EXHIBIT 1.1
Execution version
SOUTHWEST AIRLINES CO.
Debt Securities
UNDERWRITING AGREEMENT
February 26, 2002
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Banc One Capital Markets, Inc.
Tokyo-Mitsubishi International plc
First Union Securities, Inc.
Xxxxx Fargo Brokerage Services, LLC
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
c/o World Financial Center
Xxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Ladies and Gentlemen:
Southwest Airlines Co., a Texas corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule II hereto
$385,000,000 aggregate principal amount of its debt securities (the
"Securities") with the interest rate and date of maturity set forth on Schedule
I hereto on the terms and conditions stated herein. The Securities will be
issued under an indenture dated as of February 25, 1997 (the "Indenture")
between the Company and U.S. Trust Company of Texas, N.A., as Trustee. As used
herein, unless the context otherwise requires, the term "Underwriters" shall
mean the firms named as Underwriters in Schedule II, and the term "you" shall
mean Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated. Terms not otherwise
defined herein shall have the meanings specified in the Indenture. For purposes
hereof, the term "Operative Agreements" shall mean, collectively, this
Agreement, the Indenture and the Securities.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-71392) for the registration of debt securities, including the Securities,
under the Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations").
Such registration statement has been declared effective by the Commission and
the Indenture has been qualified under the Trust Indenture Act of 1939, as
amended (the "1939 Act"). The Company has, pursuant to Rule 424 under the 1933
Act, filed with, or transmitted for filing to, or shall within the required
period of time
hereafter file with or transmit for filing to, the Commission a prospectus
supplement (the "Prospectus Supplement") specifically relating to the
Securities. The term "Registration Statement" means the above-referenced
registration statement in the form in which it became effective, including the
exhibits thereto and the documents incorporated by reference therein, as amended
to the date hereof. The term "Basic Prospectus" means the prospectus relating to
the debt securities included in the Registration Statement. The term
"Prospectus" means the Basic Prospectus as supplemented by the Prospectus
Supplement, except that if any revised prospectus and/or prospectus supplement
shall be provided to you by the Company for use in connection with the offering
of the Securities which is not required to be filed by the Company pursuant to
Rule 424(b) of the 1933 Act Regulations, the term "Prospectus" shall refer to
such revised prospectus, if any, together with any such revised prospectus
supplement from and after the time it is first provided to you for such use. As
used herein, the terms "Basic Prospectus" and "Prospectus" shall include in each
case the documents, if any, incorporated by reference therein. The terms
"supplement" and "amendment" or "amend" as used herein shall include all
documents deemed to be incorporated by reference in the Prospectus that have
been filed subsequent to the date of the Prospectus Supplement by the Company
with the Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "1934 Act").
1. Representations and Warranties. (a) The Company represents
and warrants to, and agrees with each Underwriter that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Texas and has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where those
failures to so qualify in the aggregate would not have a material
adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company and its consolidated
subsidiaries taken as a whole (a "Material Adverse Effect").
(ii) The Company meets the requirements for the use of Form
S-3 under the 1933 Act Regulations, and the Registration Statement has
become effective under the 1933 Act. At the time the Registration
Statement became effective, the Registration Statement complied, and as
of the date hereof does comply, in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the 1939
Act and the rules and regulations of the Commission promulgated
thereunder. The Registration Statement, at the time it became effective
(and if an amendment to the Registration Statement has been filed by
the Company with the Commission subsequent to the effectiveness of the
Registration Statement, then at the time of the most recent such
filing) did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; and the Prospectus, as
of the date hereof, does not, and at all times subsequent hereto up to
the Closing Date will not, contain any untrue statement of
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a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by an Underwriter expressly for use
in the Registration Statement or Prospectus or to that part of the
Registration Statement which constitutes the Trustee's Statement of
Eligibility and Qualification under the 1939 Act (Form T-1). No stop
order suspending the effectiveness of the Registration Statement has
been issued, and, to the Company's knowledge, no proceedings for that
purpose have been initiated or threatened by the Commission.
(iii) The documents incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations promulgated
thereunder (the "1934 Act Regulations"), and, when read together and
with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto became effective and
as of the date hereof did not and will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were or are made, not
misleading.
(iv) The consolidated financial statements of the Company
included or incorporated by reference in the Prospectus and the
Registration Statement present fairly in all material respects the
consolidated financial position of the Company as of the dates
indicated and the results of operations, changes in stockholders'
equity and cash flows of the Company, for the respective period covered
thereby, all in conformity with generally accepted accounting
principles applied, except as stated therein, on a consistent basis
throughout the entire period involved; and the financial schedules
included or incorporated by reference in the Registration Statement
meet the requirements of the 1933 Act Regulations or the 1934 Act
Regulations, as applicable, and fairly present the information required
to be shown therein. The selected consolidated financial data
incorporated by reference in the Prospectus present fairly the
information shown therein and have been compiled on a basis consistent
with that of the audited consolidated financial statements incorporated
by reference in the Registration Statement and the Prospectus.
(v) Except as stated in or contemplated by the Prospectus,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
material adverse change in the financial condition or results of
operations of the Company and its subsidiaries, considered as one
enterprise.
(vi) The Company is a "citizen of the United States" within
the meaning of Section 40102(a)(15)(C) of Title 49, U.S.C. and is a
holder of an "air
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carrier operating certificate" issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, U.S.C. for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company.
(viii) The Indenture has been duly authorized, executed and
delivered by, and assuming the due execution and delivery by the
Trustee, is a valid and binding agreement of, the Company, enforceable
against the Company in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(ix) The Securities have been duly authorized by the Company
and when duly authenticated by the Trustee and executed and delivered
in the manner provided for in the Indenture and sold and paid for as
provided in this Agreement, the Securities will be legally and validly
executed, issued and delivered and will be a valid and binding
obligation of the Company entitled to the benefits of the Indenture.
