Exhibit 1.1
Sales Agency Financing
Agreement
Sales Agency Financing Agreement
(this “Agreement”), dated as of April 22, 2004, between
Southwest Gas Corporation, a California corporation (the
“Company”), and BNY CAPITAL MARKETS, INC., a registered
broker-dealer organized under the laws of New York
(“BNYCMI”).
W I T N E S S E T H:
WHEREAS, the Company has authorized
and proposes to issue and sell in the manner contemplated by this
Agreement Common Shares with an aggregate Sales Price of up to
$60,000,000 upon the terms and subject to the conditions contained
herein; and
WHEREAS, BNYCMI has been appointed
by the Company as its agent to distribute the Common Shares and
agrees to use its commercially reasonable efforts to distribute the
Common Shares offered by the Company upon the terms and subject to
the conditions contained herein.
NOW THEREFORE, in consideration of
the premises, representations, warranties, covenants and agreements
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain
Definitions . For purposes of this Agreement, capitalized terms
used herein and not otherwise defined shall have the following
respective meanings:
“Actual Sold Amount”
means the number of Issuance Shares that BNYCMI has sold during the
Selling Period.
“Affiliate” of a Person
means another Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common
control with, such first-mentioned Person. The term
“control” (including the terms
“controlling,” “controlled by” and
“under common control with”) means the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of voting securities, by contract or
otherwise.
“Closing” has the
meaning set forth in Section 2.02.
“Closing Date” means the
date on which the Closing occurs.
“Commission” means the
United States Securities and Exchange Commission.
“Commitment Period”
means the period commencing on the date of this Agreement and
expiring on the earliest to occur of (x) the date on which BNYCMI
shall have distributed the
Maximum Program Amount pursuant to this
Agreement, (y) the date this Agreement is terminated pursuant to
Article VII and (z) the third anniversary of the date of this
Agreement.
“Common Stock” shall
mean the Company’s Common Stock, $1 par value per
share.
“Common Shares” shall
mean shares of the Company’s Common Stock issued or issuable
pursuant to this Agreement.
“Effective Date” has the
meaning set forth in Section 3.03.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Floor Price” means the
minimum price set by the Company in the Issuance Notice below which
BNYCMI shall not sell Common Shares during the Selling Period,
which may be adjusted by the Company at any time during the Selling
Period and which in no event shall be less than $1.00 without the
prior written consent of BNYCMI, which may be withheld in
BNYCMI’s sole discretion.
“Issuance” means each
occasion the Company elects to exercise its right to deliver an
Issuance Notice requiring BNYCMI to use its commercially reasonable
efforts to sell the Common Shares as specified in such Issuance
Notice, subject to the terms and conditions of this
Agreement.
“Issuance Amount” means
the aggregate Sales Price of the Issuance Shares to be distributed
by BNYCMI with respect to any Issuance, which may not exceed
$6,000,000 during any Selling Period without the prior written
consent of BNYCMI, which may be withheld in its sole
discretion.
“Issuance Date” means
any Trading Day during the Commitment Period that an Issuance
Notice is deemed delivered pursuant to Section 2.03(b)
hereof.
“Issuance Notice” means
a written notice to BNYCMI delivered in accordance with this
Agreement in the form attached hereto as Exhibit A.
“Issuance Price” means
the Sales Price less the Selling Commission.
“Issuance Shares” means
all shares of Common Stock issued or issuable pursuant to an
Issuance that has occurred or may occur in accordance with the
terms and conditions of this Agreement.
“Material Adverse
Effect” means a material adverse effect on the business,
assets, operations, properties, or financial condition of the
Company and its Subsidiaries, taken as a whole, or any material
adverse effect on the Company’s ability to consummate the
transactions contemplated by, or to execute, deliver and perform
its obligations under, this Agreement.
“Material Subsidiary”
has the meaning set forth in Section 3.05.
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“Maximum Program Amount”
means Common Shares with an aggregate Sales Price of $60,000,000
(or, if less, the aggregate amount of Common Shares registered
under the Registration Statement and permitted to be sold under
Rule 415(a)(4) under the Securities Act).
“Person” means an
individual or a corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental authority or other
entity of any kind.
