<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7850
SOUTHWEST GAS CORPORATION
(Exact name of registrant as specified in its charter)
California 88-0085720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5241 Spring Mountain Road
Post Office Box 98510
Las Vegas, Nevada 89193-8510
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 876-7237
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common Stock, $1 Par Value, 24,320,288 shares as of November 1, 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The condensed consolidated financial statements included herein have been
prepared by Southwest Gas Corporation (the Company), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. In
the opinion of management, all adjustments, consisting of normal recurring
items necessary for a fair presentation of the results for the interim
periods, have been made. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's 1994 Annual Report
on Form 10-K, and 1995 quarterly reports on Form 10-Q.
2<PAGE>
<PAGE>
<TABLE>
SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Thousands of dollars)
(Unaudited)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 126,949 $ 129,998
Debt securities available for sale 462,669 529,400
Debt securities held to maturity (fair value of $87,491 and $99,403) 88,325 101,880
Loans receivable, net of allowance for estimated losses of
$16,035 and $17,659 1,044,479 936,037
Loans receivable held for sale (fair value of $4,262 and $2,135) 4,193 2,114
Receivables, less reserves for uncollectibles 38,860 105,438
Gas utility property, net of accumulated depreciation 1,103,282 1,035,916
Other property, net of accumulated depreciation 36,386 35,605
Excess of cost over net assets acquired 62,744 65,640
Other assets 117,076 147,965
------------ ------------
$ 3,084,963 $ 3,089,993
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits $ 1,246,856 $ 1,239,949
Securities sold under agreements to repurchase 221,683 281,935
Deferred income taxes and tax credits, net 122,606 133,531
Accounts payable and other accrued liabilities 208,108 208,691
Short-term debt 56,000 92,000
Long-term debt, including current maturities 858,475 790,798
------------ ------------
2,713,728 2,746,904
------------ ------------
Preferred stock, including current maturities 4,000 4,000
------------ ------------
Common stock
Authorized - 30,000,000 shares;
Issued and outstanding - 24,229,734 shares and 21,281,717 shares 25,860 22,912
Additional paid-in capital 310,853 273,217
Unrealized gain (loss), net of tax, on debt securities available for sale 694 (9,467)
Retained earnings 29,828 52,427
------------ ------------
367,235 339,089
------------ ------------
$ 3,084,963 $ 3,089,993
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3<PAGE>
<PAGE>
<TABLE>
SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
----------------------- ----------------------- -----------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Gas operating revenues $ 91,433 $ 92,245 $ 417,143 $ 408,021 $ 608,604 $ 580,080
Financial services interest income 33,394 29,894 99,406 87,063 130,777 116,534
Other 2,608 2,156 8,277 8,543 9,916 12,078
---------- ---------- ---------- ---------- ---------- ----------
127,435 124,295 524,826 503,627 749,297 708,692
---------- ---------- ---------- ---------- ---------- ----------
Operating expenses:
Net cost of gas purchased 30,973 34,411 184,639 179,846 254,716 235,934
Financial services interest expense, net 18,503 14,867 55,279 43,116 71,953 57,779
Operating expense 43,962 43,006 132,863 125,988 176,712 167,268
Maintenance expense 8,272 8,125 24,433 22,188 32,443 29,588
Provision for estimated credit losses 1,588 1,498 5,355 5,254 7,494 6,936
Depreciation, depletion and amortization 18,244 16,191 52,982 48,593 69,441 64,330
Taxes other than income taxes 6,889 6,314 20,576 19,055 27,270 25,324
Other 4,579 4,582 13,437 13,159 17,682 17,806
---------- ---------- ---------- ---------- ---------- ----------
133,010 128,994 489,564 457,199 657,711 604,965
---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss) (5,575) (4,699) 35,262 46,428 91,586 103,727
---------- ---------- ---------- ---------- ---------- ----------
Other income and (expenses):
Net interest deductions (15,705) (14,677) (46,883) (42,087) (62,131) (55,238)
Other income (deductions), net (272) 386 (403) (994) (803) (15,105)
---------- ---------- ---------- ---------- ---------- ----------
(15,977) (14,291) (47,286) (43,081) (62,934) (70,343)
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes (21,552) (18,990) (12,024) 3,347 28,652 33,384
Income tax expense (benefit) (8,721) (7,825) (4,497) 1,583 11,642 12,923
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) (12,831) (11,165) (7,527) 1,764 17,010 20,461
Preferred/preference stock dividend requirements 95 138 285 415 380 554
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common stock $ (12,926) $ (11,303) $ (7,812) $ 1,349 $ 16,630 $ 19,907
========== ========== ========== ========== ========== ==========
Earnings (loss) per share of common stock $ (0.54) $ (0.54) $ (0.34) $ 0.06 $ 0.74 $ 0.95
========== ========== ========== ========== ========== ==========
Dividends paid per share of common stock $ 0.205 $ 0.205 $ 0.615 $ 0.595 $ 0.82 $ 0.79
========== ========== ========== ========== ========== ==========
Average number of common shares outstanding 24,062 21,067 22,768 21,040 22,370 21,008
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4<PAGE>
<PAGE>
<TABLE>
SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ (7,527) $ 1,764 $ 17,010 $ 20,461
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation, depletion and amortization 52,982 48,593 69,441 64,330
Provision for estimated losses 5,355 5,254 7,494 6,936
Change in unrecovered purchased gas costs 50,971 11,000 48,985 (13,250)
Change in deferred income taxes (15,296) (14,568) (8,940) (10,868)
Change in deferred charges and credits 5,710 7,929 (3,190) 12,013
Change in noncash working capital 30,462 42,794 820 28,502
Other (1,159) 1,112 (1,068) 13,953
---------- ---------- ---------- ----------
Net cash provided by operating activities 121,498 103,878 130,552 122,077
---------- ---------- ---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures (119,193) (99,873) (163,946) (136,645)
Loan originations, net of repayments (136,824) (113,370) (178,478) (160,879)
Sales of loans and loan servicing rights 25,427 40,786 30,731 63,105
Purchases of debt securities -- (205,351) (90,998) (251,239)
Proceeds from sale of debt securities 7,538 5,074 7,538 10,172
Maturities and repayment of debt securities 84,938 226,961 149,724 311,268
Proceeds from sales of real estate acquired through foreclosure 5,424 3,713 5,759 16,066
Other 4,766 (915) 9,051 (1,935)
---------- ---------- ---------- ----------
Net cash used in investing activities (127,924) (142,975) (230,619) (150,087)
---------- ---------- ---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock 40,584 2,299 43,058 4,734
Dividends paid (14,468) (12,932) (18,946) (17,204)
Issuance of long-term debt 122,107 36,400 190,607 53,309
Retirement of long-term debt (54,430) (3,255) (58,142) (3,178)
Issuance (repayment) of short-term debt (36,000) 1,000 (31,000) 26,000
Change in deposit accounts 6,907 43,698 (4,694) 53,539
Proceeds from repurchase agreements/other borrowings 600,055 354,860 526,528 564,860
Repayment of repurchase agreements/other borrowings (660,307) (388,421) (530,325) (644,821)
Other (1,071) (686) (5,278) (7,050)
---------- ---------- ---------- ----------
Net cash provided by financing activities 3,377 32,963 111,808 30,189
---------- ---------- ---------- ----------
Net change in cash and cash equivalents (3,049) (6,134) 11,741 2,179
Balance at beginning of period 129,998 121,342 115,208 113,029
---------- ---------- ---------- ----------
Balance at end of period $ 126,949 $ 115,208 $ 126,949 $ 115,208
========== ========== ========== ==========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest, net of amounts capitalized $ 66,705 $ 54,071 $ 82,322 $ 66,377
Income taxes, net of refunds 26,143 2,425 25,850 (2,713)
</TABLE>
The accompanying notes are an integral part of these statements.
5<PAGE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summarized Consolidated Financial Statement Data
Summarized consolidated financial statement data for PriMerit Bank is presented
below:
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Thousands of dollars)
(Unaudited)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -------------
ASSETS
<S> <C> <C>
Cash and due from banks $ 34,096 $ 35,262
Cash equivalents 85,634 88,660
Debt securities available for sale 462,669 529,400
Debt securities held to maturity, net of allowance for
estimated losses of $1,000 at September 30, 1995
(fair value of $87,491 and $99,403) 88,325 101,880
Loans receivable, net of allowance for estimated credit
losses of $16,035 and $17,659 1,044,479 936,037
Loans receivable held for sale (fair value of $4,262
and $2,135) 4,193 2,114
Real estate acquired through foreclosure, net of allowance for
estimated losses of $208 at September 30, 1995 2,745 7,631
Real estate held for sale or development, net of allowance for
estimated losses of $719 and $476 409 771
FHLB stock, at cost 10,912 17,277
Excess of cost over net assets acquired 62,744 65,640
Other assets 28,326 31,649
------------- -------------
$ 1,824,532 $ 1,816,321
============= =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Deposits $ 1,246,856 $ 1,239,949
Securities sold under agreements to repurchase 221,683 281,935
Advances from FHLB 139,400 99,400
Notes payable 8,065 8,135
Other liabilities 26,684 20,514
------------- -------------
1,642,688 1,649,933
------------- -------------
Stockholder's equity
Common stock 57 57
Additional paid-in capital 160,442 160,442
Unrealized gain (loss), net of tax, on debt
securities available for sale 694 (9,467)
Retained earnings 20,651 15,356
------------- -------------
181,844 166,388
------------- -------------
$ 1,824,532 $ 1,816,321
============= =============
</TABLE>
6<PAGE>
<PAGE>
Note 1 - Summarized Consolidated Financial Statement Data (Continued)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
----------------------- ----------------------- -----------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 33,394 $ 29,894 $ 99,406 $ 87,063 $ 130,777 $ 116,534
Interest expense 18,503 14,867 55,279 43,116 71,953 57,779
---------- ---------- ---------- ---------- ---------- ----------
Net interest income 14,891 15,027 44,127 43,947 58,824 58,755
Provision for estimated credit losses (1,604) (1,493) (5,003) (5,202) (7,031) (6,369)
---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision for credit losses 13,287 13,534 39,124 38,745 51,793 52,386
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) from real estate operations 1 (108) (316) 2 (930) (596)
---------- ---------- ---------- ---------- ---------- ----------
Gain on sale of loans 433 179 736 543 791 857
Loss on sale of loans (62) (20) (63) (289) (125) (324)
Net gain on sale of debt securities -- 1 970 34 970 134
Gain (loss) on secondary marketing hedging activities (18) (6) (48) 316 25 328
Loan-related fees 356 133 907 799 1,273 932
Deposit-related fees 1,886 1,923 5,616 5,154 7,250 6,855
Gain on sale of credit cards -- -- -- 1,690 (1) 1,690
Gain on sale - Arizona branches -- -- -- -- -- 538
Other income 28 49 123 242 200 1,635
---------- ---------- ---------- ---------- ---------- ----------
Total noninterest income 2,623 2,259 8,241 8,489 10,383 12,645
---------- ---------- ---------- ---------- ---------- ----------
General and administrative expenses 11,306 11,116 33,632 32,877 44,263 44,978
Amortization of cost in excess of net assets acquired 965 965 2,896 2,896 3,861 3,861
---------- ---------- ---------- ---------- ---------- ----------
Total noninterest expense 12,271 12,081 36,528 35,773 48,124 48,839
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 3,640 3,604 10,521 11,463 13,122 15,596
Income tax expense 1,625 1,627 4,726 5,121 5,996 6,936
---------- ---------- ---------- ---------- ---------- ----------
Net income $ 2,015 $ 1,977 $ 5,795 $ 6,342 $ 7,126 $ 8,660
========== ========== ========== ========== ========== ==========
Contribution to consolidated net income (loss) (a) $ 522 $ 746 $ 1,328 $ 2,676 $ 1,429 $ 3,763
========== ========== ========== ========== ========== ==========
</TABLE>
(a) Includes after-tax allocation of costs from parent.
7<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company is comprised of two business segments: natural gas operations and
financial services. The gas segment purchases, transports and distributes
natural gas to residential, commercial and industrial customers in
geographically diverse portions of Arizona, Nevada and California. The
financial services segment consists of PriMerit Bank (the Bank), a wholly
owned subsidiary, which is engaged in retail and commercial banking. The
Bank's principal business is to attract deposits from the general public and
make consumer and commercial loans secured by real estate and other
collateral. For the twelve months ended September 30, 1995, the natural gas
operations segment contributed $15.6 million and the financial services
segment contributed $1.4 million, resulting in consolidated net income of
$17 million.
CONSOLIDATED CAPITAL RESOURCES AND LIQUIDITY
The capital requirements and resources of the Company generally are determined
independently for the natural gas operations and financial services segments.
Each segment is generally responsible for securing its own financing sources.
In February 1995, Standard and Poor's (S&P) reaffirmed the Company's unsecured
long-term debt rating at BBB-. S&P debt ratings range from AAA (highest
rating possible) to D (obligation is in default). According to S&P, the BBB-
rating indicates the debt is regarded as having an adequate capacity to pay
interest and repay principal.
In November 1994, Moody's upgraded the Company's unsecured long-term debt
rating from Ba1 to Baa3. Moody's debt ratings range from Aaa (best quality)
to C (lowest quality). Moody's applies a Baa3 rating to obligations which are
considered medium grade obligations, i.e., they are neither highly protected
nor poorly secured.
In September 1995, Duff & Phelps upgraded the Company's long-term unsecured
debt from BB+ to BBB-. Duff & Phelps debt ratings range from AAA (highest
credit quality) to DD (defaulted debt obligation). The Duff & Phelps rating
of BBB- indicates that the Company's credit quality is considered sufficient
for prudent investment.
A security rating is not a recommendation to buy, sell or hold a security, and
it is subject to revision or withdrawal at any time by the assigning rating
organization. Each rating should be evaluated independently of any other
rating.
See separate discussions of the capital resources and liquidity for each
segment.
RESULTS OF CONSOLIDATED OPERATIONS
Quarterly Analysis
- ------------------
Contribution to Consolidated Net Loss
Three Months Ended September 30,
-------------------------------------
(Thousands of dollars)
1995 1994
--------- ---------
Natural gas operations segment $ (13,353) $ (11,911)
Financial services segment 522 746
--------- ---------
Consolidated net loss $ (12,831) $ (11,165)
========= =========
Loss per share during the quarter ended September 30, 1995 was $0.54, compared
to a net loss of $0.54 per share recorded for the quarter ended September 30,
1994. Average common shares outstanding increased by approximately three
million shares from the prior period, primarily as a result of a common stock
offering completed in May 1995. See separate discussions of each business
segment for an analysis of these changes.
8<PAGE>
<PAGE>
Nine-Month Analysis
- -------------------
Contribution to Consolidated Net Income (Loss)
Nine Months Ended September 30,
---------------------------------------------
(Thousands of dollars)
1995 1994
--------- --------
Natural gas operations segment $ (8,855) $ (912)
Financial services segment 1,328 2,676
--------- --------
Consolidated net income (loss) $ (7,527) $ 1,764
========= ========
Loss per share during the nine months ended September 30, 1995, was $0.34, a
$0.40 decrease from the earnings per share of $0.06 recorded for the nine
months ended September 30, 1994. Average shares outstanding increased 1.7
million shares between periods. See separate discussions of each business
segment for an analysis of these changes.
Twelve-Month Analysis
- ---------------------
Contribution to Consolidated Net Income
Twelve Months Ended September 30,
---------------------------------------
(Thousands of dollars)
1995 1994
--------- ---------
Natural gas operations segment $ 15,581 $ 16,698
Financial services segment 1,429 3,763
--------- ---------
Consolidated net income $ 17,010 $ 20,461
========= =========
Earnings per share for the twelve months ended September 30, 1995 were $0.74,
a $0.21 decrease from earnings per share of $0.95 recorded for the twelve
months ended September 30, 1994. Average shares outstanding increased
1.4 million shares between periods. See separate discussions of each business
segment for an analysis of these changes.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." This statement requires that long-lived assets and certain intangible
assets to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
asset may not be recoverable. This statement is effective for financial
statements for fiscal years beginning after December 15, 1995. The Company
does not anticipate any material effect on its financial position or results
of operations upon implementation of this statement.
NATURAL GAS OPERATIONS SEGMENT
The Company is engaged in the business of purchasing, transporting, and
distributing natural gas in portions of Arizona, Nevada and California. Its
service areas are geographically as well as economically diverse. The Company
is the largest distributor in Arizona, selling and transporting natural gas in
most of southern, central, and northwestern Arizona, including the Phoenix and
Tucson metropolitan areas. The Company is also the largest distributor and
transporter of natural gas in Nevada, and serves the Las Vegas metropolitan
area and northern Nevada. In addition, the Company distributes and transports
gas in portions of California, including the Lake Tahoe area in northern
California and high desert and mountain areas in San Bernardino County.
9<PAGE>
<PAGE>
The Company purchases, transports and distributes natural gas to approximately
998,000 residential, commercial and industrial customers within its three-state
service territory, of which 59 percent are in Arizona, 30 percent are in
Nevada, and 11 percent are in California. During the twelve months ended
September 30, 1995, the Company earned 60 percent of its operating margin from
residential customers, 24 percent from commercial customers, and 16 percent
from industrial and other customers. During this same period, 58 percent of
operating margin was earned in Arizona, 31 percent in Nevada and 11 percent in
California. These patterns are consistent with prior years and are expected
to continue.
For the twelve months ended September 30, 1995, the Company's natural gas
construction expenditures totaled $160 million, a 19 percent increase when
compared to $134 million of construction expenditures for the same period
ended a year ago. The increase is attributed to the investment in new
transmission and distribution plant in Arizona, Nevada, and California to meet
the demand from the Company's growing customer base.
CAPITAL RESOURCES AND LIQUIDITY
The Company currently estimates that the total financing requirements for the
gas segment for the three-year period ending December 31, 1997, will be
approximately $425 million. Of this amount, construction expenditures will
approximate $410 million, and debt maturities and repayments and other cash
requirements will approximate $15 million. It is currently estimated that
cash flows from operating activities (net of dividends) will generate
approximately one-half of the gas segment's total financing requirements
during the three-year period ending December 31, 1997. A portion of the
remaining financing requirements will be provided by $83 million of funds held
in trust at December 31, 1994, from the issuance of 1993 Clark County, Nevada,
Series A and 1993 City of Big Bear Lake, California, Series A industrial
development revenue bonds (IDRB). At September 30, 1995, $53 million of IDRB
funds remain in trust.
The remaining cash requirements are expected to be provided by external
financing sources. The timing, types, and amounts of these additional
external financings will be dependent on a number of factors, including
conditions in the capital markets, timing and amounts of rate relief, and
growth factors in the Company's service areas. These external financings may
include the issuance of both debt and equity securities, bank and other
short-term borrowings, and other forms of financing.
In May 1995, the Company completed an offering of 2.1 million primary shares
of common stock. The net proceeds from this offering were $28.5 million after
deducting underwriting discounts, commissions, and expenses. The proceeds
were used to repay a portion of short-term borrowings incurred to finance
utility construction, and to finance construction, completion, extension or
improvement of the Company's facilities.
In October 1995, the Securities and Exchange Commission declared effective a
$270 million shelf registration statement filed by the Company. This
registration statement replaced a $300 million shelf registration statement
which became effective in October 1994. Under the new registration statement,
the Company may offer, up to the registered amount, any combination of debt
securities, preferred stock, depositary shares, common stock, and preferred
securities. Subsequently, Southwest Gas Capital I (the Trust), a subsidiary
of the Company, completed an offering of 2.4 million 9.125% preferred
securities. The Trust was formed for the sole purpose of issuing preferred
securities and investing the proceeds thereof in an equivalent amount of
subordinated debt of the Company. The net proceeds from the offering were
$57.8 million after deducting underwriting discounts, commissions, and
expenses. The proceeds were used to repay short-term borrowings incurred to
finance utility construction.
10<PAGE>
<PAGE>
RESULTS OF NATURAL GAS OPERATIONS
Quarterly Analysis
- ------------------
Three Months Ended
September 30,
------------------------
(Thousands of dollars)
1995 1994
---------- ----------
Gas operating revenues $ 91,433 $ 92,245
Net cost of gas 30,973 34,411
---------- ----------
Operating margin 60,460 57,834
Operations and maintenance expense 46,565 45,624
Depreciation and amortization 16,326 14,293
Taxes other than income taxes 6,784 6,220
---------- ----------
Operating loss (9,215) (8,303)
Other income (expense), net (272) 386
---------- ----------
Loss before interest and income taxes (9,487) (7,917)
Net interest deductions 15,705 14,677
Income tax expense (benefit) (10,346) (9,452)
---------- ----------
Net loss before allocation to the Bank (14,846) (13,142)
Carrying costs allocated to the Bank, net of tax 1,493 1,231
---------- ----------
Contribution to consolidated net loss $ (13,353) $ (11,911)
========== ==========
Contribution to consolidated net loss increased $1.4 million compared to the
third quarter of 1994. Costs incurred as a result of customer growth continue
to outpace the growth in margin. These costs include higher operating
expenses and net interest deductions. Operating margin increased
$2.6 million, or five percent, when compared to the same period ended a year
ago. The increase is attributed to customer growth in all service areas and
rate relief in the California rate jurisdictions.
Operations and maintenance expenses increased $941,000, or two percent,
reflecting increases in labor and maintenance costs, including the
incremental expenses associated with meeting the needs of the Company's
growing customer base.
Depreciation expense and general taxes increased $2.6 million, or 13 percent,
primarily due to an increase in average gas plant in service of $137 million,
or ten percent, compared to the third quarter of 1994. This increase reflects
ongoing capital expenditures for the upgrade of existing operating facilities
and the expansion of the system to accommodate continued customer growth.
Net interest deductions increased $1 million, or seven percent, over the third
quarter of 1994. Average debt outstanding during the current quarter
increased five percent, and consisted of a $77 million increase in average
long-term debt, net of funds held in trust, partially offset by a $40 million
decrease in average short-term debt. The increase in debt is attributed
primarily to borrowings for construction expenditures, including the drawdown
of a portion of IDRB funds previously held in trust. Higher interest rates on
variable-rate debt also contributed to the increase in net interest deductions.
11<PAGE>
<PAGE>
Nine-Month Analysis
- -------------------
Nine Months Ended
September 30,
-----------------------
(Thousands of dollars)
1995 1994
---------- ----------
Gas operating revenues $ 417,143 $ 408,021
Net cost of gas 184,639 179,846
---------- ----------
Operating margin 232,504 228,175
Operations and maintenance expense 140,287 131,732
Depreciation and amortization 47,204 42,722
Taxes other than income taxes 20,272 18,756
---------- ----------
Operating income 24,741 34,965
Other income (expense), net (403) (994)
---------- ----------
Income before interest and income taxes 24,338 33,971
Net interest deductions 46,883 42,087
Income tax expense (benefit) (9,223) (3,538)
---------- ----------
Net income before allocation to the Bank (13,322) (4,578)
Carrying costs allocated to the Bank, net of tax 4,467 3,666
---------- ----------
Contribution to consolidated net income (loss) $ (8,855) $ (912)
========== ==========
Contribution to consolidated net loss increased $7.9 million, compared to the
nine months ended September 1994. This was the result of unseasonably warm
weather during the first quarter and increased operating costs and net interest
deductions incurred due to the continued expansion and upgrading of the gas
system to accommodate the Company's growth.
Operating margin increased two percent during the nine months ended September
1995, compared to the same period in 1994. Margin increases from continued
customer growth and authorized rate relief in California and southern Arizona
were offset by the effects of unseasonably warm weather during the first
quarter of 1995 in the Company's three largest operating areas: Phoenix, Las
Vegas and Tucson.
Operations and maintenance expenses increased $8.6 million, or six percent,
reflecting increases in labor and maintenance costs along with incremental
operating expenses associated with meeting the needs of the Company's growing
customer base.
Depreciation expense and general taxes increased $6 million, or ten percent,
primarily due to an increase in average gas plant in service of $124 million,
or nine percent. This increase reflects capital expenditures for the upgrade
of existing operating facilities and the expansion of the system to
accommodate continued customer growth within the Company's service area.
Net interest deductions increased $4.8 million, or 11 percent, over the prior
period. Average debt outstanding during the period increased ten percent
compared to the corresponding period in 1994, and consisted of a $76 million
increase in average long-term debt, net of funds held in trust, partially
offset by a $12 million decrease in average short-term debt. The increase in
debt is attributed primarily to borrowings for construction expenditures,
including the drawdown of IDRB funds previously held in trust. Higher
interest rates on variable-rate debt also contributed to the increase in net
interest deductions.
12<PAGE>
<PAGE>
Twelve-Month Analysis
- ---------------------
Twelve Months Ended
September 30,
-----------------------
(Thousands of dollars)
1995 1994
---------- ----------
Gas operating revenues $ 608,604 $ 580,080
Net cost of gas 254,716 235,934
---------- ----------
Operating margin 353,888 344,146
Operations and maintenance expense 186,808 174,715
Depreciation and amortization 61,755 56,439
Taxes other than income taxes 26,861 24,862
---------- ----------
Operating income 78,464 88,130
Other income (expense), net (803) (15,105)
---------- ----------
Income before interest and income taxes 77,661 73,025
Net interest deductions 62,131 55,238
Income tax expense 5,646 5,986
---------- ----------
Net income before allocation to the Bank 9,884 11,801
Carrying costs allocated to the Bank, net of tax 5,697 4,897
---------- ----------
Contribution to consolidated net income $ 15,581 $ 16,698
========== ==========
Contribution to consolidated net income decreased $1.1 million, or seven
percent, compared to the twelve months ended September 1994. Increases in
operating expenses and net interest deductions offset an increase in operating
margin during the current twelve-month period. However, the recognition of
the Arizona pipe replacement program disallowances had a significant negative
impact on net income for the twelve months ended September 1994 (see
discussion below).
Operating margin increased $9.7 million, or three percent, during the twelve
months ended September 1995. This increase was due to continued customer
growth in the Company's service areas combined with rate relief in the
Company's southern Arizona and California rate jurisdictions.
Operations and maintenance expenses increased $12.1 million, or seven percent,
reflecting increases in labor and maintenance costs along with incremental
operating expenses associated with meeting the needs of the Company's growing
customer base.
Depreciation expense and general taxes increased $7.3 million, or
nine percent, primarily due to an increase in average gas plant in service of
$113 million, or eight percent. This increase reflects the upgrade of
existing operating facilities and the expansion of the system to accommodate
continued customer growth.
Other expenses for the twelve months ended September 1994 include a cumulative
$19.1 million write-off in gross plant related to the central and southern
Arizona pipe replacement programs, the result of a regulatory mandate. The
impact of these disallowances, net of accumulated depreciation, tax benefits
and other related items, was a noncash reduction to net income of
$9.6 million.
Net interest deductions increased $6.9 million, or 12 percent, over the prior
period. Average total debt outstanding during the period increased 10 percent
compared to the corresponding period in 1994, and consisted of a $67 million
increase in average long-term debt, net of funds held in trust, partially
offset by a $2 million decrease in average short-term debt. The increase in
debt is attributed primarily to borrowings for construction expenditures and
operating activities as well as the drawdown of IDRB funds previously held in
trust. Higher interest rates on variable-rate debt also contributed to the
increase in net interest deductions.