(x) No authorization, approval, consent, order or license of
or filing with or notice to any government, governmental
instrumentality or court, domestic or foreign, is required on behalf of
the Company for (i) the valid authorization, issuance, sale and
delivery of the Securities, (ii) the valid authorization, execution,
delivery and performance by the Company of the Operative Agreements, or
(iii) the consummation by the Company of the transactions contemplated
by the Operative Agreements, except such as are required under the 1933
Act, the 1934 Act, the 1939 Act and the securities or blue sky or
similar laws of the various states and of foreign jurisdictions.
(xi) Except as disclosed in the Prospectus, there is no
action, suit or proceeding before or by any governmental agency or body
or court, domestic or foreign, now pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries or
any of their respective properties that individually (or in the
aggregate in the case of any class of related lawsuits), could
reasonably be expected to result in a Material Adverse Effect or that
could reasonably be expected to materially and adversely affect the
consummation of the transactions contemplated by this Agreement or the
other Operative Agreements.
(xii) Except as disclosed in the Prospectus, no union contract
dispute respecting the employees of the Company or any subsidiary
exists or, to the knowledge of the Company, is imminent that, in either
case, could reasonably be expected to have a Material Adverse Effect.
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(xiii) Each of the Company and its subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, and
is in compliance with all statutes and regulations as required, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Prospectus, except to the
extent that the failure to so obtain, declare, file or comply would not
have a Material Adverse Effect.
(xiv) Except as disclosed in the Prospectus, (x) to the
knowledge of the Company, neither the Company nor any of its
subsidiaries is in violation of any statute, rule, regulation, decision
or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any
real property contaminated with any substance that is subject to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
individually or in the aggregate is reasonably expected to have a
Material Adverse Effect, and (y) the Company is not aware of any
pending investigation which might lead to such a claim that is
reasonably expected to have a Material Adverse Effect.
(xv) Except as disclosed in the Prospectus, neither the
Company nor any of its subsidiaries is in violation of its charter or
by-laws or in default (nor has any event occurred which with notice or
lapse of time or both would constitute a default or acceleration) in
the performance of any obligation, agreement or condition contained in
any indenture, mortgage, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which any of them or their respective properties is
bound or affected and none of the Company or any of its subsidiaries is
in violation of any judgment, ruling, decree, order, franchise, license
or permit or any statute, rule or regulation applicable to the business
or properties of any of the Company or any of its subsidiaries, except
for such violations or defaults which do not have a Material Adverse
Effect.
(xvi) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is customary for major U.S. airlines
operating similar flight equipment over similar routes.
(xvii) The accountants that examined and issued an auditors'
report with respect to the consolidated financial statements of the
Company and the financial statement schedules, if any, included or
incorporated by reference in the Registration Statement are independent
public accountants within the meaning of the 1933 Act.
(xviii) The Company is not an "investment company", or an
entity "controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act") required to
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register under the Investment Company Act; and after giving effect to
the offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, the Company will not
be an "investment company", or an entity "controlled" by an "investment
company", as defined in the Investment Company Act, required to
register under the Investment Company Act.
(xix) This Agreement and the other Operative Agreements will,
upon execution and delivery thereof, conform in all material respects
to the descriptions thereof contained in the Prospectus.
(b) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters in connection with an
offering of the Securities shall be deemed a representation and warranty by the
Company to each Underwriter participating in such offering as to the matters
covered thereby on the date of such certificate unless subsequently amended or
supplemented subsequent thereto. None of the foregoing applies to statements in
or omissions from any of the aforementioned documents based upon written
information furnished to the Company by any Underwriter specifically for use
therein.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties set forth herein, the
Company agrees to cause the Trustee to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Trustee, at
a purchase price of 98.778% of the principal amount thereof, the aggregate
principal amounts of such Securities set forth opposite the name of such
Underwriter in Schedule II hereto, together with interest thereon, if any, from
March 1, 2002, if closing occurs thereafter.
3. Delivery and Payment. Payment of the purchase price for any
Securities to be purchased by the Underwriters shall be made at the offices of
the Company, 0000 Xxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000, or at such other place
as shall be agreed upon by you and the Company, at 9:00 A.M., New York time, on
the third business day (unless postponed in accordance with the provisions of
Section 10) following the date hereof or at such other date, time or location as
otherwise shall be agreed upon by you and the Company (such time and date being
referred to as the "Closing Date"). Unless otherwise specified, delivery of the
Securities shall be made to The Depository Trust Company for your account
against payment by you to the Company of the purchase price thereof by wire
transfer of Federal funds or other immediately available funds. Such Securities
shall be registered in the name of Cede & Co. or in such other names, and in
such denominations, as you may request in writing at least two business days
prior to the Closing Date. The Company agrees to have the Securities available
for inspection by you at its offices in Dallas, Texas, not later than 5:00 P.M.
on the business day prior to the Closing Date.
(b) It is understood that each Underwriter has authorized you,
on its behalf and for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Securities that it has agreed to
purchase. You, individually and not as a representative, may (but shall not be
obligated to) make payment of the purchase
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price for the Securities to be purchased by any Underwriter whose check or
checks shall not have been received by the Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. The Company covenants with each Underwriter
that:
(a) Immediately following the execution of this Agreement, the
Company will prepare a Prospectus Supplement setting forth the principal amount
of the Securities covered thereby, the terms of the Securities not otherwise
specified in the Basic Prospectus, the names of the Underwriters participating
in the offering and the principal amount of the Securities which each severally
has agreed to purchase, the names of the Underwriters acting as manager or
co-managers in connection with the offering, the price at which the Securities
are to be purchased by the Underwriters from the Company, the initial public
offering price, the selling concession and reallowance, if any, and such other
information as you and the Company deem appropriate in connection with the
offering of the Securities. The Company will promptly transmit copies of the
Prospectus to the Commission for filing pursuant to Rule 424 of the 1933 Act
Regulations and will furnish to the Underwriters named therein as many copies of
the Prospectus as you shall reasonably request.