“Principal Market” means
the New York Stock Exchange.
“Prospectus” has the
meaning set forth in Section 3.01.
“Registration Statement”
has the meaning set forth in Section 3.01.
“Sales Price” means the
actual sale execution price of each Common Share sold by BNYCMI on
the Principal Market (or, in BNYCMI’s sole discretion, any
other exchange on which the Common Stock is then listed or admitted
to trading) hereunder in the case of ordinary brokers’
transactions, or as otherwise agreed by the parties in other
methods of sale.
“Securities Act” means
the Securities Act of 1933, as amended.
“Selling Commission”
means 1.0% of the Sales Price.
“Selling Period” means
the period of one to twenty consecutive Trading Days (as determined
by the Company in its sole discretion and specified in the
applicable Issuance Notice) following the Trading Day on which an
Issuance Notice is delivered or deemed to be delivered pursuant to
Section 2.03(b) hereof.
“Settlement Date” means
the Trading Day immediately following the last Trading Day of the
Selling Period.
“Subsidiary” has the
meaning set forth in Section 3.05.
“Trading Day” means any
day which is a trading day on the New York Stock Exchange, other
than a day on which trading is scheduled to close prior to its
regular weekday closing time.
“Voting Stock” of any
Person as of any date means the capital stock of such Person that
is at the time entitled to vote in the election of the Board of
Directors of such Person.
ARTICLE II
DISTRIBUTION OF COMMON STOCK
Section 2.01 Issuance . (a)
Upon the terms and subject to the conditions of this Agreement, the
Company may issue Common Shares through BNYCMI and BNYCMI shall use
its commercially reasonable efforts to distribute Common Shares,
with an aggregate Sales Price of up to the Maximum Program Amount,
based on and in accordance with such number of Issuance Notices as
the Company, in its sole discretion, shall choose to deliver during
the Commitment Period until the aggregate Sales Price of the Common
Shares distributed under this
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Agreement equals the Maximum Program Amount or
this Agreement is otherwise terminated. Subject to the foregoing
and the other terms and conditions of this Agreement, upon the
delivery of an Issuance Notice, and unless the sale of the Issuance
Shares described therein has been suspended, cancelled or otherwise
terminated in accordance with the terms of this Agreement, BNYCMI
will use its commercially reasonable efforts consistent with its
normal trading and sales practices to sell such Issuance Shares up
to the amount specified into the Principal Market (or, in
BNYCMI’s sole discretion, any other exchange on which the
Common Stock is then listed or admitted to trading), and otherwise
in accordance with the terms of such Issuance Notice. BNYCMI will
provide written confirmation to the Company no later than the
opening of the Trading Day next following the Trading Day on which
it has made sales of Issuance Shares hereunder setting forth the
portion of the Actual Sold Amount for such Trading Day, the
corresponding Sales Price and the Issuance Price payable to the
Company in respect thereof. BNYCMI may sell Issuance Shares in the
manner described in Section 2.01(b) herein. The Company
acknowledges and agrees that (i) there can be no assurance that
BNYCMI will be successful in selling Issuance Shares and (ii)
BNYCMI will incur no liability or obligation to the Company or any
other Person if it does not sell Issuance Shares for any reason
other than a failure by BNYCMI to use its commercially reasonable
efforts consistent with its normal trading and sales practices to
sell such Issuance Shares as required under this Section 2.01. In
acting hereunder, BNYCMI will be acting as agent for the Company
and not as principal.
(b) Method of Offer and Sale
. The Common Shares may be offered and sold in (1) privately
negotiated transactions (if and only if the parties hereto have so
agreed in writing), or (2) by any other method or payment permitted
by law deemed to be an “at the market” offering as
defined in Rule 415 of the Securities Act, including sales made
directly on the Principal Market (or, in BNYCMI’s sole
discretion, any other exchange on which the Common Stock is then
listed or admitted to trading) or sales made to or through a market
maker or through an electronic communications network. Nothing in
this Agreement shall be deemed to require either party to agree to
the method of offer and sale specified in clause (1) above, and
either party may withhold its consent thereto in its sole
discretion.