13<PAGE>
<PAGE>
FINANCIAL SERVICES SEGMENT
PriMerit Bank (the Bank) is a federally chartered stock savings bank conducting
business through branch offices in Nevada. The Bank's deposit accounts are
insured to the maximum extent permitted by law by the Federal Deposit Insurance
Corporation (FDIC) through the Savings Association Insurance Fund (SAIF). The
Bank is regulated by the Office of Thrift Supervision (OTS) and the FDIC, and
is a member of the Federal Home Loan Bank (FHLB) system.
The Bank's principal business is to attract deposits from the general public
and make loans secured by real estate and other collateral to enable borrowers
to purchase, refinance, construct or improve such property. Revenues are
derived from interest on real estate loans and debt securities and, to a lesser
extent, from interest on nonmortgage loans, gains on sales of loans and debt
securities, and fees received in connection with loans and deposits. The
Bank's major expense is the interest paid on deposits and borrowings.
CAPITAL RESOURCES AND LIQUIDITY
In accordance with OTS regulations, the Bank is required to maintain an
average daily balance of liquid assets equal to at least five percent of its
liquidity base (as defined in the OTS regulations) during the preceding
calendar month. The liquidity ratio was 14 percent for the month of September
1995. The Bank maintains a ratio substantially higher than the requirement
due to its higher level of transaction accounts relative to a traditional
thrift. Management considers the Bank's liquidity position to be adequate.
At September 30, 1995, the Bank maintained in excess of $430 million of
unencumbered assets which could be borrowed against or sold to increase
liquidity levels.
The Bank's deposits decreased $6.4 million during the quarter while increasing
$6.9 million year to date. The decrease in the third quarter of 1995 is
principally due to a $4.8 million decrease in longer term certificate of
deposit accounts, and a $1.6 million decrease in transaction and other
accounts. The net increase for the first nine months of 1995 is due primarily
to a $16.7 million increase in transaction and other retail accounts partially
offset by a $9.8 million decrease in certificates of deposit. The Bank began
offering a new money market product at the beginning of the year which was the
primary product accounting for the increase in transaction accounts.
FINANCIAL AND REGULATORY CAPITAL
At September 30, 1995, the Bank exceeded all three capital ratios for a
"well-capitalized" institution as defined by the FDIC Improvement Act of 1991
(FDICIA), and all three fully phased-in FDICIA capital requirements which will
be applicable at July 1, 1996 under current FDICIA capital standards. As
required by the OTS, effective January 1995, all supervisory goodwill was
excluded from regulatory capital, contributing to a decline in two of the
Bank's regulatory risk-based capital ratios. The higher risk weighting of
loans versus investments, as the loan portfolio has increased, also caused a
reduction in these two regulatory capital ratios from year end. This
reduction was offset partially by the Bank's year-to-date net income and
goodwill amortization. The Bank continues to be classified as
"well-capitalized" under FDICIA.
14<PAGE>
<PAGE>
A reconciliation of stockholder's equity to the three FDICIA regulatory
capital standards and the Bank's resulting ratios are set forth in the table
below (thousands of dollars):
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
---------------------------------------- -----------------------------------------
Total Tier 1 Tier 1 Total Tier 1 Tier 1
Risk-Based Risk-Based Leverage Risk-Based Risk-Based Leverage
---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stockholder's equity $ 181,844 $ 181,844 $ 181,844 $ 166,388 $ 166,388 $ 166,388
Nonsupervisory goodwill (38,810) (38,810) (38,810) (40,376) (40,376) (40,376)
Supervisory goodwill (23,934) (23,934) (23,934) (18,661) (18,661) (18,661)
Real estate investments (609) -- -- (1,325) (194) (194)
Unrealized loss (gain), net of
tax, on debt securities
available for sale (694) (694) (694) 9,467 9,467 9,467
Mortgage servicing rights
adjustment (23) (23) (23) -- -- --
General loan loss reserves 12,466 -- -- 11,512 -- --
---------- ---------- ---------- ----------- ---------- ---------
Regulatory capital $ 130,240 $ 118,383 $ 118,383 $ 127,005 $ 116,624 $ 116,624
========== ========== ========== =========== ========== ==========
Regulatory capital ratio 13.11% 11.91% 6.72% 13.88% 12.75% 6.62%
Adequately capitalized ratio 8.00 4.00 4.00 8.00 4.00 4.00
---------- ---------- ---------- ----------- ---------- ----------
Excess 5.11% 7.91% 2.72% 5.88% 8.75% 2.62%
========== ========== ========== =========== ========== ==========
Asset base $ 993,681 $ 993,681 $1,761,673 $ 914,812 $ 914,812 $1,760,801
========== ========== ========== =========== ========== ==========
</TABLE>
At September 30, 1995, under fully phased-in FDICIA capital rules applicable
at July 1, 1996, the Bank would have exceeded its fully phased-in, adequately
capitalized, total risk-based, tier 1 risk-based, and tier 1 leverage capital
requirements by $50.5 million, $78.6 million and $47.9 million, respectively.
The Company, at the time that it acquired the Bank, stipulated in an agreement
with the Federal Home Loan Bank Board (predecessor to the OTS) that it would
assist the Bank in maintaining levels of regulatory capital required by the
regulations in effect at the time or as they were amended thereafter, so long
as it controlled the Bank. The Company also stipulated in connection with the
acquisition, that dividends paid by the Bank to the Company would not exceed
50 percent of the Bank's cumulative net income after the date of acquisition,
without prior approval by the regulators. In addition, the Company agreed
that the Bank would not at any time declare a dividend that would reduce the
Bank's regulatory capital below minimum regulatory requirements in effect at
the time of the acquisition or thereafter. In June 1995, the Company and the
Bank requested that the OTS lift these stipulations since laws and regulations
have been enacted since the Company's acquisition of the Bank, in conjunction
with FIRREA and FDICIA, which govern capital distributions and prompt
corrective action measures when the capitalization of a thrift is deficient.
In July 1995, the OTS terminated these stipulations, such that capital
distributions by the Bank and capitalization of the Bank are now governed by
the laws and regulations governing all other thrifts.
In June 1995, the Bank declared a $250,000 cash dividend paid to the Company
in September 1995. In August 1995, the Bank declared a $250,000 cash
dividend payable to the Company in December 1995.
The Bank enters into various interest rate swaps in managing its interest rate
risk (IRR). In these swaps, the Bank agrees with other parties to exchange,
at specified intervals, the difference between fixed-rate and floating-rate
interest amounts calculated on an agreed-upon notional principal amount.
Because the Bank's interest-earning assets tend to be long-term fixed-rate
instruments while the Bank's interest-bearing liabilities tend to be shorter
term or floating-rate obligations, interest rate swaps reduce the impact of
market fluctuations on the Bank's net interest income.
The Bank only enters into interest rate swaps to hedge specific assets or
liabilities, and not for speculative or trading purposes. Therefore, the Bank
accounts for the swaps by accruing for the cash flows which are contractually
receivable and payable under the agreements. These net costs are included as
cost of hedging activities in the consolidated statements of income.
15<PAGE>
<PAGE>
The Bank mitigates the credit risk associated with interest rate swaps by
limiting itself to transactions with counterparties who are U.S. Government
Securities dealers registered with the Securities and Exchange Commission
(SEC) and are in full compliance with the SEC's Net Capital Rule for Brokers
and Dealers. Additionally, the Bank's policy limits the maximum notional
amount outstanding per dealer and in total.
The following table summarizes the terms of the Bank's outstanding interest
rate swaps as of the dates indicated (thousands of dollars):
September 30, December 31,
1995 1994
------------- ------------
Notional principal $ 85,500 $ 72,450
Weighted average remaining term (months) 58 59
Weighted average fixed-rate payable 6.97% 6.95%
Weighted average variable-rate receivable 6.11% 5.66%
Unrealized gains $ 306 $ 2,991
Unrealized losses $ (2,696) $ (5)
The increase in unrealized losses affiliated with the interest rate swaps is
due entirely to the general decline in interest rates since year end. The
assets hedged by these interest rate swaps have experienced corresponding
increases in their fair values during this same time period.
RESULTS OF FINANCIAL SERVICES OPERATIONS
Adoption of SFAS No. 122
- ------------------------
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing
Rights." The statement eliminates the previous distinction between purchased
and originated mortgage servicing rights. The statement requires an
allocation of the cost basis of a mortgage loan between the mortgage servicing
rights and the loan when mortgage loans are sold or securitized and the
servicing is retained. The Bank adopted SFAS No. 122 effective April 1, 1995.
As a result of the implementation, year-to-date earnings before taxes and net
income increased $214,000 and $139,000, respectively.
Quarterly Analysis
- ------------------
The Bank recorded net income of $2 million for the three months ended
September 30, 1995, compared to net income of $2 million for the same period
in 1994. After-tax components of the Bank's 1995 third quarter net income
were comprised of $3 million from core banking operations, offset by $965,000
in goodwill amortization. After-tax components of the Bank's 1994 third
quarter net income were comprised of $3.2 million from core banking
operations, offset partially by $965,000 in goodwill amortization expense,
$71,000 in real estate losses, and $170,000 from credit card charge-offs.
16<PAGE>
<PAGE>
The following table sets forth information with respect to interest rate
spread for the periods shown (thousands of dollars):
<TABLE>
<CAPTION>
Three Months Ended September 30,
------------------------------------------------------------------------------------
1995 1994
--------------------------------------- ---------------------------------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Cash equivalents $ 32,103 $ 479 5.97% $ 44,297 $ 514 4.64%
Debt securities held to maturity 89,154 1,725 7.74 74,775 1,286 6.88
Debt securities available for sale 480,334 8,048 6.70 533,065 8,547 6.41
Loans receivable 1,031,755 22,988 8.91 892,465 19,275 8.64
FHLB stock 10,872 154 5.67 17,020 272 6.39
----------- ----------- ----------- ----------- ----------- -----------
Total interest-earning assets $ 1,644,218 33,394 8.12 $ 1,561,622 29,894 7.66
----------- ----------- ----------- ----------- ----------- -----------
Interest-bearing liabilities:
Deposits $ 1,246,344 13,217 4.21 $ 1,240,284 11,252 3.60
Securities sold under
agreements to repurchase 165,055 2,517 6.05 185,897 2,406 5.13
Advances from FHLB 144,239 2,476 6.81 74,144 899 4.81
Notes payable 8,065 166 8.17 8,200 165 7.98
----------- ----------- ----------- ----------- ----------- -----------
Total interest-bearing liabilities $ 1,563,703 18,376 4.66 $ 1,508,525 14,722 3.87
=========== ===========
Cost of hedging activities 127 0.03 147 0.04
----------- ----------- ----------- -----------
Cost of funds 18,503 4.69 14,869 3.91
----------- ----------- ----------- -----------
Capitalized and transferred interest -- -- (2) --
----------- ----------- ----------- -----------
Net interest income $ 14,891 3.43% $ 15,027 3.75%
=========== =========== =========== ===========
Net yield on interest-earning assets 3.62% 3.85%
=========== ===========
Despite a flattening of the yield curve between periods, caused by increased
short-term rates and decreased long-term rates, the Bank's net interest margin
has remained strong. Increases in the costs of interest-bearing liabilities
have largely been offset by increases in loan and security yields as a result
of the adjustable-rate features of a large portion of the asset portfolios and
by new originations at higher rates.
The yield on interest-earning assets has also been maintained by an increase
in construction and consumer loans which have shorter terms and higher rates.
The increase in yield on loans receivable is partially attributable to a
$333,000 receipt of delinquent interest on a Nevada construction loan which
was paid off during the third quarter. In order to take advantage of the
relatively attractive long-term rates and to improve the Bank's interest rate
risk posture, the Bank paid off $39.5 million of borrowings on securities
under agreements to repurchase and increased the amount of its advances from
the FHLB by $50 million.
Noninterest income increased $364,000 in the third quarter of 1995 compared to
1994, principally due to an increase of $223,000 in loan fee income.
Additionally, a $212,000 increase in net gains on sale of loans from secondary
marketing activities resulted from declining interest rates, as the value of
such loans increased during the period between origination and sale.
General and administrative expenses were higher during the third quarter of
1995 compared to the same period in 1994, due primarily to increased expenses
associated with the opening of a new branch and normal incremental salary
increases.
Nine-Month Analysis
- -------------------
Net income of $5.8 million was recorded for the first nine months of 1995
compared to net income of $6.3 million for the nine months ended September 30,
1994. After-tax components of net income for the first nine months of 1995
were comprised of $9 million from core banking operations, partially offset by
$80,000 of credit card charge-offs, a $205,000 loss from real estate
operations, and $2.9 million of goodwill amortization. After-tax components
17<PAGE>
<PAGE>
of the Bank's 1994 year-to-date net income were $8.5 million from core banking
operations, and a gain of $742,000 from the sale of the Bank's credit card
portfolio sale, net of charge-offs. These were partially offset by
$2.9 million in goodwill amortization expense.
The following table sets forth information with respect to interest rate
spread for the periods shown (thousands of dollars):
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------------------------------------------------------------
1995 1994
--------------------------------------- ---------------------------------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Cash equivalents $ 47,635 $ 2,163 6.05% $ 54,847 $ 1,579 3.84%
Debt securities held to maturity 95,597 5,395 7.52 69,701 3,448 6.60
Debt securities available for sale 499,319 25,156 6.72 560,444 25,351 6.03
Loans receivable 996,393 66,180 8.86 877,048 56,072 8.52
FHLB stock 13,606 512 5.02 16,812 613 4.86
----------- ----------- ----------- ----------- ----------- -----------
Total interest-earning assets $ 1,652,550 99,406 8.02 $ 1,578,852 87,063 7.35
=========== ----------- ----------- =========== ----------- -----------
Interest-bearing liabilities:
Deposits $ 1,244,838 38,804 4.17 $ 1,224,978 32,275 3.52
Securities sold under
agreements to repurchase 192,081 8,961 6.24 218,790 7,582 4.63
Advances from FHLB 139,027 6,590 6.34 72,048 2,553 4.74
Notes payable 8,089 499 8.25 8,222 479 7.79
----------- ----------- ----------- ----------- ----------- -----------
Total interest-bearing liabilities $ 1,584,035 54,854 4.63 $ 1,524,038 42,889 3.76
=========== ===========
Cost of hedging activities 425 0.04 240 0.02
----------- ----------- ----------- -----------
Cost of funds 55,279 4.67 43,129 3.78
----------- ----------- ----------- -----------
Capitalized and transferred interest -- -- (13) --
----------- ----------- ----------- -----------
Net interest income $ 44,127 3.35% $ 43,947 3.57%
=========== =========== =========== ===========
Net yield on interest-earning assets 3.56% 3.71%
=========== ===========
</TABLE>
During the first nine months of 1995, average interest-earning assets
increased by $73.7 million compared to the first nine months of 1994. The
increase was primarily due to increased loan originations and a decrease in
prepayments. The loan originations were funded by paydowns on and sales of
investment securities, increased deposits, and borrowings from the FHLB. The
Bank's net interest margin remained relatively strong despite the increased
interest rate environment. Increased costs in interest-bearing liabilities
have been partially offset by increased loan and security yields as a result
of a large portion of the asset portfolio's adjustable-rate attributes as well
as by new originations at higher rates.
Noninterest income decreased $248,000 for year-to-date 1995 as compared to
year-to-date 1994 primarily due to the gain of $1.7 million on the sale of the
Bank's credit card portfolio in 1994, while no similar activity occurred in
1995. This was partially offset by a gain of $970,000 on the sale of debt
securities during the second quarter of 1995.
General and administrative expenses were $755,000 higher during the first nine
months of 1995 than for the same period in 1994 primarily due to normal
incremental salary increases, increased marketing expenses, and the opening of
a new branch.
Twelve-Month Analysis
- ---------------------
The Bank recorded net income of $7.1 million for the twelve months ended
September 30, 1995, compared to net income of $8.7 million for the twelve
months ended September 30, 1994. After-tax components of the Bank's net
income for the twelve months ended September 30, 1995 were comprised of
$11.8 million from core banking operations, offset partially by $193,000 from
expenses and charge-offs related to the sale of the credit card portfolio,
$605,000 from real estate operations, and $3.9 million of goodwill
amortization. After-tax components of the Bank's net income for the twelve
months ended September 30, 1994 were comprised of $11 million from core
banking operations, a gain of $348,000 from the sale of debt securities used
to fund the sale of the Bank's Arizona branches, a gain of $742,000 on the
18<PAGE>
<PAGE>
sale of the Bank's credit card portfolio, and a $780,000 gain from a legal
settlement, partially offset by a $387,000 loss from real estate operations
and $3.8 million in goodwill amortization expense.
The following table sets forth information with respect to interest rate
spread for the periods shown (thousands of dollars):
<TABLE>
<CAPTION>
Twelve Months Ended September 30,
------------------------------------------------------------------------------------
1995 1994
--------------------------------------- ---------------------------------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Cash equivalents $ 50,971 $ 3,016 5.92% $ 60,664 $ 2,120 3.49%
Debt securities held to maturity 92,941 6,866 7.39 68,775 4,677 6.80
Debt securities available for sale 510,937 33,970 6.65 568,451 34,195 6.02
Loans receivable 976,210 86,188 8.83 865,402 74,783 8.64
FHLB stock 14,512 737 5.08 16,729 759 4.54
----------- ----------- ----------- ----------- ----------- -----------
Total interest-earning assets $ 1,645,571 130,777 7.95 $ 1,580,021 116,534 7.38
=========== ----------- ----------- ----------- ----------- -----------
Interest-bearing liabilities:
Deposits $ 1,244,410 50,645 4.07 $ 1,217,331 42,923 3.53
Securities sold under
agreements to repurchase 202,589 12,403 6.12 234,092 10,588 4.52
Advances from FHLB 123,744 7,580 6.13 71,786 3,394 4.73
Notes payable 8,104 655 8.08 8,233 636 7.73
Unsecured senior notes -- -- -- -- (1) --
----------- ----------- ----------- ----------- ----------- -----------
Total interest-bearing liabilities $ 1,578,847 71,283 4.51 $ 1,531,442 57,540 3.76
=========== ===========
Cost of hedging activities 670 0.04 264 0.02
----------- ----------- ----------- -----------
Cost of funds 71,953 4.55 57,804 3.78
----------- ----------- ----------- -----------
Capitalized and transferred interest -- -- (25) --
----------- ----------- ----------- -----------
Net interest income $ 58,824 3.40% $ 58,755 3.60%
=========== =========== =========== ===========
Net yield on interest-earning assets 3.57% 3.72%
=========== ===========
</TABLE>
Average interest-earning assets increased by $63.7 million due to the
increased loan production and decreased payoff activity. Average
interest-bearing liabilities increased due to additional FHLB advances and
deposit growth.
Noninterest income decreased by $2.3 million for the twelve months ending
September 1995 versus 1994 primarily due to a $1.7 million gain on the sale of
the credit card portfolio which occurred in the first quarter of 1994, while
no similar sale occurred in 1995. General and administrative expense declined
$715,000 for the twelve months ended September 30, 1995 compared to the same
period in 1994 due primarily to the sale of the Bank's Arizona branch network.
ASSET QUALITY
Loan Impairment. On January 1, 1995, the Bank adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan" and SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan--Income Recognition and
Disclosures." SFAS No. 114 requires the measurement of loan impairment to be
based on the present value of expected future cash flows discounted at the
loan's original effective interest rate or the fair value of the underlying
collateral on collateral-dependent loans. SFAS No. 118 allows a creditor to
use existing methods for recognizing interest income on impaired loans.
Upon adoption of SFAS No. 114 in the first quarter of 1995, $2.9 million of
in-substance foreclosed assets were reclassified on the Bank's consolidated
statement of financial condition from real estate acquired through foreclosure
(REO-F) to loans receivable as SFAS No. 114 eliminated the in-substance
designation. No other financial statement impact resulted from the Bank's
adoption of SFAS No. 114.
In general, under SFAS No. 114, interest income on impaired loans will
continue to be recognized by the Bank on the accrual basis of accounting,
unless the loan is greater than 90 days delinquent with respect to principal
or interest, or the loan has been partially or fully charged-off. Interest on
loans greater than 90 days delinquent is generally recognized on a cash basis.
19<PAGE>
<PAGE>
Interest income on loans which have been fully or partially charged-off is
generally recognized on a cost-recovery basis; that is, all proceeds from the
loan payments are first applied as a reduction to principal before any income
is recorded.
Interest payments received on impaired loans are recorded as interest income
unless collection of the remaining recorded investment is doubtful, in which
case, payments received are recorded as reductions of principal. Interest
income recognized and balances of impaired loans are as follows (thousands of
dollars):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, 1995 September 30, 1995
------------------ ------------------
<S> <C> <C>
Interest income recognized:
Accrual basis $ 1,083 $ 2,159
Cash basis $ 7 $ 15
Average balance outstanding on impaired loans* $ 17,505 $ 20,817
</TABLE>
*The outstanding balance of impaired loans at September 30, 1995 was $26,801.
NONPERFORMING ASSETS. Nonperforming assets are comprised of nonaccrual
assets, restructured loans and foreclosed real estate (REO-F). Nonaccrual
assets are those on which management believes the timely collection of
interest or principal is doubtful. Assets are transferred to nonaccrual
status when payments of interest or principal are 90 days past due, or if, in
management's opinion, the accrual of interest should be ceased sooner. There
were no loans on accrual status which were over 90 days delinquent or past
maturity as of September 30, 1995.
The following table summarizes nonperforming assets as of the dates indicated
(thousands of dollars):
September 30, December 31,
1995 1994
------------- ------------
Nonaccrual loans past due 90 days or more:
Mortgage loans:
Construction and land $ 1,807 $ 576
Permanent single-family residences 4,267 5,517
Other mortgage loans 4,024 5,696
------------- ------------
Total mortgage loans 10,098 11,789
Nonmortgage loans 1,008 904
Restructured loans 9,777 16,768
------------- ------------
Total nonperforming loans 20,883 29,461
Real estate acquired through foreclosure 2,954 7,631
------------- ------------
Total nonperforming assets $ 23,837 $ 37,092
============= ============
Allowance for estimated credit losses $ 16,243 $ 17,659
============= ============
Allowance for estimated credit losses as a
percentage of nonperforming loans 77.78% 59.94%
============= ============
Allowance for estimated credit losses as a
percentage of nonperforming assets 68.14% 47.61%
============= ============
Restructured loans, at September 30, 1995, include $4 million of single-family
residential loan modifications made to borrowers with earthquake-related
damage in California. Federal agencies encouraged financial institutions to
modify loan terms for certain borrowers who were affected by the earthquake
which occurred in January 1994. The terms of these modifications were
generally three- to six-month payment extensions with no negative credit
reporting regarding the borrower. The reduction of $7 million in restructured
loans was primarily due to a change in OTS regulations allowing for the
20<PAGE>
<PAGE>
removal of loans from the restructured loan designation that have been
performing for the prior twelve months and were not modified below a normal
market rate.
CLASSIFIED ASSETS. OTS regulations require the Bank to classify certain
assets and establish prudent valuation allowances. Classified assets are
categorized as "substandard," "doubtful," and "loss." In addition, the Bank
can designate an asset as "special mention." Impaired loans, as defined by
SFAS No. 114, are included in substandard assets.
The following table sets forth the amounts of the Bank's classified assets and
ratio of classified assets to total assets, net of allowances and charge-offs,
as of the dates indicated (thousands of dollars):
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------------ -----------------------
% of Total % of Total
Balance Assets Balance Assets
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Substandard assets:
Loans:
Single-family residential $ 5,780 0.32% $ 6,882 0.38%
Consumer 1,216 0.07 1,297 0.07
Commercial and multi-family mortgage 18,809 1.03 20,797 1.14
Construction and land 3,250 0.18 615 0.03
Commercial loans 3,121 0.17 -- --
REO-F (net) 2,954 0.16 7,631 0.42
Real estate held for investment 1,128 0.06 1,191 0.07
Investment securities -- -- 21,972 1.21
---------- ---------- ---------- ----------
Total $ 36,258 1.99% $60,385 3.32%
========== ========== ========== ==========
</TABLE>
Classified assets decreased $24.1 million from December 31, 1994 to September
30, 1995, primarily as a result of a $20.2 million investment security which
was upgraded from substandard to special mention during the second quarter, a
$2.7 million decrease in foreclosed real estate due to sales, an $821,000
decrease in major real estate loans due to payoffs and paydowns, and $759,000
of paydowns in residential loans. These decreases were partially offset by
$3.1 million of downgrades related to two commercial loans in Nevada secured
by accounts receivable and inventory. Construction and land loans increased
$2.6 million due primarily to a downgrade of a $3 million Nevada construction
loan.
The upgrade of the privately issued $20.2 million investment security from
"substandard" to "special mention" was the result of the stabilization of
delinquencies of the security's underlying loans and the market values of
collateral supporting such loans, and management's analysis of the credit
enhancement of the security versus loss estimates on the underlying loans.
The Bank continues to receive scheduled monthly payments of principal and
interest on this security.
Special mention assets increased from $32.2 million at December 31, 1994 to
$45.2 million at September 30, 1995. This increase was caused primarily by
the upgrade of the $20.2 million investment security from substandard and the
downgrade of a $2.3 million residential construction loan, partially offset by
a $3 million reclassification to substandard of a construction loan and
paydowns of California residential loans, commercial real estate loans, and
commercial loans.
The largest substandard loan at September 30, 1995 was an $8.2 million
apartment complex loan in Nevada. The Bank had four additional substandard
loans in excess of $1 million at September 30, 1995: two hotel loans, a
construction loan, and an apartment complex loan, all located in Nevada. The
largest foreclosed real estate asset held by the Bank at September 30, 1995
was a $500,000 single-family residential loan in California.
The Bank's largest investment in real estate classified as substandard at
September 30, 1995, was a former bank branch in Arizona with a current book
value of $798,000. The Bank's two remaining real estate development projects
classified as substandard have current book values of $195,000 and $135,000.
21<PAGE>
<PAGE>
The geographic concentration of the Bank's classified assets at September 30,
1995 was 79 percent in Nevada, 16 percent in California, and 5 percent in
Arizona.
It is the Bank's practice to charge off all assets or portions thereof which
it considers to be "loss." As a result, none of the Bank's assets, net of
charge-offs, were classified as "loss" at September 30, 1995 and December 31,
1994. Also, none were classified as "doubtful" at either date.
The following tables set forth the Bank's charge-off experience for loans
receivable and REO-F, by loan type, as well as real estate held for investment
and debt securities (thousands of dollars):
<TABLE>
<CAPTION> Net
Charge-Offs Recoveries Charge-Offs
----------- ------------ -----------
<S> <C> <C> <C>
Nine Months Ended September 30, 1995:
Loans and REO-F:
Single-family residential $ 736 $ (270) $ 466
Commercial and multi-family mortgage 132 -- 132
Construction/land 450 (172) 278
Nonmortgage 2,853 (586) 2,267
Commercial 199 -- 199
Real estate held for investment 108 -- 108
Debt securities 2,077 -- 2,077
----------- ------------ -----------
Total net charge-offs $ 6,555 $ (1,028) $ 5,527
=========== ============ ===========
Nine Months Ended September 30, 1994:
Loans and REO-F:
Single-family residential $ 1,337 $ (692) $ 645
Commercial and multi-family mortgage 661 (101) 560
Construction/land 1,263 (115) 1,148
Nonmortgage 2,845 (740) 2,105
Commercial -- -- --
Real estate held for investment 579 (498) 81
----------- ------------ -----------
Total net charge-offs $ 6,685 $ (2,146) $ 4,539
=========== ============ ===========
</TABLE>
PROVISIONS AND ALLOWANCES FOR CREDIT LOSSES. On a regular basis, management
evaluates the adequacy of the allowances for estimated losses on loans, debt
securities, and real estate and establishes additions to the allowances
through provisions to expense. The Bank utilizes a comprehensive internal
asset review system and general valuation allowance methodology. General
valuation allowances are established for unforeseen losses for each of the
loan, debt securities, and real estate portfolios. Factors taken into account
in determining the adequacy of allowances include review of existing risks in
the portfolios, prevailing and anticipated economic conditions, actual loss
experience and delinquencies. Reviews of the quality of the Bank's loan, debt
securities, and real estate portfolios by the Risk Management Committee, and
examinations by regulatory authorities, are performed periodically.