(b) The Company will notify you immediately (i) of the
effectiveness of any amendment to the Registration Statement, (ii) of the
transmittal to the Commission for filing of any supplement to the Prospectus or
any document to be filed pursuant to the 1934 Act which will be incorporated by
reference in the Prospectus, (iii) of the receipt of any comments from the
Commission with respect to the Registration Statement, the Prospectus or the
Prospectus Supplement, (iv) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the Prospectus
or for additional information, and (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Company will use its best
efforts to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof as soon as possible.
(c) For so long as a Prospectus is required to be delivered in
connection with the Securities, the Company will give you notice of its
intention to file or prepare any amendment to the Registration Statement or any
amendment or supplement to the Prospectus, whether by the filing of documents
pursuant to the 1934 Act, the 1933 Act or otherwise (except for its Current
Report on Form 8-K relating to this Agreement and the form of the Securities),
and will furnish you with copies of any such amendment or supplement or other
documents proposed to be filed or prepared a reasonable time in advance of such
proposed filing or preparation, as the case may be.
(d) The Company will deliver to you as many signed and
conformed copies of the Registration Statement (as originally filed) and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents
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incorporated by reference in the Prospectus) as you may reasonably request. The
Company will furnish to you as many copies of the Prospectus (as amended or
supplemented) as you shall reasonably request, so long as you are required to
deliver a Prospectus in connection with sales or solicitations of offers to
purchase the Securities.
(e) If at any time when the Prospectus is required by the 1933
Act to be delivered in connection with sales of the Securities any event shall
occur or condition exist as a result of which it is necessary to further amend
or supplement the Prospectus in order that the Prospectus will not include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary at any such time to amend or supplement the Registration
Statement or the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission such amendment or supplement, whether by filing documents
pursuant to the 1934 Act, the 1933 Act, or otherwise, as may be necessary to
correct such untrue statement or omission or to make the Registration Statement
and Prospectus comply with such requirements.
(f) With respect to the sale of the Securities, the Company
will make generally available to its security holders earning statements (in
form complying with the provisions of Rule 158 under the 1933 Act), which will
satisfy the requirements of Section 11(a) of the 1933 Act.
(g) The Company will endeavor, in cooperation with you, to
qualify the Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as the
Underwriters may designate, and will maintain such qualifications in effect for
so long as may be required for the distribution of the Securities; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or to subject itself
to taxation as doing business in any jurisdiction in which it is not otherwise
required to be so qualified. The Company will file such statements and reports
as may be required by the laws of each jurisdiction in which the Securities have
been qualified as provided above.
(h) Between the date of this Agreement and the Closing Date,
the Company shall not, without your prior written consent, offer, sell, or enter
into any agreement to sell (as public debt securities registered under the 1933
Act (other than the Securities) or as debt securities which may be resold in a
transaction exempt from the registration requirements of the 1933 Act in
reliance on Rule 144A thereunder and which are marketed through the use of a
disclosure document containing substantially the same information as a
prospectus for similar debt securities registered under the 1933 Act), any debt
securities similar to the Securities, equipment notes, pass through
certificates, equipment trust certificates or equipment purchase certificates
secured by aircraft owned or leased by the Company (or rights relating thereto).
6. Conditions to the Obligations of Underwriters. The several
obligations of the Underwriters to purchase the Securities pursuant to this
Agreement will be subject at all times to the accuracy of the representations
and warranties on the part of the
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Company herein, to the accuracy of the statements of the Company's officers made
in any certificate furnished pursuant to the provisions hereof, to the
performance and observance by the Company of all covenants and agreements
contained herein, on its part to be performed and observed and to the following
additional conditions precedent:
(a) At the Closing Date, (i) the Prospectus, and any
supplement thereto, shall have been filed within the time period required by
Rule 424(b); and (ii) no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(b) At the Closing Date, you shall have received the following
opinions:
(1) The opinion of the General Counsel of the Company, dated
the Closing Date, in form and substance reasonably satisfactory to you
and substantially to the effect set forth in Exhibit A hereto.
(2) The opinion of Xxxxxx & Xxxxxx L.L.P., Houston, Texas,
special counsel to the Company, dated the Closing Date, in form and
substance reasonably satisfactory to you and substantially to the
effect set forth in Exhibit B hereto.
(3) The opinion of Milbank, Tweed, Xxxxxx & XxXxxx LLP,
counsel to the Underwriters, with respect to such matters as you may
reasonably request.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any change, or any development or event
involving a prospective change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
considered as one enterprise that, in your judgment, is material and adverse and
that makes it, in your judgment, impracticable or inadvisable to proceed with
the completion of the public offering of the Securities on the terms and in the
manner contemplated by the Prospectus.
(d) You shall have received a certificate of the Vice Chairman
of the Board and Chief Executive Officer, the President or the Executive Vice
President and Chief Financial Officer of the Company and the Treasurer or the
Secretary of the Company, dated as of the Closing Date to the effect that:
(1) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made at the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(2) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
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purpose have been instituted or, to the Company's knowledge,
threatened; and
(3) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has been
no material adverse change, or any development involving a prospective
material adverse change, in or affecting particularly the business or
properties of the Company or its subsidiaries, considered as one
enterprise.
(e) The Underwriters shall have received on each of the date
of this Agreement and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to the
Underwriters, from the Company's independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain other financial or statistical data and certain financial information
contained in or incorporated by reference into the Registration Statement and
the Prospectus.
(f) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date, (i) there shall not have been any downgrading in
the rating accorded any of the Company's securities by any "nationally
recognized statistical rating organization", as such term is defined for
purposes of Rule 436(g)(2) under the 1933 Act, or (ii) any public announcement
that any such organization has under surveillance or review, in each case for
possible change, its ratings of any such securities (other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating).
(g) On the Closing Date, the Securities shall be rated (x) not
lower than "A" by Standard & Poor's Ratings Services, and (y) not lower than
"Baa1" by Xxxxx'x Investors Service, Inc.
(h) At the Closing Date, counsel for the Underwriters shall
have been furnished with such documents and opinions as such counsel may
reasonably require for the purpose of enabling such counsel to pass upon the
issuance and sale of Securities as herein contemplated and related proceedings,
or in order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the conditions,
herein contained.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to you and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be cancelled by
you at any time at or prior to the Closing Date, and such termination shall be
without liability of any party to any other party except as provided in Section
7 hereof. Notice of any such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing. Notwithstanding any
such termination, the provisions of Sections 8 and 11 shall remain in effect.