(c) Issuances . Upon the
terms and subject to the conditions set forth herein, on any
Trading Day as provided in Section 2.03(b) hereof during the
Commitment Period on which the conditions set forth in Section 5.01
and 5.02 hereof have been satisfied, the Company may exercise an
Issuance by the delivery of an Issuance Notice, executed by the
Chief Executive Officer, President, Chief Financial Officer,
Treasurer, Vice President/Finance, Corporate Secretary or Assistant
Corporate Secretary of the Company (each, an “Authorized
Officer”), to BNYCMI. The number of Issuance Shares that
BNYCMI shall use its commercially reasonable efforts to distribute
pursuant to such Issuance shall have an aggregate Sales Price equal
to the Issuance Amount. Each Issuance will be settled on the
applicable Settlement Date following the Issuance Date.
Section 2.02 Effectiveness .
The effectiveness of this Agreement (the “Closing”)
shall be deemed to take place concurrently with the execution and
delivery of this Agreement by the parties hereto and the completion
of the closing transactions set forth in the immediately following
sentence. At the Closing, the following closing transactions shall
take place, each of which shall be deemed to occur simultaneously
with the Closing: (i) the Company shall deliver to BNYCMI a
certificate executed by the Secretary of the Company, signing in
such capacity,
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dated the date of the Closing (A) certifying
that attached thereto are true and complete copies of the
resolutions duly adopted by the Board of Directors of the Company
authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (including,
without limitation, the issuance of the Common Shares pursuant to
this Agreement), which authorization shall be in full force and
effect on and as of the date of such certificate and (B) certifying
and attesting to the office, incumbency, due authority and specimen
signatures of each Person who executed the Agreement for or on
behalf of the Company; (ii) the Company shall deliver to BNYCMI a
certificate executed by the Chief Executive Officer, the President
or any Vice-President of the Company and by the Chief Financial
Officer or Treasurer of the Company, signing in such capacity,
dated the date of the Closing, confirming that the representations
and warranties of the Company contained in this Agreement are true
and correct in all material respects and that the Company has
performed in all material respects all of its obligations hereunder
to be performed on or prior to the Closing Date and as to the
matters set forth in Section 5.01(a) hereof; (iii) Morrison &
Foerster LLP, counsel to the Company, shall deliver to BNYCMI an
opinion, dated the date of the Closing and addressed to BNYCMI,
substantially in the form of Exhibit B-1 attached hereto and Robert
M. Johnson, Assistant General Counsel of the Company, shall deliver
to BNYCMI an opinion, dated the date of the Closing and addressed
to BNYCMI, substantially in the form of Exhibit B-2 attached
hereto; (iv) PricewaterhouseCoopers LLP shall deliver to BNYCMI a
letter, dated the Closing Date, in form and substance reasonably
satisfactory to BNYCMI; and (v) the Company shall pay the expenses
set forth in Section 9.02(ii), (iv) and (viii) hereof by wire
transfer to the account designated by BNYCMI in writing prior to
the Closing.
Section 2.03 Mechanics of
Issuances . (a) Issuance Notice . On any Trading Day
during the Commitment Period, the Company may deliver an Issuance
Notice to BNYCMI, subject to the satisfaction of the conditions set
forth in Sections 5.01 and 5.02; provided, however, that (1) the
Issuance Amount for each Issuance as designated by the Company in
the applicable Issuance Notice shall in no event exceed $6,000,000
during the Selling Period without the prior written consent of
BNYCMI, which may be withheld in its sole discretion and (2)
notwithstanding anything in this Agreement to the contrary, BNYCMI
shall have no further obligations with respect to any Issuance
Notice if and to the extent the aggregate Sales Price of the
Issuance Shares sold pursuant thereto, together with the aggregate
Sales Price of the Common Shares previously sold under this
Agreement (together with the amount of Common Stock sold by the
Company pursuant to the terms of any other “at-the-market
offering,” as such term is defined in Rule 415(a)(4) of the
Securities Act, to the extent such sales are required to be taken
into account for purposes of clause (ii) of Rule 415(a)(4)), shall
exceed the Maximum Program Amount.
