1 EXHIBIT 4.01
------------------------------------------------------------------------------
------------------------------------------------------------------------------
PREFERRED SECURITIES GUARANTEE AGREEMENT
SOUTHWEST GAS CAPITAL I
Dated as of October 31, 1995
------------------------------------------------------------------------------
------------------------------------------------------------------------------
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
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
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 ▇▇▇▇▇▇ 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
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
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 ▇▇▇▇▇▇ 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
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 ▇▇▇▇▇▇ 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
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
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
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
7
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
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
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
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
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
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
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
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
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
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
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
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
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):
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Indenture Trust Administration
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
(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
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
(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
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
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as Preferred Guarantee Trustee
By: /s/ E. ▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: E. ▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
S-1