In further consideration of our agreement hereunder, you agree that between
the date hereof and the above Settlement Date, you will not offer or sell, or
enter into any agreement to sell, any debt securities of the Company, other than
borrowings under your revolving credit agreements and lines of credit, the
private placement of securities and issuances of your commercial paper.
We may terminate this Agreement, immediately upon notice to you, at any
time prior to the Settlement Date, if prior thereto there shall have occurred:
(i) any change, or any development involving a prospective change, in or
affecting primarily the business, properties, condition (financial or other),
results of operations or prospects of the Company or the Company and its
subsidiaries taken as a whole which materially impairs the investment quality of
the Notes; (ii) a suspension or material limitation in trading in securities
generally or the Company's securities specifically on the New York Stock
Exchange or the establishment of minimum prices on such exchange; (iii) a
general moratorium on commercial
C-1
<PAGE> 38
banking activities declared by Federal, Washington State or New York State
authorities; (iv) any downgrading in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g) (2) under the
Act or any public announcement that any such organization has under surveillance
or review its rating of any debt securities of the company (other than an
announcement with positive implications of a possible upgrading, and no
implications of a possible downgrading, of such rating); (v) any outbreak or
escalation of hostilities in which the United States is involved, any outbreak
of war involving the United States or any other national calamity or emergency;
or (vi) any material adverse change in the existing financial, political or
economic conditions in the United States, including any effect of international
conditions on the financial markets in the United States, that in our judgment,
with respect to any of clauses (iv), (v) and (vi) above, makes it impracticable
or inadvisable to proceed with the purchase of the Notes on the terms and in the
manner contemplated in the Prospectus, as supplemented or amended, or you are
unable to provide any of the opinions, certificates or letters referred to in
the second preceding paragraph. In the event of such termination, no party shall
have any liability hereunder to the other party hereto, except as provided in
Sections 4, 7 and 13 of the Agency Agreement.
This Agreement shall be governed by and construed in accordance with the
laws of New York.
[Insert name of Agent[s]]
By
-------------------------------
[Title]
Accepted: , 19
WASHINGTON NATURAL GAS COMPANY
By
--------------------------------
[Title]
C-2
<PAGE> 1
EXHIBIT 4-A
SECURITY AGREEMENT
THIS IS A SECURITY AGREEMENT COVERING PERSONAL PROPERTY AS WELL
AS OTHER PROPERTY REAL AND/OR PERSONAL
WASHINGTON NATURAL GAS COMPANY
TO
HARRIS TRUST AND SAVINGS BANK,
TRUSTEE
-------------------------------------------------------------------------------
THIRTIETH SUPPLEMENTAL INDENTURE
DATED AS OF AUGUST 15, 1995
SUPPLEMENTING
INDENTURE OF FIRST MORTGAGE
DATED AS OF APRIL 1, 1957
<PAGE> 2
SECURITY AGREEMENT
This is a Security Agreement covering personal property as well as other
property real and/or personal.
THIRTIETH SUPPLEMENTAL INDENTURE dated as of August 15, 1995 (hereinafter
called the "Thirtieth Supplemental Indenture") and made by and between
WASHINGTON NATURAL GAS COMPANY, as Debtor (its Federal identification number
being 91-1005303), a corporation organized and existing under the laws of the
State of Washington (the "Company"), whose mailing address and address of its
principal place of business is 815 Mercer Street, Seattle, Washington 98109,
party of the first part and HARRIS TRUST AND SAVINGS BANK, as Trustee and
Secured Party (its Federal identification number being 36-1194448), a
corporation duly organized and existing under the laws of the State of Illinois
and having its principal place of business at 111 West Monroe Street, Chicago,
Illinois 60603 and whose mailing address is P.O. Box 755, Chicago, Illinois
60690 (hereinafter called the "Trustee"), party of the second part.
WHEREAS, Washington Natural Gas Company, a Delaware corporation (the
"Predecessor Company") which was merged into the Company on August 9, 1978, has
heretofore executed and delivered to the Trustee its Indenture of First Mortgage
dated as of April 1, 1957 (hereinafter called the "Original Indenture" or as
heretofore supplemented and modified and as supplemented by this Thirtieth
Supplemental Indenture hereinafter called the "Indenture") in order, among other
things, to secure, as provided therein, the payment of the principal of and
premium, if any, and interest on its bonds (in the Original Indenture and herein
called the "Bonds") at any time issued and outstanding thereunder according to
their tenor and effect, said Bonds to be designated generally as its "First
Mortgage Bonds", and to be issued in one or more series as provided in the
Original Indenture; and
WHEREAS, the Predecessor Company has heretofore executed and delivered
sixteen indentures supplemental to the Original Indenture as follows: First
Supplemental Indenture, dated as of April 1, 1957, naming and appointing,
pursuant to the provisions of Section 15.18 of the Original Indenture, R. H.
Long, an individual, to act as Co-Trustee jointly with the Trustee, Second
Supplemental Indenture dated as of October 1, 1959, Third Supplemental Indenture
dated as of May 1, 1961, Fourth Supplemental Indenture dated as of May 1, 1963,
Fifth Supplemental Indenture dated as of June 1, 1965, Sixth Supplemental
Indenture dated as of August 1, 1966, Seventh Supplemental Indenture dated as of
February 1, 1967, Eighth Supplemental Indenture dated as of September 1, 1967,
Ninth Supplemental Indenture dated as of September 1, 1968, Tenth Supplemental
Indenture dated as of June 1, 1970, Eleventh Supplemental Indenture dated as of
April 1, 1971, Twelfth Supplemental Indenture dated as of November 1, 1972,
Thirteenth Supplemental Indenture dated as of September 1, 1975, Fourteenth
Supplemental Indenture dated as of September 15, 1975, Fifteenth Supplemental
Indenture dated as of March 1, 1977 and Sixteenth Supplemental Indenture dated
as of June 1, 1977, naming and appointing, pursuant to the provisions of Section
15.18 of the Original Indenture, R. G. Mason, an individual, to act as successor
Co-Trustee, pursuant to each of which supplemental indentures, except said
First, Seventh, and Sixteenth Supplemental Indentures, the Company provided for
the creation of an issue of First Mortgage Bonds, and said Sixth and Seventh
Supplemental Indentures provided for certain modifications of the Original
Indenture; and
WHEREAS, the Company has heretofore executed and delivered a Seventeenth
Supplemental Indenture dated as of August 9, 1978, whereby the Company succeeded
to the Predecessor Company with the same effect as if the Company had been named
in the Indenture as the mortgagor company and in the Bonds and coupons as the
obligor thereon or maker thereof, and the Predecessor Company merged into the
Company on August 9, 1978 whereupon the Company acquired all the property, real,
personal or mixed, including all rights, privileges, immunities and franchises,
described in the Indenture and thereby conveyed and mortgaged or intended so to
be, including also all such property acquired by the Predecessor Company since
the execution and delivery of the Original Indenture, which by the terms of the
Indenture is subject or intended to be subjected to the lien thereof; and
1
<PAGE> 3
WHEREAS, the Company has also heretofore executed and delivered an
Eighteenth Supplemental Indenture dated as of September 1, 1979, a Nineteenth
Supplemental Indenture dated as of January 15, 1982, a Twentieth Supplemental
Indenture dated as of August 15, 1983, a Twenty-first Supplemental Indenture
dated as of August 15, 1983, a Twenty-second Supplemental Indenture dated as of
July 15, 1986, a Twenty-third Supplemental Indenture dated as of July 15, 1986,
a Twenty-fourth Supplemental Indenture dated as of December 15, 1987, a
Twenty-fifth Supplemental Indenture dated as of August 15, 1988, a Twenty-sixth
Supplemental Indenture dated as of September 1, 1990, a Twenty-seventh
Supplemental Indenture dated as of September 1, 1990, a Twenty-eighth
Supplemental Indenture dated as of July 1, 1991 and a Twenty-ninth Supplemental
Indenture dated as of June 1, 1993 pursuant to each of which supplemental
indentures the Company provided for the creation of an issue of First Mortgage
Bonds, and said Twenty-second and Twenty-eighth Supplemental Indentures provided
for certain modifications of the Original Indenture; and
WHEREAS, R.G. Mason, the successor Co-Trustee, resigned on July 31, 1993
and no successor trustee was appointed to replace him; and
WHEREAS, pursuant to the Original Indenture, as heretofore supplemented and
modified, there have been executed, authenticated, delivered and issued and
there are now outstanding, First Mortgage Bonds of series and in principal
amounts as follows:
<TABLE>
<CAPTION>
TITLE ISSUED OUTSTANDING
----- ----------- -----------
<S> <C> <C>
9.96% Series due 1995.................... $40,000,000 $40,000,000
8 1/8% Series due 1997................... 6,000,000 3,200,000
10 1/4% Series due 1997.................. 30,000,000 30,000,000
9.60% Series due 2000.................... 25,000,000 25,000,000
9.57% Series due 2020.................... 25,000,000 25,000,000
SECURED MEDIUM-TERM NOTES, SERIES A --
8.25% due 1998......................... 11,000,000 11,000,000
7.08% due 1999......................... 10,000,000 10,000,000
8.51% through 8.55% due 2001........... 19,000,000 19,000,000
7.53% and 7.91% due 2002............... 30,000,000 30,000,000
8.25% through 8.4% due 2022............ 35,000,000 35,000,000
SECURED MEDIUM-TERM NOTES, SERIES B --
6.23% through 6.31% due 2003........... 28,000,000 28,000,000
6.07% and 6.10% due 2004............... 18,500,000 18,500,000
6.51% and 6.53% due 2008............... 4,500,000 4,500,000
6.83% and 6.90% due 2013............... 13,000,000 13,000,000
7.19% due 2023......................... 13,000,000 13,000,000
</TABLE>
and
WHEREAS, the Board of Directors of the Company has established under the
Original Indenture, a new series of Bonds to be designated First Mortgage Bonds,
Secured Medium-Term Notes, Series C (hereinafter referred to as the "Bonds of
the New Series"), and has authorized the issue, from time to time, of said Bonds
of the New Series in the aggregate principal amount of up to One Hundred Fifty
Million Dollars ($150,000,000) pursuant to the provisions of Article Five of the
Original Indenture; and
WHEREAS, Section 18.01 of the Original Indenture provides, among other
things, that the Company, when authorized by a resolution of the Board of
Directors, and the Trustee, from time to time and at any time, subject to the
restrictions in the Indenture contained, may, and when so required by the