Charge-offs are recorded on particular assets when it is determined that the
present value of expected cash flows or fair value of the underlying
collateral of an asset is below its carrying value. When a loan is
foreclosed, the asset is written down to fair value based on a current
appraisal of the subject property.
22<PAGE>
<PAGE>
Activity in the allowances for losses on loans, debt securities, investments
in real estate, and foreclosed real estate is summarized as follows (thousands
of dollars):
<TABLE>
<CAPTION>
Investments
Foreclosed in
Debt Impaired Nonimpaired Real Real
Securities Loans Loans Estate Estate Total
---------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994* $ -- $ 3,038 $ 14,621 $ -- $ 476 $ 18,135
Transfer 3,077 -- (5,471) 2,394 -- --
Provisions for estimated losses -- (465) 5,468 -- 351 5,354
Charge-offs, net of recoveries (2,077) 52 (1,208) (2,186) (108) (5,527)
---------- ---------- ----------- ---------- ----------- ----------
Balance at September 30, 1995 $ 1,000 $ 2,625 $ 13,410 $ 208 $ 719 $ 17,962
========== ========== =========== ========== =========== ==========
Balance at June 30, 1995 $ 1,000 $ 2,267 $ 13,207 $ 473 $ 736 $ 17,683
Transfer -- -- (576) 576 -- --
Provisions for estimated losses -- 226 1,378 -- (17) 1,587
Charge-offs, net of recoveries -- 132 (599) (841) -- (1,308)
---------- ---------- ----------- ---------- ----------- ----------
Balance at September 30, 1995 $ 1,000 $ 2,625 $ 13,410 $ 208 $ 719 $ 17,962
========== ========== =========== ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Investments
Foreclosed in
Debt Impaired Total Real Real
Securities Loans Loans Estate Estate Total
---------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $ -- $ N/A $ 16,251 $ -- $ 935 $ 17,186
Transfer -- N/A (2,612) 2,612 -- --
Provisions for estimated losses -- N/A 5,202 -- 52 5,254
Charge-offs, net of recoveries -- N/A (1,846) (2,612) (81) (4,539)
---------- ---------- ----------- ---------- ----------- ----------
Balance at September 30, 1994 $ -- N/A $ 16,995 $ -- $ 906 $ 17,901
========== ========== =========== ========== =========== ==========
Balance at June 30, 1994 $ -- $ N/A $ 16,443 $ -- $ 485 $ 16,928
Transfer -- N/A (490) 490 -- --
Provisions for estimated losses -- N/A 1,493 -- 5 1,498
Charge-offs, net of recoveries -- N/A (451) (490) 416 (525)
---------- ---------- ----------- ----------- ----------- ----------
Balance at September 30, 1994 $ -- $ N/A $ 16,995 $ -- $ 906 $ 17,901
========== ========== =========== =========== =========== ==========
</TABLE>
* Balances for impaired loans and foreclosed real estate and nonimpaired
loans at December 31, 1994, have been reclassified to reflect adoption of
SFAS No. 114.
During the second quarter of 1995, the Bank transferred $4.4 million of its
allowance for estimated credit losses affiliated with loans to separate
allowances for credit losses affiliated with REO-F and debt securities. Of
this amount, $1.3 million was transferred to the REO-F allowance for losses
and $3.1 million was transferred to the allowance for losses on debt
securities. Prior to the second quarter, the evaluation of the adequacy of
the Bank's allowance for estimated credit losses affiliated with loans
receivable incorporated estimates for losses in the foreclosed real estate and
debt security portfolios, but were not deemed material enough to be segregated
as separate allowances. Additionally, prior to the second quarter, no credit
losses had been experienced in the debt security portfolio. Losses in the
foreclosed real estate portfolio subsequent to foreclosure had been accounted
for as loan losses.
In 1991, the Bank purchased $10 million of adjustable-rate mortgage-backed
securities (MBS) issued by the Resolution Trust Corporation (RTC). The
securities were rated AA by Standard & Poor's (S&P) and Aa2 by Moody's on the
date of issuance and purchase. When the Bank implemented SFAS No. 115 on
December 31, 1993, these securities were designated as held to maturity. The
securities still were rated AA and Aa2 at that time. At December 31, 1994 and
March 31, 1995, the securities were performing according to their contractual
terms, and all realized losses from the disposition of REO-F were being
absorbed by a credit enhancement feature. In April 1995, Moody's and S&P
lowered their ratings on the securities to below investment grade rating of
Ba3 and BB, respectively. As a result of this deterioration, the Bank
determined that the securities should be considered "other than temporarily"
impaired under the provisions of SFAS No. 115. A pretax loss of $1.9 million
was recorded as a credit-related charge-off through the general valuation
23<PAGE>
<PAGE>
allowance for debt securities in the second quarter. In June 1995, the Bank
sold these securities. No additional loss was recorded at the time of sale.
Also during the second quarter, the Bank sold a $1.5 million security from its
available for sale portfolio at a loss of $181,000. The security was a
privately issued MBS whose credit rating was downgraded to Baa3 during April
1995. As a result of the downgrade, the Bank sold the security and recorded
the loss as a credit related charge-off to the general valuation allowance for
debt securities.
The loan and foreclosed real estate charge-offs were primarily attributable to
consumer loan charge-offs of $2.3 million and $466,000 in single-family
residential loan charge-offs. The Bank's quarterly analysis required no
significant change in the allowance for estimated credit losses at September
30, 1995 from December 31, 1994.
Regulatory Matters
- ------------------
The deposit accounts of savings associations, including those of PriMerit, are
insured to the maximum extent permitted by law by the FDIC through the SAIF.
The deposit accounts of commercial banks are separately insured by the FDIC
through the bank insurance fund (BIF). Commercial banks and savings
associations are separately assessed annual deposit insurance premiums. For
savings associations, the deposit premiums range from 23 to 31 cents per $100
of deposits and, under current requirements, will remain at that level until
the SAIF is capitalized at 1.25 percent of insured deposits. The SAIF is not
expected to reach this level of capitalization for several years. The BIF has
reached the 1.25 percent capitalization level. As a result, in August 1995,
the FDIC reduced the deposit insurance premiums paid by most commercial banks
insured by BIF to four cents per $100 of deposits. This regulatory change
will give commercial banks a competitive advantage over savings associations
and place additional pressure on the SAIF.
A number of plans have been proposed in Congress to deal with the
undercapitalization of the SAIF. Several proposals provide for a one-time
special assessment on SAIF-insured deposits to fully capitalize the SAIF to
1.25 percent of insured deposits and require federally chartered thrifts, like
the Bank, to change to a bank charter. These proposals would subsequently
reduce annual premiums to levels similar to those of BIF-insured commercial
banks and eventually merge the BIF and SAIF insurance funds. A change to a
bank charter, under current law, would require recapture of the Bank's tax bad
debt reserve. Proposals to deal with this issue include a "fresh start"
approach, whereby thrifts would not need to recapture reserves established
prior to December 31, 1987. The Bank is unable to predict if these proposals,
or other proposals, will ultimately be approved by Congress.
Assuming a one-time special assessment and change in charter requirement was
approved by Congress and became law in 1995, and was immediately charged
against results of operations, the one-time assessment and tax bad debt
recapture would, most likely, have a material impact on the Bank's 1995
results of operations. However, management believes the Bank would continue
to be classified as "well-capitalized" under fully phased-in FDICIA capital
rules. In addition, the Bank would not face any liquidity issues as a result
of a one-time assessment.
24<PAGE>
<PAGE>
PART II - OTHER INFORMATION
----------------------------
ITEM 1 None
ITEM 2 Changes in Securities
(a) None
(b) In October 1995, Southwest Gas Capital I (the Trust), a wholly
owned subsidiary of the Company, completed an issuance of 2.4
million 9.125 percent preferred securities, the proceeds of
which were used to purchase an equivalent amount of
subordinated debt securities of the Company. The payment of
distributions out of moneys held by the Trust and payments on
liquidation of the Trust or the redemption of the preferred
securities are guaranteed by the Company. The obligations of
the Company under this guarantee are subordinate and junior in
right of payment to all other liabilities of the Company and
pari passu with the most senior preferred stock issued by the
Company. The Company has the right to defer interest payments
on the subordinated debt securities. However, should interest
payments be deferred, the Company can not (i) declare or pay
dividends on, or make a distribution with respect to, or
redeem, purchase or acquire or make a liquidation payment with
respect to, any of its capital stock, or (ii) make any payment
of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company
that rank pari passu with or junior to the subordinated debt
securities. The Company has previously filed the following
documents defining the rights of securities holders:
Amendment No. 1 to Form S-3 Registration Statement
(No. 33-62143) which was declared effective October 24, 1995;
prospectus supplement, dated October 26, 1995, and prospectus,
dated October 24, 1995, filed pursuant to Rule 424(b)(2) with
the Securities and Exchange Commission (the Commission) on
October 27, 1995; Form 8-K Current Report dated October 26,
1995, and filed with the Commission on October 31, 1995.
Items 3-5 None
Item 6 Exhibits and Reports on Form 8-K
(a) The following documents are filed as part of this report on
Form 10-Q:
Exhibit 4.01 - Southwest Gas Capital I Preferred Securities
Guarantee by the Company and Harris Trust and
Savings Bank, dated as of October 31, 1995.
Exhibit 4.07 - Subordinated Debt Securities Indenture between
the Company and Harris Trust and Savings Bank,
dated as of October 31, 1995.
Exhibit 4.08 - First Supplemental Indenture Between the
Company and Harris Trust and Savings Bank,
dated as of October 31, 1995, supplementing
and amending the Indenture dated as of October
31, 1995, with respect to the 9.125%
Subordinated Debt Securities.
Exhibit 27 - Financial Data Schedule (filed electronically
only)
Exhibit 99 - Financial Analyst Report - Third Quarter 1995
(b) Reports on Form 8-K
The Company filed a Form 8-K, dated October 26, 1995, containing
exhibits relating to the issuance of 2.4 million preferred
securities by Southwest Gas Capital I, a wholly owned subsidiary of
the Company.
25<PAGE>
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Southwest Gas Corporation
---------------------------------------
(Registrant)
Date: November 8, 1995
/s/ Edward A. Janov
---------------------------------------
Edward A. Janov
Controller and Chief Accounting Officer
26<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4.01 Southwest Gas Capital I Preferred Securities Guarantee by the
Company and Harris Trust and Savings Bank, dated as of October 31,
1995.
4.07 Subordinated Debt Securities Indenture between the Company and
Harris Trust and Savings Bank, dated as of October 31, 1995.
4.08 First Supplemental Indenture Between the Company and Harris Trust
and Savings Bank, dated as of October 31, 1995, supplementing and
amending the Indenture dated as of October 31, 1995, with respect to
the 9.125% Subordinated Debt Securities.
27 Financial Data Schedule (filed electronically only)
99 Financial Analyst Report - Third Quarter 1995
<PAGE> 1 EXHIBIT 4.01
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PREFERRED SECURITIES GUARANTEE AGREEMENT
SOUTHWEST GAS CAPITAL I
Dated as of October 31, 1995
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------<PAGE>
<PAGE> 2
TABLE OF CONTENTS
Section Page
ARTICLE I
Definitions and Interpretation
Section 1.1. Definitions and Interpretation . . . . . . . . . . . 2
ARTICLE II
Trust Indenture Act
Section 2.1. Trust Indenture Act; Application . . . . . . . . . . 5
Section 2.2. Lists of Holders of Trust Securities . . . . . . . . 5
Section 2.3. Reports by the Preferred Guarantee Trustee . . . . . 6
Section 2.4. Periodic Reports to Preferred Guarantee
Trustee. . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5. Evidence of Compliance with Conditions
Precedent. . . . . . . . . . . . . . . . . . . . . . 6
Section 2.6. Events of Default; Waiver. . . . . . . . . . . . . . 6
Section 2.7. Event of Default; Notice . . . . . . . . . . . . . . 7
Section 2.8. Conflicting Interests. . . . . . . . . . . . . . . . 7
ARTICLE III
Power, Duties and Rights of
Preferred Guarantee Trustee
Section 3.1. Powers and Duties of the Preferred Guarantee
Trustee. . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.2. Certain Rights of Preferred Guarantee
Trustee. . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.3. Not Responsible for Recitals or Issuance of
Guarantee. . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
Preferred Guarantee Trustee
Section 4.1. Preferred Guarantee Trustee; Eligibility . . . . . . 12
Section 4.2. Appointment, Removal and Resignation of
Preferred Guarantee Trustees . . . . . . . . . . . . 13
i<PAGE>
<PAGE> 3
ARTICLE V
Guarantee
Section 5.1. Guarantee. . . . . . . . . . . . . . . . . . . . . . 14
Section 5.2. Subordination. . . . . . . . . . . . . . . . . . . . 14
Section 5.3. Waiver of Notice and Demand. . . . . . . . . . . . . 14
Section 5.4. Obligations Not Affected . . . . . . . . . . . . . . 15
Section 5.5. Rights of Holders. . . . . . . . . . . . . . . . . . 16
Section 5.6. Guarantee of Payment . . . . . . . . . . . . . . . . 16
Section 5.7. Subrogation. . . . . . . . . . . . . . . . . . . . . 16
Section 5.8. Independent Obligations. . . . . . . . . . . . . . . 17
ARTICLE VI
Limitation of Transactions; Subordination
Section 6.1. Limitation of Transactions . . . . . . . . . . . . . 17
Section 6.2. Ranking. . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
Termination
Section 7.1. Termination. . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VIII
Indemnification
Section 8.1. Exculpation. . . . . . . . . . . . . . . . . . . . . 18
Section 8.2. Indemnification. . . . . . . . . . . . . . . . . . . 19
ARTICLE IX
Miscellaneous
Section 9.1. Successors and Assigns.. . . . . . . . . . . . . . . 19
Section 9.2. Amendments.. . . . . . . . . . . . . . . . . . . . . 19
Section 9.3. Notices. . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.4. Benefit. . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.5. Governing Law. . . . . . . . . . . . . . . . . . . . 21
ii<PAGE>
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
October 31, 1995, is executed and delivered by Southwest Gas Corporation, a
California corporation (the "Guarantor"), and Harris Trust and Savings Bank,
an Illinois banking corporation, as trustee (the "Preferred Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to
time of the Preferred Securities (as defined herein) of Southwest Gas Capital
I, a Delaware statutory business trust (the "Issuer").
RECITALS
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of October 26, 1995, among the trustees of the
Issuer named therein, the Guarantor as sponsor and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof $60,000,000 aggregate stated liquidation amount
of Preferred Securities designated the 9.125% Trust Originated Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders (as hereinafter defined) to
purchase the Preferred Securities, the Guarantor desires irrevocably
and unconditionally to agree, to the extent set forth in this Guarantee
Agreement, to pay to the Holders of the Preferred Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms
and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee Agreement") with substantially
identical terms to this Guarantee Agreement for the benefit of the holders of
the Common Securities (as defined herein) except that if an Event of Default
(as defined in the Indenture (as defined herein)), has occurred and is
continuing, the rights of holders of the Common Securities to receive
Guarantee Payments under the Common Securities Guarantee Agreement are
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments under this Guarantee Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement
for the benefit of the Holders.
1<PAGE>
<PAGE> 5
ARTICLE I
Definitions and Interpretation
Section 1.1. Definitions and Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not defined
in the preamble above have the respective meanings assigned to them
in this Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Common Securities" means the common securities representing
undivided beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person by that Person; or
2<PAGE>
<PAGE> 6
(b) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Declaration) that are required to be paid on such Preferred
Securities to the extent the Issuer shall have received a payment of interest
or principal on the Notes therefor from the Guarantor, (ii) the redemption
price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price") to the extent the Issuer has received a
payment of interest or principal on the Notes from the Guarantor with respect
to any Preferred Securities called for redemption by the Issuer, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination
of the Issuer (other than in connection with the distribution of Notes to the
Holders in exchange for Preferred Securities as provided in the Declaration or
the redemption of all of the Preferred Securities upon the maturity or
redemption of the Notes), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Preferred Securities to
the date of payment, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of October 31, 1995, among
the Note Issuer and Harris Trust and Savings Bank, as trustee, and any
indenture supplemental thereto pursuant to which certain Notes are to be
issued.
"Majority in liquidation amount of the Trust Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of
Preferred Securities, voting separately as a class, of more than 50% of the
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
3<PAGE>
<PAGE> 7
the date upon which the voting percentages are determined) of all Preferred
Securities.
"Note Issuer" means the Guarantor in its capacity as issuer of the
Notes.
"Notes" means the subordinated debt securities of the Note Issuer
issued pursuant to the Indenture and acquired by the Issuer.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means Harris Trust and Savings Bank,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee Agreement,
and thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, when used with respect to the Preferred
Guarantee Trustee, an officer of the Trustee in the Corporate Trust Office,
including the president, any vice-president, any assistant vice-president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer,
4<PAGE>
<PAGE> 8
any trust officer or assistant trust officer or any other officer customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, in
effect at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Securities" means collectively the Common Securities and the
Preferred Securities.
ARTICLE II
Trust Indenture Act
Section 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee
Agreement and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such duties
imposed by the Trust Indenture Act shall control.
Section 2.2. Lists of Holders of Trust Securities.
(a) The Guarantor shall provide the Preferred Guarantee Trustee with a
list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred
Securities ("List of Holders") as of such date, (i) within 14 days
after each record date for payment of distributions, and (ii) at any
5<PAGE>
<PAGE> 9
other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days
before such List of Holders is given to the Preferred Guarantee
Trustee provided that the Guarantor shall not be obligated to
provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the
Preferred Guarantee Trustee by the Guarantor. The Preferred
Guarantee Trustee may destroy any List of Holders previously given
to it on receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
Section 2.3. Reports by the Preferred Guarantee Trustee.
Within 60 days after December 31 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities
such reports as are required by Section 313 of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
Section 2.4. Periodic Reports to Preferred Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
Section 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
Section 2.6. Events of Default; Waiver.
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
6<PAGE>
<PAGE> 10
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
Section 2.7. Event of Default; Notice.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default known to the Preferred Guarantee Trustee, unless such defaults have
been cured before the giving of such notice, provided, that, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers of the Preferred Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests
of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice as provided in Section 9.3, or a Responsible
Officer shall have obtained actual notice, of such Event of Default.
Section 2.8. Conflicting Interests.
The Declaration shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of the first proviso contained in Section
310(b) of the Trust Indenture Act.
ARTICLE III
Power, Duties and Rights of
Preferred Guarantee Trustee
Section 3.1. Powers and Duties of the Preferred Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.5(b)
or to a Successor Preferred Guarantee Trustee on acceptance by such
<PAGE>
7
<PAGE> 11
Successor Preferred Guarantee Trustee of its appointment to act as
Successor Preferred Guarantee Trustee. The right, title and
interest of the Preferred Guarantee Trustee shall automatically vest
in any Successor Preferred Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Guarantee Agreement for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are
specifically set forth in this Guarantee Agreement, and no implied
covenants shall be read into this Guarantee Agreement against the
Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section
2.6), the Preferred Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Guarantee Agreement, and
use the same degree of care and skill in its exercise thereof, as a
prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express
provisions of this Guarantee Agreement, and the Preferred
Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement, and no
implied covenants or obligations shall be read into this
Guarantee Agreement against the Preferred Guarantee
Trustee; and
8<PAGE>
<PAGE> 12
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Preferred
Guarantee Trustee and conforming to the requirements of
this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall
be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee
Agreement;
(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer
of the Preferred Guarantee Trustee, unless it shall be proved
that the Preferred Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was
made;
(iii) the Preferred Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities
relating to the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the
Preferred Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers, if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity against
such risk or liability is not reasonably assured to it.
9<PAGE>
<PAGE> 13
Section 3.2. Certain Rights of Preferred Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may rely and shall be fully
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by a
Direction or an Officers' Certificate.
(iii) Whenever, in the administration of this Guarantee Agreement,
the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or
omitting any action hereunder, the Preferred Guarantee Trustee
(unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and rely upon
an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its
employees. The Preferred Guarantee Trustee shall have the
right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of
competent jurisdiction.
10<PAGE>
<PAGE> 14
(vi) The Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Guarantee Agreement at the request or direction of any Holder,
unless such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity acceptable to the
Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or
direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee; provided that,
nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the occurrence of
an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee Agreement.
(vii) The Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Preferred Guarantee Trustee, in its
discretion may make such further inquiry or investigation into
such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys, and the
Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee
Trustee or its agents alone shall be sufficient and effective
to perform any such action. No third party shall be required
to inquire as to the authority of the Preferred Guarantee
Trustee to so act or as to its compliance with any of the terms
and provisions of this Guarantee Agreement, both of which shall
be conclusively evidenced by the Preferred Guarantee Trustee's
or its agent's taking such action.
11<PAGE>
<PAGE> 15
(x) Whenever in the administration of this Guarantee Agreement the
Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of the
Preferred Securities, (ii) may refrain from enforcing such
remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Preferred Guarantee Trustee to perform
any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to
the Preferred Guarantee Trustee shall be construed to be a duty.
Section 3.3. Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Guarantee Agreement.
ARTICLE IV
Preferred Guarantee Trustee
Section 4.1. Preferred Guarantee Trustee; Eligibility.
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act
12<PAGE>
<PAGE> 16
as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii),
the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect
set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act.
Section 4.2. Appointment, Removal and Resignation of Preferred Guarantee
Trustees.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written
instrument executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee
Trustee.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred
Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the
Preferred Guarantee Trustee and delivered to the Guarantor, which
13<PAGE>
<PAGE> 17
resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor
Preferred Guarantee Trustee and delivered to the Guarantor and the
resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of
resignation, the resigning Preferred Guarantee Trustee may petition
any court of competent jurisdiction for appointment of a Successor
Preferred Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a
Successor Preferred Guarantee Trustee.
ARTICLE V
Guarantee
Section 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
Section 5.2. Subordination.
If an event of default under the Indenture has occurred and is
continuing, the rights of holders of the Common Securities to receive payments
under the Common Securities Guarantee Agreement are subordinated to the rights
of Holders of Preferred Securities to receive Guarantee Payments.
Section 5.3. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice
14<PAGE>
<PAGE> 18
of nonpayment, notice of dishonor, notice of redemption and all other notices
and demands.
Section 5.4. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with,
the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution
or other sums payable that results from the extension of any
interest payment period on the Notes or any extension of the
maturity date of the Notes permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the
15<PAGE>
<PAGE> 19
intent of this Section 5.4 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
Section 5.5. Rights of Holders.
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the
Preferred Guarantee Trustee in respect of this Guarantee Agreement
or exercising any trust or power conferred upon the Preferred
Guarantee Trustee under this Guarantee Agreement.
(b) If the Preferred Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights
under this Guarantee Agreement, without first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or
any other Person.
Section 5.6. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection.
Section 5.7. Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee Agreement;
PROVIDED, HOWEVER, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Guarantee
Agreement, if, at the time of any such payment, any amounts are due and unpaid
under this Guarantee Agreement. If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders.
16<PAGE>
<PAGE> 20
Section 5.8. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.4 hereof.
ARTICLE VI
Limitation of Transactions; Subordination
Section 6.1. Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if there
shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
or make any distribution with respect to, or redeem, purchase or acquire or
make a liquidation payment with respect to, any of its capital stock and (b)
the Guarantor shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the
Guarantor which rank pari passu with or junior to the Notes, provided, that,
the foregoing restriction in this Section 6.1(a) shall not apply to any stock
dividends paid by the Guarantor, where the dividend stock is the same stock as
that on which the dividend is being paid.
Section 6.2. Ranking.
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor (other than the Common Securities
Guarantee or any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of the
Guarantor), (ii) pari passu with the most senior preferred or preference stock
now or hereafter issued by the Guarantor and with any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.
17<PAGE>
<PAGE> 21
ARTICLE VII
Termination
Section 7.1. Termination.
This Guarantee Agreement shall terminate upon (i) full payment
of the Redemption Price of all Preferred Securities, (ii) the distribution of
the Notes to the Holders of all Preferred Securities or (iii) full payment of
the amounts payable in accordance with the Declaration upon liquidation of the
Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue
to be effective or will be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or under this Preferred Securities Guarantee.
Notwithstanding anything contained herein to the contrary, the obligations of
the Guarantor set forth in Article VIII hereof shall survive termination of
this Guarantee Agreement or the earlier resignation or removal of the
Preferred Guarantee Trustee.
ARTICLE VIII
Indemnification
Section 8.1. Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner that such Indemnified Person reasonably believed to
be within the scope of the authority conferred on such Indemnified Person by
this Guarantee Agreement or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such
acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters
the Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
18<PAGE>
<PAGE> 22
assets from which Distributions to Holders of Preferred Securities might
properly be paid.
Section 8.2. Indemnification.
(a) To the fullest extent permitted by applicable law, the Guarantor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person in connection with
this Guarantee Agreement including without limitation by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on
such Indemnified Person by this Guarantee Agreement, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of negligence or
willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding shall, from time to time,
be advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of any
undertaking by or on behalf of the Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
ARTICLE IX
Miscellaneous
Section 9.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.
Section 9.2. Amendments.
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Guarantee Agreement may only be amended with the prior approval of the Holders
of at least 66-2/3% in liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
19<PAGE>
<PAGE> 23
Distributions to the date upon which the voting percentages are determined) of
all the outstanding Preferred Securities (as defined in the Declaration). The
provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Trust Securities apply to the giving of such approval. The
Preferred Guarantee Trustee may, but shall have no obligation to, execute and
deliver any amendment to this Guarantee Agreement which affects the Preferred
Guarantee Trustee's rights, duties or immunities hereunder or otherwise.
Section 9.3. Notices.
All notices provided for in this Guarantee Agreement shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the
Holders of the Preferred Securities):
Harris Trust and Savings Bank
311 West Monroe Street, 12th Floor
Chicago, Illinois 60606
Attention: Indenture Trust Administration
Telecopy Number: (312) 461-3525
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):
Southwest Gas Corporation
5241 Spring Mountain Road
Las Vegas, Nevada 89102
Telecopy Number: (702) 876-7037
(c) If given to any Holder of Preferred Securities, at the address set
forth in the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
20<PAGE>
<PAGE> 24
Section 9.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders of
the Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.
