EXHIBIT 1
SOUTHWEST WATER COMPANY
$20,000,000
____% Convertible Subordinate Debentures
due July 1, 2021
UNDERWRITING AGREEMENT
----------------------
_________, 2001
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Principal
Gentlemen:
The undersigned, Southwest Water Company, a Delaware corporation (the
"Company"), hereby confirms its agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., L.P. (the
"Underwriter") as follows:
1. Offering. The Company proposes to issue and sell to the Underwriter an
--------
aggregate principal amount of $20,000,000 of its ___% Convertible Subordinate
Debentures due July 1, 2021 (the "Debentures"). The Debentures are to be issued
pursuant to an indenture to be dated as of __________________, 2001 (the
"Indenture) between the Company and Chase Manhattan Bank and Trust Company,
National Association, as trustee (the "Trustee") and will be convertible into
shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"). The Debentures are more particularly described in the Prospectus (as
hereinafter defined) and in the form of Indenture filed as an exhibit to the
Registration Statement (as hereinafter defined). No amendment to such form of
Indenture will be made prior to the Closing Date, hereinafter defined, without
your prior approval.
2. Reserved.
--------
3. Sale and Delivery of the Debentures. Subject to the terms and
-----------------------------------
conditions and based upon the representations and warranties set forth in this
Agreement, (a) the Company agrees to issue and sell $20,000,000 in aggregate
principal amount of Debentures to the Underwriter and (b) the Underwriter agrees
to purchase from the Company the aggregate principal amount of the Debentures at
a price of 96% of the principal amount thereof.
The Underwriter agrees to make a public offering of the Debentures promptly
after the Registration Statement shall have become effective, at the public
offering price and upon the terms and conditions set forth in the Prospectus.
The Underwriter may reserve and sell such of the Debentures purchased by the
Underwriter, as the Underwriter may elect, to dealers chosen by
it (the "Selected Dealers") at the public offering price set forth in the
Prospectus less the applicable Selected Dealers concessions as established by
the Underwriter, for re-offering by Selected Dealers to the public at the public
offering price.
Delivery of the Debentures and payment therefor, shall be made to the
Underwriter at _____ A.M., St. Louis time, on ________________, 2001, or on such
later day and time (not later than seven full business days thereafter) as may
be agreed upon in writing between the Underwriter and the Company, such day and
time of delivery and payment being herein called the "Closing Date."
On the Closing Date, the Debentures shall be delivered by the Company to
the Underwriter at its office at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ and/or at The Depository Trust Company in New York, New York, as
designated by the Underwriter, against payment of the purchase price therefor in
funds immediately available to the Company. The Company agrees to make available
to the Underwriter for inspection and packaging in St. Louis, Missouri, at least
one full business day prior to the Closing Date, the Debentures so to be
delivered in good delivery form and in such denominations and registered in such
names as the Underwriter shall have requested, all such requests to have been
made in writing at least two full business days prior to the Closing Date.
4. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants to the Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act") and has prepared a
registration statement on Form S-3 (Registration No. 333-63196) for the
registration of the Debentures (and the shares of Common Stock issuable
upon conversion of the Debentures) and one or more amendments thereto in
conformity with the requirements of the Act and all applicable instructions
and the published rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") under the Act and
has filed such registration statement and amendments with the Commission.
Copies of such registration statement and amendments (including all forms
of preliminary prospectus) have been delivered to the Underwriter, and the
Company will not, before the registration statement becomes effective, file
any other amendment thereto or supplement to which you reasonably object in
writing after being furnished with a copy thereof. Such registration
statement, including all prospectuses included as a part thereof, all
financial schedules and exhibits thereto and all documents incorporated by
reference therein, as amended at the time when it becomes effective, is
herein called the "Registration Statement," and the term "Prospectus" as
used herein means the prospectus, including the documents incorporated by
reference therein, in the form first filed by the Company pursuant to Rule
424(b) under the Act. The term "preliminary prospectus" as used herein
means any preliminary prospectus included at any time as part of the
Registration Statement, including the documents incorporated by reference
therein.