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7. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including:
(i) the printing and filing of the Registration Statement and
all amendments thereto, and the Prospectus and any amendments or supplements
thereto;
(ii) the preparation, printing, issuance and delivery of the
Securities;
(iii) the reasonable fees and disbursements of the Company's
accountants and counsel and of the Trustee and its counsel, and of any issuing
and paying agent or transfer agent;
(iv) the qualification of the Securities under securities laws
in accordance with the provisions of Section 5(g), including filing fees and the
reasonable fees and disbursements of counsel to the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky Survey;
(v) the printing and delivery to the Underwriters in
quantities as hereinabove stated of copies of the Registration Statement and any
amendments thereto, and of the Prospectus and any amendments or supplements
thereto, and the delivery by the Underwriters of the Prospectus and any
amendments or supplements thereto in connection with solicitations or
confirmations of sales of the Securities;
(vi) the preparation and delivery to the Underwriters of
copies of the Operative Agreements;
(vii) any fees charged by rating agencies for the rating of
the Securities; and
(viii) the fees and expenses, if any, incurred with respect to
any filing with the National Association of Securities Dealers, Inc.
If this Agreement is terminated by you in accordance with the
provisions of Section 6 hereof, the Company shall reimburse the Underwriters for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of Milbank, Tweed, Xxxxxx & XxXxxx LLP, counsel for the
Underwriters, or, in any other case, including any termination pursuant to
Section 9 or 10 hereof, the Underwriters will pay all of their own expenses,
including their fees of counsel, transfer taxes on resale of any of the
Securities and any advertising expenses connected with any offers they may make.
8. Indemnification and Contribution; Default of Underwriters.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, and each person, if any, who controls such Underwriter within the
meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred by any
Underwriter or any such controlling person in
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connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
such Underwriter ("Underwriter Information").
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, each of the officers who
signed the Registration Statement and each person, if any, who controls the
Company, within the meaning of either Section 15 of the 1933 Act or Section 20
of the 1934 Act, to the same extent as the foregoing indemnity from the Company
to such Underwriter but only with reference to the Underwriter Information
provided by such Underwriter.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing. The
indemnifying party, upon request of the indemnified party, shall, and the
indemnifying party may elect to, retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and the indemnifying party
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel, (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, or (iii) the indemnifying party shall have
failed to retain counsel as required by the prior sentence to represent the
indemnified party within a reasonable amount of time. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. The firm chosen to represent the indemnified parties shall be
designated in writing by you in the case of parties indemnified pursuant to
paragraph (a) above and by the Company in the case of parties indemnified
pursuant to paragraph (b) above. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
in writing an indemnifying party to
12
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 90
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement, unless such
fees and expenses are being disputed in good faith. The indemnifying party at
any time may, subject to the last sentence of this Section 8(c), settle or
compromise any proceeding described in this paragraph at the expense of the
indemnifying party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of an indemnified party.
(d) To the extent the indemnification provided for in
paragraph (a) or (b) of this Section 8 is required to be made but is unavailable
to an indemnified party or insufficient in respect of any losses, claims,
damages or liabilities, then the applicable indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Underwriters, on the other hand, from the offering of such
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of such
Securities shall be deemed to be in the same respective proportions as the
proceeds from the offering of such Securities received by the Company (before
deducting expenses) less total underwriting discounts and commissions paid to
the Underwriters by the Company, and the total underwriting discounts and
commissions paid to the Underwriters by the Company, in each case as set forth
on the cover of the Prospectus, bear to the aggregate public offering price of
such Securities. The relative fault of the Company on the one hand and of the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or information supplied by the Underwriters, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 8 are several in proportion
to the respective principal amount of Securities they have purchased hereunder,
and not joint.
13
(e) The Company and the Underwriters agree that it would not
be just or equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
9. Default by an Underwriter. If any Underwriter or
Underwriters default in their obligations to purchase Securities hereunder and
the aggregate principal amount of the Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total principal amount of the Securities, you may make arrangements
satisfactory to the Company for the purchase of such Securities by other
persons, including any of the Underwriters, but if no such arrangements are made
by the Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters so default and the
aggregate principal amount of the Securities with respect to which such default
or defaults occurs exceeds 10% of the total principal amount of the Securities
and arrangements satisfactory to you and the Company for purchase of such
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Section 7 and 8
hereof. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
10. Termination. This Agreement shall be subject to
termination, in the absolute discretion of the Underwriters, immediately upon
notice to the Company, at any time if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange or the National Association of Securities Dealers, Inc.,
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities, (iv) any outbreak or escalation of
hostilities shall have occurred in which the United States is involved, any
declaration of war by Congress or any substantial national or international
calamity or emergency shall occur and the effect of which is such as to make it,
in your judgment, impracticable or inadvisable to proceed
14
with the offering or delivery of the Securities on the terms and in the manner
contemplated in the Prospectus or (v) there shall have occurred such a material
adverse change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the United States
shall be such) as to make it, in your judgment, impracticable or inadvisable to
proceed with the offering or delivery of the Securities on the terms and in the
manner contemplated in the Prospectus. In the event of any such termination of
this Agreement, the provisions of Section 7 hereof, the indemnity and
contribution agreements set forth in Section 8 hereof, and the provisions of
Sections 11 through 15 hereof shall remain in effect.
11. Representations and Indemnities to Survive. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
termination of this Agreement, any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter, the Company or any of their
respective representatives, officers or directors or any controlling person and
will survive delivery of and payment for the Securities. If for any reason the
purchase of the Securities by the Underwriters is not consummated, the Company
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 7 and the respective obligations of the Company and the
Underwriters pursuant to Section 8 shall remain in effect. If the purchase of
the Securities by the Underwriters is not consummated for any reason other than
solely because of the occurrence of the termination of this Agreement pursuant
to Section 9 or 10, the Company will reimburse the Underwriters for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of such Securities
and comply with its other obligations under Section 7.