Section 9.5. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
21<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee
Agreement to be executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
SOUTHWEST GAS CORPORATION
By: /s/ THOMAS J. TRIMBLE
---------------------------
Name: THOMAS J. TRIMBLE
Title: Senior Vice President
HARRIS TRUST AND SAVINGS BANK,
as Preferred Guarantee Trustee
By: /s/ E. KAY LIEDERMAN
---------------------------
Name: E. KAY LIEDERMAN
Title: Vice President
S-1<PAGE>
<PAGE> 1 EXHIBIT 4.07
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SOUTHWEST GAS CORPORATION
TO
HARRIS TRUST AND SAVINGS BANK
Trustee
_______________
INDENTURE
Dated as of October 31, 1995
_______________
SUBORDINATED DEBT SECURITIES
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------<PAGE>
<PAGE> 2
SOUTHWEST GAS CORPORATION
Certain Sections of this Indenture relating to
Sections 310 through 318, inclusive, of the
Trust Indenture Act of 1939:
Trust Indenture
Act Section Indenture Section
Section 310(a)(1) . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . 608
610
Section 311(a) . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . 613
Section 311(a) . . . . . . . . . . . . . 701
702
(b) . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . 702
Section 313(a) . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . 703
Section 314(a) . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . 101
1004
(b) . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . 101
(a)(1)(A). . . . . . . . . . . . 502
512
(a)(1)(B). . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . 104
501
502
512
i<PAGE>
<PAGE> 2
Section 317(a)(1) . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . 107
---------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
ii<PAGE>
<PAGE> 3
TABLE OF CONTENTS*
____________________
Page
----
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
Definitions and Other Provisions
of General Application . . . . . . . . . . . 1
Section 101. DEFINITIONS . . . . . . . . . . . . . . . . 1
"Act" . . . . . . . . . . . . . . . . . . . 2
"Affiliate" . . . . . . . . . . . . . . . . 2
"Authenticating Agent". . . . . . . . . . . 2
"Authorized Newspaper". . . . . . . . . . . 2
"Bearer Security" . . . . . . . . . . . . . 2
"Board of Directors". . . . . . . . . . . . 2
"Board Resolution". . . . . . . . . . . . . 2
"Business Day". . . . . . . . . . . . . . . 2
"Commission". . . . . . . . . . . . . . . . 3
"Common Securities" . . . . . . . . . . . . 3
"Common Securities Guarantee" . . . . . . . 3
"Company" . . . . . . . . . . . . . . . . . 3
"Company Request" or "Company Order". . . . 3
"Corporate Trust Office". . . . . . . . . . 3
"Corporation" . . . . . . . . . . . . . . . 3
"Coupon". . . . . . . . . . . . . . . . . . 3
"Covenant Defeasance" . . . . . . . . . . . 3
"Declaration" . . . . . . . . . . . . . . . 4
"Defaulted Interest". . . . . . . . . . . . 4
"Defeasance". . . . . . . . . . . . . . . . 4
"Defeasible Series" . . . . . . . . . . . . 4
"Depositary". . . . . . . . . . . . . . . . 4
"Event of Default". . . . . . . . . . . . . 4
"Exchange Act". . . . . . . . . . . . . . . 4
"Global Security" . . . . . . . . . . . . . 4
"Holder". . . . . . . . . . . . . . . . . . 4
"Indenture" . . . . . . . . . . . . . . . . 4
"Interest". . . . . . . . . . . . . . . . . 4
"Interest Payment Date" . . . . . . . . . . 5
"Maturity". . . . . . . . . . . . . . . . . 5
---------------------
* NOTE: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
i<PAGE>
<PAGE> 4
"Officers' Certificate" . . . . . . . . . . 5
"Opinion of Counsel". . . . . . . . . . . . 5
"Original Issue Discount Security". . . . . 5
"Outstanding" . . . . . . . . . . . . . . . 5
"Paying Agent". . . . . . . . . . . . . . . 6
"Person". . . . . . . . . . . . . . . . . . 6
"Place of Payment". . . . . . . . . . . . . 7
"Predecessor Security". . . . . . . . . . . 7
"Preferred Securities". . . . . . . . . . . 7
"Preferred Securities Guarantee". . . . . . 7
"Preferred Stock" . . . . . . . . . . . . . 7
"Redemption Date" . . . . . . . . . . . . . 7
"Redemption Price". . . . . . . . . . . . . 7
"Registered Security" . . . . . . . . . . . 7
"Regular Record Date" . . . . . . . . . . . 7
"Responsible Officer" . . . . . . . . . . . 7
"Securities". . . . . . . . . . . . . . . . 8
"Security Register" and "Security
Registrar" . . . . . . . . . . . . . . 8
"Senior Indebtedness" . . . . . . . . . . . 8
"Special Record Date" . . . . . . . . . . . 8
"Stated Maturity" . . . . . . . . . . . . . 8
"Subsidiary". . . . . . . . . . . . . . . . 8
"Trust" . . . . . . . . . . . . . . . . . . 8
"Trustee" . . . . . . . . . . . . . . . . . 8
"Trust Indenture Act" . . . . . . . . . . . 9
"Trust Securities". . . . . . . . . . . . . 9
"U.S. Government Obligations" . . . . . . . 9
"Vice President". . . . . . . . . . . . . . 9
Section 102. COMPLIANCE CERTIFICATES AND OPINIONS. . . . 9
Section 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE . . 10
Section 104. ACTS OF HOLDERS; RECORD DATES. . . . . . . 10
Section 105. NOTICES, ETC., TO TRUSTEE AND COMPANY. . . 13
Section 106. NOTICE TO HOLDERS; WAIVER. . . . . . . . . 13
Section 107. CONFLICT WITH TRUST INDENTURE ACT. . . . . 15
Section 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS . 15
Section 109. SUCCESSORS AND ASSIGNS . . . . . . . . . . 15
Section 110. SEPARABILITY CLAUSE. . . . . . . . . . . . 15
Section 111. BENEFITS OF INDENTURE. . . . . . . . . . . 15
ii<PAGE>
<PAGE> 5
Section 112. GOVERNING LAW. . . . . . . . . . . . . . . 15
Section 113. LEGAL HOLIDAYS . . . . . . . . . . . . . . 15
ARTICLE TWO
Security Forms . . . . . . . . . . 16
Section 201. FORMS GENERALLY. . . . . . . . . . . . . . 16
Section 202. FORM OF LEGEND FOR GLOBAL SECURITIES . . . 17
Section 203. FORM OF TRUSTEE'S CERTIFICATE OF
AUTHENTICATION. . . . . . . . . . . . 18
ARTICLE THREE
The Securities . . . . . . . . . . 18
Section 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES . . . 18
Section 302. DENOMINATIONS. . . . . . . . . . . . . . . 21
Section 303. EXECUTION, AUTHENTICATION, DELIVERY AND
DATING. . . . . . . . . . . . . . . . 21
Section 304. TEMPORARY SECURITIES . . . . . . . . . . . 23
Section 305. REGISTRATION, REGISTRATION OF
TRANSFER AND EXCHANGE . . . . . . . . 24
Section 307. PAYMENT OF INTEREST; INTEREST RIGHTS
PRESERVED . . . . . . . . . . . . . . 28
Section 308. PERSONS DEEMED OWNERS. . . . . . . . . . . 30
Section 309. CANCELLATION . . . . . . . . . . . . . . . 31
Section 310. COMPUTATION OF INTEREST. . . . . . . . . . 31
ARTICLE FOUR
Satisfaction and Discharge . . . . . . . 32
Section 401. SATISFACTION AND DISCHARGE OF INDENTURE. . 32
Section 402. APPLICATION OF TRUST MONEY . . . . . . . . 33
iii<PAGE>
<PAGE> 6
ARTICLE FIVE
Remedies. . . . . . . . . . . . 33
Section 501. EVENTS OF DEFAULT. . . . . . . . . . . . . 33
Section 502. ACCELERATION OF MATURITY; RESCISSION
AND ANNULMENT . . . . . . . . . . . . 37
Section 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. . . . . . . . 38
Section 504. TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . 39
Section 505. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF SECURITIES. . . 40
Section 506. APPLICATION OF MONEY COLLECTED . . . . . . 40
Section 507. LIMITATION ON SUITS. . . . . . . . . . . . 41
Section 508. UNCONDITIONAL RIGHT OF HOLDERS TO
RECEIVE PRINCIPAL, PREMIUM AND
INTEREST. . . . . . . . . . . . . . . 41
Section 509. RESTORATION OF RIGHTS AND REMEDIES . . . . 42
Section 510. RIGHTS AND REMEDIES CUMULATIVE . . . . . . 42
Section 511. DELAY OR OMISSION NOT WAIVER . . . . . . . 42
Section 512. CONTROL BY HOLDERS . . . . . . . . . . . . 42
Section 513. WAIVER OF PAST DEFAULTS. . . . . . . . . . 43
Section 514. UNDERTAKING FOR COSTS. . . . . . . . . . . 44
Section 515. WAIVER OF USURY, STAY OR EXTENSION LAWS. . 44
ARTICLE SIX
The Trustee . . . . . . . . . . . . . 44
Section 601. CERTAIN DUTIES AND RESPONSIBILITIES. . . . 44
Section 602. NOTICE OF DEFAULTS . . . . . . . . . . . . 45
Section 603. CERTAIN RIGHTS OF TRUSTEE. . . . . . . . . 45
Section 604. NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF SECURITIES. . . . . . . . 46
iv<PAGE>
<PAGE> 7
Section 605. MAY HOLD SECURITIES OR COUPONS . . . . . . 46
Section 606. MONEY HELD IN TRUST. . . . . . . . . . . . 47
Section 607. COMPENSATION AND REIMBURSEMENT . . . . . . 47
Section 608. DISQUALIFICATION; CONFLICTING INTERESTS. . 48
Section 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. . 48
Section 610. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR. . . . . . . 48
Section 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR . . 50
Section 612. MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION TO BUSINESS . . . . . . 52
Section 613. PREFERENTIAL COLLECTION
OF CLAIMS AGAINST COMPANY . . . . . . 52
Section 614. APPOINTMENT OF AUTHENTICATING AGENT. . . . 52
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company . 54
Section 701. COMPANY TO FURNISH TRUSTEE
NAMES AND ADDRESSES OF HOLDERS. . . . 54
Section 702. PRESERVATION OF INFORMATION;
COMMUNICATIONS TO HOLDERS . . . . . . 55
Section 703. REPORTS BY TRUSTEE . . . . . . . . . . . . 55
Section 704. REPORTS BY COMPANY . . . . . . . . . . . . 55
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease 56
Section 801. COMPANY MAY CONSOLIDATE,
ETC., ONLY ON CERTAIN TERMS . . . . . 56
Section 802. SUCCESSOR SUBSTITUTED. . . . . . . . . . . 57
ARTICLE NINE
Supplemental Indentures. . . . . . . . 57
v<PAGE>
<PAGE> 8
Section 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT
OF HOLDERS. . . . . . . . . . . . . . 57
Section 902. SUPPLEMENTAL INDENTURES
WITH CONSENT OF HOLDERS . . . . . . . 58
Section 903. EXECUTION OF SUPPLEMENTAL INDENTURES . . . 60
Section 904. EFFECT OF SUPPLEMENTAL INDENTURES. . . . . 60
Section 905. CONFORMITY WITH TRUST INDENTURE ACT. . . . 60
Section 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL
INDENTURES. . . . . . . . . . . . . . 61
ARTICLE TEN
Covenants. . . . . . . . . . . . . . 61
Section 1001. PAYMENT OF PRINCIPAL, PREMIUM AND
INTEREST. . . . . . . . . . . . . . . 61
Section 1002. MAINTENANCE OF OFFICE OR AGENCY. . . . . . 61
Section 1003. MONEY FOR SECURITIES
PAYMENTS TO BE HELD IN TRUST. . . . . 62
Section 1004. STATEMENT BY OFFICERS AS TO DEFAULT. . . . 64
Section 1005. EXISTENCE. . . . . . . . . . . . . . . . . 64
Section 1006. MAINTENANCE OF PROPERTIES. . . . . . . . . 64
Section 1007. PAYMENT OF TAXES AND OTHER CLAIMS. . . . . 64
Section 1008. LIMITATION ON DIVIDENDS; TRANSACTIONS
WITH AFFILIATES . . . . . . . . . . . 65
Section 1009. COVENANTS AS TO THE TRUST. . . . . . . . . 66
ARTICLE ELEVEN
Redemption of Securities. . . . . . . . 66
Section 1101. APPLICABILITY OF ARTICLE . . . . . . . . . 66
Section 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. . . 66
Section 1103. SELECTION BY TRUSTEE OF
SECURITIES TO BE REDEEMED . . . . . . 67
vi<PAGE>
<PAGE> 9
Section 1104. NOTICE OF REDEMPTION . . . . . . . . . . . 67
Section 1105. DEPOSIT REDEMPTION PRICE . . . . . . . . . 68
Section 1106. SECURITIES PAYABLE ON REDEMPTION DATE. . . 69
Section 1107. SECURITIES REDEEMED IN PART. . . . . . . . 70
ARTICLE TWELVE
Sinking Funds . . . . . . . . . . . . . 70
Section 1201. APPLICABILITY OF ARTICLE . . . . . . . . . 70
Section 1202. SATISFACTION OF SINKING
FUND PAYMENTS WITH SECURITIES . . . . 70
Section 1203. REDEMPTION OF SECURITIES FOR SINKING FUND 71
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance. . . . . . . . 71
Section 1301. COMPANY'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE . . 71
Section 1302. DEFEASANCE AND DISCHARGE.. . . . . . . . . 72
Section 1303. COVENANT DEFEASANCE. . . . . . . . . . . . 72
Section 1304. CONDITIONS TO DEFEASANCE
OR COVENANT DEFEASANCE. . . . . . . . 73
Section 1305. DEPOSITED MONEY AND U.S. GOVERNMENT
OBLIGATIONS TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS. . . . 75
Section 1306. REINSTATEMENT. . . . . . . . . . . . . . . 76
ARTICLE FOURTEEN
Meetings of Holders of Securities. . . . . . . . 77
Section 1401. PURPOSE FOR WHICH MEETINGS MAY BE CALLED . 77
Section 1402. CALL, NOTICE AND PLACE OF MEETINGS . . . . 77
Section 1403. PERSONS ENTITLED TO VOTE AT MEETINGS . . . 78
vii<PAGE>
<PAGE> 10
Section 1404. QUORUM; ACTION . . . . . . . . . . . . . . 78
Section 1405. DETERMINATION OF VOTING RIGHTS;
CONDUCT AND ADJOURNMENT OF MEETINGS . 79
Section 1406. COUNTING VOTES AND RECORDING ACTION OF
MEETINGS. . . . . . . . . . . . . . . 80
viii<PAGE>
<PAGE>10
INDENTURE, dated as of October 31, 1995, between Southwest Gas
Corporation, a corporation duly organized and existing under the laws of the
State of California (herein called the "Company"), having its principal office
at 5241 Spring Mountain Road, P. O. Box 98510, Las Vegas, Nevada 89193-98510,
and Harris Trust and Savings Bank, an Illinois banking corporation, as Trustee
(herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured and
subordinated debentures, notes or other evidences of indebtedness (herein
called the "Securities"), to be issued in one or more series as in this
Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series
thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly provided,
the term "generally accepted accounting principles" with respect to any
1<PAGE>
<PAGE>11
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of such computation;
(4) the words "Article" and "Section" refer to an Article and
Section, respectively, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Authorized Newspaper" means a newspaper, in an official language of
the place of publication or in the English language, customarily published on
each day that is a Business Day in the place of publication, and of general
circulation in each place in connection with which the term is used or in the
financial community of each such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may
be made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any day that is a Business Day in
the place of publication.
"Bearer Security" means any Security in the form established
pursuant to Section 201 which is payable to bearer.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment,
means any day other than a day on which banking institutions in New York, New
York, Los Angeles, California or Chicago, Illinois are authorized or required
2<PAGE>
<PAGE>12
by law to close or such other day as provided in or pursuant to an Officers'
Certificate or supplemental indenture referred to in Section 301.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Securities" means common securities representing undivided
beneficial interests in the assets of the Trust.
"Common Securities Guarantee" means any guarantee that the Company
enters into that operates directly or for the benefit of Holders of Common
Securities of the Trust.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered which office at the date of execution of this Indenture is
located at 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606,
Attention: Indenture Trust Division.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Coupon" means any interest coupon appertaining to a Bearer
Security.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Declaration" means in respect of the Trust, the amended and
restated declaration of trust of the Trust or any other governing instrument
of the Trust.
3<PAGE>
<PAGE>13
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Defeasible Series" has the meaning specified in Section 1301.
"Depositary" means, with respect to Securities of any series
issuable in whole or in part in the form of one or more Global Securities, a
clearing agency registered under the Exchange Act that is designated to act as
Depositary for such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor legislation.
"Global Security" means a Security that evidences all or part of the
Securities of any series and is authenticated and delivered to, and registered
in the name of, the Depositary for such Securities or a nominee thereof.
"Holder", in the case of any Registered Security, means a Person in
whose name such Security is registered in the Security Register and, in the
case of any Bearer Security, means the bearer thereof and, in the case of any
Coupon, means the bearer thereof.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301.
"Interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", when used with respect to any Security,
means the Stated Maturity of an instalment of interest on such Security.
4<PAGE>
<PAGE>14
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security or an instalment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity
or by declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the President
or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee. One of the officers signing an Officers' Certificate given pursuant
to Section 1004 shall be the principal executive, financial or accounting
officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall, and which opinion shall, be acceptable
to the Trustee (which acceptance shall not unreasonably be withheld).
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to Section
502.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, EXCEPT:
(1) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities and any Coupons
appertaining thereto; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made;
(3) Securities as to which Defeasance has been effected pursuant to
Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
5<PAGE>
<PAGE>15
in whose hands such Securities are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (A) the
principal amount of an Original Issue Discount Security that shall be deemed
to be Outstanding shall be the amount of the principal thereof that would be
due and payable as of the date of such determination upon acceleration of the
Maturity thereof to such date pursuant to Section 502, (B) the principal
amount of a Security denominated in one or more foreign currencies or currency
units shall be the U.S. dollar equivalent, determined in the manner provided
as contemplated by Section 301 on the date of original issuance of such
Security, of the principal amount (or, in the case of an Original Issue
Discount Security, the U.S. dollar equivalent on the date of original issuance
of such Security of the amount determined as provided in Clause (A) above) of
such Security, and (C) Securities owned by the Company or any other obligor
upon the Securities or any Subsidiary of the Company or of such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Responsible Officer of the Trustee knows to be so owned
shall be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon
the Securities or any Coupon appertaining thereto or any Subsidiary of the
Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities or any Coupon on
behalf of the Company.
"Person" means a legal person, including any individual, corporation,
estate, limited liability company, partnership, joint venture, association,
joint stock company, trust, unincorporated association or government or any
agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
6<PAGE>
<PAGE>16
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 306 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security or any Security to
which a mutilated, destroyed, lost or stolen Coupon appertains shall be deemed
to evidence the same debt as the lost, destroyed, mutilated or stolen Security
or the Security to which a mutilated, destroyed, lost or stolen Coupon
appertains.
"Preferred Securities" means the preferred securities representing
undivided beneficial interests in the assets of the Trust.
"Preferred Securities Guarantee" means any guarantee that operates
directly or indirectly for the benefit of Holders of Preferred Securities of
the Trust.
"Preferred Stock" means capital stock of any class or classes
(however designated) which is preferred as to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of capital stock of any other
class of such corporation.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Security" means any Security established pursuant to
Section 201 which is registered in the Security Register.
"Regular Record Date" for the interest payable on any Registered
Security on any Interest Payment Date means the date specified for that purpose
as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means
an officer of the Trustee in the Corporate Trust Office, including the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
7<PAGE>
<PAGE>17
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" when used with respect to any Security means
indebtedness of the Company which is designated as senior to other indebtedness
of the Company in the terms of the particular series of Securities established
as contemplated by Section 301.
"Special Record Date" for the payment of any Defaulted Interest on
any Registered Security means a date fixed by the Trustee pursuant to Section
307.
"Stated Maturity", when used with respect to any Security or any
instalment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such instalment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at
all times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trust" means Southwest Gas Capital I, a Delaware statutory business
trust.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, and if at any time there is more
than one such Person, "Trustee" as used with respect to the Securities of any
series shall mean exclusively the Trustee with respect to Securities of that
series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; PROVIDED, HOWEVER,
that in the event the Trust Indenture Act of 1939 is amended after such date,
8<PAGE>
<PAGE>18
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Securities" means Common Securities and Preferred Securities.
"U.S. Government Obligations" has the meaning specified in Section
1304.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
Section 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in
the form of an Officers' Certificate, if to be given by an officer of the
Company, or an Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirements
set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
9<PAGE>
<PAGE>19
Section 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. ACTS OF HOLDERS; RECORD DATES.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by agent
duly appointed in writing. If, but only if, Securities of a series are
issuable as Bearer Securities, any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Holders of Securities of such series may, alternatively, be
embodied in and evidenced by the record of Holders of Securities of such
series voting in favor thereof, either in person or by proxies duly appointed
in writing, at any meeting of Holders of Securities of such series duly called
and held in accordance with the provisions of Article Fourteen, or a
combination of such instruments and any such record. Except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments or record or both are delivered to the Trustee and,
10<PAGE>
<PAGE>20
where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent, or
of the holding by any Person of a Security, shall be sufficient for any
purpose of this Indenture and (subject to Section 601) conclusive in favor of
the Trustee and the Company and any agent of the Trustee or the Company, if
made in the manner provided in this Section. The record of any meeting of
Holders of Securities shall be proved in the manner provided in Section 1406.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
The ownership, principal amount and serial number of Registered
Securities shall be proved by the Security Register.
The ownership, principal amount and serial number of Bearer
Securities held by any person may be proved by the production of such Bearer
Securities or by a certificate executed, as depositary, by any trust company,
bank, banker or other depositary reasonably acceptable to the Company,
wherever situated, if such certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein mentioned such Person had on
deposit with such depositary, or exhibited to it, the Bearer Securities
therein described; or such facts may be proved by the certificate or affidavit
of the Person holding such Bearer Securities, if such certificate or affidavit
is deemed by the Trustee to be satisfactory. The Trustee and the Company may
assume that such ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the same
Bearer Security is produced, or (2) such Bearer Security is produced to the
Trustee by some other Person, or (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no longer
Outstanding. The ownership of Bearer Securities held by the Person so
executing such instrument or writing and the date of the commencement and the
date of the termination of holding the same may also be proved in any other
manner which the Trustee deems sufficient.
11<PAGE>
<PAGE>21
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made
upon such Security.
The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of determining
the Holders of Outstanding Registered Securities of any series entitled to
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action or permitted by this Indenture to be given or taken by
Holders of Securities of such series. With regard to any record date set
pursuant to this paragraph, the Holders of Outstanding Registered Securities
of the relevant series on such record date (or their duly appointed agents),
and only such Persons, shall be entitled to give or take the relevant action,
whether or not such Holders remain Holders after such record date. With
regard to any action that may be given or taken hereunder only by Holders of a
requisite principal amount of Outstanding Securities of any series (or their
duly appointed agents) and for which a record date is set pursuant to this
paragraph, the Company may, at its option, set an expiration date after which
no such action purported to be given or taken by any Holder shall be effective
hereunder unless given or taken on or prior to such expiration date by Holders
of the requisite principal amount of Outstanding Registered Securities of such
series on such record date (or their duly appointed agents). On or prior to
any expiration date set pursuant to this paragraph, the Company may, on one or
more occasions at its option, extend such date to any later date. Nothing in
this paragraph shall prevent any Holder (or any duly appointed agent thereof)
from giving or taking, after any expiration date, any action identical to, or,
at any time, contrary to or different from, any action given or taken, or
purported to have been given or taken, hereunder by a Holder on or prior to
such date, in which event the Company may set a record date in respect thereof
pursuant to this paragraph. Notwithstanding the foregoing or the Trust
Indenture Act, the Company shall not set a record date for, and the provisions
of this paragraph shall not apply with respect to, any action to be given or
taken by Holders pursuant to Sections 501, 502 or 512.
Without limiting the foregoing, a Holder entitled hereunder to give
or take any action hereunder with regard to any particular Security may do so
with regard to all or any part of the principal amount of such Security or by
12<PAGE>
<PAGE>22
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such principal amount.
Section 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office or sent by
telefacsimile to the Trustee at (312) 461-3525 or at any other number
previously furnished in writing to the Company by the Trustee, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it to the attention of its Treasurer at the address of its
principal office specified in the first paragraph of this instrument or
at any other address previously furnished in writing to the Trustee by
the Company or if sent to the Company by telefacsimile addressed to it to
the attention of its Treasurer at (702) 876-7037.
Section 106. NOTICE TO HOLDERS; WAIVER.
Except as otherwise expressly provided in or pursuant to this
Indenture, where this Indenture provides for notice to Holders of Securities
of any event,
(1) such notice shall be sufficiently given to Holders of
Registered Securities if in writing and mailed, first-class postage
prepaid, to each Holder of a Registered Security affected by such event,
at his address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the
giving of such Notice; and
(2) such notice shall be sufficiently given to Holders of Bearer
Securities, if any, if published in an Authorized Newspaper in The City
of New York and, if such Securities are then listed on any stock exchange
outside the United States, in an Authorized Newspaper in such city as the
Company shall advise the Trustee that such stock exchange so requires, on
a Business Day at least twice, the first such publication to be not
earlier than the earliest date and not later than the latest date
prescribed for the giving of such notice.
13<PAGE>
<PAGE>23
In any case where notice to Holders of Registered Securities is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder of a Registered Security shall
affect the sufficiency of such notice with respect to other Holders of
Registered Securities or the sufficiency of any notice to Holders of Bearer
Securities given as provided herein. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided. In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect
in any notice so published, shall affect the sufficiency of any notice mailed
to Holders of Registered Securities as provided above.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
Section 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
Section 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
14<PAGE>
<PAGE>24
Section 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture, any Security or any Coupon
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 111. BENEFITS OF INDENTURE.
Nothing in this Indenture, the Securities or any Coupon, express or
implied, shall give to any Person (including any Paying Agent or
Authenticating Agent appointed pursuant to Section 614), other than the
parties hereto and holders of Senior Indebtedness and their successors
hereunder and the Holders of Securities or Coupons, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
Section 112. GOVERNING LAW.
This Indenture, the Securities and any Coupons shall be governed by
and construed in accordance with the law of the State of New York, but without
regard to principles of conflicts of laws.
Section 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity of any Security shall not be a Business
Day at any Place of Payment, then (notwithstanding any other provision of this
Indenture, any Security or any Coupon other than a provision of the Security
or Coupon which specifically states that such provision shall apply in lieu of
this Section) payment of interest or principal (and premium, if any) need not
be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date, Redemption Date, Repurchase
Date, or at the Stated Maturity, provided that no interest shall accrue for
the period from and after such Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity, as the case may be.
15<PAGE>
<PAGE>25
ARTICLE TWO
SECURITY FORMS
Section 201. FORMS GENERALLY.
Each Registered Security, Bearer Security, Coupon and Global
Security issued pursuant to this Indenture shall be in substantially the form
established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, shall have such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by or pursuant
to this Indenture or any indenture supplemental hereto and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistent herewith, be determined by the
officers executing such Security or Coupon as evidenced by their execution of
such Security or Coupon. If the form of Securities of any series or Coupons
is established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities. If all of the Securities of
any series and Coupons established by action taken pursuant to a Board
Resolution are not to be issued at one time, it shall not be necessary to
deliver a record of such action at the time of issuance of each Security of
such series, but an appropriate record of such action shall be delivered at or
before the time of issuance of the first Security of such series.