Original Indenture, shall, enter into indentures supplemental to the Original
Indenture and which thereafter shall form a part thereof, for the purposes,
among others, of (a) providing for the creation of a series of Bonds,
designating the series to be created and specifying the form and provisions of
the Bonds for such series,
2
<PAGE> 4
(b) adding to the Original Indenture other covenants and agreements thereafter
to be observed by the Company, (c) mortgaging, pledging, conveying, transferring
or assigning to the Trustee, and subjecting to the lien of the Indenture,
additional properties acquired by the Company, and (d) curing any ambiguity, or
curing, correcting or supplementing any defective provision contained in the
Indenture; and
WHEREAS, the Board of Directors of the Company, by resolutions duly
adopted, authorized the execution of this Thirtieth Supplemental Indenture for
the purposes of (a) creating the Bonds of the New Series, designating the series
created and specifying the form and provisions of the Bonds of such series, (b)
adding to the Original Indenture certain covenants and agreements hereafter to
be observed by the Company, and (c) mortgaging, pledging, conveying,
transferring and assigning to the Trustee, and subjecting to the lien of the
Indenture, additional properties acquired by the Company; and
WHEREAS, all acts and proceedings required by law and by the Restated
Articles of Incorporation and Bylaws of the Company necessary to secure the
payment of the principal of and premium, if any, and interest on the Bonds of
the New Series, to make the Bonds of the New Series to be issued hereunder, when
executed by the Company, authenticated and delivered by the Trustee and duly
issued, the valid, binding and legal obligations of the Company, and to
constitute the Indenture a valid and binding mortgage for the security of all
the Bonds, in accordance with its and their terms, have been done and taken; and
the execution and delivery of this Thirtieth Supplemental Indenture and the
issue of the Bonds of the New Series have been in all respects duly authorized:
NOW, THEREFORE, THIS THIRTIETH SUPPLEMENTAL INDENTURE WITNESSETH, that in
order to secure the payment of the principal of and premium, if any, and
interest on all Bonds at any time issued and outstanding under the Indenture,
according to their tenor, purport and effect, to confirm the lien of the
Indenture upon the mortgaged property mentioned therein, including any and all
property purchased, constructed or otherwise acquired by the Company since the
date of the Twenty-ninth Supplemental Indenture, and to secure the performance
and observance of all the covenants and conditions herein and in the Bonds and
in the Indenture contained, and to declare the terms and conditions upon and
subject to which the Bonds of the New Series are and are to be issued and
secured, and for and in consideration of the premises and of the mutual
covenants herein contained, and of the sum of Ten Dollars ($10) duly paid to the
Company by the Trustee, at or before the ensealing and delivery hereof and for
other valuable consideration, the receipt whereof is hereby acknowledged, the
Company has executed and delivered this Thirtieth Supplemental Indenture, and by
these presents, does grant, bargain, sell, alien, remise, release, convey,
assign, transfer, mortgage, pledge, set over and confirm unto the Trustee, its
successor in trust and its successors and assigns, all the property, rights,
privileges and franchises (other than excepted property) of the character
described in the Granting Clauses of the Original Indenture now owned of record
or otherwise by the Company, whether or not constructed or acquired since the
date of the Twenty-ninth Supplemental Indenture or which may hereafter be
constructed or acquired by it, and expressly excepting and excluding from the
lien and operation of the Indenture all properties of the character specifically
excepted by Paragraphs A through I of Granting Clause IX of the Original
Indenture, to the extent contemplated thereby, and all property heretofore
released or otherwise disposed of pursuant to the provisions of the Indenture.
TO HAVE AND TO HOLD all of the property, real, personal and mixed, and all
and singular the lands, properties, estates, rights, franchises, privileges and
appurtenances hereby granted, bargained, sold, aliened, remised, released,
conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed, or
intended so to be, unto the Trustee and its successor in trust and to its
successors and assigns, forever.
BUT IN TRUST, NEVERTHELESS, for the equal and proportionate use, benefit,
security and protection of those who from time to time shall hold the Bonds and
coupons, or any of them, authenticated and delivered under the Indenture, and
duly issued by the Company, without any discrimination, preference or priority
of any one Bond or coupon over any other by reason of priority in the time of
issue, sale or negotiation thereof or otherwise, except as provided in Section
12.28 of the Original Indenture, so that, subject to said Section 12.28, each
and all of said Bonds and coupons shall have the
3
<PAGE> 5
same right, lien and privilege under the Indenture and shall be equally and
proportionately secured thereby and hereby (except as any sinking, renewal or
other analogous fund established in accordance with the provisions of the
Indenture may afford additional security for the Bonds of any particular
series), with the same effect as if all of the Bonds and coupons had been
issued, sold and negotiated simultaneously on the date of the delivery of the
Original Indenture.
THE COMPANY HEREBY DECLARES that it holds and will hold and apply all
property and rights of the character described in Paragraph G of Granting Clause
IX of the Original Indenture as specifically reserved and excepted, upon the
trusts as set forth in the Indenture, and as the Trustee (or any purchaser upon
any sale of the mortgaged property) shall for such purpose direct from time to
time, to the fullest extent permitted by law or in equity and by any instruments
creating the same, as fully as if the same could be and had been hereby granted,
conveyed, mortgaged, pledged, transferred and assigned to and vested in the
Trustee.
It is hereby covenanted, declared and agreed by and between the parties
hereto that all Bonds and coupons, if any, are to be authenticated, delivered
and issued and that all property subject or to become subject to the Indenture
is to be held, subject to the further covenants, conditions, uses and trusts set
forth in the Indenture, and the Company for itself and its successor or assigns
does hereby covenant and agree to and with the Trustee and its successor or
successors in such trust, for the benefit of those who shall hold Bonds, or
coupons, or any of them, as follows:
ARTICLE ONE
BONDS OF THE NEW SERIES AND PROVISIONS RELATING THERETO
SECTION 1.01. A. Terms of Bonds of the New Series. There shall be, and is
hereby created, a new series of Bonds, known as and entitled "First Mortgage
Bonds, Secured Medium-Term Notes, Series C" (herein referred to as the "Bonds of
the New Series"). The aggregate principal amount of the Bonds of the New Series
shall be and hereby is limited, except for duplicate Bonds authenticated and
delivered pursuant to Section 3.12 of the Indenture, to One Hundred Fifty
Million Dollars ($150,000,000) in aggregate principal amount, to be initially
authenticated and delivered from time to time upon delivery to the Trustee of
the documents required by the Original Indenture, including written instructions
from the Chairman of the Board, the President or any Vice President of the
Company specifying the principal amount of the Bonds of the New Series to be
issued on the specified date of issuance, the numbers, denominations, maturity
date or dates, redemption prices, if any, and interest rate or rates of such
Bonds of the New Series; provided that all Bonds of the New Series having the
same date of maturity shall be identical as to rate of interest and terms of
redemption if redeemable.
The definitive Bonds of the New Series shall be issued only as registered
Bonds without coupons in the denomination of $100,000 and any amount in excess
thereof which is an integral multiple of $1,000.
As used herein, the term "Global Note" shall mean a Bond of the New Series
that is delivered to the Depositary (as hereinbelow defined) or pursuant to the
instructions of the Depositary and that shall be registered in the name of the
Depositary or its nominee. As used herein, the term "Depositary" shall mean,
unless otherwise specified by the Company, The Depository Trust Company, New
York, New York, or any successor thereto registered and qualified under the
Securities Exchange Act of 1934, as amended, or other applicable statute or
regulation.
The definitive Bonds of the New Series may be issued in the form of Bonds
fully engraved or printed or lithographed or otherwise photocopied.
The principal of, and premium, if any, and interest on the Bonds of the New
Series will be paid in any coin or currency of the United States of America
which at the time of payment is legal tender for the payment of public and
private debts. The principal of and premium, if any, on the Bonds of the New
Series will be payable in Chicago, Illinois, at the office of Harris Trust and
Savings Bank, which is the initial paying agent for the Bonds of the New Series,
except that the Company may designate from time to time
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<PAGE> 6
other offices or agencies at which Bonds of the New Series may be surrendered
for redemption and payment. Except as hereinbefore provided, interest on Bonds
of the New Series shall be payable at the office of the paying agent in Chicago,
Illinois, in each case to the holder of record on the record date (as
hereinbelow defined) in such manner as may be directed by the holder of each
Bond of the New Series.
Notwithstanding any provision in the Indenture to the contrary, each Bond
of the New Series shall be dated the date of the authentication thereof by the
Trustee (the "Original Issue Date"). Each Bond of the New Series shall bear
interest from the Original Issue Date thereof on the principal amount thereof,
until payment of the principal thereof, at such rate or rates per annum, and
shall have such other terms and provisions, as the Chairman of the Board, the
President or any Vice President of the Company, may determine. Interest on Bonds
of the New Series shall be payable semi-annually on June 15 and December 15 of
each year; provided, however, that if the Original Issue Date with respect to a
Bond of the New Series is between the record date for an interest payment date
and an interest payment date, the first interest payment shall be made on the
second succeeding interest payment date after the Original Issue Date. Each
payment of interest shall include interest accrued to, but excluding, such
interest payment date.