(b) Delivery of Issuance
Notice . An Issuance Notice shall be deemed delivered on the
Trading Day that it is received by facsimile or otherwise (and the
Company confirms such delivery by e-mail notice or by telephone
(including voicemail message)) by BNYCMI. No Issuance Notice may be
delivered other than on a Trading Day during the Commitment
Period.
(c) Floor Price . BNYCMI
shall not sell Common Shares below the Floor Price during any
Selling Period and such Floor Price may be adjusted by the Company
at any time during any Selling Period upon notice to BNYCMI and
confirmation to the Company.
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(d) Determination of Issuance
Shares to be Distributed . The number of Issuance Shares to be
distributed by BNYCMI with respect to any Issuance shall be the
Actual Sold Amount during the Selling Period.
(e) Trading Guidelines .
BNYCMI may, to the extent permitted under the Securities Act and
the Exchange Act, purchase and sell Common Stock for its own
account while this Agreement is in effect provided that (i) no such
purchase or sales shall take place while an Issuance Notice is in
effect (except to the extent BNYCMI may engage in sales of Issuance
Shares purchased or deemed purchased from the Company as a
“riskless principal” or in a similar capacity), (ii) in
no circumstances shall BNYCMI have a short position in the Common
Stock for its own account and (iii) the Company shall not be deemed
to have authorized or consented to any such purchases or sales by
BNYCMI. In addition, the Company hereby acknowledges and agrees
that BNYCMI’s affiliates may make markets in the Common Stock
or other securities of the Company, in connection with which they
may buy and sell, as agent or principal, for long or short account,
shares of Common Stock or other securities of the Company, at the
same time BNYCMI is acting as agent pursuant to this
Agreement.
Section 2.04 Settlements .
Subject to the provisions of Article V, on or before each
Settlement Date, the Company, as transfer agent, will approve the
Issuance Shares being sold by crediting BNYCMI or its
designee’s account at the Depository Trust Company through
its Deposit Withdrawal Agent Commission System (DWAC), or by such
other means of delivery as may be mutually agreed upon by the
parties hereto and, upon receipt of such Issuance Shares, which in
all cases shall be freely tradable, transferable, registered shares
in good deliverable form, BNYCMI will deliver the related Issuance
Price in same day funds delivered to an account designated by the
Company prior to the Settlement Date. If the Company defaults in
its obligation to deliver Issuance Shares on a Settlement Date, the
Company agrees that it will (i) hold BNYCMI harmless against any
loss, claim, damage or expense (including, without limitation,
penalties, interest and reasonable legal fees and expenses), as
incurred, arising out of or in connection with such default by the
Company, and (ii) pay to BNYCMI any Selling Commission to which it
would otherwise have been entitled absent such default. The parties
acknowledge and agree that, in performing its obligations under
this Agreement, BNYCMI may borrow shares of Common Stock from stock
lenders, and may use the Issuance Shares to settle or close out
such borrowings.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
The Company represents and warrants
to, and agrees with, BNYCMI that as of the date hereof, as of the
date of delivery of each Issuance Notice by the Company, as of each
Settlement Date and as of any time that the Registration Statement
or the Prospectus shall be amended or supplemented (each of the
times referenced above is referred to herein as a
“Representation Date”), except as may be disclosed in
the Prospectus (including any documents incorporated by reference
therein and any supplements thereto) on or before a Representation
Date:
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Section 3.01 Registration .