(b) The Commission has not issued any order preventing or suspending
the use of any preliminary prospectus, and each preliminary prospectus, at
the time of the filing thereof with the Commission, did not include any
untrue statement of a material
2
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading; provided,
however, that none of the representations and warranties in this
subparagraph shall apply to statements in, or omissions from, any
preliminary prospectus made in reliance upon and in conformity with the
information furnished to the Company by or on behalf of the Underwriter
contained in, and specifically for use in, the section entitled
"Underwriter" in such preliminary prospectus.
(c) When the Registration Statement becomes effective and at all
times subsequent thereto up to and including the Closing Date, the
Registration Statement and Prospectus, and all amendments thereof and
supplements thereto, will comply in all material respects with the
provisions of the Act and the Rules and Regulations; when the Registration
Statement becomes effective, and when any post-effective amendment thereto
becomes effective, the Registration Statement (as amended, if the Company
has filed with the Commission any post-effective amendment thereto) will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and when the Registration Statement
becomes effective and at all times subsequent thereto up to and including
the Closing Date, the Prospectus (as amended or supplemented, if the
Company has filed with the Commission any amendment thereof or supplement
thereto) will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading; provided, however,
that none of the representations and warranties in this subparagraph will
apply to statements in, or omissions from, the Registration Statement or
the Prospectus or any amendment thereof or supplement thereto made in
reliance upon and in conformity with information furnished to the Company
by or on behalf of the Underwriter contained in, and specifically for use
in, the section entitled "Underwriter" in the Registration Statement or the
Prospectus or any such amendment or supplement or to that part of the
Registration Statement that constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), of the trustee referred to in the Registration
Statement.
(d) The documents incorporated by reference into the Prospectus
pursuant to Item 12 of Form S-3 under the Act, at the time they were filed
with the Commission, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations of the Commission thereunder
(the "Exchange Act Rules and Regulations"), and any documents deemed to be
incorporated by reference in the Prospectus will, when they are filed with
the Commission, comply in all material respects with the requirements of
the Exchange Act and the Exchange Act Rules and Regulations, and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
(e) The Company has been duly incorporated and is validly existing in
good standing under the laws of Delaware, and is duly qualified as a
foreign corporation for the
3
transaction of business and in good standing in each jurisdiction in which
the ownership or leasing of its properties or the conduct of its business
requires such qualification.
(f) The Company has an authorized and outstanding capitalization as
set forth in the Prospectus, has authorized shares of Common Stock reserved
for issuance upon conversion of the Debentures, and all of the outstanding
shares of Common Stock and the shares of Common Stock to be issued upon
conversion of the Debentures have been duly and validly authorized and have
been, or, when issued and delivered in accordance with the Indenture, will
be, duly and validly issued, fully paid and non-assessable and conform, or
when issued will conform, to the description thereof contained in the
Prospectus. Except as described in the Prospectus, there are no preemptive
or other rights to subscribe for or purchase, or any restriction upon the
voting or transfer of, any Common Stock, under the Certificate of
Incorporation or By-Laws of the Company or any agreement or other
outstanding instrument to which the Company is a party or by which it may
be bound, other than limitations on transfers by certain stockholders such
that they must conform with the applicable securities laws; the Company
does not have outstanding any option, warrant, convertible security, or
other right permitting or requiring it or others to purchase, or convert
any obligation into, Common Stock nor has the Company agreed to issue or
sell any Common Stock except as described in the Prospectus; and there are
no rights in any entity or person to have the Company register under the
Act any Common Stock or other securities of the Company except as described
in the Prospectus.
(g) The Company has full right, power and authority to enter into
this Agreement and to perform all of its obligations hereunder or
contemplated hereby; this Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company.
(h) The Debentures have been duly authorized and, when issued and
delivered against payment of the agreed consideration pursuant to this
Agreement, will have been duly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms and entitled to the
benefits provided by the Indenture, except insofar as enforcement may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization and other laws of general applicability relating
to or affecting the enforcement of creditors' rights and by equitable
principles of general applicability, whether or not enforcement is sought
at law or equity`; the Indenture has been duly authorized and, when
executed and delivered by the Company and the Trustee, will constitute a
valid and legally binding instrument of the Company enforceable in
accordance with its terms except insofar as enforcement may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, moratorium,
reorganization and other laws of general applicability relating to or
affecting the enforcement of creditors' rights and by equitable principles
of general applicability, whether or not enforcement is sought at law or
equity; and the Debentures and the Indenture will conform to the
descriptions thereof in the Prospectus and the Indenture will be
substantially in the form filed as an exhibit to the Registration
Statement.