12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed,
delivered by Federal Express service or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to them at the
address indicated on page 1 hereof. Notices to the Company shall be directed to
it at Southwest Airlines Co., 0000 Xxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000-0000,
Attention of the Vice President-Finance, with a copy thereof directed to the
General Counsel.
13. Successors. This Agreement shall inure to the benefit of
and be binding upon you and the Company and any Underwriter who becomes a party
hereto and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any firm or corporation,
other than the parties hereto and their respective successors and the
controlling persons and officers and directors referred to in Section 8 and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the parties hereto, their respective
successors and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser
15
of Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
15. Counterparts. This Agreement may be executed in one or
more counterparts and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement. A
party may submit its signed counterpart of this Agreement by facsimile and such
counterpart so received by facsimile shall for all purposes constitute an
original.
16
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts will become a binding
agreement between each Underwriter and the Company in accordance with its terms.
Very truly yours,
SOUTHWEST AIRLINES CO.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President- Finance
and Treasurer
17
CONFIRMED AND ACCEPTED, as of the date first above written:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
BANC ONE CAPITAL MARKETS, INC.
TOKYO-MITSUBISHI INTERNATIONAL PLC
FIRST UNION SECURITIES, INC.
XXXXX FARGO BROKERAGE SERVICES, LLC
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
18
SCHEDULE I
Interest Rate: 6 1/2%
Date of Maturity March 1, 2012
19
SCHEDULE II
Aggregate Principal
Underwriters Amount of Securities
------------ --------------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated $231,000,000
Banc One Capital Markets, Inc. 38,500,000
Tokyo-Mitsubishi International plc 38,500,000
First Union Securities, Inc. 38,500,000
Xxxxx Fargo Brokerage Services, LLC 38,500,000
------------
Total $385,000,000
============
20
Exhibit A
March 1, 2002
To Each of the Persons Listed
on Schedule A Attached Hereto
Ladies and Gentlemen:
I am the Vice President - General Counsel of
Southwest Airlines Co., a
Texas corporation ("Southwest"). In such capacity, I and persons on my legal
staff have acted as counsel to Southwest in connection with the transactions
contemplated by the
Underwriting Agreement dated February 26, 2002 among Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Banc One Capital Markets, Inc.,
Tokyo-Mitsubishi International plc, First Union Securities, Inc. and Xxxxx Fargo
Brokerage Services, LLC (collectively, the "Underwriters") and Southwest (the
"
Underwriting Agreement"). Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the
Underwriting Agreement. This opinion
is furnished pursuant to Section 6(b)(1) of the
Underwriting Agreement.
In arriving at the opinions expressed below, I or members of my legal
staff have reviewed the following documents, each of which is dated as of the
date hereof, except where otherwise indicated above or below:
(a) an executed copy of the
Underwriting Agreement,
(b) an executed copy of the Indenture, between Southwest and U.S.
Trust Company of Texas, N.A., as trustee (the "Indenture"),
(c) the global security representing the Southwest Airlines
$385,000,000 6 1/2% Notes due 2012 (the "Notes"), such Notes
to be issued under the Indenture,
(d) the registration statement on Form S-3 (Registration No.
333-71392), filed by Southwest under the Securities Act of
1933, as amended, and the rules and regulations there under
(collectively, the "Securities Act"), with the Commission (the
registration statement at the time when it became effective,
including the exhibits thereto and the documents incorporated
by reference therein, is referred to herein as the
"Registration Statement"),
(e) the prospectus included in the Registration Statement (the
"Base Prospectus") relating to debt securities and the
prospectus supplement dated February 26, 2002 with respect to
the Notes (the "Prospectus
21
Supplement"; and the Base Prospectus as supplemented and
modified by the Prospectus Supplement, the "Prospectus"), and
(f) the documents delivered to you by Southwest at the closing
pursuant to the
Underwriting Agreement, including copies of
Southwest's articles of incorporation (the "Articles of
Incorporation") and bylaws certified by the Secretary of State
of the State of Texas and the Assistant Secretary of
Southwest, respectively.
The Indenture, the Notes and the
Underwriting Agreement are referred to
herein collectively as the "Transaction Documents".
In addition, I or members of my legal staff have reviewed the originals
or copies certified or otherwise identified to my or their satisfaction of all
such corporate records of Southwest and such other instruments and other
certificates of public officials, officers and representatives of Southwest and
such other persons, and I or members of my legal staff have made such
investigations of law, as I deemed appropriate as a basis for the opinions
expressed below.
In arriving at the opinions expressed below, I and members of my legal
staff have assumed the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents submitted to us
as copies. In addition, I and members of my legal staff have assumed and have
not verified the accuracy as to factual matters of each document I or they have
reviewed including, without limitation, the accuracy of the representations and
warranties of Southwest in the
Underwriting Agreement. As used herein, the
phrase "to my knowledge" shall mean to my actual knowledge after reasonable
investigation, including inquiry of members of my legal staff, but shall not be
interpreted to impute to me knowledge of others.
Based on the foregoing, and subject to the further assumptions,
qualifications and limitations set forth below, it is my opinion that:
1. Southwest has been duly incorporated and is an existing corporation
in good standing under the laws of the State of Texas, with corporate power to
own, lease and operate its properties and conduct its business as described in
the Prospectus; Southwest is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in the United States in
which its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not have a
material adverse effect on the business or consolidated financial condition of
Southwest.
2. To my knowledge, except as disclosed in the Prospectus, there is no
action, suit or proceeding before or by any governmental agency or body or
court, domestic or foreign, now pending against Southwest or any of the
Subsidiaries or any of their respective properties that will have a material
adverse effect on the business or
22
consolidated financial condition of Southwest and the Subsidiaries taken as a
whole or the ability of Southwest to perform its obligations under any of the
Transaction Documents.