The Common Stock is registered pursuant to Section 12(b) of the
Exchange Act and is currently listed and quoted on the Principal
Market under the trading symbol “SWX”, and the Common
Shares have been listed on the Principal Market (and any other
exchange on which the Common Stock is then listed or admitted to
trading), subject to notice of issuance. The Company (i) meets the
requirements for the use of Form S-3 under the Securities Act and
the rules and regulations thereunder for the registration of the
transactions contemplated by this Agreement and (ii) has been
subject to the requirements of Section 12 of the Exchange Act and
has timely filed all the material required to be filed pursuant to
Sections 13 and 14 of the Exchange Act for a period of more than 12
calendar months. The Company has filed with the Commission a
registration statement on Form S-3 (Registration No. 333-106419)
which registration statement, as amended, has been declared
effective by the Commission for the registration of up to
$300,000,000 aggregate amount of Common Shares and other securities
under the Securities Act (of which $100 million has been issued and
sold prior to the date of this Agreement), and the offering thereof
from time to time pursuant to Rule 415 promulgated by the
Commission under the Securities Act. Such registration statement
(and any further registration statements that may be filed by the
Company for the purpose of registering additional Common Shares to
be sold pursuant to this Agreement), as amended, and the prospectus
constituting a part of such registration statement, together with
the Prospectus Supplement (as defined in Section 5.01(k)) and any
pricing supplement relating to a particular issuance of the
Issuance Shares (each, an “Issuance Supplement”),
including all documents incorporated or deemed to be incorporated
therein by reference pursuant to Item 12 of Form S-3 under the
Securities Act, in each case, as from time to time amended or
supplemented, are referred to herein as the “Registration
Statement” and the “Prospectus,” respectively,
except that if any revised prospectus is provided to BNYCMI by the
Company for use in connection with the offering of the Common
Shares that is not required to be filed by the Company pursuant to
Rule 424(b) promulgated by the Commission under the Securities Act,
the term “Prospectus” shall refer to such revised
prospectus from and after the time it is first provided to BNYCMI
for such use. Promptly after the Closing, the Company will prepare
and file the Prospectus Supplement relating to the Issuance Shares
pursuant to Rule 424(b) promulgated by the Commission under the
Securities Act, as contemplated by Section 5.01(k) of this
Agreement. As used in this Agreement, the terms
“amendment” or “supplement” when applied to
the Registration Statement or the Prospectus shall be deemed to
include the filing by the Company with the Commission of any
document under the Exchange Act after the date hereof that is or is
deemed to be incorporated therein by reference.
Section 3.02 Incorporated
Documents . The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectus pursuant to Item 12 of Form S-3 (collectively, the
“Incorporated Documents”), as of the date filed with
the Commission under the Exchange Act, conformed and will conform
in all material respects to the requirements of the Exchange Act
and the rules and regulations of the Commission promulgated
thereunder, and none of such documents contained or will contain at
such time an untrue statement of a material fact or omitted or will
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
Section 3.03 The Registration
Statement . No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been initiated
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or threatened by the Commission. The
Registration Statement, as of the Effective Date, conformed or will
conform in all material respects to the requirements of the
Securities Act, and the rules and regulations of the Commission
promulgated thereunder and, as of the Effective Date, did not and
will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as
of its original issue date, as of the date of any filing of an
Issuance Supplement thereto pursuant to Rule 424(b) promulgated by
the Commission under the Securities Act and as of the date of any
other amendment or supplement thereto, conformed or will conform in
all material respects to the requirements of the Securities Act and
the rules and regulations of the Commission promulgated thereunder
and, as of such respective dates, did not and will not contain an
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by BNYCMI
expressly for use in the Prospectus. As used herein, with respect
to the Registration Statement, the term “Effective
Date” means, as of a specified time, the later of (i) the
date that the Registration Statement or the most recent
post-effective amendment thereto was or is declared effective by
the Commission under the Securities Act and (ii) the date that the
Company’s Annual Report on Form 10-K for its most recently
completed fiscal year is filed with the Commission under the
Exchange Act.
Section 3.04 Changes .
Neither the Company nor any Material Subsidiary has sustained since
the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) neither the Company
nor any of its Subsidiaries has incurred any liabilities or
obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are
material to the Company and its Subsidiaries and (ii) there has not
been any change in the capital stock, except for issuances of
capital stock pursuant to the Company’s dividend reinvestment
program and employee benefit or option plans reflected in the
Prospectus, or long-term debt, other than the repayment of current
maturities of long-term debt and ordinary course borrowings and
repayments under the Company’s bank facility, of the Company
or any of its Subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
shareholders’ equity or results of operations of the Company
and its Subsidiaries, otherwise than as set forth or contemplated
in the Prospectus.