4
(i) The Company has all requisite power and authority necessary to
own or hold its properties and conduct its business as described in the
Prospectus and owns or holds all material licenses, permits and other
required authorizations from governmental authorities necessary to conduct
the business operated by it.
(j) The Company has good and marketable title to all property
described in the Prospectus as being owned by it, in each case free and
clear of all liens, claims, security interests or other encumbrances except
such as are described in the Prospectus or such as are not material to the
business of the Company; and the property held under lease by the Company
is held by it under valid, subsisting and enforceable leases with only such
exceptions as in the aggregate are not material and do not interfere with
the conduct of the business of the Company.
(k) Except as set forth in the Prospectus, there are no actions,
suits, proceedings, hearings, or to the best of the knowledge of the
Company, any claims or investigations pending, before or by any court,
governmental authority, or instrumentality (or, to the best of the
knowledge of the Company, any state of facts which would give rise thereto)
threatened against the Company or involving any of its properties, which
the Company has reason to believe may result in any material adverse change
in the business, operations, assets, financial condition or prospects of
the Company, or which the Company has reason to believe may adversely
affect the transactions or other acts contemplated by this Agreement or the
validity or enforceability of the Debentures, the Indenture or this
Agreement.
(l) Except as reflected in or contemplated by the Prospectus, since
the respective dates as of which information is given in the Prospectus and
up to and including the Closing Date, the Company has not incurred, and
will not have incurred, any liabilities or obligations, direct or
contingent, which are material to the business of the Company, or entered
into any transaction which is material to the business of the Company, and
there has not been any change in the capital stock, short-term or long-term
debt of the Company which is material to the business of the Company, or
any material adverse change, or any development specifically related to the
business of the Company involving, in the opinion of the Company, a
prospective material adverse change, in the business, operations, assets,
financial condition or prospects of the Company.
(m) The issuance and sale of the Debentures, the execution and
delivery of this Agreement and the Indenture by the Company, the
consummation of the transactions contemplated herein and compliance with
the terms of the Debentures, the Indenture and this Agreement 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 creation or
imposition of any lien, charge or encumbrance upon any of the property or
assets of the Company pursuant to the terms of any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company is a party or by which it is bound or to which any of its property
is subject, except for conflicts, breaches, violations or defaults which
would be immaterial to the business and operations of the Company and which
would not affect the validity or enforceability of the Debentures, the
Indenture or this Agreement or otherwise adversely affect the rights,
duties or obligations of the Trustee,
5
the Underwriter or the holders of the Debentures; nor would such issuance,
sale, execution, delivery, consummation or compliance conflict with or
result in a breach or violation of any of the terms or provisions of or
constitute a default under the Certificate of Incorporation or By-Laws of
the Company or any applicable law, rule, regulation, judgment or decree or
order of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its properties. No
consent, approval, authorization or order of any court or governmental
agency or body is required for the issuance and sale of the Debentures or
the consummation by the Company of the transactions contemplated by this
Agreement or the Indenture, except as may be required under the Act, the
Trust Indenture Act, the Rules and Regulations or state securities or Blue
Sky laws in connection with the purchase and distribution of the Debentures
by the Underwriter.
(n) The financial statements and schedules of the Company included in
the Registration Statement and Prospectus fairly present, and the financial
statements and schedules of the Company included in any amendment or
supplement to the Registration Statement and Prospectus will fairly
present, the financial condition of the Company and the results of its
operations and changes in its financial position as of the dates and for
the periods therein specified; and said financial statements have been and
will be prepared in accordance with generally accepted accounting
principles which have been consistently maintained and applied throughout
the periods involved.
(o) To the best of the Company's knowledge, the accountants who have
certified or shall certify the financial statements filed or to be filed
with the Commission as part of the Registration Statement and the
Prospectus are independent accountants as required by the Act.
(p) The Company is not a "holding company," as such term is defined
in the Public Utility Holding Company Act of 1935.
5. Agreements of the Company. The Company agrees that:
-------------------------
(a) Prior to the effective date of the Registration Statement and at
any time when a prospectus relating to the Debentures is required to be
delivered under the Act or the Rules and Regulations, the Company will not
file or make any amendment or post-effective amendment to the Registration
Statement or any amendment or supplement to the Prospectus to which the
Underwriter shall reasonably object in writing within two business days
after being furnished copies thereof and following reasonable telephonic
notice of such amendment or supplement from the Company to the Underwriter.