3. Southwest is a "citizen of the United States" within the meaning of
Section 401 02(a)( 15) of Title 49 of the United States Code, as amended,
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States Code, as
amended, for aircraft capable of carrying 10 or more individuals or 6,000 pounds
or more of cargo.
4. The execution, delivery and performance by Southwest of the
Transaction Documents, and the consummation by Southwest of the transactions
contemplated by such documents, will not result in any violation of the
provisions of the articles of incorporation or by-laws of Southwest or, to my
knowledge, any applicable law, administrative regulation or any administrative
or court decree, nor does any such action, to my knowledge, constitute a breach
of, or default under, or (except as contemplated therein) result in the creation
or imposition of any lien, charge or encumbrance upon any assets of Southwest or
any of the Subsidiaries pursuant to, any material contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which Southwest is a party or
by which it is bound or to which any of the assets of Southwest is subject.
5. The issuance and sale of the Notes to the Underwriters pursuant to
the
Underwriting Agreement, the valid authorization, execution and delivery of
the Transaction Documents by Southwest and the performance by Southwest of its
obligations under the Transaction Documents do not require Southwest to obtain
or effect any consent, approval, authorization, registration or qualification of
or with any governmental agency or body of the United States or the State of
Texas, except such as may be required under federal or state securities or blue
sky laws.
6. To my knowledge, except as disclosed in the Prospectus, there is no
event of default under any material agreement or instrument under which
indebtedness of Southwest is outstanding or by which it is bound or any of its
properties is subject.
7. To my knowledge, there are no legal or governmental proceedings
pending or threatened against the Company or any Subsidiary which are required
to be disclosed in the Registration Statement, other than those disclosed
therein or those which individually (or in the aggregate in the case of any
class of related lawsuits) could not reasonably be expected to have a Material
Adverse Effect.
8. Each document filed pursuant to the Securities Exchange Act of 1934,
as amended, and the rules and regulations there under (the "Exchange Act"), and
incorporated or deemed incorporated by reference in the Registration Statement
or the Prospectus (other than the exhibits thereto, the financial statements,
financial statement schedules and other financial or statistical data included
therein, or incorporated or deemed incorporated therein by reference, or omitted
there from, and other matters referred to in the Base Prospectus or the
Prospectus Supplement under the captions
23
"Experts", as to which I am not expressing an opinion), when so filed with the
Commission, appeared on its face to have been appropriately responsive in all
material respects to the requirements of the Exchange Act.
I have examined the Registration Statement, the Base Prospectus and the
Prospectus Supplement. The limitations inherent in the independent verification
of factual matters and in the role of General Counsel are such, however, that I
cannot and do not assume any responsibility for the accuracy, completeness or
fairness of the statements made therein have made no independent check or
verification thereof. In the course of the preparation of the Registration
Statement and the Prospectus, I have participated in conferences with certain
officers and employees of Southwest and with representatives of the
Underwriters. My examination of the Registration Statement and the Prospectus
and my participation in the above-mentioned conferences did not disclose to me
any information which has led me to believe that the Registration Statement
(other than the exhibits thereto, the financial statements, financial statement
schedules and other financial or statistical data included therein, or
incorporated or deemed incorporated by reference therein, or omitted there from,
and other matters referred to in the Base Prospectus or the Prospectus
Supplement under the caption "Experts", as to which I express no belief), as of
its effective date, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or that the Prospectus (other
than the financial statements, financial statement schedules and other financial
or statistical data included therein, or incorporated or deemed incorporated by
reference therein, or omitted therefrom, and other matters referred to in the
Base Prospectus or the Prospectus Supplement under the caption "Experts", as to
which I express no belief), as of February 26, 2002 contained, or as of the date
hereof contains, any untrue statement of a material fact or, as of February 26,
2002 omitted, or as of the date hereof omits, to state a material fact necessary
in order to make the statements therein, in the light of the circumstances in
which they were made, not misleading.
Insofar as the foregoing opinions relate to the valid existence and
good standing of Southwest, they are based solely on a certificate of existence
and of good standing received from the Secretary of State of the State of Texas
and the Comptroller of Public Accounts of the State of Texas. Insofar as the
foregoing opinions relate to qualification to do business of Southwest and the
Subsidiaries, they are based solely on certificates of foreign qualification
received from the applicable Secretary of State's office.
The foregoing opinions are limited to the federal law of the United
States of America and the law of the State of Texas, in each case as in effect
on the date hereof, except that I express no opinion with respect to (i) the
laws, regulations or ordinances of any county, town or municipality or
governmental subdivision or agency thereof, (ii) (x) state securities or blue
sky laws and (y) except as set forth in paragraph 8 above, federal securities
laws, including without limitation the Securities Act, the Exchange Act, the
Trust Indenture Act of 1939, as amended, and the Investment Company Act of 1940,
as amended, (iii) any federal or state tax, antitrust or fraudulent transfer or
conveyance laws, and (iv) the Employee Retirement Income Security Act of 1974,
as amended. In addition,
24
my opinions are based upon a review of those laws, statutes, rules and
regulations which, in my experience, are normally applicable to transactions of
the type contemplated by the Transaction Documents.
I am furnishing this opinion letter to you solely for your benefit in
connection with the transactions described above. This opinion letter is not to
be used, circulated, quoted or otherwise referred to by any other person or for
any other purpose. This opinion letter speaks only as of the date hereof and I
disclaim any obligation to advise you of changes of law or fact that occur after
the date hereof.
Very truly yours,
Xxxxxxx Xxxxxxxx
Vice President - General Counsel
25
SCHEDULE A
ADDRESSEES
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Banc One Capital Markets, Inc.
Tokyo-Mitsubishi International plc
First Union Securities, Inc.
Xxxxx Fargo Brokerage Services, LLC
26
Exhibit B
March 1, 2002
To Each of the Persons Listed
on Schedule A Attached Hereto
Ladies and Gentlemen:
We have acted as special counsel to
Southwest Airlines Co., a Texas
corporation ("Southwest"), in connection with the transactions contemplated by
the Underwriting Agreement dated February 26, 2002 among Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, Banc One Capital Markets, Inc., Tokyo-Mitsubishi
International plc, First Union Securities, Inc. and Xxxxx Fargo Brokerage
Services, LLC (collectively, the "Underwriters") and Southwest (the
"Underwriting Agreement"). Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Underwriting Agreement. This opinion
is furnished pursuant to Section 6(b)(2) of the Underwriting Agreement.