Promptly after each record date that is not a date of maturity or
redemption, the Trustee shall furnish to the Company a notice setting forth the
total amount of the interest payments to be made on the applicable interest
payment date, and to the Depositary a notice setting forth the total amount of
interest payments to be made on the Global Notes on such interest payment date.
On or about the first business day of each month, the Trustee (or any duly
selected paying agent) will deliver to the Company a written list of the
principal and interest to be paid on Bonds of the New Series maturing in the
next succeeding month and to the Company and the Depositary a written list of
the principal and interest to be paid on Global Notes maturing in the next
succeeding month. Promptly after the first business day of each month, the
Trustee shall furnish to the Company a written notice setting forth the
aggregate principal amount of the outstanding Global Notes. The Trustee shall
assume responsibility for withholding taxes on interest paid as required by law.
Notwithstanding any provision in the Indenture to the contrary, the person
in whose name any Bond of the New Series is registered at the close of business
on any record date with respect to any interest payment date shall be entitled
to receive the interest payable on such interest payment date notwithstanding
the cancellation of such Bond of the New Series upon any transfer or exchange
thereof (including any exchange incident to a partial redemption thereof)
subsequent to the record date and prior to such interest payment date, except
that, if and to the extent that the Company shall default in the payment of the
interest due on such interest payment date, then the registered holders of Bonds
of the New Series on such record date shall have no further right to or claim in
respect of such defaulted interest as such registered holders on such record
date, and the persons entitled to receive payment of any defaulted interest
thereafter payable or paid on any Bonds of the New Series shall be the
registered holders of such Bonds of the New Series on the record date for
payment of such defaulted interest. The term "record date" as used in this
Section 1.01, and in the form of the Bonds of the New Series, with respect to
any interest payment date applicable to the Bonds of the New Series, shall mean
the close of business on the May 31 next preceding a June 15 interest payment
date or the November 30 next preceding a December 15 interest payment date as
the case may be (or the preceding business day if a holiday or other day on
which the principal corporate trust office of the Trustee is closed), or such
record date established for defaulted interest as hereinafter provided.
In case of failure by the Company to pay interest when due, the claim for
such interest shall be deemed to have been transferred by transfer of any Bonds
of the New Series registered on the books of the Company and the Company, by not
less than 10 days' written notice to bondholders, may fix a subsequent record
date, which is not more than 30 days or less than 5 days prior to the date fixed
for the payment of such interest, for determination of holders entitled to
payment of such interest. Such provision for establishment of a subsequent
record date, however, shall in no way affect the rights of bondholders or of the
Trustee consequent on any default.
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<PAGE> 7
Subject to Section 1.01(B) hereof, and as permitted by the provisions of
Section 3.10 of the Original Indenture and upon payment at the option of the
Company of a sum sufficient to reimburse it for any stamp tax or other
governmental charge as provided in Section 3.11 of the Original Indenture, Bonds
of the New Series may be exchanged for other registered Bonds of the New Series
of different authorized denominations of like aggregate principal amount.
Notwithstanding the provisions of Section 3.11 of the Original Indenture, no
further sum, other than the sum sufficient to reimburse the Company for such
stamp taxes or other governmental charges, shall be required to be paid upon any
exchange of Bonds of the New Series or upon any transfer thereof.
The Trustee hereunder, by virtue of its office as such Trustee, shall be a
paying agent of the Company for the purpose of the payment of the principal of
and interest on the Bonds of the New Series and the registrar and transfer agent
of the Company for the purpose of registering and transferring Bonds of the New
Series. Neither the Company nor the Trustee shall be required to make transfers
or exchanges of any Bonds (or parts therein) designated for redemption.
B. Provisions Relating to Global Notes. In addition to those provisions
of the Indenture applicable to all Bonds of the New Series, the following
provisions shall apply to all Global Notes.
(a) If the Company issues Global Notes, then the Company shall execute and
the Trustee shall authenticate and deliver such Global Note or Global Notes,
which (i) shall bear a legend substantially to the following effect for so long
as The Depository Trust Company is the Depositary: "Unless this certificate is
presented by an authorized representative of The Depository Trust Company (55
Water Street, New York, New York) to the Company or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein."; and (ii) shall bear such other legend as requested by any
other depositary for so long as such depositary is the Depositary.
(b) Notwithstanding any other provision of this Section 1.01.B, unless the
terms of a Global Note expressly permit such Global Note to be transferred or
exchanged in whole or in part for individual Bonds of the New Series, a Global
Note may not be transferred or exchanged as provided in Sections 3.09, 3.10 and
3.11 of the Indenture.
(c) (i) Notwithstanding the legend which any Global Note shall bear as
provided in Section 1.01.B(a) hereof, if at any time the Depositary for a Global
Note notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Note or if at any time the Depositary for the Global
Note shall no longer be eligible or in good standing under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation, the
Company shall appoint a successor Depositary with respect to such Global Note.
If a successor Depositary for such Global Note is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company shall execute and the Trustee, upon receipt of the
Company order for the authentication and delivery of Bonds of the New Series
having the same Original Issue Date, maturity date, interest rate, redemption
provisions and all other terms as, and in exchange for, such Global Note, shall
authenticate and deliver, Bonds of the New Series with like tenor and terms in
definitive form and registered in the names of the persons as provided in the
next succeeding paragraph in an aggregate principal amount equal to the
principal amount of the Global Note, in exchange for such Global Note. The
Trustee shall not be charged with knowledge of notice or the ineligibility of a
Depositary unless a responsible officer assigned to and working in its corporate
trustee administration department shall have actual knowledge thereof.
(ii) In any exchange provided for in the preceding paragraph, the Company
will execute and the Trustee will authenticate and deliver Bonds of the New
Series in definitive registered form in authorized denominations. Upon the
exchange of a Global Note for Bonds of the New Series, such Global Notes shall
be cancelled by the Trustee. Bonds of the New Series issued in exchange for a
Global Note pursuant to
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<PAGE> 8
this Section shall be registered in such names and in such authorized
denominations as the Depositary for such Global Note, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Bonds of the New Series to the
Depositary for delivery to the persons in whose names such Bonds of the New
Series are so registered, or if the Depositary shall refuse or be unable to
deliver such Bonds of the New Series, the Trustee shall deliver such Bonds of
the New Series to the persons in whose names such Bonds of the New Series are
registered, unless otherwise agreed upon between the Trustee and the Company.
(d) Neither the Company, the Trustee, any authenticating agent nor any
paying agent will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests of a Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interest.
C. Form of Bonds of the New Series. The Bonds of the New Series, and the
Trustee's authentication certificate to be executed on the Bonds of said series,
shall be in substantially the following forms, respectively:
[FORM OF FACE OF BOND OF THE NEW SERIES]
[FORM OF LEGEND TO BE USED IN CONNECTION WITH
GLOBAL NOTES FOR WHICH THE DEPOSITORY TRUST
COMPANY IS DEPOSITARY]
Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to
the Company or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of
The Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
<TABLE>
<S> <C>
No. REGISTERED
-------------------------
CUSIP NO. $
------------------- -----------------------
</TABLE>
WASHINGTON NATURAL GAS COMPANY
First Mortgage Bond, Secured Medium-Term Note, Series C
<TABLE>
<S> <C> <C>
ORIGINAL ISSUE DATE: INTEREST RATE: STATED MATURITY DATE:
------------------------ ----------------------- -------------------------
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: PERCENTAGE REDUCTION:
------------------------ ----------------------- -------------------------
</TABLE>
WASHINGTON NATURAL GAS COMPANY, a Washington corporation (hereinafter
sometimes called the "Company"), for value received, hereby promises to pay to
or registered assigns, the principal sum of Dollars on
the Stated Maturity Date specified above (except to the extent redeemed prior to
the Stated Maturity Date) and to pay interest hereon, at the Interest Rate per
annum stated above, until the principal hereof is paid or duly made available
for payment, payable semi-annually on the fifteenth days of June and December in
each year (each an "Interest Payment Date") commencing on the first Interest
Payment Date next succeeding the Original Issue Date specified above, unless the
Original Issue Date occurs between a Record Date (as defined below) and the next
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<PAGE> 9
succeeding Interest Payment Date, in which case commencing on the second
Interest Payment Date succeeding the Original Issue Date, to the holder of this
Bond on the Record Date with respect to such succeeding Interest Payment Date,
and on the Stated Maturity Date (or on any Redemption Date (as defined on the
reverse hereof)). The interest so payable upon any June 15 or December 15 will,
subject to certain exceptions described on the reverse hereof, be paid to the
person in whose name this bond is registered on the Record Date, and shall be
computed on the basis of a 360-day year of twelve 30-day months.
Any payment required to be made in respect of this bond on a date that is
not a business day need not be made on such date, but may be made on the next
succeeding business day with the same effect as if made on such date, and no
additional interest shall accrue as a result of such delayed payment.
The principal of and interest on this bond will be paid in any coin or
currency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts. The principal of this bond
will be payable at the principal corporate trust office of Harris Trust and
Savings Bank, the Trustee, or its successor in trust, in the City of Chicago,
State of Illinois, except that, in case of the redemption as a whole at any time
of the bonds of this series then outstanding, the Company may designate in the
redemption notice other offices or agencies at which, at the option of the
holder, this bond may be surrendered for redemption and payment. Interest on
this bond will be payable at the principal corporate trust office of Harris
Trust and Savings Bank, the Trustee, or its successor in trust, in the City of
Chicago, State of Illinois in such manner as may be directed by the holder of
this bond.
"Record Date" as used herein, with respect to any Interest Payment Date
shall mean (a) the close of business on the May 31 next preceding a June 15
Interest Payment Date or the November 30 next preceding a December 15 Interest
Payment Date as the case may be (or the preceding business day if a holiday or
other day on which the principal corporate trust office of the Trustee is
closed), or (b) in case of failure by the Company to pay interest when due, a
subsequent record date fixed by the Company, by not less than 10 days' written
notice to bondholders, which is not more than 30 days or less than 5 days prior
to the date fixed for the payment of such interest, for determination of holders
entitled to payment of such interest; provided, however, that such provision for
establishment of a subsequent record date shall in no way affect the rights of
bondholders or of the Trustee consequent on any default.