(b) The Company will use its commercially reasonable best efforts to
cause the Registration Statement to become effective and will advise the
Underwriter immediately and confirm that advice in writing (i) of the
effectiveness of the Registration Statement, or any post-effective
amendment thereto, (ii) of any request of the Commission to amend or
supplement the Registration Statement or Prospectus, or to provide
additional information, and (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
the suspension of
6
the qualification of the Debentures for sale in any state or other
jurisdiction, or of the initiation or threat of any proceeding for any such
purpose. The Company will use its best efforts to prevent the issuance of
any stop order or suspension order and to obtain the withdrawal of any such
stop order or suspension order.
(c) The Company will promptly deliver to the Underwriter without
charge, (i) three copies of the Registration Statement, as originally
filed, and of each amendment thereto, and of each post-effective amendment
thereto filed at any time when a prospectus relating to the Debentures is
required to be delivered under the Act, at least two of which have been
signed by the proper officers and at least a majority of directors of the
Company, either directly or by their attorney(s)-in-fact and include a
signed copy of each consent and certificate of experts named in the
Registration Statement, together with all exhibits filed therewith or
incorporated by reference therein and (ii) such number of conformed copies
of the Registration Statement, as originally filed, and of each amendment
thereto, and of each post-effective amendment thereto filed at any time
when a prospectus relating to the Debentures is required to be delivered
under the Act or the Rules and Regulations (in each such case excluding
exhibits), as the Underwriter may reasonably require. The Company will
promptly deliver, without charge, to the Underwriter and such others whose
names and addresses are designated by the Underwriter: (A) from time to
time until the effective date of the Registration Statement, as many
printed copies of any preliminary prospectus filed with the Commission
prior to the effective date of the Registration Statement as the
Underwriter may reasonably request; and (B) as soon as possible after the
Registration Statement becomes effective, and from time to time thereafter,
as many printed copies of the Prospectus and of any amended or supplemented
Prospectus as the Underwriter may reasonably request.
(d) The Company will comply to the best of its ability with the Act,
the Trust Indenture Act and the Exchange Act and the Rules and Regulations
so as to permit the continuance of sales of and dealings in the Debentures
and Common Stock under the Act, the Trust Indenture Act and the Exchange
Act, and will keep current in the filing of all reports and forms required
to be filed with any regulatory authority having jurisdiction over the
Company.
(e) If at any time when a prospectus relating to the Debentures is
required to be delivered under the Act or the Rules and Regulations, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact, or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances under which made, not misleading, or if it is
necessary at any time to amend or supplement the Prospectus to comply with
the Act or the Rules and Regulations, the Company will promptly notify the
Underwriter and promptly prepare and file with the Commission an amendment
or supplement to the Registration Statement or an appropriate filing
pursuant to Section 13 or 14 of the Exchange Act which will correct such
statement or omission or an amendment which will effect such compliance,
and deliver in connection therewith, such Prospectus or Prospectuses to the
Underwriter in such quantity as may be necessary to permit compliance with
the requirements of the Act and the Rules and Regulations.
7
(f) The Company will cooperate with the Underwriter and counsel for
the Underwriter in taking such action as may be necessary to qualify the
Debentures for offering and sale under the securities laws of any state or
jurisdiction of the United States as the Underwriter may reasonably request
and will use its best efforts to continue such qualification in effect so
long as required for the distribution of the Debentures.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 120 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Section 11(a) of the Act, including, at the option of the
Company, Rule 158 under the Act, which need not be certified by independent
public accountants unless required by the Act or the Rules and Regulations)
covering a period of at least 12 months commencing after the effective date
of the Registration Statement.
(h) The Company will not assert, plead (as a defense or otherwise) or
in any manner whatsoever claim (and will actively resist any attempt to
compel it to assert, plead or claim) in any action, suit or proceeding that
the interest rate on the Debentures violates present or future usury or
other laws relating to the interest payable on any indebtedness and will
not otherwise avail itself (and will actively resist any attempt to compel
it to avail itself) of the benefits or advantages of any such laws.