In arriving at the opinions expressed below, we have reviewed the
following documents, each of which is dated as of the date hereof, except where
otherwise indicated above or below:
(a) an executed copy of the Underwriting Agreement,
(b) an executed copy of the Indenture, between Southwest and U.S.
Trust Company of Texas, N.A., as trustee (the "Indenture"),
(c) the global security representing the Southwest Airlines
$385,000,000 6 1/2% Notes due 2012 (the "Securities"), such
Securities to be issued under the Indenture,
(d) the registration statement on Form S-3 (Registration No.
333-71392), filed by Southwest under the Securities Act of
1933, as amended, and the rules and regulations there under
(collectively, the "Securities Act"), with the Commission (the
registration statement at the time when it became effective,
including the exhibits thereto and the documents incorporated
by reference therein, is referred to herein as the
"Registration Statement"),
(e) the prospectus included in the Registration Statement (the
"Base Prospectus") relating to debt securities and the
prospectus supplement dated February 26, 2002 with respect to
the Securities (the "Prospectus Supplement"; and the Base
Prospectus as supplemented and modified by the Prospectus
Supplement, the "Prospectus"), and
27
(f) the documents delivered to you by Southwest at the closing
pursuant to the Underwriting Agreement, including copies of
Southwest's articles of incorporation (the "Articles of
Incorporation") and bylaws certified by the Secretary of State
of the State of Texas and the Assistant Secretary of
Southwest, respectively.
The Indenture, the Securities and the Underwriting Agreement are
referred to herein collectively as the "Transaction Documents".
We have considered such matters of law and fact, and relied upon such
certificates of officers of the Company and public officials, corporate records
and other information furnished to us, including without limitation the
certificates and representations referred to below, as we have deemed
appropriate as a basis for the opinions set forth below.
In arriving at the opinions expressed below, we have assumed the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified (i) the accuracy as to factual matters of each
document we have reviewed and of the representations and warranties set forth
therein, (ii) that (A) each of the Transaction Documents has been duly
authorized, executed and delivered by each party thereto (other than Southwest)
and (B) each party to the Transaction Documents has satisfied those legal
requirements that are applicable to it to the extent necessary to make such
agreement or obligation enforceable against it (except that the assumption set
forth in this clause (ii)(B) is not made as to Southwest regarding matters of
applicable federal law of the United States of America or the law of the State
of Texas, and that, except as specifically covered in the opinions expressed
below, each of the Transaction Documents is a valid, binding and enforceable
obligation of each party thereto, (iii) that the Securities will be duly
authenticated in accordance with the terms of the Indenture, and (iv) that the
Securities will be delivered against payment therefore in accordance with the
terms of the Underwriting Agreement.
Based on and subject to the foregoing, and to the other assumptions,
qualifications and limitations set forth herein, it is our opinion that:
1. Southwest is validly existing as a corporation in good standing
under the laws of the State of Texas.
2. Southwest has the corporate power (i) to own, lease and operate its
properties and conduct its business as described in the Prospectus and (ii) to
enter into each of the Transaction Documents and to perform its obligations
thereunder.
3. The execution and delivery by Southwest of the Indenture and the
Securities have been duly authorized by all necessary corporate action of
Southwest, and each of the Indenture and the global security representing the
Securities has been duly executed and delivered by Southwest. Each of the
Indenture and the Securities is a valid
28
and binding obligation of Southwest enforceable against Southwest in accordance
with its terms.
4. The execution and delivery by Southwest of the Underwriting
Agreement has been duly authorized by all necessary corporate action of
Southwest, and has been duly executed and delivered by Southwest.
5. The Trustee, the Securities constitute valid and binding obligations
of the Company enforceable against it in accordance with their terms and the
Securities are entitled to the benefits afforded by the Indenture.
6. The statements set forth under the heading "Description of Notes",
in the Prospectus Supplement, insofar as such statements purport to summarize
certain provisions of the Indenture and the Securities, provide a fair summary
of such provisions.
7. Southwest is not an "investment company", and is not a company
"controlled" by an "investment company", in each case within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act").
8. The issuance and sale of the Securities to the Underwriters pursuant
to the Underwriting Agreement, the valid authorization, execution and delivery
of the Transaction Documents by Southwest and the performance by Southwest of
its obligations under the Transaction Documents do not require Southwest to
obtain or effect any consent, approval, authorization, registration or
qualification of or with any governmental agency or body of the United States or
the State of Texas, except such as are required under the Securities Act, the
Trust Indenture Act of 1939, as amended, and the rules and regulations
thereunder (collectively, the "Trust Indenture Act"), and the securities or blue
sky laws of the various states. Neither the execution and delivery by Southwest
of the Transaction Documents and the Underwriting Agreement nor the consummation
by Southwest of the transactions contemplated thereby to be consummated on the
date hereof violates (i) Southwest's Articles of Incorporation or bylaws or (ii)
any law or governmental rule or regulation known to us to be applicable to, or
binding on, Southwest, provided, however, for purposes of this clause (ii) we
express no opinion with respect to my anti-fraud law or rule, but refer you to
our letter to you dated the date hereof describing our examination of the
Registration Statement and the Prospectus.
9. The Registration Statement has become effective under the Securities
Act and, to our knowledge, (i) no stop order suspending the effectiveness of the
Registration Statement has been issued and (ii) no proceedings for that purpose
have been instituted or threatened by the Commission. The Indenture has been
duly qualified under the Trust Indenture Act.