This bond shall not become obligatory for any purpose or be entitled to any
security or benefit under the Indenture hereinafter mentioned until the
authentication certificate hereon shall have been signed by the Trustee.
The provisions of this bond are continued on the reverse hereof and such
continued provisions shall for all purposes have the same effect as though fully
set forth at this place.
IN WITNESS WHEREOF, WASHINGTON NATURAL GAS COMPANY has caused these
presents to be executed in its corporate name by the manual or facsimile
signature of its President or one of its Vice Presidents, under its corporate
seal or facsimile thereof, attested by the manual or facsimile signature of its
Secretary or one of its Assistant Secretaries, all as of
WASHINGTON NATURAL GAS COMPANY
By:
----------------------------------
President
ATTEST:
---------------------------------------------------------
Secretary
8
<PAGE> 10
[FORM OF REVERSE OF BOND]
WASHINGTON NATURAL GAS COMPANY
First Mortgage Bond, Secured Medium-Term Note, Series C
This bond is one of the bonds, of the above designated series, of an
authorized issue of bonds of the Company known as First Mortgage Bonds, not
limited as to maximum aggregate principal amount, all issued or issuable in one
or more series under and equally and proportionately secured (except in so far
as any sinking fund, renewal fund or other fund established in accordance with
the provisions of the Indenture hereinafter mentioned may afford additional
security for the bonds of any specific series) by an Indenture of First Mortgage
dated as of April 1, 1957 (herein sometimes called the "Original Indenture"),
executed and delivered by the Company to Harris Trust and Savings Bank, as
Trustee (herein and its successors under said Indenture called the "Trustee"),
as supplemented and modified by the Sixth Supplemental Indenture dated as of
August 1, 1966, by the Seventh Supplemental Indenture dated as of February 1,
1967, by the Seventeenth Supplemental Indenture dated as of August 9, 1978, by
the Twenty-second Supplemental Indenture dated as of July 15, 1986, and by the
Twenty-eighth Supplemental Indenture dated as of July 1, 1991 and as
supplemented by all other indentures supplemental thereto, including in
particular a Thirtieth Supplemental Indenture dated as of August 15, 1995
(herein sometimes called the "Thirtieth Supplemental Indenture"), executed by
the Company and the Trustee, to which Original Indenture and all indentures
supplemental thereto (herein sometimes called the "Indenture") reference is
hereby made for a description of the property mortgaged and pledged as security
for said bonds, the nature and extent of the security, the rights, duties and
immunities thereunder of the Trustee, the rights of the holders of said bonds
and of the Trustee and of the Company in respect of such security, and the terms
upon which said bonds may be issued thereunder.
The bonds of this series are issuable solely as registered bonds without
coupons in denominations of $100,000 and any amount in excess thereof which is
an integral multiple of $1,000.
The bonds of this series are subject to redemption at the option of the
Company on any date on and after the Initial Redemption Date, if any, specified
on the face hereof (any date fixed for redemption shall hereafter be referred to
as a "Redemption Date"). If no Initial Redemption Date is set forth on the face
hereof, this bond may not be redeemed at the option of the Company prior to the
Stated Maturity Date specified on the face hereof. On and after the Initial
Redemption Date, if any, this bond may be redeemed at any time in whole or from
time to time in part at the option of the Company at the applicable Redemption
Price (as defined below) together with interest thereof payable to the
Redemption Date, on notice given not less than thirty days prior to the
Redemption Date. In the event of redemption of this bond in part only, a new
bond for the unredeemed portion hereof shall be issued in the name of the holder
hereof upon the surrender hereof.
If this bond is redeemable in the foregoing manner at the option of the
Company, the "Redemption Price" shall initially be the Initial Redemption
Percentage, specified on the face hereof, of the principal amount of this bond
to be redeemed and shall decline at each anniversary of the Initial Redemption
Date by the Annual Redemption Percentage Reduction, if any, specified on the
face hereof, of the principal amount to be redeemed until the Redemption Price
is 100% of such principal amount.
Bonds of this series are also subject to redemption at any time or from
time to time prior to maturity, at the special redemption price of 100% of their
principal amount, together with accrued interest to the Redemption Date by (a)
the application of the proceeds of certain property subject to the lien of the
Indenture upon payment of the called principal amount thereof if any sale or
taking of the nature described in Section 2.04 of the Original Indenture shall
occur or (b) the application of cash transferred to the Trustee for deposit in
the renewal fund as provided in Section 4.04 of the Original Indenture and
Section 2.01 of the Twenty-eighth Supplemental Indenture, in each case upon
prior notice given by first class mail, postage prepaid, as provided in the
Thirtieth Supplemental Indenture to the holder not less than thirty days prior
to the Redemption Date and subject to all other conditions and provisions of the
Indenture.
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<PAGE> 11
If this bond or any portion hereof ($100,000 or any amount in excess
thereof which is an integral multiple of $1,000) is duly designated for
redemption, if payment of the principal hereof or of such portion, together with
accrued interest, and premium, if any, is irrevocably provided for and if notice
of such redemption is duly given or provided for, or waived, all as specified in
the Indenture, this bond or such portion shall cease to be entitled to the lien
of the Indenture from and after the date such payment and notice are irrevocably
so provided for and shall cease to bear interest from and after the Redemption
Date.
In the event of the selection for redemption of a portion only of the
principal of this bond, payment of the Redemption Price will be made at the
option of the registered owner, either (a) upon presentation of this bond for
notation hereon of such payment of the portion of the principal of this bond so
called for redemption, or (b) upon surrender of this bond in exchange for a bond
or bonds (of authorized denominations of the same series) for the unredeemed
balance of the principal amount of this bond, or (c) pursuant to the provisions
of any agreement providing for the making of notations of principal payments on
this bond by the holders thereof or by an agency of the Company or the Trustee,
as provided in the Indenture. In the event of the redemption of this bond in
whole, payment of the Redemption Price will be made only upon surrender of this
bond.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than sixty-six and two-thirds per
cent in principal amount of the bonds at the time outstanding (determined as
provided in the Indenture) including, if more than one series of bonds shall be
at the time outstanding, not less than sixty-six and two-thirds percent in
principal amount of the bonds at the time outstanding of each series affected,
to effect, by an indenture supplemental to the Indenture, modifications or
alterations of the Indenture and of the rights and obligations of the Company
and of the holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the consent of the registered
owner hereof which will (a) extend the maturity of this bond or reduce the rate
or extend the time of payment of interest herein or reduce the amount of the
principal hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the Indenture, or alter the
equal and proportionate security afforded by the lien of the Indenture for the
bonds issued thereunder, or (c) reduce the number or percentage of the principal
amount of the bonds upon the consent of the holders of which modifications or
alterations may be made as aforesaid or defaults may be waived.
This bond is transferable by the registered owner hereof in person or by
his duly authorized attorney, on books of the Company kept for the purpose at
the principal corporate trust office of the Trustee, upon surrender of this bond
for cancellation and upon payment, if the Company shall so require, of the
charges provided for in the Thirtieth Supplemental Indenture, sufficient to
reimburse the Company for any stamp tax or other governmental charge incident
thereto, and thereupon a new registered bond of the same series of like
principal amount will be issued to the transferee in exchange therefor.
The registered owner of this bond at his option may surrender the same for
cancellation at said office and receive in exchange therefor the same aggregate
principal amount of registered bonds of the same series but of other authorized
denominations, upon payment, if the Company shall so require, of the charges
provided for in the Thirtieth Supplemental Indenture, sufficient to reimburse
the Company for any stamp tax or other governmental charge incident thereto, and
subject to the terms and conditions therein set forth.
Neither the Company nor the Trustee shall be required to make transfers or
exchanges of any bonds designated for redemption.
If a default as defined in the Indenture shall occur, the principal of this
bond may become or be declared due and payable before maturity in the manner and
with the effect provided in the Indenture. The holders, however, of certain
specified percentages of the bonds at the time outstanding, including in certain
cases specified percentages of bonds of particular series, may in the cases, to
the extent and under the conditions provided in the Indenture, waive certain
defaults thereunder and the consequences of such defaults.
10
<PAGE> 12
The Thirtieth Supplemental Indenture provides that in the event of any
default in payment of the interest due on any Interest Payment Date, such
interest shall not be payable to the holder of the bond on the original Record
Date but shall be paid to the registered holder of such bond on the subsequent
Record Date established for payment of such defaulted interest.
The Company and the Trustee, any paying agent and any bond registrar, may
deem and treat the person in whose name this bond is registered, or his
registered assigns, as the absolute owner hereof, whether or not this bond shall
be overdue, for the purpose of receiving payment and for all other purposes and
neither the Company nor the Trustee nor any paying agent nor any bond registrar
shall be affected by any notice to the contrary.
[FORM OF ASSIGNMENT]
For value received, the undersigned hereby sells, assigns and transfers
unto
---------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please Insert Social Security or Other Identifying Number of Assignee
the within bond, and all rights thereunder, hereby irrevocably constituting and
appointing
---------------------------------------------------------------------
attorney to transfer said bond on the books
-----------------------------------
of the Company, with full power of substitution in the premises.
--------------------------------------
Dated:
In the presence of:
---------------------------------------------------------
NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within bond in every particular, without
alteration or enlargement or any change whatever.
[FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE]
This is one of the bonds, of the series designated therein, described in
the within mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
As Trustee,
By:
----------------------------------
Authorized Officer
SECTION 1.02. Redemption Provisions for Bonds of the New Series. The Bonds
of the New Series shall be subject to redemption prior to maturity:
(a) as a whole at any time or in part from time to time, at the option
of the Company, upon payment of the Redemption Price designated by the
Chairman of the Board, the President or any Vice President in the Company's
written instructions to the Trustee relating to the issuance and
authentication of any Bonds of the New Series and as specified in such
Bonds; or
(b) as a whole at any time upon payment of 100% of the principal
amount thereof if any sale or taking of the nature described in Section
7.04 of the Original Indenture of all or substantially all of the property
of the Company shall occur, through the application pursuant to Section
8.05 of the Original Indenture of any trust moneys held by the Trustee
received from the proceeds of such property sold or taken pursuant to the
provisions of Section 7.04 of the Original Indenture; or
11
<PAGE> 13
(c) as a whole at any time or in part from time to time, at the option
of the Company, upon payment of 100% of the called principal amount
thereof, without premium, through the application of cash transferred to
the Trustee for deposit into the renewal fund provided for in Section 1.03
hereof.
Any redemption pursuant to the provisions of this Section 1.02 shall be
made, together in any case with interest accrued thereon to the date fixed for
redemption, upon not less than thirty days' nor more than sixty days' notice
given by first class mail, postage prepaid, to the holder of record at the date
of such notice of each Bond of the New Series, at his address as shown on the
Bond register. Such notice shall be sufficiently given if deposited in the
United States mail as aforesaid within such period. Neither the failure to mail
such notice, nor any defect in any notice so mailed to any holder, shall affect
the sufficiency of such notice with respect to other holders. The foregoing
provision with respect to notice shall be subject to all other conditions and
provisions of the Indenture not inconsistent therewith.
Whenever less than all of the outstanding Bonds of the New Series are to be
redeemed, the principal amount of such Bonds to be redeemed shall be prorated in
units of $100,000 each among the holders of the Bonds of the New Series in the
proportion that their respective holdings bear to the aggregate principal amount
of Bonds of the New Series outstanding on the date of selection.
Subject to the specific provisions set forth hereinabove in this Section
1.02 and in the form of the Bonds of the New Series in Section 1.01 hereof, the
provisions of Article Ten of the Indenture shall govern any redemption of the
Bonds of such series.
SECTION 1.03. Renewal Fund. Notwithstanding the provisions of Section 4.06
of the Original Indenture, the Company hereby covenants that so long as any of
the Bonds of the New Series shall remain outstanding (a) the covenants made by
the Company in Section 4.04 of the Original Indenture shall continue in full
force and effect and (b) Bond credits and Bonds delivered as credits in any
annual or interim renewal fund certificate shall be funded (as defined in
Section 1.33(3) of the Original Indenture), and shall not again be used as the
basis of action or credit under the Indenture, unless and to the extent that the
same have been reinstated or unfunded, as provided in said Section 4.04 or in
Section 2.03 of the Original Indenture. Cash deposited in the renewal fund may
be applied to the redemption of the Bonds of the New Series, as set forth in
Section 1.02 above.
SECTION 1.04. Restriction on Payment of Dividends on Common Stock. The
Company hereby covenants that so long as any of the Bonds of the New Series
shall remain outstanding it shall not directly or indirectly (a) declare or pay
any dividend (other than dividends payable in Common Stock of the Company) or
declare or make any other distribution on any shares of its Common Stock, or (b)
make, or permit any subsidiary to make, any expenditures for the purchase,
redemption or other retirement for a consideration of any shares of capital
stock of the Company (other than in exchange for, or from the net cash proceeds
of, other new shares of capital stock of the Company and other than any shares
of any class of stock ranking as to dividends or assets prior to the Common
Stock of the Company required to be purchased, redeemed or otherwise retired for
any sinking fund or purchase fund for such class of stock), if the aggregate
amount of all such dividends, distributions and expenditures made since
September 30, 1994, would exceed the aggregate amount of the net income of the
Company accumulated after September 30, 1994 plus the sum of $20,000,000.
Net income of the Company for the purpose of this Section shall mean the
sum of (a) the total operating revenues of the Company, less an amount equal to
the total operating expenses of the Company, including but not limited to (i)
all taxes (including without limitation income, excess profits and other taxes
imposed on or measured by income or undistributed earnings or income), (ii)
rentals, insurance, current repairs and maintenance, (iii) provision for
retirements, depreciation or obsolescence, which shall be the amount actually
charged by the Company on its books of account (but in respect of depreciable
gas utility property not subject to prior liens, shall not be less than the
minimum provision for depreciation as defined in Section 1.32 of the Original
Indenture), and (iv) all charges on account of interest on indebtedness and on
account of debt discount and expense, and (b) net income or loss from the
operation of properties other than the trust estate and any other income
received (less applicable expenses) or loss incurred by the Company; which sum
shall be diminished by an amount equal to all
12
<PAGE> 14
dividends accrued subsequent to September 30, 1994 (whether or not paid) on any
outstanding stock of the Company having preference over the Common Stock as to
dividends, assets or otherwise, all of the foregoing determined in accordance
with generally accepted accounting principles. In determining the net income of
the Company for the purpose of this Section, no deduction or adjustment shall be
made for or in respect of any charges or credits which under generally accepted
accounting principles are not appropriate charges or credits in determining net
income, but, in any event, the following items shall be excluded from the
computation: (1) expenses in connection with the issuance of stock of the
Company and expenses in connection with the redemption or retirement of any
securities issued by the Company, including any amount paid in excess of the
principal amount or par or stated value of securities redeemed or retired, or,
in the event that such redemption or retirement is effected with the proceeds of
sale of other securities of the Company, any interest or dividends on the
securities redeemed or retired from the date on which the funds required for
such redemption or retirement are deposited in trust for such purpose to the
date of redemption or retirement, (2) profits or losses from the sale,
abandonment or other disposition of property or other assets carried in plant or
investment accounts of the Company, or from the reacquisition of any securities
of the Company, or taxes in respect of any such profits, (3) any change in or
adjustment of the book value of any assets owned by the Company arising from a
revaluation thereof, (4) any adjustment (including tax adjustments) applicable
to any period prior to October 1, 1992, or (5) amortization or elimination of
gas utility property plant adjustment or acquisition accounts or intangibles.
The Company covenants that it will not, directly or indirectly, reclassify
or otherwise convert Common Stock into any stock preferred over Common Stock as
to dividends or upon liquidation.
SECTION 1.05. Restrictions on Funded Debt. The Company hereby covenants
that so long as any of the Bonds of the New Series shall remain outstanding it
will not incur any Funded Debt (i) if immediately thereafter the aggregate
principal amount of all Funded Debt to be outstanding shall exceed 65% of Total
Capitalization, or (ii) unless Net Earnings Available for Interest, for a period
of 12 consecutive calendar months within the 15 calendar months immediately
preceding the incurrence of such debt, shall be not less than 1.75 times the
aggregate of annual interest charges on all indebtedness of the Company to be
outstanding immediately after such incurrence (excluding from such computation
of interest charges, interest on any indebtedness which is to be paid, redeemed
or otherwise retired or provision for the retirement of which is to be made,
prior to or concurrently with the incurrence of such debt).
SECTION 1.06. Meanings of Certain Terms used in Section 1.05 of this
Thirtieth Supplemental Indenture. As used in Section 1.05 of this Thirtieth
Supplemental Indenture:
(a) Net Earnings Available for Interest shall be determined in
accordance with generally accepted accounting principles by deducting, from
the total operating revenues and other income of the Company for the period
in question, an amount equal to the total operating expenses for such
period, including but not limited to (i) all taxes other than income,
excess profits and other taxes imposed on or measured by income or
undistributed earnings or income or any income in the computation of which
interest is deductible; (ii) rentals, insurance, current repairs and
maintenance; and (iii) provision for retirements, depreciation or
obsolescence, which shall be the amounts actually charged on the
appropriate books of account (but in respect of depreciable gas utility
property of the Company not subject to prior liens, shall not be less than
the minimum provision for depreciation as defined in Section 1.32 of the
Original Indenture), but excluding any charges on account of interest on
indebtedness, or on account of debt discount and expense. No amortization
or elimination of gas utility property plant adjustment or acquisition
accounts or intangibles, shall be taken into account in determining Net
Earnings Available for Interest.
If the Company shall have acquired, within or after the period for which
Net Earnings Available for Interest is being determined, or will acquire in
connection with the incurrence of indebtedness which is the subject of such
determination, properties which within six months prior to such acquisition were
used or operated in a business similar to that in which they are or are to be
used or operated by the Company, and if the earnings of such properties can be
separately determined or fairly estimated in accordance with
13
<PAGE> 15
generally accepted accounting principles, then, in computing Net Earnings
Available for Interest, the net earnings of such properties for the whole of
such period shall be included as if such properties had been owned by the
Company, during the whole of such period; and if, within or after said period,
any portion of the properties of the Company exceeding $500,000 in value shall
have been disposed of by the Company, or will be disposed of in connection with
the incurrence of indebtedness which is the subject of such determination, and
if the earnings of such properties can be separately determined or fairly
estimated in accordance with generally accepted accounting principles, then in
computing Net Earnings Available for Interest, the net earnings of such
properties for the whole of such period shall be excluded.
(b) The term "Funded Debt" of the Company shall mean, at any date as
of which the amount thereof is to be determined, (i) all debt of the
Company and all obligations of the Company under any lease or other
agreement which, in accordance with generally accepted accounting
principles, should be capitalized on the Company's balance sheet or for
which the amount of liability thereunder if so capitalized should be
disclosed in such balance sheet, whether secured or unsecured, maturing by
its terms more than one year after the date of the creation thereof
(notwithstanding the fact that payments (whether installment, serial or
sinking fund payments or otherwise) are required to be made less than one
year after such date in respect of any such debt or obligation and
notwithstanding the fact that part thereof is at any time classified, in
accordance with generally accepted accounting principles, as current
liabilities), (ii) any indebtedness or obligation maturing in not more than
one year from the date of creation which by its terms can be extended or
renewed beyond such period at the option of the Company, and (iii) any debt
or obligation maturing by its terms not more than one year after the date
of the creation thereof if secured by the pledge of Bonds by the Company.