(i) For a period of five years after the issuance of the Debentures,
the Company will furnish as soon as practicable to the Underwriter copies
of any reports filed by the Company with the Commission pursuant to Section
13 of the Exchange Act, copies of the Company's definitive proxy statements
and annual reports and copies of all reports and communications which shall
be sent to the holders of Common Stock.
(j) The Company will apply the net proceeds from the offering of the
Debentures in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
6. Expenses. The Company and the Underwriter agree as follows:
--------
(a) The Company, whether or not the transactions contemplated
hereunder are consummated, will pay all costs and expenses incident to the
performance of its obligations hereunder, including without limitation, all
costs and expenses in connection with (i) the preparation and filing of the
Registration Statement, Prospectus and Indenture and any supplements or
amendments thereto; (ii) the preparation, issuance and delivery of the
Debentures contemplated by this Agreement; (iii) the printing and mailing
in reasonable quantities of the Registration Statement, the Indenture,
amendments thereto, each preliminary prospectus, the Prospectus and any
amendments or supplements thereto, this Agreement and related documents
delivered to the Underwriter and Selected Dealers; (iv) any taxes,
including transfer taxes, on the sale of the Debentures to the Underwriter;
(v) the filing fees and expenses (including legal fees and reasonable
disbursements) incurred in connection with the qualification of the
Debentures under the Blue Sky or securities laws of the various states,
filings with the National Association of Securities Dealers, Inc. and the
preparation of Preliminary and Supplemental Blue Sky Memoranda
8
for the Offering; (vi) the fees and expenses of the accountants and the
counsel for the Company; (vii) the fees of the Trustee and any agent of the
Trustee (including legal fees and disbursements, if any, of counsel to the
Trustee); (viii) the listing of the shares of Common Stock underlying the
Debentures on the Nasdaq National Market; and (ix) all other costs and
expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section.
(b) The Underwriter will pay (i) the fees and disbursements of the
Underwriter's counsel, except as set forth in (a) above and Section 10(b)
hereof, and (ii) their own out-of-pocket expenditures.
7. Conditions of the Underwriter's Obligations. The obligations of the
-------------------------------------------
Underwriter to purchase and pay for the Debentures shall be subject in its
discretion to the accuracy of and compliance with the representations and the
warranties of the Company herein contained as of the date hereof and the Closing
Date, to the performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) The Registration Statement shall have become effective and the
Indenture qualified under the Trust Indenture Act not later than ___ P.M.,
St. Louis time on such date as shall be consented to in writing by the
Underwriter and the Company, and no stop order suspending the effectiveness
of such Registration Statement shall have been issued under the Act or
proceedings therefor initiated or threatened by the Commission prior to the
Closing Date; and all requests for additional information on the part of
the Commission shall have been complied with to the reasonable satisfaction
of the Underwriter.
(b) The Underwriter shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, contains an untrue statement of fact which in its
judgment, is material, or omits to state a fact which, in its judgment, is
material, and is required to be stated therein or necessary to make the
statements therein not misleading.
(c) On the Closing Date, the Underwriter shall have received an
opinion, dated the Closing Date, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the
Company, substantially in the form of Exhibit A attached hereto.
(d) On the Closing Date, the Underwriter shall have received from
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP an opinion or opinions with respect to the
sufficiency of the Company proceedings and other legal matters relating to
this Agreement, the Registration Statement, the Prospectus and such related
matters as the Underwriter may reasonably require, and there shall have
been furnished to such counsel such documents as they may request to enable
them to pass upon such matters. In giving such opinion or opinions,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP may rely as to matters of fact upon statements and
certifications of officers of the Company and of other appropriate persons
and may rely as to matters of law, other than the law of the United States
and the State of Missouri, upon an opinion or opinions of local counsel,
who may be counsel for the Company, provided that any such
9
opinion or opinions are delivered to the Underwriter and that said counsel
shall state that they have no reason to believe that such opinions are not
correct.
(e) On the Closing Date, the Underwriter shall have received a
certificate, dated the Closing Date, signed by the chief executive officer
or president and principal financial or accounting officer of the Company,
in form and substance satisfactory to the Underwriter, to the effect that
(i) the representations and warranties of the Company in this Agreement are
true and correct as if made on the Closing Date and the Company has
complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied at or prior to the Closing Date; (ii)
since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the business,
operations, assets, financial condition or prospects, of the Company, or in
the business of the Company; (iii) since such dates there has not been any
material transaction entered into by the Company other than transactions in
the ordinary course of business; and (iv) no stop order affecting the
Registration Statement is in effect or, to the best of such officers'
knowledge, threatened, and covering such other matters as the Underwriter
may reasonably request.