Unless otherwise provided in or pursuant to this Indenture, the
Securities shall be issuable in registered form without Coupons.
Definitive Securities and definitive Coupons shall be printed,
lithographed or engraved or produced by any combination of these methods or
may be produced in any other manner, all as determined by the officers of the
Company executing such Securities or Coupons, as evidenced by their execution
of such Securities or Coupons.
Section 202. FORM OF LEGEND FOR GLOBAL SECURITIES.
Every Global Security authenticated and delivered hereunder shall
bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS GLOBAL SECURITY IS EXCHANGEABLE
FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
16<PAGE>
<PAGE>26
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES. EVERY
SECURITY DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR, OR IN
LIEU OF, THIS GLOBAL SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE
FOREGOING, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED ABOVE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), 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 IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS TO BE MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Section 203. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificates of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
__________________________________
As Trustee
By................................
Authorized Officer
ARTICLE THREE
THE SECURITIES
Section 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate,
17<PAGE>
<PAGE>27
or established in one or more indentures supplemental hereto, prior to the
issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906 or 1107
and except for any Securities which, pursuant to Section 303, are deemed
never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Registered Security of the
series shall be payable, if other than the Person in whose name that
Registered Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of the Securities of
the series is payable;
(5) the rate or rates at which the Securities of the series shall
bear interest, if any, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which any such interest shall be
payable and the Regular Record Date for any interest payable on any
Interest Payment Date;
(6) the place or places where the principal of and any premium and
interest on Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at
which and the terms and conditions upon which Securities of the series
may be redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
18<PAGE>
<PAGE>28
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(10) the currency, currencies or currency units in which payment of
the principal of and any premium and interest on any Securities of the
series shall be payable if other than the currency of the United States
of America and the manner of determining the equivalent thereof in the
currency of the United States of America for purposes of the definition
of "Outstanding" in Section 101;
(11) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined with reference
to an index, the manner in which such amounts shall be determined;
(12) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Company
or a Holder thereof, in one or more currencies or currency units other
than that or those in which the Securities are stated to be payable, the
currency, currencies or currency units in which payment of the principal
of and any premium and interest on Securities of such series as to which
such election is made shall be payable, and the periods within which and
the terms and conditions upon which such election is to be made;
(13) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to
Section 502;
(14) if applicable, that the Securities of the series shall be
defeasible as provided in Article Thirteen;
(15) if and as applicable, that the Securities of the series shall
be issuable in whole or in part in the form of one or more Global
Securities and, in such case, the Depositary or Depositaries for such
Global Security or Global Securities and any circumstances other than
those set forth in Section 305 in which any such Global Security may be
transferred to, and registered and exchanged for Securities registered in
the name of, a Person other than the Depositary for such Global Security
or a nominee thereof and in which any such transfer may be registered;
(16) the provisions, if any, relating to the conversion or exchange
of the Securities of any series into Securities of another series or into
any other debt or equity securities;
19<PAGE>
<PAGE>29
(17) if such Securities are to be issuable other than solely as
Registered Securities (whether as Bearer Securities or alternatively as
Bearer Securities or Registered Securities), and if such Securities are
to be issued as Bearer Securities, whether the Bearer Securities are to
be issuable with Coupons, without Coupons or both, and any restrictions
applicable to the offer, sale or delivery of the Bearer Securities and
the terms, if any, upon which Bearer Securities may be exchanged for
Registered Securities and vice versa and the date as of which any such
Bearer Security shall be dated (if other than its date of
authentication);
(18) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect to Securities
of any series, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;
(19) the identity of the Trustee for the Securities of the series,
and the identity of each Paying Agent and Securities Registrar for the
Securities of the series;
(20) the subordination terms of the Securities of the series;
(21) the rights, if any, to defer payments of interest on the
Securities by extending the interest payment periods and the duration of
such extension; and
(22) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted
by Section 901(5)).
All Securities of any one series and all Coupons, if any,
appertaining to Bearer Securities of such series shall be substantially
identical except as to denomination and except as may otherwise be provided in
or pursuant to the Board Resolution referred to above and (subject to
Section 303) set forth, or determined in the manner provided, in the Officers'
Certificate referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
20<PAGE>
<PAGE>30
Section 302. DENOMINATIONS.
In the absence of any specified denomination with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Section 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or one of its Assistant Secretaries. Coupons shall be executed
on behalf of the Company by its Treasurer or any Assistant Treasurer. The
signature of any of these officers on the Securities or any Coupon may be
manual or facsimile.
Securities and any Coupons appertaining thereto bearing the manual
or facsimile signatures of individuals who were at any time the proper officers
of the Company shall bind the Company, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of such
Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series, together
with Coupons appertaining thereto, executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. The Trustee shall be
entitled to receive and (subject to Section 601) shall be fully protected in
relying upon an Opinion of Counsel stating that such Securities and Coupons,
if any, when authenticated and delivered by the Trustee and issued by
the Company in the manner and subject to any conditions specified in such
Opinion of Counsel, will constitute the legally valid and binding obligations
of the Company enforceable against the Company in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws) and by general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief regardless of whether considered in
a proceeding in equity or at law.
21<PAGE>
<PAGE>31
If the form or terms of the Securities of the series and any Coupons
appertaining thereto have been established in or pursuant to one or more Board
Resolutions as permitted by Sections 201 and 301, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities and any Coupons appertaining thereto, the
Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities and Coupons, if any, have been
established by or pursuant to Board Resolution as permitted by
Section 201, that such form or forms have been established in conformity
with the provisions of this Indenture; and
(2) if the terms of such Securities and Coupons, if any, have been
established by or pursuant to Board Resolution as permitted by
Section 301, that such terms have been established in conformity with the
provisions of this Indenture.
If such form or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own
rights, duties or immunities under the Securities and this Indenture
or otherwise in a manner which is not reasonably acceptable to the
Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at
one time, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 301 or the Company Order and Opinion of
Counsel otherwise required pursuant to such preceding paragraph at or prior to
the time of authentication of each Security of such series if such documents
are delivered at or prior to the authentication upon original issuance of the
first Security of such series to be issued.
Each Registered Security shall be dated the date of its
authentication. Each Bearer Security shall be dated as of the date specified
pursuant to Section 301.
No Security or Coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Except as permitted by Section 306 or 307, the Trustee shall not
22<PAGE>
<PAGE>32
authenticate and deliver any Bearer Security unless all Coupons appertaining
thereto then matured have been detached and cancelled. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in
Section 309, for all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.
Section 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized in or pursuant to this
Indenture, in bearer form with one or more Coupons or without Coupons and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
Every temporary Security shall be executed by the Company and
authenticated by the Trustee and registered by the Security Registrar, upon
the same conditions, and with like effect, as a definitive Security.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities of any series (accompanied by any unmatured
Coupons appertaining thereto), the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive
Securities of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor; PROVIDED, HOWEVER, that no definitive
Bearer Security, except as provided in or pursuant to this Indenture, shall be
delivered in exchange for a temporary Registered Security; and PROVIDED
FURTHER that a definitive Bearer Security shall be delivered in exchange for a
temporary Bearer Security only in compliance with the conditions set forth in
or pursuant to this Indenture. Until so exchanged the temporary Securities of
any series shall in all respects be entitled to the same benefits under this
23<PAGE>
<PAGE>33
Indenture as definitive Securities of such series and tenor.
Section 305. REGISTRATION, REGISTRATION OF
TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any
other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Registered
Securities. The Trustee is hereby appointed "Security Registrar" for the
purpose of registering Registered Securities and transfers of Registered
Securities as herein provided.
Upon surrender for registration of transfer of any Registered
Security of any series at the office or agency in a Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Registered Securities of the same series, of any authorized denominations
and of a like aggregate principal amount and tenor.
At the option of the Holder, Registered Securities of any series may
be exchanged for other Registered Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Registered Securities to be exchanged at such office or
agency. Whenever any Registered Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Registered Securities which the Holder making the exchange is entitled to
receive.
If provided in or pursuant to this Indenture, with respect to
Securities of any series, at the option of the Holder, Bearer Securities of
such series may be exchanged for Registered Securities of such series
containing identical terms, denominated as authorized in or pursuant to this
Indenture and in the same aggregate principal amount, upon surrender of the
Bearer Securities to be exchanged at any office or agency in a Place
of Payment for such series, with all unmatured Coupons and all matured Coupons
in default thereto appertaining. If the Holder of a Bearer Security is unable
to produce any such unmatured Coupon or Coupons or matured Coupon or Coupons
in default, such exchange may be effected if the Bearer Securities are
accompanied by payment in funds acceptable to the Company and the Trustee in
an amount equal to the face amount of such missing Coupon or Coupons, or the
surrender of such missing Coupon or Coupons may be waived by the Company and
the Trustee if there is furnished to them such security or indemnity as they
may require to save each of them and any Paying Agent harmless. If
24<PAGE>
<PAGE>34
thereafter the Holder of such Bearer Security shall surrender to any Paying
Agent any such missing Coupon in respect of which such a payment shall have
been made, such Holder shall be entitled to receive the amount of such
payment; PROVIDED, HOWEVER, that, except as otherwise provided in Section
1002, interest represented by Coupons shall be payable only upon presentation
and surrender of those Coupons at an office or agency in a Place of Payment
for such series located outside the United States. Notwithstanding the
foregoing, in case a Bearer Security is surrendered at any such office or
agency in a Place of Payment for such series in exchange for a Registered
Security of such series and like tenor after the close of business at such
office or agency on (i) any Regular Record Date, or (ii) any Special Record
Date and before the opening of business at such office or agency on the
related date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the Coupon relating to such Interest Payment Date or
proposed date of payment, as the case may be (or, if such Coupon is so
surrendered with such Bearer Security, such Coupon shall be returned to the
Person so surrendering the Bearer Security), and interest or Defaulted
Interest, as the case may be, shall not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect of the
Registered Security issued in exchange for such Bearer Security, but shall be
payable only to the Holder of such Coupon when due in accordance with the
provisions of this Indenture.
If provided in or pursuant to this Indenture with respect to
Securities of any series, at the option of the Holder, Registered Securities
of such series may be exchanged for Bearer Securities upon such terms and
conditions as may be provided in or pursuant to this Indenture with respect to
such series.
Whenever any Securities are surrendered for exchange as contemplated
by the immediately preceding two paragraphs, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration
of transfer or for exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed, by the Holder thereof or his attorney duly authorized in writing.
25<PAGE>
<PAGE>35
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 304, 906 or 1107 not involving any
transfer.
The Company shall not be required (1) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption under
Section 1103 and ending at the close of business on the day of such mailing,
or (2) to register the transfer or exchange of any Registered Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part or (3) to exchange any Bearer Security so
selected for redemption except, to the extent provided with respect to such
Bearer Security, that such Bearer Security may be exchanged for a Registered
Security of like tenor and the same series, provided that such Registered
Security shall be immediately surrendered for redemption with written
instructions for payment consistent with the provisions of this Indenture.
Notwithstanding any other provision in this Indenture, no Global
Security may be transferred to, or registered or exchanged for Securities
registered in the name of, any Person other than the Depositary for such
Global Security or any nominee thereof, and no such transfer may be
registered, unless (1) such Depositary (A) notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (B)
ceases to be a clearing agency registered under the Exchange Act, (2) the
Company executes and delivers to the Trustee a Company Order that such Global
Security shall be so transferable, registrable and exchangeable, and such
transfers shall be registrable, (3) there shall have occurred and be
continuing an Event of Default with respect to the Securities evidenced by
such Global Security or (4) there shall exist such other circumstances, if
any, as have been specified for this purpose as contemplated by Section 301.
Notwithstanding any other provision in this Indenture, a Global Security to
which the restriction set forth in the preceding sentence shall have ceased to
apply may be transferred only to, and may be registered and exchanged for
Securities registered only in the name or names of, such Person or Persons as
the Depositary for such Global Security shall have directed and no transfer
thereof other than such a transfer may be registered.
Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security to which the
26<PAGE>
<PAGE>36
restriction set forth in the first sentence of the preceding paragraph shall
apply, whether pursuant to this Section, Section 304, 306, 906 or 1107 or
otherwise, shall be authenticated, registered and delivered in the form of,
and shall be, a Global Security.
Section 306. MUTILATED, DESTROYED,
LOST AND STOLEN SECURITIES.
If any mutilated Security or a Security with a mutilated Coupon
appertaining to it is surrendered to the Trustee, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security of the same series and of like tenor and principal amount and bearing
a number not contemporaneously outstanding, with Coupons appertaining thereto
corresponding to the Coupons, if any, appertaining to the surrendered
Security.
If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security or Coupon and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security or
Coupon has been acquired by a bona fide purchaser, the Company shall execute
and the Trustee shall authenticate and deliver, in lieu of any such destroyed,
lost or stolen Security or in exchange for the Security to which a destroyed,
lost or stolen Coupon appertains with all appurtenant Coupons not destroyed,
lost or stolen, a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding, with
Coupons corresponding to the Coupons, if any, appertaining to such destroyed,
lost or stolen Security or to the Security to which such destroyed, lost or
stolen Coupon appertains.
In case any such mutilated, destroyed, lost or stolen Security or
Coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security or
Coupon.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series, with any Coupons appertaining
thereto, issued pursuant to this Section in lieu of any mutilated, destroyed,
lost or stolen Security, or in exchange for a Security to which a destroyed,
lost or stolen Coupon appertains, shall constitute an original additional
contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security or Coupon shall be at any time enforceable
27<PAGE>
<PAGE>37
by anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series and any
Coupons duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities or
Coupons.
Section 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Registered Security which
is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Registered Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest. Except as otherwise provided as
contemplated by Section 301 with respect to any series of Securities, in case
a Bearer Security is surrendered in exchange for a Registered Security after
the close of business (at an office or agency at a Place of Payment for such
Security) on any Regular Record Date therefor and before the opening of
business (at such office or agency) on the next succeeding Interest Payment
Date therefor, such Bearer Security shall be surrendered without the Coupon
relating to such Interest Payment Date and interest shall not be payable on
such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but shall be payable only to the Holder of
such Coupon when due in accordance with the provisions of this Indenture.
Any interest on any Registered Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Registered Securities of such series
(or their respective Predecessor Securities) are registered at the close
of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Registered Security of such series and the
date of the proposed payment, and at the same time the Company
28<PAGE>
<PAGE>38
shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest
as in this Clause provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
to be mailed, first-class postage prepaid, to each Holder of Registered
Securities of such series at his address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Registered Securities of such
series (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2). In case a Bearer Security
is surrendered at the office or agency at a Place of Payment for such
Security in exchange for a Registered Security after the close of
business at such office or agency on any Special Record Date and before
the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the Coupon relating to such proposed date of payment
and Defaulted Interest shall not be payable on such proposed date of
payment in respect of the Registered Security issued in exchange for such
Bearer Security, but shall be payable only to the Holder of such Coupon
when due in accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange, if,
after notice is given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in
29<PAGE>
<PAGE>39
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such
other Security.
Section 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Registered Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Registered Security is
registered as the owner of such Security for the purpose of receiving payment
of principal of and any premium and (except as contemplated by Section 301(3)
and subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the bearer of any Bearer Security or the bearer of any Coupon as the
absolute owner of such Security or Coupon for the purpose of receiving payment
thereof or on account thereof and for all other purposes whatsoever, whether
or not any payment with respect to such Security or Coupon shall be overdue,
and neither the Company, nor the Trustee or any agent of the Company or the
Trustee shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar 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 Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
In the event the Securities are issued in book-entry form with the
Depositary, the Trustee may deal with the Depositary as the authorized
representative of the Holders and the Depositary may be treated by the Trustee
and its agents, employees, officers and directors as the Holder of the
Securities for all purposes hereunder.
Section 309. CANCELLATION.
All Securities and Coupons surrendered for payment, redemption,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
30<PAGE>
<PAGE>40
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Securities and Coupons held by the Trustee shall be
disposed of as directed by a Company Order.
Section 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Coupons appertaining to Bearer Securities
surrendered in exchange for Registered Securities of such series and
maturing after such exchange whose surrender is not required or has
been waived as provided in Section 305, (ii) Securities or Coupons
which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306, (iii) Coupons
appertaining to Securities called for redemption and maturing after
the relevant Redemption Date whose surrender has been waived as
provided in this Indenture, and (iv) Securities for whose payment
money has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
31<PAGE>
<PAGE>41
(B) all such Securities and, in the case of (i) and (ii)
below, any Coupons appertaining thereto not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose an amount sufficient to pay and discharge
the entire indebtedness on such Securities and any Coupons
appertaining thereto not theretofore delivered to the Trustee for
cancellation, for principal and any premium and interest to the date
of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case
may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 607, the
obligations of the Trustee to any Authenticating Agent under Section 614 and,
if money shall have been deposited with the Trustee pursuant to subclause (B)
of Clause (1) of this Section, the obligations of the Trustee under Section 402
and the last paragraph of Section 1003 shall survive.
Section 402. APPLICATION OF TRUST MONEY.
Subject to provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent) as the Trustee
32<PAGE>
<PAGE>42
may determine, to the Persons entitled thereto, of the principal and any
premium and interest for whose payment such money has been deposited with the
Trustee.
ARTICLE FIVE
REMEDIES
Section 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Securities
of any series, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
Article Fourteen or be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of
that series when it becomes due and payable, and continuance of such
default for a period of 30 days; provided, however, that a valid
extension of the interest payment provided by the Company for any
Security in accordance with the terms of any indenture supplement hereto
shall not constitute a default in the payment of interest and, provided
further, that if Securities are issued to the Trust or a trustee of the
Trust in connection with the issuance of Trust Securities by the Trust,
such 30 day period will be replaced by a 10 day period; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; provided, however, that
a valid extension of the maturity of such Securities in accordance with
the terms of any indenture supplemental hereto shall not constitute a
default in the payment of principal or premium, if any; or
(3) default in the payment of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been included
in this Indenture solely for the benefit of series of Securities other
than that series), and continuance of such default or breach for a period
of 60 days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the
33<PAGE>
<PAGE>43
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(5) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company (including a default with
respect to Securities of any series other than that series) in an
individual principal amount outstanding of at least $15,000,000 or under
any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness for money
borrowed by the Company in an individual principal amount outstanding of
at least $5,000,000, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in such
indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable, without such
acceleration having been rescinded or annulled, within a period of
10 Business Days after there shall have been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such
default and requiring the Company to cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of
Default" hereunder; PROVIDED, HOWEVER, that, subject to the provisions of
Sections 601 and 602, the Trustee shall not be deemed to have knowledge
of such default unless either (A) a Responsible Officer of the Trustee
shall have actual knowledge of such default or (B) the Trustee shall have
received written notice thereof from the Company, from any Holder, from
the holder of any such indebtedness or from the trustee under any such
mortgage, indenture or other instrument; or
(6) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance
34<PAGE>
<PAGE>44
of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(7) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such action;
(8) in the event Securities are issued and sold to a Trust or a
trustee of the Trust in connection with the issuance of Trust Securities
by the Trust, the Trust shall have voluntarily or involuntarily
dissolved, wound up its business or otherwise terminated its existence
except in connection with (i) the distribution of Securities to holders
of Trust Securities in liquidation or redemption of their interests in
the Trust, (ii) the redemption of all of the outstanding Trust Securities
of the Trust, or (iii) certain mergers, consolidations or amalgamations,
each as permitted by the Declaration of the Trust; or
(9) any other Event of Default provided with respect to Securities
of that series; PROVIDED, HOWEVER, that a valid extension of the interest
payment provided by the Company for the Subordinated Debt Securities
shall not constitute a default in the payment of interest for this
purpose.
Upon receipt by the Trustee of any Notice of Default pursuant to
this Section 501 with respect to Securities of any series, a record date shall
automatically and without any other action by any Person be set for the
purpose of determining the Holders of Outstanding Securities of such series
entitled to join in such Notice of Default, which record date shall be the
close of business on the day the Trustee receives such Notice of Default.
35<PAGE>
<PAGE>45
The Holders of Outstanding Securities of such series on such record date (or
their duly appointed agents), and only such Persons, shall be entitled
to join in such Notice of Default, whether or not such Holders remain Holders
after such record date; provided that, unless such Notice of Default shall have
become effective by virtue of Holders of the requisite principal amount of
Outstanding Securities of such series on such record date (or their duly
appointed agents) having joined therein on or prior to the 90th day after such
record date, such Notice of Default shall automatically and without any action
by any Person be canceled and of no further effect. Nothing in this paragraph
shall prevent a Holder (or a duly appointed agent thereof) from giving, before
or after the expiration of such 90-day period, a Notice of Default contrary to
or different from, or, after the expiration of such period, identical to, a
Notice of Default that has been canceled pursuant to the proviso to the
preceding sentence, in which event a new record date in respect thereof shall
be set pursuant to this paragraph.
Section 502. ACCELERATION OF MATURITY;
RESCISSION AND ANNULMENT.
If an Event of Default with respect to Securities of any series at
the time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if
any of the Securities of that series are Original Issue Discount Securities,
such portion of the principal amount of such Securities as may be specified in
the terms thereof) of all of the Securities of that series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal amount (or
specified amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series and
any Coupons appertaining thereto,
(B) the principal of (and premium, if any, on) any Securities
of that series which have become due otherwise than by such
36<PAGE>
<PAGE>46
declaration of acceleration and any interest thereon at the rate or
rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of that
series which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Upon receipt by the Trustee of any declaration of acceleration, or
any rescission and annulment of any such declaration, pursuant to this Section
502 with respect to Securities of any series, a record date shall
automatically and without any other action by any Person be set for the
purpose of determining the Holders of Outstanding Securities of such series
entitled to join in such declaration, or rescission and annulment, as the case
may be, which record date shall be the close of business on the day the
Trustee receives such declaration, or rescission and annulment, as the case
may be. The Holders of Outstanding Securities of such series on such record
date (or their duly appointed agents), and only such Persons, shall be
entitled to join in such declaration, or rescission and annulment, as the case
may be, whether or not such Holders remain Holders after such record date;
provided that, unless such declaration, or rescission and annulment, as the
case may be, shall have become effective by virtue of Holders of the requisite
principal amount of Outstanding Securities of such series on such record date
(or their duly appointed agents) having joined therein on or prior to the 90th
day after such record date, such declaration, or rescission and annulment, as
the case may be, shall automatically and without any action by any Person be
canceled and of no further effect. Nothing in this paragraph shall prevent a
Holder (or a duly appointed agent thereof) from giving, before or after the
expiration of such 90-day period, a declaration of acceleration, or a
rescission and annulment of any such declaration, contrary to or different
from, or, after the expiration of such period,identical to, a declaration, or
37<PAGE>
<PAGE>47
rescission and annulment, as the case may be, that has been canceled pursuant
to the proviso to the preceding sentence, in which event a new record date in
respect thereof shall be set pursuant to this paragraph.
Section 503. COLLECTION OF INDEBTEDNESS AND
SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
or any Coupon appertaining thereto when such interest becomes due and
payable and such default continues for a period of 30 days or 10 days in
the case of Securities issued to a Trust or a trustee of the Trust, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities and any Coupons appertaining thereto, the whole
amount then due and payable on such Securities and any Coupons appertaining
thereto for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series and any Coupons appertaining thereto by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
Section 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities or any Coupons appertaining thereto), its
property or its creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions
authorized under the Trust Indenture Act in order to have claims of the
38<PAGE>
<PAGE>48
Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or any Coupon or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding; PROVIDED, HOWEVER, that the Trustee may, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar official
and be a member of a creditors' or other similar committee.
Section 505. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the
Securities or Coupons may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or Coupons or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities or Coupons in respect of which such judgment has been recovered.
Section 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any
premium or interest, upon presentation of the Securities or Coupons, or both,
as the case may be, and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
39<PAGE>
<PAGE>49
SECOND: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities and any
Coupon in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities and Coupons
for principal and any premium and interest, respectively.
Section 507. LIMITATION ON SUITS.
No Holder of any Security of any series or any Coupons appertaining
thereto shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request in such amount as shall be reasonably
acceptable to the Trustee;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all of such Holders.
40<PAGE>
<PAGE> 50
Section 508. UNCONDITIONAL RIGHT OF HOLDERS TO
RECEIVE PRINCIPAL, PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Security or Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of and any premium and
(except as contemplated by Section 301(3) and subject to Section 307) interest
on such Security or payment of such Coupon, as the case may be, on the
respective Stated Maturities expressed in such Security or Coupon (or, in the
case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
Section 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
Section 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or Coupons in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Securities or Coupons to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
41<PAGE>
<PAGE> 51
Section 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Upon receipt by the Trustee of any such direction with respect to
Securities of any series, a record date shall automatically and without any
other action by any Person be set for determining the Holders of Outstanding
Securities of such series entitled to join in such direction, which record
date shall be the close of business on the day the Trustee receives such
direction. The Holders of Outstanding Securities of such series on such
record date (or their duly appointed agents), and only such Persons, shall be
entitled to join in such direction, whether or not such Holders remain Holders
after such record date; provided that, unless such direction shall have become
effective by virtue of Holders of the requisite principal amount of
Outstanding Securities of such series on such record date (or their duly
appointed agents having joined therein on or prior to the 90th day after such
record date, such direction shall automatically and without any action by any
Person be canceled and of no further effect. Nothing in this paragraph shall
prevent a Holder (or a duly appointed agent thereof) from giving, before or
after the expiration of such 90-day period, a direction contrary to or
different from, or, after the expiration of such period, identical to, a
direction that has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date in respect thereof shall be set
pursuant to this paragraph.
Section 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to
such series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest
on any Security of such series or any Coupons appertaining thereto, or
42<PAGE>
<PAGE> 52
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, a court may require any party litigant in such
suit to file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent
provided in the Trust Indenture Act; provided that neither this Section nor
the Trust Indenture Act shall be deemed to authorize any court to require such
an undertaking or to make such an assessment in any suit instituted by the
Company.
Section 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury, stay or
extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE SIX
THE TRUSTEE
Section 601. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties, responsibilities, rights, immunities and protection of
the Trustee shall be as provided by the Trust Indenture Act. Prior to any
Event of Default the Trustee shall not be liable except for the performance of
such duties as are specifically set out herein and in the Trust Indenture Act.
Notwithstanding the foregoing, no provision of this Indenture shall require
43<PAGE>
<PAGE> 53
the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
Section 602. NOTICE OF DEFAULTS.
The Trustee shall give notice of any default known to a Responsible
Officer of the Trustee with respect to the Securities of any series when, as
and to the extent provided by the Trust Indenture Act and in the manner
provided by Section 106 hereof; PROVIDED, HOWEVER, that in the case of any
default of the character specified in Section 501(4) with respect to
Securities of such series, no such notice to Holders shall be given until at
least 30 days after the default is known to a Responsible Officer of the
Trustee. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.
Section 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
44<PAGE>
<PAGE> 54
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities (including legal
fees and expenses) which might be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney upon 10
Business Days advance written notice and during regular business hours;
and
(7) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due
care by it hereunder.
Section 604. NOT RESPONSIBLE FOR RECITALS
OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities and Coupons,
except the Trustee's certificates of authentication, shall be taken as the
statements of the Company, and the Trustee or any Authenticating Agent assumes
no responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities
or Coupons. The Trustee or any Authenticating Agent shall not be accountable
for the use or application by the Company of Securities or the proceeds
thereof.