For the purposes of this definition, any debt or obligation which is
extended or renewed (other than at the option of the Company pursuant to
the terms thereof) shall be deemed to have been created at the effective
date of such extension or renewal.
(c) The term "generally accepted accounting principles" shall have the
same meaning as "sound accounting practice" as defined in the Original
Indenture.
(d) The term "Total Capitalization" shall have the meaning set forth
with respect thereto in Section 4.05 of the Original Indenture.
SECTION 1.07. Parties in Interest; Duration of Effectiveness of Article
One. The covenants, conditions and provisions of this Article One shall, except
to the extent that failure to comply therewith shall (with the lapse of time or
the giving of notice, or otherwise) constitute a default under the Indenture, be
for the sole and exclusive benefit of the Company, the Trustee and the holders
of the Bonds of the New Series. This Article One shall be of force and effect
only so long as any Bonds of the New Series are outstanding.
ARTICLE TWO
PRINCIPAL AMOUNT OF BONDS PRESENTLY TO BE OUTSTANDING
SECTION 2.01. The total aggregate principal amount of the First Mortgage
Bonds of the Company issued and outstanding and presently authorized to be
issued under the provisions of and secured by the Indenture, will be Four
Hundred Fifty Five Million Two Hundred Thousand Dollars ($455,200,000), namely
Forty Million Dollars ($40,000,000) principal amount of First Mortgage Bonds,
9.96% Series due 1995, Three Million Two Hundred Thousand Dollars ($3,200,000)
principal amount of First Mortgage Bonds, 8-1/8% Series due 1997, Thirty Million
Dollars ($30,000,000) principal amount of First Mortgage Bonds, 10-1/4% Series
due 1997, Twenty Five Million Dollars ($25,000,000) principal amount of First
Mortgage Bonds, 9.60% Series due 2000, Twenty Five Million Dollars ($25,000,000)
principal amount of First Mortgage Bonds, 9.57% Series due 2020, One Hundred
Five Million Dollars ($105,000,000) principal amount of First Mortgage Bonds,
Secured Medium-Term Notes, 7.08% to 8.55% Series A due 1995-2022, Seventy Seven
Million Dollars ($77,000,000) principal amount of First Mortgage Bonds, Secured
Medium-Term Notes, 6.07% to 7.19% Series B due 2003-2023, now issued and
outstanding and
14
<PAGE> 16
up to One Hundred Fifty Million Dollars ($150,000,000) aggregate principal
amount of First Mortgage Bonds, Secured Medium-Term Notes, Series C, to be
issued from time to time upon compliance by the Company with the provisions of
Sections 5.02, 5.03, 5.04 and/or 5.05 of the Original Indenture.
ARTICLE THREE
MISCELLANEOUS
SECTION 3.01. This Thirtieth Supplemental Indenture is executed and shall
be construed as an indenture supplemental to the Original Indenture, and shall
form a part thereof, and the Original Indenture, as heretofore supplemented and
modified and as hereby supplemented, is hereby confirmed. All terms used in this
Thirtieth Supplemental Indenture shall be taken to have the same meaning as in
the Original Indenture except in cases where the context clearly indicates
otherwise.
SECTION 3.02. The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Thirtieth Supplemental
Indenture or the due execution thereof by the Company or for or in respect of
the recitals of fact and statements contained herein. The Company covenants and
agrees that all such recitals and statements are made by it solely and that the
same are true.
SECTION 3.03. This Thirtieth Supplemental Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
ARTICLE FOUR
REAL PROPERTY ACQUIRED SINCE THE DATE OF THE TWENTY NINTH
SUPPLEMENTAL INDENTURE
IN COUNTY, WASHINGTON:
[Insert County and legal description for all
real property acquired since June 1, 1993]
IN WITNESS WHEREOF, WASHINGTON NATURAL GAS COMPANY has caused this
Thirtieth Supplemental Indenture to be signed in its corporate name and behalf
by its President or one of its Vice Presidents and its corporate seal to be
hereunto affixed and attested by its Secretary or an Assistant Secretary, and
HARRIS TRUST AND SAVINGS BANK has caused this Thirtieth Supplemental Indenture
to be signed in its corporate name and behalf by its President or one of its
Vice Presidents and its corporate
15
<PAGE> 17
seal to be hereunto affixed and attested by its Secretary or an Assistant
Secretary, all on the dates of their respective acknowledgments but effective as
of the day and year first above written.
WASHINGTON NATURAL GAS COMPANY
By:
JAMES P. TORGERSON
---------------------------------
Senior Vice President -- Finance,
Planning
and Development
(SEAL)
ATTEST:
--------------------------------------
TIMOTHY J. HOGAN
Secretary
HARRIS TRUST AND SAVINGS BANK
as Trustee
By:
---------------------------------
Vice-President
(SEAL)
ATTEST:
--------------------------------------
C. POTTER
Assistant Secretary
16
<PAGE> 18
<TABLE>
<S> <C>
STATE OF WASHINGTON
COUNTY OF KING ss.:
</TABLE>
On this day of August, A.D., 1995, before me personally appeared JAMES P.
TORGERSON, to me known to be the Senior Vice President -- Finance, Planning and
Development, and TIMOTHY J. HOGAN, to me known to be the Secretary of WASHINGTON
NATURAL GAS COMPANY, the corporation that executed the within and foregoing
instrument, and acknowledged the said instrument to be the free and voluntary
act and deed of said corporation, for the uses and purposes therein mentioned,
and on oath stated that they were authorized to execute said instrument and that
the seal affixed is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
--------------------------------------
NOTARY PUBLIC in and for the State
of Washington, residing at: __________
My Commission Expires: _______________
(NOTARIAL SEAL)
<TABLE>
<S> <C>
STATE OF ILLINOIS
COUNTY OF COOK ss.:
</TABLE>
On this day of August, A.D., 1995, before me personally appeared
, to me known to be a , and , to me
known to be an Assistant Secretary, of HARRIS TRUST AND SAVINGS BANK, the
corporation that executed the within and foregoing instrument, and acknowledged
the said instrument to be the free and voluntary act and deed of said
corporation, for the uses and purposes therein mentioned, and on oath stated
that they were authorized to execute said instrument and that the seal affixed
is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
--------------------------------------
NOTARY PUBLIC in and for the State
of Illinois, residing at: ____________
My Commission Expires: _______________
17
<PAGE> 1
EXHIBIT 5
August 16, 1995
Washington Natural Gas Company
815 Mercer Street
P.O. Box 1869
Seattle, WA 98111
Re: Registration Statement on Form S-3 Relating to the Offering
of $150,000,000 Principal Amount of First Mortgage Bonds
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of $150,000,000 aggregate
principal amount of First Mortgage Bonds, Secured Medium-Term Notes, Series C
(the "Bonds") of Washington Natural Gas Company (the "Company").
We have examined the Company's Registration Statement on Form S-3 and such
other documents and records of the Company, certificates of public officials,
and other documents as we have deemed necessary or appropriate for the purposes
of this opinion.
Based upon the foregoing, we are of the opinion that when the following
events have occurred:
(a) The Board of Directors of the Company has duly authorized the
issuance and sale of the Bonds, and the execution and delivery of a
Thirtieth Supplemental Indenture to the Indenture of First Mortgage of
the Company dated as of April 1, 1957 to Harris Trust and Savings Bank,
as trustee (the "Trustee"), as heretofore supplemented and modified
(the "Mortgage");
(b) The Registration Statement referred to above and any amendments or
supplements thereto have been filed and such Registration Statement has
become effective;
(c) The terms of the Bonds and their issue and sale have been duly
established in conformity with the Mortgage so as not to violate any
applicable law, agreement or instrument then binding upon the Company;
(d) The Company has complied with the terms and conditions of the
Mortgage with respect to the creation, authentication and delivery of a
Thirtieth Supplemental Indenture by the Company and the Trustee; the
due execution by the Company and the authentication and delivery by the
Trustee of the Bonds, and the issuance and sale thereof by the Company
as contemplated by the Registration Statement and in accordance with
the above-mentioned corporate authorizations; and
(e) A Thirtieth Supplemental Indenture has been duly filed and recorded
in the offices of the County Auditors, or other appropriate recording
officers, of all counties in the State of Washington in which the
properties subject to the Mortgage are located, and the appropriate
Uniform Commercial Code filings have been duly filed and recorded in
the State of Washington;
the Bonds will constitute, in the hands of the holders hereof, valid and binding
obligations of the Company, and will be entitled to the security afforded by the
Mortgage, subject to applicable bankruptcy, fraudulent transfer and insolvency
laws.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the heading "Validity of the
Notes" in the Prospectus contained within the Registration Statement.