(f) On the date of this Agreement, the Underwriter and the Company
shall have received a letter from KPMG LLP dated such date and addressed to
the Underwriter and the Company in form and substance satisfactory to the
Underwriter, with respect to the financial statements and certain financial
and statistical information contained in the Registration Statement and the
Prospectus.
(g) At the Closing Date, the Underwriter and the Company shall have
received from KPMG LLP a letter, dated the Closing Date and addressed to
the Underwriter and the Company in form and substance satisfactory to the
Underwriter, confirming as of the Closing Date their letter dated the date
hereof and delivered to the Underwriter pursuant to Section 7(f) hereof.
(h) Before _________________________________, counsel for the
Underwriter, shall have been furnished with such opinions and copies of
such documents as they may reasonably require for the purpose of enabling
them to pass upon the issuance and sale of the Debentures as herein
contemplated and related proceedings, or in order to evidence the accuracy
or completeness of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the
Debentures as herein contemplated and all opinions and certificates
mentioned above or elsewhere in this Agreement shall be satisfactory in
form and substance in all material respects to the Underwriter and said
counsel.
(i) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall not have been any material change
in the capital stock, short-term debt or long-term debt of the Company or
any material adverse change, or any development specifically related to the
business of the Company involving a prospective material adverse change, in
the business, operations, assets, financial condition or prospects of the
10
Company considered as a whole which, in the judgment of the Underwriter,
makes it impractical to offer or deliver the Debentures on the terms and in
the manner contemplated in the Prospectus.
If any of the conditions specified in this Section 7 shall not have been
fulfilled, this Agreement may be terminated by the Underwriter upon notice to
the Company or such conditions may be waived, modified or the time for
fulfillment thereof may be extended by the Underwriter upon notice to the
Company.
8. Conditions of the Company's Obligations. The obligations of the
---------------------------------------
Company to deliver the Debentures shall be subject to the following conditions:
(a) The Registration Statement shall have been declared effective by
the Commission.
(b) No stop order suspending the effectiveness of the Registration
Statement shall be in effect at the Closing Date, and no proceedings
therefor shall be pending or threatened by the Commission at the Closing
Date.
In the event the conditions specified in this Section 8 shall not be
fulfilled, this Agreement may be terminated by the Company by delivery of notice
to the Underwriter. Any such notice shall be without liability of the Company to
the Underwriter, except as otherwise provided in Section 10(b) thereof, and
without liability of the Underwriter to the Company.
9. Indemnification.
---------------
(a) The Company will indemnify and hold harmless the Underwriter and
each person, if any, who controls the Underwriter within the meaning of the
Act against any losses, claims, damages or liabilities, joint or several,
to which the Underwriter or such controlling person may be subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto or any related preliminary prospectus, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse the Underwriter and
each controlling person for any legal or other expenses reasonably incurred
by the Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in such case
to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or omission made in any of such
documents in reliance upon and in conformity with information furnished to
the Company by the Underwriter contained in the section of the Prospectus
entitled "Underwriter" and specifically for use therein; provided, however,
that the indemnification contained in this paragraph with respect to any
preliminary prospectus shall not inure to the benefit of the Underwriter
(or of any person controlling the Underwriter) on account of any such
losses, claims, damages, liabilities or expenses arising from the sale of
the Debentures by the
11
Underwriter to any person if a copy of the Prospectus (as amended or
supplemented if any amendments or supplements thereto shall have been
furnished to the Underwriter prior to the written confirmation of the sale
involved) shall not have been given or sent to such person by or on behalf
of the Underwriter with or prior to the written confirmation of the sale
involved, and the untrue statement or omission of a material fact contained
in such preliminary prospectus was corrected in the Prospectus (as amended
or supplemented if amended or supplemented as aforesaid). Indemnification
pursuant to this Section 9 will be in addition to any liability which the
Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer or
controlling person may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or action in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, the Prospectus or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Underwriter contained in
the section of the Prospectus entitled "Underwriter" and specifically for
use therein, and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability or action. Indemnification pursuant to this Section 9 will be in
addition to any liability which the Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of any claim or the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under this Section 9, notify the indemnifying party
of the commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under Section 9. In case any claim or
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this Section 9 for
any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable cost of
investigation. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized by the indemnifying
party, (ii) the indemnified
12
party shall have reasonably concluded that there may be a conflict of
interest between the indemnifying party and the indemnified party in the
conduct of the defense of such action (in which case the indemnifying party
shall not have the right to direct the defense of such action on behalf of
the indemnified party) or (iii) the indemnifying party shall not in fact
have employed counsel to assume the defense of such action, in each of
which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party. An indemnifying party shall not be liable for any
settlement of any action or claim effected without its consent, which
consent shall not be unreasonably withheld, delayed or conditioned.