45<PAGE>
<PAGE> 55
Section 605. MAY HOLD SECURITIES OR COUPONS.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities or Coupons and,
subject to Sections 608 and 613, may otherwise deal with the Company with the
same rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.
Section 606. MONEY HELD IN TRUST.
Money held by the Trustee, or by any Paying Agent (other than the
Company if the Company shall act as Paying Agent), in trust hereunder need not
be segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Company.
Section 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or
willful misconduct; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder or performance of its
duties hereunder, including the costs and expenses (including legal fees
and expenses) of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a claim prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
46<PAGE>
<PAGE> 56
funds held in trust for the payment of principal of (and premium, if any) or
interest on particular Securities or any coupons.
When the Trustee renders services or incurs expenses after the
occurrence of an Event of Default specified in Sections 501(6) or 501(7)
hereof, the compensation for services and expenses are intended to constitute
expenses of administration under any applicable bankruptcy or insolvency law
or law applicable to creditors' rights to the extent permitted by applicable
law.
Section 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture and
the Company shall take prompt action to have a successor Trustee appointed in
the manner provided herein.
Section 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be one or more Trustees hereunder with
respect to the Securities of each series, at least one of which shall be a
Person that (i) is eligible pursuant to the Trust Indenture Act to act as
such, and (ii) has a combined capital and surplus of at least $50,000,000;
PROVIDED, HOWEVER, that if the Trustee shall be a member of a bank holding
company group, such bank holding company group shall have combined capital and
surplus of at least $50,000,000 and the Trustee shall have a combined capital
and surplus of at least $10,000,000. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accor-
dance with the provisions of this Section, it shall resign immediately in the
manner and with the effect hereinafter specified in this Article.
Section 610. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
47<PAGE>
<PAGE> 57
The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Company or the Holders of a majority in
principal amount of the Outstanding Securities of such series, delivered to
the Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all securities, or (B) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect to
all Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the Securities of
one or more or all of such series and that at any time there shall be only one
Trustee with respect to the Securities of any particular series) and shall
comply with the applicable requirements of Section 611. If, within one year
48<PAGE>
<PAGE> 58
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series
shall be appointed by Act of the Holders of a majority in principal amount of
the Outstanding Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 611, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee appointed
by the Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any Holder who has been a
bona fide Holder of a Security of such series for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series to all Holders of Securities of such series in the manner provided in
Section 106. Each notice shall include the name of the successor Trustee with
respect to the Securities of such series and the address of its Corporate
Trust Office.
No resignation or removal pursuant to this Section 610 shall be
effective unless and until any and all amounts due to such Trustee pursuant to
Section 607 shall have been paid. The obligations of the Company provided for
in Section 607 hereof shall survive such resignation or removal.
Section 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee, provided,
however, that no Trustee under this Indenture shall be liable for any act or
omission of any successor Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all
the rights, powers and trusts of the retiring Trustee and shall duly assign,
49<PAGE>
<PAGE> 59
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the Securities
of one or more series shall execute and deliver an indenture supplemental
hereto wherein each successor Trustee shall accept such appointment and which
(1) shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to
all Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee; and
upon the execution and delivery of such supplemental indenture the resignation
or removal of the retiring Trustee shall become effective to the extent pro-
vided therein and each such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Securities
of that or those series to which the appointment of such successor Trustee
relates.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) and (b) of this Section, as the case may be.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
50<PAGE>
<PAGE> 60
Section 612. MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may
adopt such authentication and deliver the Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated such
Securities. In the event any Securities shall not have been authenticated by
such predecessor Trustee, any such successor Trustee may authenticate and
deliver such Securities, in either its own name or that of its predecessor
Trustee, with the full force and effect which this Indenture provides for the
certificate of authentication of the Trustee.
Section 613. PREFERENTIAL COLLECTION
OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities or any Coupons), the Trustee shall
be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
Section 614. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to act
on behalf of the Trustee to authenticate Securities of such series issued upon
original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 306, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Company and shall
51<PAGE>
<PAGE> 61
at all times be a corporation organized and doing business under the laws of
the United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the corporate agency
or corporate trust business of an Authenticating Agent, shall continue to be
an Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall provide notice of
such appointment to the Holders of Securities of the series with respect to
which such Authenticating Agent will serve, in the manner provided in Section
106. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an Authen-
ticating Agent. No successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section.
52<PAGE>
<PAGE> 62
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
........................,
AS TRUSTEE
By......................,
AS AUTHENTICATING AGENT
By......................
AUTHORIZED OFFICER
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. COMPANY TO FURNISH TRUSTEE
NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not more than 15 days after each Regular
Record Date, a list for each series of Securities, in such form as
the Trustee may reasonably require, of the names and addresses of
the Holders of Securities of such series as of such Regular Record
Date, and
(2) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request,
a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;
53<PAGE>
<PAGE> 63
EXCLUDING from any such list names and addresses received by the Trustee in
its capacity as Security Registrar.
Section 702. PRESERVATION OF INFORMATION;
COMMUNICATIONS TO HOLDERS.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities or
Coupons, and the corresponding rights and privileges of the Trustee, shall be
as provided by the Trust Indenture Act.
Every Holder of Securities or Coupons, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 703. REPORTS BY TRUSTEE.
The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
Section 704. REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed
54<PAGE>
<PAGE> 64
with the Trustee within 15 days after the same is so required to be filed with
the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. COMPANY MAY CONSOLIDATE,
ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a cor-
poration, partnership, limited liability company or trust, shall be
organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due
and punctual payment of the principal of and any premium and interest on
all the Securities and Coupons and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company as a
result of such transaction as having been incurred by the Company at the
time of such transaction, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall
have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance which would not be permitted by this Indenture, the Company
or such successor Person, as the case may be, shall take such steps as
55<PAGE>
<PAGE> 65
shall be necessary effectively to secure the Securities equally and ratably
with (or prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture, comply with this Article and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
Section 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except
in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture, the Securities and the
Coupons.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. SUPPLEMENTAL INDENTURES
WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of
56<PAGE>
<PAGE> 66
such series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of, any
premium or interest on Securities, to permit Registered Securities to be
exchanged for Bearer Securities, to permit Bearer Securities to be
exchanged for Bearer Securities of other authorized denominations or to
permit or facilitate the issuance of Securities in uncertificated form,
provided any such action shall not adversely affect the interests of the
Holders of Securities of any series or any Coupons appertaining thereto
in any material respect; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that
any such addition, change or elimination (A) shall neither (i) apply to
any Security of any series or Coupon appertaining thereto created prior
to the execution of such supplemental indenture and entitled to the
benefit of such provision nor (ii) modify the rights of the Holder of any
such Security or Coupon with respect to such provision or (B) shall
become effective only when there is no such Security or Coupon
Outstanding; or
(6) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Inden-
ture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611; or
(8) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this
clause (8) shall not adversely affect the interests of the Holders of
Securities of any series (except a series consenting pursuant to Section
902) in any material respect.
57<PAGE>
<PAGE> 67
Section 902. SUPPLEMENTAL INDENTURES
WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the Holders of Securities of such series and any Coupons under this
Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected
thereby,
(1) change the Stated Maturity of the principal of, or any
instalment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of the
principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502, or change the coin or currency in which any
Security or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or modify the provisions of this Indenture
with respect to the conversion or exchange of the Securities into
Securities of another series or into any other debt or equity securities
in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture, or
(3) modify any of the provisions of this Indenture relating to the
subordination of the Securities in a manner adverse to Holders of
Securities, or
(4) modify any of the provisions of this Section or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby,
58<PAGE>
<PAGE> 68
PROVIDED, HOWEVER, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Sections 611 and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
Section 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
59<PAGE>
<PAGE> 69
Section 906. REFERENCE IN SECURITIES
TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
ARTICLE TEN
COVENANTS
Section 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any
premium and interest on the Securities of that series in accordance with the
terms of the Securities or any Coupons appertaining thereto and this
Indenture. Any interest due on any Bearer Security or before the maturity
thereof shall be payable only upon presentation and surrender of the Coupons
appertaining thereto for such interest as they severally mature.
Section 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series (but not Bearer
Securities, except as otherwise provided below, unless such Place of Payment
is located outside the United States) may be presented or surrendered for
payment, where Securities of that series may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company
in respect of the Securities of that series and this Indenture may be served.
If Securities of a series are issuable as Bearer Securities, the Company shall
maintain, subject to any laws or regulations applicable thereto, an office or
agency in a Place of Payment for such series which is located outside the
United States where Securities of such series and any Coupons appertaining
thereto may be presented and surrendered for payment. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee,
60<PAGE>
<PAGE> 70
except that Bearer Securities of such series and any Coupons appertaining
thereto may be presented and surrendered for payment at the place specified
for the purpose with respect to such Securities as provided in or pursuant to
this Indenture, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.
Except as otherwise provided in or pursuant to this Indenture, no
payment of principal, premium or interest with respect to Bearer Securities
shall be made at any office or agency of the Company in the United States or
by check mailed to any address in the United States by transfer to an account
maintained with a bank located in the United States; PROVIDED, HOWEVER, if
amounts owing with respect to any Bearer Securities shall be payable in United
States Dollars, payment of principal of and any premium or interest on any
such Security may be made at the Corporate Trust Office of the Trustee or any
office or agency designated by the Company in the United States, but only if
payment of the full amount of such principal, premium or interest at all
offices outside the United States maintained for such purpose by the Company
in accordance with the Indenture is illegal or effectively precluded by
exchange controls or other similar restrictions.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; PROVIDED, HOWEVER, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
Section 1003. MONEY FOR SECURITIES
PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of
the principal of or any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities and any Coupons appertaining thereto, it will, prior to
61<PAGE>
<PAGE> 71
each due date of the principal of or any premium or interest on any Securities
of that series, deposit with a Paying Agent a sum sufficient to pay such
amount, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will (1) comply with
the provisions of the Trust Indenture Act applicable to it as a Paying Agent
and (2) during the continuance of any default by the Company (or any other
obligor upon the Securities of that series) in the making of any payment in
respect of the Securities of that series, and upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or any
premium or interest on any Security of any series and remaining unclaimed for
two years after such principal, premium or interest has become due and payable
shall be paid to the Company on Company Request (including interest income
accrued on said funds to which the Company is otherwise entitled), or (if then
held by the Company) shall be discharged from such trust; and the Holder of
such Security or any Coupon appertaining thereto shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause
to be published once, in an Authorized Newspaper in each Place of Payment for
such series, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
62<PAGE>
<PAGE> 72
Section 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and, if
the Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.
Section 1005. EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; PROVIDED, HOWEVER,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the
loss thereof is not disadvantageous in any material respect to the Holders.
Section 1006. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct
of its business to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times; PROVIDED, HOWEVER, that nothing in this
Section shall prevent the Company from discontinuing the operation or main-
tenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business and not disadvan-
tageous in any material respect to the Holders.
Section 1007. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or upon the income,
profits or property of the Company, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company; PROVIDED, HOWEVER, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
63<PAGE>
<PAGE> 73
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
Section 1008. LIMITATION ON DIVIDENDS; TRANSACTIONS WITH
AFFILIATES.
(a) If Securities are issued to the Trust or a trustee of the Trust
in connection with the issuance of Trust Securities by the Trust and (i)
there shall have occurred any event that would constitute an Event of
Default or (ii) the Company shall be in default with respect to its
payment of any other obligations under the Preferred Securities Guarantee
or Common Securities Guarantee relating to the Trust, then (A) the
Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase or acquire or make a liquidation
payment with respect to, any of its capital stock and (B) the Company
shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by the Company
which rank pari passu with or junior to such Securities, provided that
the foregoing restriction in paragraph (A) does not apply to any stock
dividends paid by the Company where the dividend stock is the same stock
as that on which the dividend is being paid.
(b) If Securities are issued to the Trust or a trustee of the Trust
in connection with the issuance of Trust Securities by the Trust and the
Company shall have given notice of its election to defer payments of
interest on such Securities by extending the interest payment period as
provided in the Indenture and such period, or any extension thereof,
shall be continuing, then (A) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase
or acquire or make a liquidation payment with respect to, any of its
capital stock and (B) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Company which rank pari passu with or junior to
such Securities, provided that the foregoing restriction in paragraph (A)
does not apply to any stock dividends paid by the Company where the
dividend stock is the same as that on which the dividend is being paid.
Section 1009. COVENANTS AS TO THE TRUST.
In the event Securities are issued and sold to the Trust or a
trustee of the Trust in connection with the issuance of Trust Securities by
the Trust, for so long as such Trust Securities remain outstanding, the
Company will (i) maintain 100% direct or indirect ownership of the Common
Securities of the Trust; provided, however, that any permitted successor of
64<PAGE>
<PAGE> 74
the Company under the Indenture may succeed to the Company's ownership of the
Common Securities, and (ii) use its reasonable efforts to cause the Trust (a)
to remain a statutory business trust, except in connection with a distribution
of Securities as provided in the Declaration of the Trust, the redemption of
all of the Trust Securities and in connection with certain mergers,
consolidations or amalgamations permitted by the Declaration of the Trust, and
(b) otherwise continue to be treated as a grantor trust for United States
federal income tax purposes.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. APPLICABILITY OF ARTICLE.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.
Section 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of less than all the Securities of any series, the Company shall,
at least 45 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date, of the principal amount of Securities of such series to
be redeemed and, if applicable, of the tenor of the Securities to be redeemed.
In the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
Section 1103. SELECTION BY TRUSTEE OF
SECURITIES TO BE REDEEMED.
If less than all the Securities of any series are to be redeemed
(unless all of the Securities of such series and of a specified tenor are to
be redeemed), the particular Securities to be redeemed shall be selected not
more than 45 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to the minimum
authorized denomination for Registered Securities of that series or any
integral multiple thereof) of the principal amount of Registered Securities of
65<PAGE>
<PAGE> 75
such series of a denomination larger than the minimum authorized denomination
for Registered Securities of that series. If less than all of the Securities
of such series and of a specified tenor are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
and specified tenor not previously called for redemption in accordance with
the preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in part,
to the portion of the principal amount of such Securities which has been or is
to be redeemed.
Section 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in
Section 106, not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial
redemption of any Securities, the principal amounts) of the particular
Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after said
date,
(5) the place or places where such Securities, together (in the
case of Bearer Securities) with all Coupons appertaining thereto, if any,
maturing after the Redemption Date, are to be surrendered for payment of
the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the case,
66<PAGE>
(7) if applicable, the conversion price and the date on which the
right to convert the Securities to be redeemed will terminate,
(8) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be
accompanied by all Coupons maturing subsequent to the date fixed for
redemption or the amount of any such missing Coupon or Coupons will be
deducted from the Redemption Price, unless security or indemnity
satisfactory to the Company, the Trustee and any Paying Agent is
furnished,
(9) if Bearer Securities of any series are to be redeemed and any
Registered Securities of such series are not being redeemed, and if such
Bearer Securities may be exchanged for Registered Securities not subject
to redemption on the Redemption Date pursuant to Section 305 or
otherwise, the last date, as determined by the Company, on which such
exchanges may be made, and
(10) the CUSIP numbers of the Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be
irrevocable.
Section 1105. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
Section 1106. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest and the Coupons for
such interest appertaining to any Bearer Securities to be redeemed, except as
provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all Coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall
67<PAGE>
<PAGE> 77
be paid by the Company at the Redemption Price, together with accrued interest
on Registered Securities to the Redemption Date; PROVIDED, HOWEVER, that,
unless otherwise specified as contemplated by Section 301, installments of
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307 and PROVIDED,
FURTHER, that installments of interest on Bearer Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable only upon
presentation and surrender of Coupons for such interest at an office or agency
located outside of the United States except as otherwise provided in Section
1002.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date,
such Security may be paid after deducting from the Redemption Price an amount
equal to the face amount of all such missing Coupons, or the surrender of such
missing Coupon or Coupons may be waived by the Company and the Trustee if
there be furnished to them such security or indemnity as they may require to
save each of them and any Paying Agent harmless. If thereafter the Holder of
such Security shall surrender to the Trustee or any Paying Agent any such
missing Coupon in respect of which a deduction shall have been made from the
Redemption Price, such Holder shall be entitled to receive the amount so
deducted; PROVIDED, HOWEVER, that any interest represented by Coupons shall be
payable only upon presentation and surrender of those Coupons at an office or
agency for such Security located outside of the United States except as
otherwise provided in Section 1002.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor
in the Security.
Section 1107. SECURITIES REDEEMED IN PART.
Any Registered Security which is to be redeemed only in part shall
be surrendered at a Place of Payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Registered Security without service charge, a new Registered Security or
Securities of the same series and of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal
to and in exchange for the unredeemed portion of the principal of the Security
so surrendered.
68<PAGE>
<PAGE> 78
ARTICLE TWELVE
SINKING FUNDS
Section 1201. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking
fund for the retirement of Securities of a series except as otherwise
specified as contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred to as
an "optional sinking fund payment". If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 1202. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of Securities of such series.
Section 1202. SATISFACTION OF SINKING
FUND PAYMENTS WITH SECURITIES.
The Company (1) may deliver Outstanding Securities of a series
(other than any previously called for redemption), together in the case of any
Bearer Securities of such series with all unmatured Coupons appertaining
thereto, and (2) may apply as a credit Securities of a series which have been
redeemed either at the election of the Company pursuant to the terms of such
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, in each case in satis-
faction of all or any part of any sinking fund payment with respect to the
Securities of such series required to be made pursuant to the terms of such
Securities as provided for by the terms of such series; provided that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
Section 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 60 days prior to each sinking fund payment date for
any series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
69<PAGE>
<PAGE> 79
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities
to be so delivered. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. COMPANY'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE.
The Company may elect, at its option by Board Resolution at any
time, to have either Section 1302 or Section 1303 applied to the Outstanding
Securities of any series and any Coupons appertaining thereto designated
pursuant to Section 301 as being defeasible pursuant to this Article Thirteen
(hereinafter called a "Defeasible Series"), upon compliance with the
conditions set forth below in this Article Thirteen; provided, that the
Company shall not effect any such defeasance under Section 1302 or Section
1303 in respect of any Securities of which the Trust or a trustee of the Trust
is a Holder.
Section 1302. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of the option provided in Section 1301
to have this Section 1302 applied to the Outstanding Securities and any
Coupons appertaining thereto of any Defeasible Series, the Company shall be
deemed to have been discharged from its obligations with respect to the
Outstanding Securities of such series and any Coupons appertaining thereto as
provided in this Section on and after the date the conditions set forth in
Section 1304 are satisfied (hereinafter called "Defeasance"). For this
purpose, such Defeasance means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by the Outstanding
Securities of such series and any Coupons appertaining thereto and to have
satisfied all its other obligations under the Securities of such series and
any Coupons appertaining thereto and this Indenture insofar as the Securities
of such series and any Coupons appertaining thereto are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), subject to the following which shall survive until
70<PAGE>
<PAGE> 80
otherwise terminated or discharged hereunder: (1) the rights of Holders of
Securities of such series and any Coupons appertaining thereto to receive,
solely from the trust fund described in Section 1304 and as more fully set
forth in such Section, payments in respect of the principal of and any premium
and interest on such Securities of such series and any Coupons appertaining
thereto when payments are due, (2) the Company's obligations with respect to
the Securities of such series and any Coupons appertaining thereto under
Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (4) this Article Thirteen.
Subject to compliance with this Article Thirteen, the Company may exercise its
option provided in Section 1301 to have this Section 1302 applied to the
Outstanding Securities and any Coupons appertaining thereto of any Defeasible
Series notwithstanding the prior exercise of its option provided in Section
1301 to have Section 1303 applied to the Outstanding Securities of such series
and any Coupons appertaining thereto.
Section 1303. COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section 1301
to have this Section 1303 applied to the Outstanding Securities and any
Coupons appertaining thereto of any Defeasible Series, (i) the Company shall
be released from its obligations under Sections 1005 through 1007, inclusive,
and any other covenants specified in or pursuant to this Indenture, and (2)
the occurrence of any event specified in Sections 501(4) (with respect to any
of Sections 1005 through 1007, inclusive, and any other covenants specified in
or pursuant to this Indenture), 501(5) and 501(9) shall be deemed not to be or
result in an Event of Default, in each case with respect to the Outstanding
Securities of such series and any Coupons appertaining thereto as provided in
this Section on and after the date the conditions set forth in Section 1304
are satisfied (hereinafter called "Covenant Defeasance"). For this purpose,
such Covenant Defeasance means that the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such specified Section (to the extent so specified in the case of
Section 501(4)), whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or by reason of any reference in any such
Section to any other provision herein or in any other document, but the
remainder of this Indenture and the Securities of such series and any Coupons
appertaining thereto shall be unaffected thereby.
Section 1304. CONDITIONS TO DEFEASANCE
OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either
Section 1302 or Section 1303 to the Outstanding Securities and any Coupons
appertaining thereto of any Defeasible Series:
71<PAGE>
<PAGE> 81
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee that satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article Thirteen applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of Outstanding Securities of such series and any Coupons
appertaining thereto, (A) money in an amount, or (B) U.S. Government
Obligations that through the scheduled payment of principal and interest
in respect thereof in accordance with their terms will provide, not later
than one day before the due date of any payment, money in an amount, or
(C) a combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or any such other
qualifying trustee) to pay and discharge, the principal of and any
premium and interest on the Securities of such series and any Coupons
appertaining thereto on the respective Stated Maturities, in accordance
with the terms of this Indenture and the Securities of such series and
any Coupons appertaining thereto. As used herein, "U.S. Government
Obligation" means (x) any security that is (i) a direct obligation of the
United States of America for the payment of which the full faith and
credit of the United States of America is pledged or (ii) an obligation
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case (i) or (ii), is not
callable or redeemable at the option of the issuer thereof, and (y) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended) as custodian with respect to any U.S.
Government Obligation specified in Clause (x) and held by such custodian
for the account of the holder of such depositary receipt, or with respect
to any specific payment of principal of or interest on any such U.S.
Government Obligation, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depositary receipt.
(2) In the case of an election under Section 1302, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
72<PAGE>
<PAGE> 82
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date first set forth
hereinabove, there has been a change in the applicable Federal income tax
law, in either case (A) or (B) to the effect that, and based thereon such
opinion shall confirm that, the Holders of the Outstanding Securities of
such series and any Coupons appertaining thereto will not recognize gain
or loss for Federal income tax purposes as a result of the deposit,
Defeasance and discharge to be effected with respect to the Securities of
such series and any Coupons appertaining thereto and will be subject to
Federal income tax on the same amount, in the same manner and at the same
times as would be the case if such deposit, Defeasance and discharge were
not to occur.
(3) In the case of an election under Section 1303, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities of such series and any
Coupons appertaining thereto will not recognize gain or loss for Federal
income tax purposes as a result of the deposit and Covenant Defeasance to
be effected with respect to the Securities of such series and any Coupons
appertaining thereto and will be subject to Federal income tax on the
same amount, in the same manner and at the same times as would be the
case if such deposit and Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that the Securities of such series, if then
listed on any securities exchange, will not be delisted as a result of
such deposit.
(5) No Event of Default or event that (after notice or lapse of
time or both) would become an Event of Default shall have occurred and be
continuing at the time of such deposit or, with regard to any Event of
Default or any such event specified in Sections 501(6), (7) and (8), at
any time on or prior to the 90th day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until
after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the meaning
of the Trust Indenture Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it is
bound.
73<PAGE>
<PAGE> 83
(8) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have
been complied with.
(9) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended, unless
such trust shall be qualified under such Act or exempt from regulation
thereunder.
Section 1305. DEPOSITED MONEY AND U.S. GOVERNMENT
OBLIGATIONS TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes of
this Section and Section 1306, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 1304 in respect
of the Securities and any Coupons appertaining thereto of any Defeasible
Series shall be held in trust and applied by the Trustee, in accordance with
the provisions of the Securities of such series and any Coupons appertaining
thereto and this Indenture, to the payment, either directly or through any
such Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Holders of Securities of such series and any
Coupons appertaining thereto, of all sums due and to become due thereon in
respect of principal and any premium and interest, but money so held in trust
need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge that by law is
for the account of the Holders of Outstanding Securities and any Coupons
appertaining thereto.
Anything in this Article Thirteen to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 with respect to Securities and any Coupons appertaining thereto
of any Defeasible Series that, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof that would then
be required to be deposited to effect an equivalent Defeasance or Covenant
74<PAGE>
<PAGE> 84
Defeasance with respect to the Securities of such series and any Coupons
appertaining thereto.
Section 1306. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article Thirteen with respect to the Securities of any
series and any Coupons appertaining thereto by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Securities of such series and any Coupons appertaining
thereto shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Thirteen with respect to Securities of such series or
any Coupons appertaining thereto until such time as the Trustee or Paying
Agent is permitted to apply all money held in trust pursuant to Section 1305
with respect to Securities of such series and any Coupons appertaining thereto
in accordance with this Article Thirteen; PROVIDED, HOWEVER, that if the
Company makes any payment of principal of or any premium or interest on any
Security of such series or any Coupons appertaining thereto following the
reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of Securities of such series and any Coupons
appertaining thereto to receive such payment from the money so held in trust.
ARTICLE FOURTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1401. PURPOSE FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Securities of any series may be called at
any time and from time to time pursuant to this Article to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be made, given or taken by Holders
of Securities of such series.
Section 1402. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1401, to be held
at such time and at such place in the Borough of Manhattan, The City of New
York, or, if Securities of such series are to be issued as Bearer Securities,
in London, as the Trustee shall determine. Notice of every meeting of Holders
of Securities of any series, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 106, not less than 21 nor
75<PAGE>
<PAGE> 85
more than 180 days prior to the date fixed for the meeting. The Trustee or
the Company may fix, in advance of the giving of such notice, a date as the
record date for determining the Holders entitled to notice or to vote at any
such meeting not more than 15 days prior to the date fixed for the giving of
such notice.
(b) In case at any time the Company or the Holders of at least 10%
in principal amount of the Outstanding Securities of any series shall have
requested the Trustee to call a meeting of the Holders of Securities of any
series for any purpose specified in Section 1401, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting, and
the Trustee shall not have made the first publication of the notice of such
meeting within 21 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Company
or the Holders of the Securities of such series in the amount above specified,
as the case may be, may determine the time and the place in the Borough of
Manhattan, The City of New York, or, if Securities of such series are to be
issued as Bearer Securities, in London for such meeting and may call such
meeting for such purposes by giving notice thereof as provided in subsection
(a) of this Section.
Section 1403. PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of Securities of
any series, a Person shall be (1) a Holder of one or more Outstanding
Securities of such series, or (2) a Person appointed by an instrument in
writing as proxy for a Holder or Holders of one or more Outstanding Securities
of such series by such Holder or Holders. The only Persons who shall be
entitled to be present or to speak at any meeting of Holders of Securities of
any series shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
Section 1404. QUORUM; ACTION.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series. In the absence of a quorum within 30
minutes after the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series, be dissolved.
In any other case the meeting may be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
76<PAGE>
<PAGE> 86
of such meeting. In the absence of a quorum at any such adjourned meeting,
such adjourned meeting may be further adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 1402(a), except that such notice need be
given only once not less than five days prior the date on which the meeting is
scheduled to be reconvened.
Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted only by the affirmative vote of the
Holders of a majority in principal amount of the Outstanding Securities of
that series, PROVIDED, HOWEVER, that, except as limited by the proviso to
Section 902, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which this
Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of
the Outstanding Securities of a series may be adopted at a meeting or an
adjourned meeting duly reconvened and at which a quorum is present as
aforesaid by the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Securities of such series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the Coupons
appertaining thereto, whether or not present or represented at the meeting.