Very truly yours,
RIDDELL, WILLIAMS, BULLITT
& WALKINSHAW
/s/ MARION V. LARSON
-------------------------------------
By: Marion V. "Mick" Larson
MVL/lji
<PAGE> 1
EXHIBIT 12
WASHINGTON NATURAL GAS COMPANY
STATEMENT OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
9 MONTHS 12 MONTHS
FOR FISCAL YEARS ENDED SEPTEMBER 30, ENDED ENDED
------------------------------------------------------------- JUNE 30, JUNE 30,
1990 1991 1992 1993 1994 TOTAL 1995 1995
------- ------- ------- ------- -------- -------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Net Income (loss)........ $18,762 $29,409 $12,231 $21,771 $ (8,243) $ 73,930 $28,604 $18,950
2. Add: Federal Income
Taxes................. 6,995 14,000 4,902 9,447 (5,992) 29,352 14,092 8,961
Extraordinary
Non-Recurring Items of
Expense............... -- -- -- -- -- -- --
------- ------- ------- ------- -------- -------- ------- -------
3. Sub-Total (1 plus 2)..... 25,757 43,409 17,133 31,218 (14,235) 103,282 42,696 27,911
4. Deduct: Extraordinary
Non-Recurring Items of
Income................ -- -- -- -- -- -- -- --
------- ------- ------- ------- -------- -------- ------- -------
5. Adjusted Net Income from
Continuing Operations
(3 minus 4)........... 25,757 43,409 17,133 31,218 (14,235) 103,282) 42,696 27,911
Add Fixed Charges:
Interest on Funded and
Unfunded Debt....... 20,424 24,425 26,249 26,381 29,275 126,754 22,277 29,569
Amortization of Debt
Discount............ 149 169 299 361 392 1,370 273 372
Rentals............... 1,304 1,406 1,517 1,633 1,337 7,197 941 1,254
------- ------- ------- ------- -------- -------- ------- -------
6. Total Fixed Charges...... 21,877 26,000 28,065 28,375 31,004 135,321 23,491 31,195
------- ------- ------- ------- -------- -------- ------- -------
7. Net Earnings Available
for Fixed Charges
(5 plus 6)............ 47,634 69,409 45,198 59,593 16,769 238,603 66,187 59,106
======= ======= ======= ======= ======== ======== ======= =======
8. Fixed Charges Times
Earned (7 divided by
6).................... 2.18 2.67 1.61 2.10 0.54(1) 1.76 2.82 1.89
</TABLE>
---------------
(1) Earnings were inadequate to cover fixed charges by $14,235.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated October 25, 1994
included in Washington Natural Gas Company's Annual Report on Form 10-K for the
year ended September 30, 1994 and to all references to our firm included in this
registration statement.
/s/ Arthur Andersen LLP
------------------------------------
ARTHUR ANDERSEN LLP
Seattle, Washington
August 15, 1995
<PAGE> 1
EXHIBIT 24.2
CERTIFIED RESOLUTIONS
WASHINGTON NATURAL GAS COMPANY
Marion V. Larson, Assistant Secretary of Washington Natural Gas Company, a
Washington corporation (the "Company"), does hereby certify that attached hereto
are true and correct copies of resolutions duly adopted by the Board of
Directors of the Company at a meeting thereof duly called and held on August 16,
1995 at which a quorum was present and acting throughout, which resolutions have
not been revoked, modified, amended or rescinded and are still in full force in
effect.
WITNESS my hand and the seal of the Company this 16th day of August, 1995.
/s/ MARION V. LARSON
-------------------------------------
Marion V. Larson, Assistant Secretary
<PAGE> 2
Washington Natural Gas Company
Resolutions for the Board of Directors
August 16, 1995
RESOLVED -- That the Board of Directors approves the registration, and the
issuance and sale from time to time, by the Company of up to $150,000,000
principal amount of its First Mortgage Bonds (the "First Mortgage Bonds") in
private placements or public offerings or any combination thereof at prices and
on terms to be negotiated, the proceeds from the sale of the First Mortgage
Bonds to be used to repay all or a portion of the Company's outstanding
short-term borrowings incurred for the Company's construction program or
securities redemptions and other corporate purposes.
RESOLVED -- That the officers of the Company be and they each hereby are
authorized to negotiate with such agents, dealers, purchasers or underwriters as
they may select, with respect to the terms of the sale of the First Mortgage
Bonds, subject, except as hereinafter set forth with respect to the series of
First Mortgage Bonds designated as First Mortgage Bonds, Secured Medium-Term
Notes, Series C, to subsequent approval by this Board of Directors of such terms
as may be agreed upon.
RESOLVED -- That the filing with the Securities and Exchange Commission, in
accordance with the Securities Act of 1933, as amended, and in conformity with
the rules and regulations of the Securities and Exchange Commission, of a
Registration Statement on Form S-3, relating to the issue and sale of the First
Mortgage Bonds, in substantially the form presented to this meeting, be and it
hereby is authorized and approved; that the signing of the Registration
Statement on behalf of the Company by the Chairman of the Board, the President,
any Vice President, the Treasurer, any Assistant Treasurer, the Secretary, any
Assistant Secretary, or any of them, with such additions, changes or deletions
as the officer signing the same on behalf of the Company may deem necessary or
advisable (such signing to be conclusive evidence that the officer signing the
same considers such additions, changes or deletions necessary or advisable), be
and hereby is authorized and approved; that the execution of the Registration
Statement by the officers of the Company, as required by the rules and
regulations of the Securities and Exchange Commission, be and hereby is
authorized and approved; provided, however, that each of the officers of the
Company be and hereby is authorized to sign the Registration Statement (either
on behalf of the Company, or as an officer or otherwise) through William P.
Vititoe, James P. Torgerson and Marion V. Larson, or any of them, as duly
authorized attorneys or attorney.
RESOLVED -- That the persons and each of them authorized by the foregoing
resolution to execute the Registration Statement be and hereby are authorized
and empowered to execute, in person or through any one or more of such
authorized attorneys, on behalf of the Company and individually as officers,
such amendments or supplements to the Registration Statement or the Prospectus
included therein as may be required or as may be deemed by them to be advisable,
including any post-effective amendments, and to cause the same to be filed with
the Securities and Exchange Commission.
RESOLVED -- That James P. Torgerson and Marion V. Larson are each hereby
designated as an agent for service with respect to the Registration Statement
(including all amendments thereto) with all the powers provided in the rules and
regulations of the Securities and Exchange Commission with respect to agents for
service.
RESOLVED -- That the officers of the Company be and each of them is
authorized to make a filing with the Washington Utilities and Transportation
Commission (the "WUTC") as required by R.C.W. 80.08.040, in connection with the
issuance and sale of up to $150,000,000 principal amount of First Mortgage
Bonds, and such filing is hereby fully authorized and approved; and further
provided, that the officers of the Company be and each of them is authorized to
make and file with said WUTC such amendments to said filing as said officers in
their discretion deem necessary or advisable.
RESOLVED -- That the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary, any Assistant
Secretary, or any of them, are hereby authorized to determine the jurisdictions
in which appropriate action shall be taken to qualify or register for sale all
or
A-1
<PAGE> 3
such part of the First Mortgage Bonds as such officers may deem advisable; that
such officers are hereby authorized to perform on behalf of the Company any and
all such acts as they may deem necessary or advisable in order to comply with
the applicable laws of any such jurisdictions, and in connection therewith to
execute and file all requisite papers and documents, including, but not limited
to, applications, reports, surety bonds, irrevocable consents and appointments
of attorneys for service of process; and that the execution by such officers of
any such papers or documents or the doing by them of any act in connection with
the foregoing matters shall conclusively establish their authority therefor from
the Company and the approval and ratification by the Company of the papers and
documents so executed and the action so taken.
RESOLVED -- That the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant
Treasurer, or any of them be, and each of them hereby is, authorized and
directed to execute, acknowledge, verify, deliver, file and/or publish in the
name and on behalf of the Company and under its corporate seal, attested by its
Secretary or any Assistant Secretary, or otherwise, any and all applications,
reports, statements, issuer's covenants, resolutions, consents to service of
process, powers of attorney, appointments, designations, waivers of hearing,
bonds, and such other papers and instruments as may be required, appropriate or
desirable under the Blue Sky Laws or securities acts of such jurisdictions as
such officers or any one or more of them may deem necessary, appropriate or
advisable for the purpose of registering, qualifying, exempting and/or
permitting the issue and sale by the Company, or the sale by agents,
underwriters, brokers and/or dealers, of the First Mortgage Bonds, and/or for
the purpose of qualifying, registering, licensing and/or exempting the Company
as a dealer or broker in connection with the sale of such First Mortgage Bonds,
and to take any and all payments of examination, filing, registration and/or
other fees, costs and expenses and to take any and all further action, which
such officers or any one or more of them deem necessary, advisable or desirable
in connection with any of the foregoing.
RESOLVED -- That the officers of the Company be and they hereby are
authorized to proceed to prepare for the issuance and sale of the First Mortgage
Bonds as provided for in and authorized by these resolutions, to prepare,
execute and file, or cause to be prepared, executed or filed, any and all
applications, documents, papers and instruments in writing and to do any and all
such other acts and things as they, in their opinion, or in the opinion of any
one of them, may deem necessary, appropriate or advisable in order to carry out
the intent and purpose of any and all of the foregoing resolutions.
RESOLVED -- That this Board of Directors hereby authorizes and directs that
there be created in accordance with the provisions of the Indenture of First
Mortgage of the Company dated as of April 1, 1957, as heretofore supplemented
and modified, and to be further supplemented and modified by a Thirtieth
Supplemental Indenture dated as of August 15, 1995 (said Indenture of First
Mortgage as so supplemented and modified and to be supplemented and modified
being herein and in subsequent resolutions adopted at this meeting sometimes
referred to as the "Mortgage"), a new series of First Mortgage Bonds designated
as "First Mortgage Bonds, Secured Medium-Term Notes, Series C" (the "New
Bonds"); that the New Bonds be dated, have maturities and bear interest in
accordance with the Thirtieth Supplemental Indenture, and be in the form and
have the provisions as provided and set forth in the Mortgage, including said
Thirtieth Supplemental Indenture.
RESOLVED -- That this Board of Directors hereby authorizes the Chairman of
the Board, the President, any Vice President, the Treasurer or any Assistant
Treasurer of the Company to execute, acknowledge and deliver, or cause to be
delivered, in the name and on behalf of the Company, under its corporate seal,
attested by the Secretary or any Assistant Secretary, said Thirtieth
Supplemental Indenture to be dated as of August 15, 1995, such Supplemental
Indenture to be by and between the Company and Harris Trust and Savings Bank,
Chicago, Illinois, as Trustee under the Mortgage (the "Trustee"), in
substantially the form and substance presented to this meeting, with such
changes as the officer of the Company executing the same shall approve, such
approval to be conclusively evidenced by the execution thereof.