10. Termination.
-----------
(a) This Agreement may be terminated at any time prior to the Closing
Date by the Underwriter by written notice to the Company, if in the
judgment of the Underwriter it is impracticable to offer for sale or to
enforce contracts made by the Underwriter for the resale of the Debentures
by reason of (i) the Company sustaining a loss, whether or not insured, by
reason of fire, flood, accident or other calamity, which, in the opinion of
the Underwriter, substantially affects the value of the properties of the
Company or which materially interferes with the operation of the business
of the Company, (ii) all trading in securities on the Nasdaq National
Market having been suspended or limited or minimum prices having been
established on such exchange, (iii) a banking moratorium having been
declared by the United States or by New York state authorities or (iv) an
outbreak of major hostilities or other national or international calamity
having occurred.
(b) If the obligations of the parties to this Agreement shall be
terminated pursuant to Section 7 or 8 hereof or this Section 10, or if the
purchase provided for herein is not consummated because of any refusal,
inability or failure on the part of the Company to comply with any of the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform all the obligations under
this Agreement, the Company shall not be liable to the Underwriter for
damages on account of loss of anticipated profits arising out of the
transactions covered by this Agreement, but the Company shall remain liable
to the extent provided in Sections 6(a) and 9(a) hereof, and, except where
termination occurs pursuant to clause (ii), (iii) or (iv) of Section 10(a)
hereof, the Company shall pay the out-of-pocket expenses incurred by the
Underwriter in contemplation of the performance by it of its obligations
hereunder, including the fees and disbursements of its counsel and its
traveling expenses and postage, telegraph and telephone charges.
13
11. Survival of Indemnities, Representations and Warranties. The
-------------------------------------------------------
respective indemnities of the Company and the Underwriter and the respective
representations and warranties of the Company and the Underwriter set forth in
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or the Underwriter or any of
their respective officers, directors, partners or any controlling person, and
will survive delivery of and payment for the Debentures or termination of this
Agreement pursuant to Section 10 hereof, as the case may be.
12. Parties in Interest. This Agreement shall inure to the benefit of the
-------------------
Company, the Underwriter, the officers, directors and partners of such parties,
each controlling person referred to in Section 9 hereof, and their respective
successors. Nothing in this Agreement is intended or shall be construed to give
to any other person, firm or corporation any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
The term "successor" as used in this Agreement shall not include any
purchaser, as such purchaser, of any Debentures from the Underwriter.
This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes any agreement previously
entered into.
13. Notices. All communication, terminations and notices hereunder shall
-------
be in writing and sent to the Underwriter or the Company, as applicable. Notices
shall be mailed, delivered or telegraphed and confirmed to the Underwriter at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇) (or
such other place as the Underwriter may specify in writing); if sent to the
Company shall be mailed, delivered or telegraphed and confirmed to the Company
at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (Attn: ▇▇▇▇▇▇
▇▇▇▇▇▇▇) (or such other place as the Company may specify in writing).
14. Counterparts. This Agreement may be executed in any number of
------------
counterparts which, taken together, shall constitute one and the same
instrument.
15. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Missouri.
14
Please sign the enclosed duplicate of this letter whereupon this letter
will become a binding agreement between the parties in accordance with its
terms.
Very truly yours,
SOUTHWEST WATER COMPANY
By:_______________________________
Name:_____________________________
Title:____________________________
The foregoing Agreement is hereby
confirmed and accepted, as of the date first
above written, on behalf of the Underwriter
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO., L.P.
By:_______________________________
Name:_____________________________
Title:____________________________
15