Section 1405. DETERMINATION OF VOTING RIGHTS;
CONDUCT AND ADJOURNMENT OF MEETINGS.
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of such series in regard to proof of the
holding of Securities of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission
and examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meetings as it
shall deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner specified
in Section 104 or by having the signature of the person executing the proxy
witnessed or guaranteed by any trust company, bank or banker authorized by
Section 104 to certify to the holding of Bearer Securities. Such regulations
may provide that written instruments appointing proxies, regular on their
face, may be presumed valid and genuine without the proof specified in Section
104 or other proof.
77<PAGE>
<PAGE> 87
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called
by the Company or by Holders of Securities as provided in Section 1402(b), in
which case the Company or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the Persons entitled to vote a majority in principal
amount of the Outstanding Securities of such series represented at the
meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount of
Securities of such series held or represented by him; PROVIDED, HOWEVER, that
no vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be
not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1402 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
Section 1406. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in triplicate of all votes cast at the meeting. A record, at
least in triplicate, of the proceedings of each meeting of Holders of
Securities of any series shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors
of votes on any vote by ballot taken thereat and affidavits by one or more
persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was given as provided in Section 1402
and, if applicable, Section 1404. Each copy shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one
such copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots
78<PAGE>
<PAGE> 88
voted at the meeting. Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
79<PAGE>
<PAGE> 89
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
SOUTHWEST GAS CORPORATION
By: /s/ MICHAEL O. MAFFIE
-------------------------
Attest:
/s/ THOMAS J. TRIMBLE
- -------------------------
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: /s/ E. KAY LIEDERMAN
-------------------------
S-1
<PAGE> 1 EXHIBIT 4.08
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SOUTHWEST GAS CORPORATION
TO
HARRIS TRUST AND SAVINGS BANK, as Trustee
FIRST SUPPLEMENTAL INDENTURE
dated as of October 31, 1995
9.125% Subordinated Deferrable
Interest Notes Due 2025
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------<PAGE>
<PAGE> 2
Table of Contents
PAGE
ARTICLE I
Definitions . . . . . . . . . . . . . . . 2
Section 1.1. Definition of Terms. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
General Terms and Conditions of the Notes. . . . . . . . 4
Section 2.1. Designation and Principal Amount . . . . . . . . . . . . . . 4
Section 2.2. Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3. Form and Payment . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4. Global Note. . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.5. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
Redemption of the Notes . . . . . . . . . . . . 8
Section 3.1. Special Event Redemption.. . . . . . . . . . . . . . . . . . 8
Section 3.2. Optional Redemption by Company . . . . . . . . . . . . . . . 9
Section 3.3. No Sinking Fund. . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
Extension of Interest Payment Period. . . . . . . . . 10
Section 4.1. Extension of Interest Payment Period . . . . . . . . . . . . 10
Section 4.2. Notice of Extension. . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V
Expenses. . . . . . . . . . . . . . . . 11
Section 5.1. Payment of Expenses. . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI
Subordination. . . . . . . . . . . . . . . 12
Section 6.1. Agreement to Subordinate . . . . . . . . . . . . . . . . . . 12
Section 6.2. Default on Senior Indebtedness . . . . . . . . . . . . . . . 12
Section 6.3. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . 13
i<PAGE>
<PAGE> 3
Section 6.4. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.5. Trustee to Effectuate Subordination. . . . . . . . . . . . . 15
Section 6.6. Notice by the Company. . . . . . . . . . . . . . . . . . . . 15
Section 6.7. Rights of the Trustee; Holders of Senior
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.8. Subordination May Not Be Impaired. . . . . . . . . . . . . . 17
ARTICLE VII
Covenants. . . . . . . . . . . . . . . . 17
Section 7.1. Listing on an Exchange . . . . . . . . . . . . . . . . . . . 17
Section 7.2. Equal and Ratable Security . . . . . . . . . . . . . . . . . 18
ARTICLE VIII
Form of Note. . . . . . . . . . . . . . . 19
Section 8.1. Form of Note . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IX
Original Issue of Notes . . . . . . . . . . . . 26
Section 9.1. Original Issue of Notes. . . . . . . . . . . . . . . . . . . 26
Section 9.2. Reports by the Trustee . . . . . . . . . . . . . . . . . . . 26
ARTICLE X
Miscellaneous. . . . . . . . . . . . . . . 26
Section 10.1. Ratification of Indenture . . . . . . . . . . . . . . . . . 26
Section 10.2. Trustee Not Responsible for Recitals. . . . . . . . . . . . 26
Section 10.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 26
Section 10.4. Separability. . . . . . . . . . . . . . . . . . . . . . . . 26
Section 10.5. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.6. Third Party Beneficiaries . . . . . . . . . . . . . . . . . 27
ii<PAGE>
<PAGE> 4
FIRST SUPPLEMENTAL INDENTURE, dated as of October 31, 1995 (the "First
Supplemental Indenture"), between Southwest Gas Corporation, a California
corporation (the "Company"), Harris Trust and Savings Bank, as trustee (the
"Trustee") under the Indenture dated as of October 31, 1995 between the
Company and the Trustee (the "Indenture").
WHEREAS, the Company executed and delivered the Indenture to the Trustee
to provide for the future issuance of the Company's unsecured subordinated
debt securities to be issued from time to time in one or more series as might
be determined by the Company under the Indenture, in an unlimited aggregate
principal amount which may be authenticated and delivered as provided in the
Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Securities to be known as
its 9.125% Subordinated Deferrable Interest Notes due 2025 (the "Notes"), the
form and substance of such Notes and the terms, provisions and conditions
thereof to be set forth as provided in the Indenture and this First
Supplemental Indenture;
WHEREAS, Southwest Gas Capital I, a Delaware statutory business trust
(the "Trust"), has offered to the public $60,000,000 aggregate liquidation
amount of its 9.125% Trust Originated Preferred Securities (the "Preferred
Securities"), representing undivided beneficial interests in the assets of the
Trust and proposes to invest the proceeds from such offering in $60,000,000
aggregate principal amount of the Notes; and
WHEREAS, the Company has requested that the Trustee execute and deliver
this First Supplemental Indenture and all requirements necessary to make this
First Supplemental Indenture a valid instrument in accordance with its terms
and to make the Notes, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company have been
performed, and the execution and delivery of this First Supplemental Indenture
has been duly authorized in all respects;
NOW THEREFORE, in consideration of the purchase and acceptance of the
Notes by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Notes and the terms,
provisions and conditions thereof, the Company covenants and agrees with the
Trustee as follows:
1<PAGE>
<PAGE> 5
ARTICLE I
Definitions
Section 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used in
this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture has the
same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of
this First Supplemental Indenture;
(e) headings are for convenience of reference only and do not affect
interpretation;
(f) the following terms have the meanings given to them in the
Declaration: (i) Business Day; (ii) Common Securities; (iii)
Delaware Trustee; (iv) Depositary; (v) Dissolution Tax Opinion;
(vi) Ministerial Action; (vii) No Recognition Opinion; (viii)
Preferred Securities Guarantee; (ix) Property Trustee; (x)
Redemption Tax Opinion; (xi) Regular Trustees; and (xii) Tax Event;
and
(g) the following terms have the meanings given to them in this Section
1.1(g):
"Additional Interest" has the meaning given such term in Section 2.5(c).
"Compounded Interest" has the meaning given such term in Section 4.1.
"Coupon Rate" has the meaning given such term in Section 2.5(a).
"Debt" means, in respect of the Company, (i) the principal, premium,
if any, and interest in respect of (A) indebtedness of the Company for money
borrowed and (B) indebtedness evidenced by securities, debentures, bonds or
other similar instruments issued by the Company, (ii) all capital lease
obligations of the Company, (iii) all obligations of the Company issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of the Company for the
reimbursement of any letter of credit, banker's acceptance, security purchase
2<PAGE>
<PAGE> 6
facility or similar credit transaction, (v) all obligations of the type
referred to in clauses (i) through (iv) above of other persons for the payment
of which the Company is responsible or liable as obligor, guarantor or
otherwise, and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other persons secured by any lien on any property or
asset of the Company (whether or not such obligation is assumed by the
Company).
"Deferred Interest" means Additional Interest and Compounded Interest.
"Dissolution Event" means that as a result of the occurrence and
continuation of a Tax Event, the Trust is to be dissolved in accordance with
the Declaration, and the Notes held by the Property Trustee are to be
distributed to the holders of the Trust Securities issued by the Trust pro
rata in accordance with the Declaration.
"Extended Maturity Date" means, if the Company elects to extend the
Maturity Date in accordance with Section 2.2(b), the date selected by the
Company which is after the Stated Maturity Date but before December 31, 2044.
"Extended Interest Payment Period" has the meaning given such term in
Section 4.1.
"Global Note" has the meaning given such term in Section 2.4(a)(i).
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes as set forth in Section 2.5(a).
"Lien" means any lien, mortgage, pledge, security interest, charge or
other encumbrance of any kind.
"Maturity Date" means the date on which the Notes mature and on which the
principal shall be due and payable together with all accrued and unpaid
interest thereon, including Deferred Interest, if any.
"Non Book-Entry Preferred Securities" has the meaning given such term in
Section 2.4(a)(ii).
"Optional Redemption Price" has the meaning given such term in Section
3.2.
"Reporting Date" means that date that is one year from the date first
written herein and each one year anniversary of such date thereafter.
"Restricted Securities" means, shares of capital stock of a Subsidiary.
3<PAGE>
<PAGE> 7
"Senior Indebtedness" means in respect of the Company, Debt of the
Company, except for (1) any such Debt that is by its terms subordinated to or
pari passu with the Notes and (2) any Debt (including all other debt
securities and guarantees in respect of those debt securities) initially
issued to any other trust, or a trustee of such trust, partnership, or other
entity affiliated with the Company that is, directly or indirectly, a
financing vehicle of the Company in connection with the issuance by such
entity of preferred securities or other similar securities.
"Stated Maturity Date" means December 31, 2025.
ARTICLE II
General Terms and Conditions of the Notes
Section 2.1. Designation and Principal Amount.
There is hereby authorized a series of Securities designated the "9.125%
Subordinated Deferrable Interest Notes due 2025", limited in aggregate
principal amount to $61.8 million, which amount shall be as set forth in any
written Company Order for the authentication and delivery of Notes pursuant to
Section 2.4 of the Indenture.
Section 2.2. Maturity.
(a) The Maturity Date will be either:
(i) the Stated Maturity Date; or
(ii) if the Company elects to extend the Maturity Date beyond the
Stated Maturity Date in accordance with Section 2.2(b), the
Extended Maturity Date;
(b) the Company may at any time before the day which is 90 days before
the Stated Maturity Date, elect to extend the Maturity Date only
once to the Extended Maturity Date, PROVIDED THAT the following
conditions in this Section 2.2(b) are satisfied both at the date the
Company gives notice in accordance with Section 2.2(c) of its
election to extend the Maturity Date and at the Stated Maturity
Date:
(i) the Company is not in bankruptcy or otherwise insolvent;
(ii) the Company is not in default on any Notes issued to the Trust
or any trustee of the Trust or to any trust or trustee of the
Trust in connection with the issuance of Trust Securities by
the Trust;
4<PAGE>
<PAGE> 8
(iii) the Company has made timely payments on the Notes for the
immediately preceding 18 months without deferrals;
(iv) the Trust is not in arrears on payments of Distributions on the
Trust Securities issued by it; and
(v) the Notes are rated in one of the four highest rating
categories by any one of Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc., Moody's Investors Service, Inc.,
Fitch Investor Services, Duff & Phelps Credit Rating Company or
any other nationally recognized statistical rating
organization; and
(c) if the Company elects to extend the Maturity Date in accordance with
Section 2.2(b), the Company shall give notice to Holders of the
Notes, the Property Trustee, the Trust and the Trustee of the
extension of the Maturity Date and the Extended Maturity Date at
least 90 days before the Stated Maturity Date.
Section 2.3. Form and Payment.
Except as provided in Section 2.4, the Notes shall be issued as
Registered Securities in fully registered certificated form without interest
coupons. Principal and interest on the Notes issued in certificated form will
be payable, the transfer of such Notes will be registrable and such Notes will
be exchangeable for Notes bearing identical terms and provisions at the office
or agency of the Trustee; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the Holder at such
address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of any Notes is the Property Trustee, the
payment of the principal of and interest, including Deferred Interest, if any,
on such Notes held by the Property Trustee will be made at such place and to
such account as may be designated by the Property Trustee.
Section 2.4. Global Note.
(a) In connection with a Dissolution Event:
(i) the Notes in certificated form may be presented to the Trustee
by the Property Trustee in exchange for a global Note in an
aggregate principal amount equal to all Outstanding Notes (a
"Global Note") to be registered in the name of the Depositary,
or its nominee, and delivered by the Trustee to the Depositary
for crediting to the accounts of its participants pursuant to
the instructions of the Regular Trustees. The Company upon any
5<PAGE>
<PAGE> 9
such presentation shall execute a Global Note in such aggregate
principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with the Indenture
and this First Supplemental Indenture. Payments on the Notes
issued as a Global Note will be made to the Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Notes in certificated form may be
presented to the Trustee by the Property Trustee and any
Preferred Security Certificate which represents Preferred
Securities other than Preferred Securities held by the
Depositary or its nominee ("Non Book-Entry Preferred
Securities") will be deemed to represent beneficial interests
in Notes presented to the Trustee by the Property Trustee
having an aggregate principal amount equal to the aggregate
liquidation amount of the Non Book-Entry Preferred Securities
until such Preferred Security Certificates are presented to the
Security Registrar for transfer or reissuance at which time
such Preferred Security Certificates will be cancelled, and a
Note registered in the name of the holder of the Preferred
Security Certificate or the transferee of the holder of such
Preferred Security Certificate, as the case may be, with an
aggregate principal amount equal to the aggregate liquidation
amount of the Preferred Security Certificate cancelled will be
executed by the Company and delivered to the Trustee together
with a Company Order for authentication and delivery in
accordance with the Indenture and this First Supplemental
Indenture. On issue of such Notes, Notes with an equivalent
aggregate principal amount that were presented by the Property
Trustee to the Trustee will be deemed to have been cancelled.
(b) A Global Note may be transferred, in whole but not in part only to
another nominee of the Depositary, or to a successor Depositary
selected or approved by the Company or to a nominee of such
successor Depositary.
(c) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or if at any time the
Depositary for such series shall no longer be registered or in good
standing under the Exchange Act or other applicable statute or
regulation, and a successor Depositary for such series is not
appointed by the Company within 90 days after the Company receives
such notice or becomes aware of such condition, as the case may be,
the Company will execute, and, subject to Article Two of the
6<PAGE>
<PAGE> 10
Indenture, the Trustee will authenticate and deliver the Notes in
definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the
principal amount of the Global Note in exchange for such Global
Note. In addition, the Company may at any time determine that the
Notes shall no longer be represented by a Global Note. In such
event the Company will execute and, subject to Article Two of the
Indenture, the Trustee will authenticate and deliver the Notes in
definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the
principal amount of the Global Note in exchange for such Global
Note. Upon the exchange of the Global Note for such Notes in
definitive registered form without coupons, in authorized
denominations, the Global Note shall be cancelled by the Trustee.
Such Notes in definitive registered form issued in exchange for the
Global Note shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee in writing. The Trustee shall deliver such Notes to the
Depositary for delivery to the Persons in whose names such Notes are
so registered.
Section 2.5. Interest.
(a) Each Note will bear interest at the rate of 9.125% per annum (the
"Coupon Rate") from the original date of issuance until the
principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of
interest at the Coupon Rate, compounded quarterly, payable (subject
to the provisions of Article Four) quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year (each, an
"Interest Payment Date", commencing on December 31, 1995), to the
Person in whose name such Note or any predecessor Note is
registered, at the close of business on the regular record date for
such interest installment, which, in respect of any Notes of which
the Property Trustee is the Holder of or a Global Note, shall be the
close of business on the Business Day next preceding that Interest
Payment Date. Notwithstanding the foregoing sentence, if the
Preferred Securities are no longer in book-entry only form or if
pursuant to the Indenture the Notes are not represented by a Global
Note, the Company may select a regular record date for such interest
installment which shall be any date at least one Business Day before
an Interest Payment Date.
7<PAGE>
<PAGE> 11
(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable
for any period shorter than a full quarterly period for which
interest is computed, will be computed on the basis of the actual
number of days elapsed in such a 30-day month. In the event that
any date on which interest is payable on the Notes is not a Business
Day, then payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except
that, notwithstanding the provisions of Section 113 of the
Indenture, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made
on such date.
(c) If at any time while the Property Trustee is the Holder of any
Notes, the Trust or the Property Trustee, on behalf of the Trust, is
required to pay any taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed by
the United States, or any other taxing authority, then, in any case,
the Company will pay as additional interest ("Additional Interest")
on the Notes held by the Property Trustee, on behalf of the Trust,
such additional amounts as shall be required so that the net amounts
received and retained by the Trust and the Property Trustee, on
behalf of the Trust, after paying such taxes, duties, assessments or
other governmental charges will be equal to the amounts the Trust
and the Property Trustee, on behalf of the Trust, would have
received had no such taxes, duties, assessments or other
governmental charges been imposed.
ARTICLE III
Redemption of the Notes
Section 3.1. Special Event Redemption.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular Trustees
shall have been informed by tax counsel rendering the Dissolution
Tax Opinion that a No Recognition Opinion cannot be delivered to the
Trust, then, notwithstanding Section 3.2(a) but subject to Section
3.2(b), the Company shall have the right upon not less than 30 days
nor more than 60 days notice to the Holders of the Notes to redeem
8<PAGE>
<PAGE> 12
the Notes in whole or in part for cash within 90 days following the
occurrence of such Tax Event (the "90 Day Period"), provided that,
if at the time there is available to the Company the opportunity to
eliminate within the 90 Day Period, the Tax Event by taking some
Ministerial Action, the Company shall pursue such Ministerial Action
in lieu of redemption, and provided, further, that the Company shall
have no right to redeem the Notes while the Trust is pursuing any
Ministerial Action pursuant to its obligations under the
Declaration. The Redemption Price shall be paid prior to 12:00
noon, New York time, on the date of such redemption or such earlier
time as the Company determines provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Redemption
Price by 10:00 a.m., New York time, on the date such Redemption
Price is to be paid.
Section 3.2. Optional Redemption by Company.
(a) Subject to the provisions of Section 3.2(b) and to the provisions of
Article Eleven of the Indenture, except as otherwise may be
specified in this First Supplemental Indenture, the Company shall
have the right to redeem the Notes, in whole or in part, from time
to time, on or after December 31, 2000, at a redemption price equal
to 100% of the principal amount to be redeemed plus any accrued and
unpaid interest thereon to the date of such redemption (the
"Optional Redemption Price"). Any redemption pursuant to this
paragraph will be made upon not less than 30 nor more than 60 days'
notice to the Holder of the Notes, at the Optional Redemption Price.
If the Notes are only partially redeemed pursuant to this Section
3.2, the Notes will be redeemed pro rata or by lot or by any other
method utilized by the Trustee; provided that, if at the time of
redemption the Notes are registered as a Global Note, the Depositary
shall determine by lot the principal amount of such Notes held by
each Holder of Notes to be redeemed. The Optional Redemption Price
shall be paid prior to 12:00 noon, New York time, on the date of
such redemption or at such earlier time as the Company determines
provided that the Company shall deposit with the Trustee an amount
sufficient to pay the Optional Redemption Price by 10:00 a.m., New
York time, on the date such Optional Redemption Price is to be paid.
(b) If a partial redemption of the Notes would result in the delisting
of the Preferred Securities issued by the Trust from any national
securities exchange or other organization on which the Preferred
Securities are then listed, the Company shall not be permitted to
9<PAGE>
<PAGE> 13
effect such partial redemption and may only redeem the Notes in
whole.
Section 3.3. No Sinking Fund.
The Notes are not entitled to the benefit of any sinking fund.
ARTICLE IV
Extension of Interest Payment Period
Section 4.1. Extension of Interest Payment Period.
The Company shall have the right, at any time during the term of the
Notes, from time to time, to defer payments of interest by extending the
interest payment period of such Notes for up to 20 consecutive quarters (the
"Extended Interest Payment Period"). To the extent permitted by applicable
law, interest, the payment of which has been deferred because of the extension
of the interest payment period pursuant to this Section 4.1, will bear
interest thereon at the Coupon Rate compounded quarterly for each quarter of
the Extended Interest Payment Period ("Compounded Interest"). At the end of
the Extended Interest Payment Period the Company shall pay all interest
accrued and unpaid on the Notes, including any Deferred Interest that shall be
payable, to the Holders of the Notes in whose names the Notes are registered
in the Security Register on the first record date after the end of the
Extended Interest Payment Period. Before the termination of any Extended
Interest Payment Period, the Company may further extend such period, provided
that such period together with all such further extensions thereof shall not
exceed 20 consecutive quarters. Upon the termination of any Extended Interest
Payment Period and upon the payment of all Deferred Interest then due, the
Company may commence a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof.
Section 4.2. Notice of Extension.
(a) If the Property Trustee is the only registered Holder of the Notes
at the time the Company selects an Extended Interest Payment Period,
the Company shall give written notice to the Regular Trustees, the
Property Trustee and the Trustee of its selection of such Extended
Interest Payment Period one Business Day before the earlier of (a)
the next succeeding date on which Distributions on the Trust
Securities issued by the Trust are payable, or (b) the date the
Trust is required to give notice of the record date or the date such
Distributions are payable to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the
10<PAGE>
<PAGE> 14
Preferred Securities issued by the Trust, but in any event at least
one Business Day before such record date.
(b) If the Property Trustee is not the only Holder of the Notes at the
time the Company selects an Extended Interest Payment Period, the
Company shall give the Holders of the Notes and the Trustee written
notice of its selection of such Extended Interest Payment Period 10
Business Days before the earlier of (i) the next succeeding Interest
Payment Date, or (ii) the date the Company is required to give
notice of the record or payment date of such interest payment to the
New York Stock Exchange or other applicable self-regulatory
organization or to Holders of the Notes.
(c) The quarter in which any notice is given pursuant to paragraphs (a)
or (b) of this Section 4.2 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period
permitted under Section 4.1.
ARTICLE V
Expenses
Section 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the Notes to the
Property Trustee in connection with the sale of the Trust Securities by the
Trust, the Company shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Notes, including compensation of the Trustee under
the Indenture in accordance with the provisions of Section 607 of
the Indenture;
(b) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs
and expenses with respect to such taxes of the Trust; and
(c) pay all other debts and obligations of the Trust (other than with
respect to the Trust Securities) and all costs and expenses of the
Trust (including, but not limited to, costs and expenses relating to
the organization of the Trust, the fees and expenses of the Property
Trustee, the trustee under the Preferred Securities Guarantee and
the guarantee of the Common Securities and the Delaware Trustee, the
costs and expenses relating to the operation of the Trust, including
without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses or printing and
engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone
11<PAGE>
<PAGE> 15
and other telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing, and
disposition of Trust assets).
ARTICLE VI
Subordination
Section 6.1. Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Notes issued
hereunder by such Holder's acceptance thereof likewise covenants and agrees,
that all Notes shall be issued subject to the provisions of this Article VI;
and each Holder of a Note, whether upon original issue or upon transfer or
assignment thereof, accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of, premium, if any, and
interest on all Notes issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and junior in right of payment to the
prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article VI shall prevent the occurrence of any
default or Event of Default hereunder.
Section 6.2. Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company in
the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Company, as the case may be, or in the event that
the maturity of any Senior Indebtedness of the Company, as the case may be,
has been accelerated because of a default, then, in either case, no payment
shall be made by the Company with respect to the principal (including
redemption and sinking fund payments) of, or premium, if any, or interest on
the Notes.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 6.2, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to
the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee
shall be paid to the holders of Senior Indebtedness.
12<PAGE>
<PAGE> 16
Section 6.3. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior
Indebtedness of the Company shall first be paid in full, or payment thereof
provided for in money in accordance with its terms, before any payment is made
by the Company on account of the principal (and premium, if any) or interest
on the Notes; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the Holders of the Note or the Trustee would be entitled to receive from
the Company, except for the provisions of this Article VI, shall be paid by
the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the Holders
of the Notes or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness of the Company (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent necessary to
pay such Senior Indebtedness in full, in money or money's worth, after giving
effect to any concurrent payment or distribution to or for the holders of such
Senior Indebtedness, before any payment or distribution is made to the Holders
of Notes or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received
by the Trustee before all Senior Indebtedness of the Company is paid in full,
or provision is made for such payment in money in accordance with its terms,
such payment or distribution shall be held in trust for the benefit of and
shall be paid over or delivered to the holders of such Senior Indebtedness or
their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, and their respective interests may appear,
as calculated by the Company, for application to the payment of all Senior
Indebtedness of the Company, as the case may be, remaining unpaid to the
extent necessary to pay such Senior Indebtedness in full in money in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
13<PAGE>
<PAE> 17
For purposes of this Article VI, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized
or readjusted, or securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article VI with respect
to the Notes to the payment of all Senior Indebtedness of the Company, as the
case may be, that may at the time be outstanding provided that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any
such reorganization or readjustment, and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation of the Company
with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article Eight of the
Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 6.3 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Eight of the Indenture. Nothing in
Section 6.2 or in this Section 6.3 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 607 of the Indenture.
Section 6.4. Subrogation.
Subject to the payment in full of all Senior Indebtedness of the Company,
the rights of the Holders of the Notes shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or distributions
of cash, property or securities of the Company, as the case may be, applicable
to such Senior Indebtedness until the principal of (and premium, if any) and
interest on the Notes shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Holders of the
Notes or the Trustee would be entitled except for the provisions of this
Article VI to or for the benefit of the holders of such Senior Indebtedness by
Holders of the Notes or the Trustee, shall, as between the Company, its
creditors other than Holders of Senior Indebtedness of the Company, and the
holders of the Notes shall be deemed to be a payment by the Company to or on
account of such Senior Indebtedness. It is understood that the provisions of
this Article VI are and are intended solely for the purposes of defining the
relative rights of the Holders of the Notes, on the one hand, and the holders
of such Senior Indebtedness of the other hand.
Nothing contained in this Article VI or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness of the Company, and
14<PAGE>
<PAGE> 18
the Holders of the Notes, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Notes the principal of (and
premium, if any) and interest on the Notes as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders of the Notes and creditors of the
Company, as the case may be, other than the holders of Senior Indebtedness of
the Company, as the case may be, nor shall anything herein or therein prevent
the Trustee or the Holder of any Note from exercising all remedies otherwise
permitted by applicable law upon default under the Indenture, subject to the
rights, if any, under this Article VI of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company, as the
case may be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article VI, the Trustee, subject to the provisions of Section 603 of the
Indenture, and the Holders of the Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, delivered
to the Trustee or to the Holders of the Notes, for the purposes of
ascertaining the Persons entitled to participate in such distribution, the
holders of Senior Indebtedness and other indebtedness of the Company, as the
case may be, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article VI.
Section 6.5. Trustee to Effectuate Subordination.
Each Holder of Notes by such Holder's acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article VI and appoints the Trustee such Holder's attorney-in-fact for any and
all such purposes.