A-2
<PAGE> 4
RESOLVED -- That the Chairman of the Board, the President, any Vice
President, the Treasurer and any Assistant Treasurer of the Company be and they
hereby severally are authorized, directed and empowered to execute, or cause to
be executed by a facsimile of their signatures in the name and on behalf of
Company, to seal with its corporate seal, or a facsimile thereof, and to deliver
to the Trustee, for authentication and delivery to the Company, from time to
time up to an aggregate of $150,000,000 principal amount of the New Bonds; that
the use of facsimile signatures for the execution of the New Bonds be and hereby
is approved, and that said officers are hereby authorized to apply to the
Trustee for the authentication and delivery to the Company from time to time of
up to $150,000,000 principal amount of the New Bonds, and, upon compliance by
the Company with the provisions of the Mortgage, the Trustee be and hereby is
authorized to authenticate and deliver to the Company from time to time up to
$150,000,000 principal amount of the New Bonds, on the basis, as provided in
Sections 5.03 and 5.05 or both of the Mortgage, of a Certificate of Available
Net Additions or a Certificate of Available Bond Credits evidencing unfunded net
additions or unfunded bond credits or both, or, as provided in Section 5.04, on
the basis of the deposit of cash with the Trustee.
RESOLVED -- That in connection with the New Bonds, if any officer of the
Company who signs or whose facsimile signature appears upon any of the New Bonds
ceases to be such officer prior to the issuance, transfer or exchange of the New
Bonds, the New Bonds so signed or bearing such facsimile signature shall
nevertheless be valid.
RESOLVED -- That Harris Trust and Savings Bank, Chicago, Illinois, be and
hereby is appointed the initial Paying Agent for the payment of the principal
of, premium on, if any, and interest on, up to $150,000,000 principal amount of
the New Bonds; provided, however, that the officers of the Company are
authorized to designate additional and substitute paying agents, which may
include the Company, for the New Bonds.
RESOLVED -- That the officers of the Company be and hereby severally are
authorized to give on behalf of the Company all necessary instructions to, and
to enter into indemnity and other agreements with, Harris Trust and Savings
Bank, Chicago, Illinois, as Paying Agent for the New Bonds, as such officers may
deem necessary or advisable in connection therewith.
RESOLVED -- That the Chairman of the Board, the President, any Vice
President, the Secretary or any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company be and hereby are severally authorized to
appoint Harris Trust and Savings Bank, Chicago, Illinois, as Fiscal and
Withholding Agent of the Company to act for the Company on all matters
pertaining to the collection of federal income taxes and the making of required
returns to the Internal Revenue Service, in connection with the payment of
interest from time to time on the New Bonds; provided, however, that the
officers of the Company are authorized to designate additional and substitute
fiscal and withholding agents, which may include the Company, for the New Bonds.
RESOLVED -- That this Board of Directors hereby authorizes the Chairman of
the Board, the President, any Vice President, the Treasurer or any Assistant
Treasurer to execute and deliver, or cause to be delivered, in the name and on
behalf of the Company, an Agency Agreement by and between the Company and
Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Smith Barney Inc., as agents ("Agency Agreement"), in
substantially the form and substance presented to this meeting, with such
changes as the officer of the Company executing the same shall approve, such
approval to be conclusively evidenced by the execution thereof.
RESOLVED -- That this Board of Directors hereby authorizes the Chairman of
the Board, the President, any Vice President, the Treasurer or any Assistant
Treasurer to execute and deliver, or cause to be delivered, from time to time,
in the name and on behalf of the Company, a Purchase Agreement in substantially
the form and substance of Exhibit C to the Agency Agreement presented to this
meeting, with such changes as the officer of the Company executing the same
shall approve, such approval to be conclusively evidenced by the execution
thereof.
A-3
<PAGE> 5
RESOLVED -- That this Board of Directors authorizes the issuance and sale
from time to time of up to $150,000,000 aggregate principal amount of the New
Bonds in such principal amounts, having such maturities and bearing such
interest rates and having such other terms, including redemption provisions,
redemption premiums and sinking fund payments, as the Chairman of the Board, the
President, or any Vice President of this Company may determine, and hereby
directs, in accordance with the provisions of the Mortgage, such officers to fix
and determine the specific provisions for each issuance and sale of the New
Bonds provided that such provisions are within the parameters established by
these resolutions; and that the written instructions to the Trustee with respect
to such specific provisions shall conclusively establish their authority
therefor from the Company and the approval and ratification by the Company.
RESOLVED -- That upon authentication by the Trustee of the New Bonds, the
officers of the Company be and hereby are authorized and directed to sell and
deliver the same to the purchasers thereof, against receipt of the consideration
therefor, all as contemplated in the Agency Agreement, and the Chairman of the
Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary and any Assistant Secretary, and each of them be and
hereby are authorized to execute and deliver all such further documents and to
do any and all other acts and things as may be deemed by such officers, or any
one or more of them, to be necessary or advisable to carry out the terms and
provisions of the Agency Agreement and these resolutions.
RESOLVED -- That the issuance and sale by the Company of up to $150,000,000
principal amount of the New Bonds shall be subject to and conditioned upon the
continued effectiveness of the Registration Statement of the Company with
respect to the New Bonds.
A-4
<PAGE> 1
EXHIBIT 25.1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) / /
HARRIS TRUST AND SAVINGS BANK
(NAME OF TRUSTEE)
<TABLE>
<S> <C>
ILLINOIS 36-1194448
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
111 WEST MONROE STREET, CHICAGO, ILLINOIS 60603
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
CAROLYN C. POTTER, HARRIS TRUST AND SAVINGS BANK
111 WEST MONROE STREET, CHICAGO, ILLINOIS 60603
(312) 461-2531
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
WASHINGTON NATURAL GAS COMPANY
(NAME OF OBLIGOR)
WASHINGTON
(STATE OF INCORPORATION)
91-1005303
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
815 MERCER STREET
SEATTLE, WASHINGTON 98111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
SECURED MEDIUM TERM NOTES, SERIES C
(TITLE OF INDENTURE SECURITIES)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164 West
Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate trust
powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee is now in effect
which includes the authority of the Trustee to commence business and to
exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in effect
and includes the authority of the Trustee to commence business and to
exercise corporate trust powers was filed in connection with the
Registration Statement of Louisville Gas and Electric Company, File No.
2-44295, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of Hillenbrand Industries, Inc., File No.
33-44086, and is incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
1
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing
under the laws of the State of Illinois, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Chicago, and State of Illinois, on the 11th day
of August, 1995.
HARRIS TRUST AND SAVINGS BANK
By: /s/ J. BARTOLINI
------------------------------------
J. Bartolini
Vice President
<PAGE> 4
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents
that reports of examinations of said trustee by Federal and State authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /s/ J. BARTOLINI
------------------------------------
J. Bartolini
Vice President
<PAGE> 5
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of March 31, 1995, as published in accordance with a
call made by the State Banking Authority and by the Federal Reserve Bank of the
Seventh Reserve District.
[HARRIS BANK LOGO]
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on March 31, 1995, a state banking institution organized and operating
under the banking laws of this State and a member of the Federal Reserve System.
Published in accordance with a call made by the Commissioner of Banks and Trust
Companies of the State of Illinois and by the Federal Reserve Bank of this
District.
<PAGE> 6
BANK'S TRANSIT NUMBER 71000288
<TABLE>
<CAPTION>
ASSETS THOUSANDS OF DOLLARS
<S> <C> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency and coin........... $ 1,005,442
Interest bearing balances..................................... $ 625,600
Securities:
a. Held-to-maturity securities................................ $ 679,653
b. Available-for-sale securities.............................. $ 1,399,848
Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBF's:
Federal funds sold............................................ $ 334,413
Securities purchased under agreements to resell............... $ 216,275
Loans and lease financing receivables:
Loans and leases, net of unearned income...................... $6,510,418
LESS: Allowance for loan and lease losses..................... $ 92,572
----------
Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b)............................... $ 6,417,846
Assets held in trading accounts................................. $ 414,465
Premises and fixed assets (including capitalized leases)........ $ 137,331
Other real estate owned......................................... $ 2,087
Investments in unconsolidated subsidiaries and associated
companies..................................................... $ 190
Customer's liability to this bank on acceptances outstanding.... $ 108,888
Intangible assets............................................... $ 23,281
Other assets.................................................... $ 324,142
-----------
TOTAL ASSETS.......................................... $11,689,461
===========
LIABILITIES
Deposits:
In domestic offices........................................... $ 4,130,806
Non-interest bearing....................................... $2,349,310
Interest bearing........................................... $1,781,496
In foreign offices, Edge and Agreement subsidiaries, and
IBF's...................................................... $ 2,666,956
Non-interest bearing....................................... $ 64,487
Interest bearing........................................... $2,602,469
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBF's:
Federal funds purchased....................................... $ 754,641
Securities sold under agreements to repurchase................ $ 1,544,138
Trading Liabilities............................................. $ 457,361
Other borrowed money:
a. With original maturity of one year or less................ $ 850,855
b. With original maturity of more than one year.............. $ 14,177
Bank's liability on acceptances executed and outstanding........ $ 108,888
Subordinated notes and debentures............................... $ 235,000
Other liabilities............................................... $ 167,882
-----------
TOTAL LIABILITIES..................................... $10,930,704
===========
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
THOUSANDS OF DOLLARS
<S> <C>
EQUITY CAPITAL
Common stock.................................................... $ 100,000
Surplus......................................................... $ 275,000
a. Undivided profits and capital reserves.................... $ 389,937
b. Net unrealized holding gains (losses) on
available-for-sale securities............................. $ (6,180)
-----------
TOTAL EQUITY CAPITAL.................................. $ 758,757
===========
Total liabilities, limited-life preferred stock, and
equity capital...................................... $11,689,461
===========
</TABLE>
I, Steve Neudecker, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
STEVE NEUDECKER
March 30, 1995
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
ALAN G. McNALLY,
DONALD S. HUNT,
JAMES J. GLASSER,
Directors