Section 3.05 Organizational
Matters . The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of California, with corporate power and authority to own or
lease its properties and conduct its business as described in the
Registration Statement and the Prospectus; the Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a
Material Adverse Effect. Each Material Subsidiary of the Company
has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its jurisdiction of
incorporation. As used in this Agreement, the term
“Subsidiary” means any
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Person (other than a natural person), at least a
majority of the outstanding Voting Stock of which is owned by the
Company, by one or more Subsidiaries or by the Company and one or
more Subsidiaries. As used in this Agreement, the term
“Material Subsidiary” means each Subsidiary of the
Company set forth on Exhibit 21 to the Company’s most recent
annual report on Form 10-K filed prior to or during the term of
this Agreement. Except as disclosed in the Incorporated Documents,
no Subsidiary, and no two or more Subsidiaries of the Company
considered in the aggregate, constitute a “significant
subsidiary” within the meaning of Rule 1-02(w) of Regulation
S-X. As of the date of this Agreement, the only Material
Subsidiaries are Northern Pipeline Construction Company and Paiute
Pipeline Company.
Section 3.06 Authorization;
Enforceability . The Company has the corporate power and
authority to execute, deliver and perform the terms and provisions
of this Agreement and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of, and the
consummation of the transactions to be performed by it contemplated
by, this Agreement. No other corporate proceeding on the part of
the Company is necessary, and no consent of any shareholder in its
capacity as such of the Company is required, for the valid
execution and delivery by the Company of this Agreement, and the
performance and consummation by the Company of the transactions
contemplated by this Agreement to be performed by the Company. The
Company has duly executed and delivered this Agreement. This
Agreement constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and
by general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law) and by limitations
imposed by law and public policy on indemnification or
exculpation.
Section 3.07 Capitalization .
The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are
fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the
preemptive or other similar rights of any security holder of the
Company; all of the issued shares of capital stock of each Material
Subsidiary have been duly and validly authorized and issued and are
fully paid and non-assessable; and all shares of capital stock of
each Material Subsidiary (other than directors’ qualifying
shares) are owned directly or indirectly by the Company, free and
clear of any liens, encumbrances or security interests, except as
described in the Registration Statement and the Prospectus. The
Common Shares (in an amount up to the Maximum Program Amount) have
been duly and validly authorized by all necessary corporate action
on the part of the Company. When issued against payment therefor as
provided in this Agreement, the Common Shares will be validly
issued, fully paid and nonassessable, free and clear of all
preemptive rights, claims, liens, charges, encumbrances and
security interests of any nature whatsoever, other than any of the
foregoing created by BNYCMI. The capital stock of the Company,
including the Common Shares, conforms to the description contained
in the Registration Statement. Except as set forth in the
Prospectus, there are no outstanding options, warrants, conversion
rights, subscription rights, preemptive rights, rights of first
refusal or other rights or agreements of any nature outstanding to
subscribe for or to purchase any shares of Common Stock of the
Company or any other securities of the Company of any kind binding
on the Company (except pursuant to dividend reinvestment, stock
purchase or ownership, stock option, director or employee
benefit
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plans) and there are no outstanding securities
or instruments of the Company containing anti-dilution or similar
provisions that will be triggered by the issuance of the Common
Shares as described in this Agreement. There are no restrictions
upon the voting or transfer of any shares of the Company’s
Common Stock pursuant to the Company’s Articles of
Incorporation or bylaws. There are no agreements or other
obligations (contingent or otherwise) that may require the Company
to repurchase or otherwise acquire any shares of its Common Stock.
No Person has the right, contractual or otherwise, to cause the
Company to issue to it, or to register pursuant to the Securities
Act, any shares of capital stock or other securities of the Company
upon the filing of the Registration Statement or the issuance or
sale of the Common Shares hereunder.
Section 3.08 No Conflicts .
The issuance and sale of the Common Shares, the compliance by the
Company with all of the provisions of this Agreement and the
consummation of the transactions contemplated herein do not and
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, or
result in the imposition of a lien or security interest under, any
material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any Material
Subsidiary is a party or by which the Company or any Material
Subsidiary is bound or to which any of the property or assets used
in the conduct of the business of the Company or any Material
Subsidiary is subject, nor will such action result in any violation
of the provisions of the Articles of Incorporation or the by-laws
of the Company or any Material Subsidiary or any statute or any
order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any Material
Subsidiary or any of their properties (except in each case for
conflicts, breaches, violations, defaults, liens or security
interests that would not have a Material Adverse Effect); and no
consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
is required for the consummation by the Company of the transactions
contemplated by this Agreement or in connection with the issuance
and sale of the Common Shares hereunder, except (1) such as have
been, or will have been prior to the Closing Date, obtained under
the Securities Act, (2) for authorizations of the Public Utilities
Commission of the State of California (the “CPUC”)
dated September 7, 2000 (which authorizations are, to the best
knowledge of the Company, not the subject of any pending or
threatened application for rehearing or petition for modification)
and (3) for such consents, approvals, authorizations, orders,
registrations or qualifications as may be required under state
securities or blue sky laws, as the case may be, and except in any
case where the failure to obtain such consent, approval,
authorization, order, registration or qualification would not have
a Material Adverse Effect.