Section 6.6. Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Notes pursuant to
the provisions of this Article VI. Notwithstanding the provisions of this
Article VI or any other provision of the Indenture and this First Supplemental
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment of monies to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article VI,
unless and until a Responsible Officer of the Trustee shall have received
15<PAGE>
<PAGE> 19
written notice thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 603 of the
Indenture, shall be entitled in all respects to assume that no such facts
exist; PROVIDED, HOWEVER, that, if the Trustee shall not have received the
notice provided for in this Section 6.6 at least two Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (or
premium, if any) or interest on any Note), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes for which they
were received, and shall not be affected by any notice to the contrary that
may be received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Section 603 of the Indenture,
shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness of the
Company, as the case may be (or a trustee on behalf of such holder) to
establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of such Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article VI, the Trustee may require such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent
to the rights of such Person under this Article VI, and, if such evidence is
not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Section 6.7. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article VI in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any
of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article VI, and no implied
covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
16<PAGE>
<PAGE> 20
Senior Indebtedness and, subject to the provisions of Section 603 of the
Indenture, the Trustee shall not be liable to any holder of such Senior
Indebtedness if it shall pay over or deliver to Holders of Notes, the Company
or any other Person money or assets to which any holder of such Senior
Indebtedness shall be entitled by virtue of this Article VI or otherwise.
Section 6.8. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of
the Company to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company, as the case may be, or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Company, as the case
may be, with the terms, provisions and covenants of this Indenture, regardless
of any knowledge thereof that any such holder may have or otherwise be charged
with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Company may, at any time and from
time to time, without the consent of or notice to the Trustee or the Holders
of the Notes, without incurring responsibility to the Holders of the Notes and
without impairing or releasing the subordination provided in this Article VI
or the obligations hereunder of the Holders of the Notes to the holders of
such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew
or alter, such Senior Indebtedness, or otherwise amend or supplement in any
manner such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable
in any manner for the collection of such Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Company, as the
case may be, and any other Person.
ARTICLE VII
Covenant to List on Exchange
Section 7.1. Listing on an Exchange.
If the Notes are to be issued as a Global Note in connection with the
distribution of the Notes to the holders of the Preferred Securities issued by
the Trust upon a Dissolution Event, the Company will use its best efforts to
list such Notes on the New York Stock Exchange or on such other exchange as
the Preferred Securities are then listed.
17<PAGE>
<PAGE> 21
Section 7.2. Equal and Ratable Security.
The Company will not create, incur, issue or assume any Debt secured by
any Lien on any property or assets owned by the Company, and the Company will
not create, incur, issue or assume any Debt secured by any Lien on any
Restricted Securities, unless (a) in the case of Debt which is expressly by
its terms subordinate or junior in right of payment to the Subordinated Debt
Securities, the Subordinated Debt Securities are secured by a Lien on such
property, assets or Restricted Securities that is senior to such other Lien,
or (b) in the case of Liens securing Debt that is ranked pari passu with the
subordinated Debt Securities, the Subordinated Debt Securities are secured by
a Lien on such property, assets or Restricted Securities that is equal and
ratable with such other Lien; PROVIDED, HOWEVER, that nothing contained in
this Section 7.2 shall apply to or prevent the creation of:
(i) existing Liens on any property or indebtedness of any entity
which is merged with or into or consolidated with the Company;
(ii) Liens in favor of the United States of America, any state or
any foreign country or any department, agency or
instrumentality or political subdivision of any such
jurisdiction, to secure partial, progress, advance or other
payment pursuant to any contract or statute, or to secure any
indebtedness incurred for the purpose of financing all or any
part of the purchase price or cost of constructing or improving
the property subject to such Liens, including, without
limitation, Liens to secure Debt of the pollution control or
industrial revenue bond type;
(iii) Liens to secure loans to the Company which mature within twelve
months from the creation thereof and which are made in the
ordinary course of business;
(iv) Liens on any property (including any natural gas, oil or other
mineral property) to secure all or part of the cost of
exploration or drilling for, or development of, oil or gas
reserves or laying a pipeline or to provide funds for any such
purpose;
(v) Liens on money or U.S. Government Obligations deposited with
the Trustee pursuant to the Indenture; and
(vi) Liens for the sole purposes of extending, renewing or
replacing, in whole or in part, Liens securing Debt of the type
referred to in the foregoing clauses (i) through (iv),
inclusive, or this clause (vi); provided, however, that the
18<PAGE>
<PAGE> 22
principal amount of Debt so secured at the time of such
extension, renewal or replacement shall not be increased, and
that such extension, renewal or replacement shall be limited to
all or part of the property or indebtedness which secured the
Lien so extended, renewed or replaced (plus improvements on
such property).
ARTICLE VIII
Form of Note
Section 8.1. Form of Note.
The Notes and the Trustee's Certificate of Authentication to be endorsed
thereon are to be substantially in the following forms:
(FORM OF FACE OF NOTE)
(IF THE NOTE IS TO BE A GLOBAL NOTE, INSERT - This Note is a Global Note
within the meaning of the Indenture hereinafter referred to and is registered
in the name of a Depositary or a nominee of a Depositary. This Note is
exchangeable for Global Notes registered in the name of a person other than
the Depositary or its nominee only in the limited circumstances described in
the Indenture, and no transfer of this Note (other than a transfer of this
Note as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances. Every Note
delivered upon registration of transfer of, or in exchange for, or in lieu of,
this Global Security shall be a Global Security, subject to the foregoing,
except in the limited circumstances described above.
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the issuer or
its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (or to such other
entity as is requested by an authorized representative of DTC) and any payment
is made to Cede & Co. (or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.)
19<PAGE>
<PAGE> 23
No. __________________
$_____________
CUSIP No.__________________
9.125% SUBORDINATED DEFERRABLE INTEREST NOTE
DUE 2025
Southwest Gas Corporation, a California corporation (the "Company"),
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to _______________,
or registered assigns, the principal sum of ______________ Dollars on December
31, 2025, (or on such later date before December 31, 2044, if the Company
elects to extend the maturity date as further described herein), and to pay
interest on said principal sum from December 31, 1995, or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, quarterly (subject to deferral as
set forth herein) in arrears on March 31, June 30, September 30 and December
31 of each year commencing December 31, 1995, at the rate of 9.125% per annum
until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum compounded
quarterly. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on this Note is not a
Business Day, then payment of interest payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes, as defined in said Indenture) is registered at
the close of business on the regular record date for such interest
installment, which shall be the close of business on the Business Day next
preceding such Interest Payment Date. [IF PURSUANT TO THE PROVISIONS OF THE
INDENTURE THE NOTES ARE NO LONGER REPRESENTED BY A GLOBAL NOTE -- which shall
be the close of business of the ____ Business Day next preceding such Interest
Payment Date.] Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered Holders on
such regular record date and may be paid to the Person in whose name this Note
(or one or more Predecessor Notes) is registered at the close of business on a
special record date to be fixed by the Trustee for the payment of such
defaulted interest, notice whereof shall be given to the registered Holders of
20<PAGE>
<PAGE> 24
this series of Notes not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Notes may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of (and premium, if any) and the
interest on this Note shall be payable at the office or agency of the Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered Holder at such address
as shall appear in the Security Register. Notwithstanding the foregoing, so
long as the Holder of this Note is the Property Trustee, the payment of the
principal of (and premium, if any) and interest on this Note will be made at
such place and to such account as may be designated by the Property Trustee.
The indebtedness evidenced by this Note is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment in
full of all Senior Indebtedness, and this Note is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Note,
by accepting the same, (a) agrees to and shall be bound by such provisions,
(b) authorizes and directs the Trustee on his or her behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her attorney-in-
fact for any and all such purposes. Each Holder hereof, by his or her
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness, whether now outstanding or hereafter incurred, and
waives reliance by each such holder upon said provisions.
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until
the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
Unless the Certificate of Authentication hereon has been executed by the
Trustee referred to on the reverse side hereof, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
The provisions of this Note are continued on the reverse side hereof and
such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
21<PAGE>
<PAGE> 25
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated:
SOUTHWEST GAS CORPORATION
By__________________________
Attest:
By__________________________
Secretary
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series of Notes described in the within-
mentioned Indenture.
__________________________
__________________________ _________________________
as Trustee or as Authentication Agent
By________________________ By_______________________
Authorized Signatory Authorized Signatory
(FORM OF REVERSE OF NOTE)
This Note is one of a duly authorized series of Notes of the Company
(herein sometimes referred to as the "Notes"), specified in the Indenture, all
issued or to be issued in one or more series under and pursuant to an
Indenture dated as of October 31, 1995, duly executed and delivered between
the Company and Harris Trust and Savings Bank, as Trustee (the "Trustee"), as
supplemented by the First Supplemental Indenture dated as of October 31, 1995,
between the Company and the Trustee (the Indenture as so supplemented, the
"Indenture"), to which Indenture and all indentures supplemental thereto
22<PAGE>
<PAGE> 26
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Notes. By the terms of the Indenture, the
Notes are issuable in series that may vary as to amount, date of maturity,
rate of interest and in other respects as provided in the Indenture. This
series of Notes is limited in aggregate principal amount as specified in said
First Supplemental Indenture.
Because of the occurrence and continuation of a Tax Event, in certain
circumstances, this Note will become due and payable at the principal amount
together with any interest accrued thereon (the "Redemption Price"). The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or at such earlier time as the Company determines. The
Company shall have the right to redeem this Note at the option of the Company,
without premium or penalty, in whole or in part at any time on or after
December 31, 2000 (an "Optional Redemption") or at any time in certain
circumstances upon the occurrence of a Tax Event, at a redemption price equal
to 100% of the principal amount plus any accrued but unpaid interest, to the
date of such redemption (the "Optional Redemption Price"). Any redemption
pursuant to this paragraph will be made upon not less than 30 nor more than 60
days' notice, at the Optional Redemption Price. If the Notes are only
partially redeemed by the Company pursuant to an Optional Redemption, the
Notes will be redeemed pro rata or by lot or by any other method utilized by
the Trustee; provided that if, at the time of redemption, the Notes are
registered as a Global Note, the Depositary shall determine by lot the
principal amount of such Notes held by each Holder of Notes to be redeemed.
In the event of redemption of this Note in part only, a new Note or Notes
of this series for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with
the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Notes of each series affected at the time outstanding,
as defined in the Indenture, to execute supplemental indentures for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Notes; PROVIDED,
HOWEVER, that no such supplemental indenture shall (i) extend the fixed
maturity of any Notes of any series, or reduce the principal amount thereof,
23<PAGE>
<PAGE> 27
or reduce the rate or extend the time of payment of interest thereon, or
reduce any premium payable upon the redemption thereof, without the consent of
the Holder of each Note so affected, or (ii) reduce the aforesaid percentage
of Notes, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Note then
outstanding and affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Notes of any series at the time outstanding affected thereby, on behalf of all
of the Holders of the Notes of such series, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture with respect to such series, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Notes of such series. Any such consent or waiver by
the registered Holder of this Note (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Note and of any Note issued in exchange
herefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Note.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the time and place and at the rate and in the money
herein prescribed.
The Company shall have the right at any time during the term of the Notes
from time to time to extend the interest payment period of such Notes to up to
20 consecutive quarters (an "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Notes to the
extent that payment of such interest is enforceable under applicable law).
Before the termination of any such Extended Interest Payment Period, the
Company may further extend such Extended Interest Payment Period, provided
that such Extended Interest Payment Period together with all such further
extensions thereof shall not exceed 20 consecutive quarters. At the
termination of any such Extended Interest Payment Period and upon the payment
of all accrued and unpaid interest and any additional amounts then due, the
Company may commence a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is transferable by the registered Holder hereof on the
Security Register of the Company, upon surrender of this Note for registration
of transfer at the office or agency of the Company in the City and State of
New York accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company or the Trustee duly executed by the
24<PAGE>
<PAGE> 28
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any paying agent and any Security Registrar may deem and
treat the registered Holder hereof as the absolute owner hereof (whether or
not this Note shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as such, of the
Company or of any predecessor or successor corporation, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
The Notes of this series are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. This
Global Note is exchangeable for Notes in definitive form only under certain
limited circumstances set forth in the Indenture. Notes of this series so
issued are issuable only in registered form without coupons in denominations
of $25 and any integral multiple thereof as provided in the Indenture and
subject to certain limitations herein and therein set forth. Notes of this
series so issued are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by
the Holder surrendering the same.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
25<PAGE>
<PAGE> 29
ARTICLE IX
Original Issue of Notes
Section 9.1. Original Issue of Notes.
Notes in the aggregate principal amount of $61,800,000 may, upon
execution of this First Supplemental Indenture, be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the
Company, signed by its Chairman, its President, or any Vice President and its
Treasurer or an Assistant Treasurer, without any further action by the
Company.
Section 9.2. Reports by the Trustee.
Up until and including the Maturity Date the Trustee shall, in respect of
each Reporting Date, make such reports, and within such time periods, as are
required to be made by the Trustee under the Trust Indenture Act.
ARTICLE X
Miscellaneous
Section 10.1. Ratification of Indenture.
The Indenture, as supplemented by this First Supplemental Indenture, is
in all respects ratified and confirmed, and this First Supplemental Indenture
shall be deemed part of the Indenture in the manner and to the extent herein
and therein provided.
Section 10.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or
sufficiency of this First Supplemental Indenture.
Section 10.3. Governing Law.
This First Supplemental Indenture and each Note shall be deemed to be a
contract made under the internal laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State.
Section 10.4. Separability.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this First
26<PAGE>
<PAGE> 30
Supplemental Indenture or of the Notes, but this First Supplemental Indenture
and the Notes shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
Section 10.5. Counterparts.
This First 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.
Section 10.6. Third Party Beneficiaries.
The Property Trustee, the trustee under the Preferred Securities
Guarantee and the Delaware Trustee are each a third party beneficiary of, and
shall be entitled to, enforce, and to exercise all rights and remedies with
respect to, the provisions of Section 5.1. The terms "Property Trustee",
"Preferred Securities Guarantee" and "Delaware Trustee" have the meaning given
such terms in the Declaration.
27<PAGE>
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, on the date or dates indicated in
the acknowledgements and as of the day and year first above written.
SOUTHWEST GAS CORPORATION
By /s/ MICHAEL O. MAFFIE
-------------------------
Attest:
/s/ THOMAS J. TRIMBLE
- -------------------------
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By /s/ E. KAY LIEDERMAN
-------------------------
Attest:
/s/ MARK E. ZIMKIND
- -----------------------
S-1<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SOUTHWEST
GAS CORPORATION'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 34,096<F1>
<INT-BEARING-DEPOSITS> 85,634<F1>
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 462,669<F1>
<INVESTMENTS-CARRYING> 88,325<F1>
<INVESTMENTS-MARKET> 87,491<F1>
<LOANS> 1,064,707<F1>
<ALLOWANCE> 16,035<F1>
<TOTAL-ASSETS> 3,084,963<F2><F3>
<DEPOSITS> 1,246,856<F1>
<SHORT-TERM> 221,683<F1>
<LIABILITIES-OTHER> 330,714<F4>
<LONG-TERM> 858,475<F2>
<COMMON> 25,860<F2>
4,000<F2>
0
<OTHER-SE> 341,375<F2>
<TOTAL-LIABILITIES-AND-EQUITY> 3,084,963<F2>
<INTEREST-LOAN> 66,180<F1>
<INTEREST-INVEST> 30,551<F1>
<INTEREST-OTHER> 2,675<F1>
<INTEREST-TOTAL> 99,406<F1>
<INTEREST-DEPOSIT> 38,804<F1>
<INTEREST-EXPENSE> 55,279<F1>
<INTEREST-INCOME-NET> 44,127<F1>
<LOAN-LOSSES> 5,003<F1>
<SECURITIES-GAINS> 970<F1>
<EXPENSE-OTHER> 36,844<F5>
<INCOME-PRETAX> (12,024)<F2>
<INCOME-PRE-EXTRAORDINARY> (7,527)<F2>
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,527)<F2>
<EPS-PRIMARY> (0.34)<F2>
<EPS-DILUTED> (0.34)<F2>
<YIELD-ACTUAL> 3.56<F1>
<LOANS-NON> 11,106<F1>
<LOANS-PAST> 0<F1>
<LOANS-TROUBLED> 9,777<F1>
<LOANS-PROBLEM> 45,200<F1>
<ALLOWANCE-OPEN> 17,659<F1>
<CHARGE-OFFS> 4,370<F1><F6>
<RECOVERIES> 1,028<F1><F6>
<ALLOWANCE-CLOSE> 16,243<F1><F6><F7>
<ALLOWANCE-DOMESTIC> 16,243<F1>
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Balance specific to financial services segment.
<F2>Consolidated financial statement balance.
<F3>Includes gas utility property, net $1,103,282.
<F4>Balance includes consolidated deferred income taxes, accounts payable and
other accrued liabilities.
<F5>Bank specific items including general and administrative expenses, goodwill
amortization and income from real estate operations.
<F6>Includes charge-offs and recoveries related to foreclosed real estate.
<F7>Bank transferred $3.1 million of its allowance for estimated losses to a
separate allowance for credit losses affiliated with debt securities.
</FN>
</TABLE>
<PAGE> 1 EXHIBIT 99
<TABLE>
SOUTHWEST GAS CORPORATION
SUMMARY STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
GAS OPERATIONS SEGMENT:
Operating revenues $417,143 $407,808 $608,604 $579,158
Net cost of gas purchased 184,639 179,846 254,716 235,934
-------- -------- -------- --------
Operating margin 232,504 227,962 353,888 343,224
Operations and maintenance expenses 140,287 131,662 186,808 174,629
Depreciation, amortization, and general taxes 67,476 61,430 88,616 81,233
-------- -------- -------- --------
Operating income 24,741 34,870 78,464 87,362
Net interest deductions 39,657 36,187 52,936 47,408
-------- -------- -------- --------
Pre-tax utility income (loss) (14,916) (1,317) 25,528 39,954
Utility income tax expense (benefit) (6,451) (853) 9,226 13,969
-------- -------- -------- --------
Net utility income (loss) (8,465) (464) 16,302 25,985
Other income (expense), net (390) (165) (721) 260
Arizona pipe replacement disallowance, net --- (283) --- (9,547)
-------- -------- -------- --------
Contribution to net income (loss) - gas operations segment (8,855) (912) 15,581 16,698
-------- -------- -------- --------
FINANCIAL SERVICES SEGMENT:
Net interest income after loan loss provision 39,124 38,745 51,793 52,386
Net income (loss) from real estate operations (316) 2 (930) (596)
Other income, net 8,241 8,489 10,383 12,645
General and administrative expenses 36,528 35,773 48,124 48,839
-------- -------- -------- --------
Pre-tax income 10,521 11,463 13,122 15,596
Income tax expense 4,726 5,121 5,996 6,936
-------- -------- -------- --------
Net income before carrying cost allocation 5,795 6,342 7,126 8,660
Acquisition carrying costs, net of tax - NOTE 5 (4,467) (3,666) (5,697) (4,897)
-------- -------- -------- --------
Contribution to net income - financial services segment 1,328 2,676 1,429 3,763
-------- -------- -------- --------
Net income (loss) (7,527) 1,764 17,010 20,461
Preferred & preference dividends 285 415 380 554
-------- -------- -------- --------
Net income (loss) applicable to common stock $ (7,812) $ 1,349 $ 16,630 $ 19,907
======== ======== ======== ========
Earnings (loss) per share $ (0.34) $ 0.06 $ 0.74 $ 0.95
======== ======== ======== ========
Earnings (loss) per share excluding disallowances --- $ 0.07 --- $ 1.40
======== ======== ======== ========
Average outstanding common shares 22,768 21,040 22,370 21,008
======== ======== ======== ========
</TABLE>
See Notes to Summary Financial Statements.<PAGE>
<PAGE> 2
<TABLE>
SOUTHWEST GAS CORPORATION
BALANCE SHEET
AT SEPTEMBER 30, 1995
(In thousands)
(Unaudited)
<CAPTION>
<S> <C> <C>
ASSETS
UTILITY PLANT
Gas plant, net of accumulated depreciation $1,079,316
Construction work in progress 23,966
----------
Net utility plant 1,103,282
----------
OTHER PROPERTY AND INVESTMENTS
PriMerit Bank - NOTE 2 181,150
Other 35,547
----------
Total other property and investments 216,697
----------
CURRENT AND ACCRUED ASSETS
Cash, working funds and temporary cash investments 7,096
Receivables - less reserve of $1,025 for uncollectibles 19,132
Accrued utility revenue 19,044
Other 42,046
----------
Total current and accrued assets 87,318
----------
DEFERRED DEBITS
Unamortized debt expense 13,779
Other deferred debits 38,227
----------
Total deferred debits 52,006
----------
TOTAL ASSETS $1,459,303
==========
CAPITALIZATION, LIABILITIES AND DEFERRED CREDITS
CAPITALIZATION
Common stockholders' equity
Common stock equity, $1 par, 24,230 shares outstanding $ 336,713
Retained earnings 29,828
----------
Total common stockholders' equity - NOTE 6 366,541 33.9%
Preferred stock equity - NOTE 3 4,000 0.4
Long-term debt - NOTE 4 711,010 65.7
---------- -----
Total capitalization 1,081,551 100.0%
---------- -----
CURRENT AND ACCRUED LIABILITIES
Notes payable 56,000
Accounts payable 20,720
Customer deposits 21,208
Taxes accrued (including income taxes) 31,464
Deferred purchased gas costs 35,752
Other 47,649
----------
Total current and accrued liabilities 212,793
----------
DEFERRED CREDITS
Deferred investment tax credits 20,089
Deferred income taxes 118,094
Other 26,776
----------
Total deferred credits 164,959
----------
TOTAL CAPITALIZATION, LIABILITIES AND DEFERRED CREDITS $1,459,303
==========
</TABLE>
See Notes to Summary Financial Statements.<PAGE>
<PAGE> 3
SOUTHWEST GAS CORPORATION
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995
(In thousands)
(Unaudited)
CASH FLOWS FROM OPERATIONS:
Net income (loss) $ (7,527)
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation and amortization 47,204
Change in receivables and payables 34,410
Change in accrued taxes (36,119)
Undistributed earnings from subsidiaries (5,717)
Change in gas cost related balancing items 56,745
Allowance for funds used during construction (918)
Change in deferred taxes 7,808
Other 6,793
---------
Net cash provided from operating activities 102,679
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in notes payable (36,000)
Dividends paid (14,468)
Net change in long-term debt 27,280
Net proceeds from stock issuance 40,584
Other (604)
---------
Net cash provided from financing activities 16,792
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (116,596)
Other (1,648)
---------
Net cash used in investing activities (118,244)
---------
Change in cash and temporary cash investments 1,227
Cash at beginning of period 5,869
---------
Cash at end of period $ 7,096
=========
SUPPLEMENTAL INFORMATION:
Interest paid, net of amount capitalized $ 48,375
Income taxes, net of refunds $ 26,143
See Notes to Summary Financial Statements.<PAGE>
<PAGE> 4
SOUTHWEST GAS CORPORATION
NOTES TO SUMMARY FINANCIAL STATEMENTS
(In thousands, except par values)
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION:
The financial statements have been prepared by Southwest Gas Corporation
(the Company) using the equity method of accounting for PriMerit Bank
(PriMerit). Segmented information is presented within the income
statement. The Financial Services segment includes the net income of
PriMerit and its subsidiaries on a stand-alone basis, reduced by
allocated costs associated with the Company's investment in PriMerit
(principally interest) net of taxes. This presentation is not in
accordance with generally accepted accounting principles (GAAP), and
certain information and footnote disclosures normally included in
financial statements prepared in accordance with GAAP have been omitted.
The financial statement presentation in this report produces the same
net income as the consolidated financial statements and, in management's
opinion, is a fair representation of the operations and contributions to
net income of the Company's two segments.
NOTE 2 - INVESTMENT IN PRIMERIT BANK:
The capital structure supports both the investment in PriMerit and the
investment in the gas segment. Financing costs allocable to PriMerit
are determined based on the investment in PriMerit under the equity
method.
<TABLE>
<CAPTION>
NOTE 3 - PREFERRED STOCK:
<S> <C>
Cumulative preferred stock, $100 par value, 9.5% series, 40 shares outstanding $ 4,000
===========
CURRENT REDEMPTION REQUIREMENTS $ 800
===========
NOTE 4 - LONG-TERM DEBT:
Commercial paper facility $ 200,000
Debentures:
Debentures, 9% series A, due 2011 26,895
Debentures, 9% series B, due 2011 31,213
Debentures, 8.75% series C, due 2011 18,353
Debentures, 9.375% series D, due 2017 120,000
Debentures, 10% series E, due 2013 23,069
Debentures, 9.75% series F, due 2002 100,000
Industrial revenue bonds - net of funds held in trust 201,602
Unamortized discount on long-term debt (10,122)
-----------
TOTAL LONG-TERM DEBT $ 711,010
===========
CURRENT MATURITIES $ 5,000
===========
</TABLE>
NOTE 5 - ACQUISITION CARRYING COSTS, NET:
<TABLE>
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest expense $ (7,227) $ (5,904) $ (9,195) $ (7,873)
Other intercompany expenses (218) (206) (301) (289)
Income taxes 2,978 2,444 3,799 3,265
--------- --------- --------- ---------
ACQUISITION CARRYING COSTS, NET $ (4,467) $ (3,666) $ (5,697) $ (4,897)
========= ========= ========= =========
NOTE 6 - COMMON STOCKHOLDERS' EQUITY:
For purposes of this report, common stockholders' equity excludes
PriMerit's unrealized gain on debt securities available for sale since
PriMerit is presented on the equity method of accounting.
/TABLE
<PAGE>
<PAGE> 5
SOUTHWEST GAS CORPORATION
SELECTED STATISTICAL DATA
SEPTEMBER 30, 1995
FINANCIAL STATISTICS
Book value per share at quarter end - NOTE 6 $15.13
Market value to book value per share at quarter end 103%
Twelve months to date return on equity -- total company 4.6%
-- gas segment 5.2%
Common stock dividend yield at quarter end 5.2%
GAS OPERATIONS SEGMENT
Authorized
Authorized Authorized Return on
Rate Base Rate of Common
Rate Jurisdiction (In thousands) Return Equity
- ------------------------ -------------- ---------- ----------
Central Arizona $ 267,348 9.13% 10.75%
Southern Arizona 157,620 9.12 11.00
Southern Nevada 184,673 8.89 11.55
Northern Nevada 47,695 9.16 11.55
Southern California 69,486 9.94 11.35
Northern California 8,357 10.02 11.35
Paiute Pipeline Company 61,057 10.09 12.50
<TABLE>
<CAPTION>
SYSTEM THROUGHPUT BY CUSTOMER CLASS NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
(In dekatherms) 1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Residential 33,353,107 33,170,690 46,149,190 44,669,464
Small commercial 17,499,110 17,142,799 23,928,594 23,036,438
Large commercial 6,631,610 7,977,308 8,960,538 10,763,075
Industrial / Other 5,464,247 6,097,028 7,708,746 7,784,681
Transportation 78,567,084 69,115,417 100,930,733 88,210,595
----------- ----------- ----------- -----------
Total system throughput 141,515,158 133,503,242 187,677,801 174,464,253
=========== =========== =========== ===========
HEATING DEGREE DAY COMPARISON
Actual 1,590 1,593 2,434 2,326
Ten year average 1,645 1,681 2,351 2,387
</TABLE>