Section 3.09 Legal
Proceedings . Other than as set forth in or contemplated in the
Registration Statement or the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
Subsidiaries is a party or of which any property of the Company or
any of its Subsidiaries is the subject which, if determined
adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect
and, to the best of the Company’s knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others.
Section 3.10 Sale of Common
Shares . Immediately after any sale of Common Shares by the
Company hereunder, the aggregate amount of Common Stock that has
been issued and sold by the Company hereunder will not exceed the
aggregate amount of Common Stock (x)
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registered under the Registration Statement and
permitted to be sold under Rule 415(a)(4) under the Securities Act
or (y) that shall be authorized by the CPUC from time to time (in
this regard, the Company acknowledges and agrees that BNYCMI shall
have no responsibility for maintaining records with respect to the
aggregate amount of Common Shares sold, or of otherwise monitoring
the availability of Common Stock for sale, under the Registration
Statement or applicable CPUC authorizations).
Section 3.11 Permits . Each
of the Company and the Material Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or
regulatory authorities (the “permits”) as are necessary
to own its respective properties and to conduct its business in the
manner described in the Prospectus, except where the failure to
obtain such permits would not reasonably be expected to have a
Material Adverse Effect; to the best knowledge of the Company after
due inquiry, each of the Company and the Material Subsidiaries has
fulfilled and performed all its material obligations with respect
to such permits, except where the failure to fulfill or perform any
such obligation would not reasonably be expected to have a Material
Adverse Effect; and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination of
any material permits or would result in any other material
impairment of the rights of the holder of any such material
permits, subject in each case to such qualifications as may be set
forth in the Prospectus.
Section 3.12 Investment
Company . The Company is not, and after giving effect to the
offering and sale of the Common Shares, will not be, an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended (the “1940
Act”).
Section 3.13 Financial Condition;
No Adverse Changes . (a) The financial statements, together
with related schedules and notes, included or incorporated by
reference in the Registration Statement and the Prospectus, present
fairly the consolidated financial position, results of operations
and changes in financial position of the Company and the
Subsidiaries on the basis stated in the Registration Statement and
the Prospectus at the respective dates or for the respective
periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, subject to normal year end adjustments, except as
disclosed therein; and the other financial and statistical
information and data included or incorporated by reference in the
Registration Statement and the Prospectus are accurately presented
and prepared on a basis consistent with such financial statements
and the books and records of the Company and the Subsidiaries. No
other financial statements are required to be set forth or to be
incorporated by reference in the Registration Statement or the
Prospectus under the Securities Act.
(b) The Company and its Subsidiaries
maintain systems of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization; (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences; and
(v) material information relating
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to the Company and its subsidiaries is made
known to the Company by its officers and employees.
(c) The accountants who have audited
the financial statements of the Company that are incorporated by
reference in the Registration Statement and the Prospectus are
independent certified public accountants as required by the
Securities Act and the rules and regulations of the Commission
promulgated thereunder.
Section 3.14 Use of Proceeds
. The Company will use the net proceeds from the offering of Common
Shares in the manner specified in the Prospectus under “Use
of Proceeds.”
Section 3.15 Environmental
Matters . Other than as set forth in the Prospectus or as set
forth in or contemplated in the documents incorporated in the
Prospectus, (a) the Company and its Subsidiaries are in compliance
in all material respects with all applicable state and federal
environmental laws, except for instances of noncompliance that,
individually or in the aggregate, would not have a Material Adverse
Effect, and (b) no event or c