10. Without independent check or verification of the statements
contained therein, the Registration Statement and the Base Prospectus (other
than the financial statements, financial statement schedules and other financial
or statistical data included
29
therein, or omitted there from, other matters referred to in the Prospectus or
the Prospectus Supplement under the captions "Experts" and the Statement of
Eligibility on Form T-1, as to which we are not expressing an opinion), in each
case excluding the documents incorporated or deemed incorporated by reference
therein, as of their respective effective or issue dates, appear on their face
to have been appropriately responsive in all material respects to the
requirements of the Securities Act.
The foregoing opinions are subject to the following assumptions,
qualifications and limitations:
(a) The opinions in paragraphs 3 and 5 above are subject to (i)
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance or other
similar laws affecting the rights or remedies of creditors generally, (ii)
general principles of equity including, without limitation, laches and estoppels
as equitable defenses and concepts of materiality, reasonableness, good faith
and fair dealing (regardless of whether enforceability is considered or applied
in a proceeding in equity or at law) and considerations of impracticability or
impossibility of performance, and defenses based upon unconscionability of
otherwise enforceable obligations in the context of the factual circumstances
under which enforcement thereof is sought and (iii) the qualification that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought.
(b) Insofar as the foregoing opinions relate to the existence and good
standing of Southwest, they are based solely on a certificate of existence and
of good standing received from the Secretary of State of the State of Texas and
the Comptroller of Public Accounts of the State of Texas.
(c) The foregoing opinions are limited to the law of the federal law of
the United States of America and the law of the State of Texas, in each case as
in effect on the date hereof, except that we express no opinion with respect to
(i) the laws, regulations or ordinances of any county, town or municipality or
governmental subdivision or agency thereof, (ii) (x) state securities or blue
sky laws, (y) except as set forth in paragraph 7 above, the Investment Company
Act, or (z) except as set forth in paragraphs 7, 8, 9 and 10 above, federal
securities laws other than the Investment Company Act, including without
limitation the Securities Act and the Trust Indenture Act, (iii) any federal or
state tax, antitrust or fraudulent transfer or conveyance laws, or (iv) the
Employee Retirement Income Security Act of 1974, as amended. In addition, our
opinions are based upon a review of those laws, statutes, rules and regulations
which, in our experience, are normally applicable to transactions of the type
contemplated by the Transaction Documents.
We are furnishing this opinion letter to you solely for your benefit;
provided, however, that the Trustee and Milbank, Tweed, Xxxxxx & XxXxxx, LLP,
are authorized to rely upon this opinion letter as if it were added to the
Trustee and Milbank, Tweed, Xxxxxx & XxXxxx, LLP. This opinion letter is not to
be used, circulated, quoted or
30
otherwise referred to for any other purpose whatsoever without in each instance
our prior written consent. This opinion letter speaks only as of the date hereof
and we disclaim any obligation to advise you of changes of law or fact that
occur after the date hereof.
Very truly yours,
Xxxxxx & Xxxxxx L.L.P.
31
SCHEDULE A
ADDRESSEES
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Banc One Capital Markets, Inc.
Tokyo-Mitsubishi International plc
First Union Securities, Inc.
Xxxxx Fargo Brokerage Services, LLC
32
March 1, 2002
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Banc One Capital Markets, Inc.
Tokyo-Mitsubishi International plc
First Union Securities, Inc.
Xxxxx Fargo Brokerage Services, LLC
Ladies and Gentlemen:
We have acted as special counsel to
Southwest Airlines Co., a Texas corporation
("Southwest"), in connection with the transactions contemplated by the
Underwriting Agreement dated February 26, 2002 among Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, Banc One Capital Markets, Inc., Tokyo-Mitsubishi
International plc, First Union Securities, Inc. and Xxxxx Fargo Brokerage
Services, LLC (collectively, the "Underwriters"), and Southwest (the
"Underwriting Agreement"). Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Underwriting Agreement. This letter is
furnished pursuant to Section 6(b)(2) of the Underwriting Agreement.
We have examined the registration statement on Form S-3 (Registration
No. 333-71392) filed by Southwest under the Securities Act of 1933, as amended,
with the Commission (the registration statement at the time it became effective,
including the exhibits thereto and the documents incorporated by reference
therein, is referred to herein as the "Registration Statement"), the prospectus
included in the Registration Statement relating to debt securities (the "Base
Prospectus"), and the prospectus supplement dated February 26, 2001 with respect
to the Securities (the "Prospectus Supplement"; and the Base Prospectus as
supplemented and modified by the Prospectus Supplement, the "Prospectus"). The
limitations inherent in the independent verification of factual matters and in
the role of outside counsel are such, however, that we cannot and do not assume
any responsibility for the accuracy, completeness or fairness of the statements
made therein and (except to the extent expressly set forth in paragraph 6 of our
opinion letter of even date herewith addressed to each of you) have made no
independent check or verification thereof. In the course of the preparation of
the Registration Statement and the Prospectus, we have participated in
conferences with certain officers and employees of Southwest and with
representatives of the Underwriters. Our examination of the Registration
Statement and the Prospectus and our participation in the above-mentioned
conferences did not disclose to us any information which has led us to believe
that the Registration Statement (other than the exhibits thereto, the financial
statements, financial statement schedules and other financial or statistical
data included therein, or incorporated or deemed incorporated by reference
therein, or omitted there from, and other matters referred to in the Base
Prospectus or Prospectus Supplement under the caption "Experts," as to which we
express no belief), as of its effective date, contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
that
33
the Prospectus (other than the financial statements, financial statement
schedules and other financial or statistical data included therein, or
incorporated or deemed incorporated by reference therein, or omitted therefrom
and other matters referred to in the Base Prospectus or the Prospectus
Supplement under the caption "Experts", as to which we express no belief), as of
February 26, 2002 contained, or as of the date hereof contains, any untrue
statement of a material fact or, as of February 26, 2002 omitted, or as of the
date hereof omits, to state a material fact necessary in order to make the
statements therein, in the light of the circumstances in which they were made,
not misleading.
We are furnishing this letter to you solely for your benefit. This
letter is not to be used, circulated, quoted or otherwise referred to for any
other purpose whatsoever without in each instance our prior written consent.
This letter speaks only as of the date hereof and we disclaim any obligation to
update this letter in any respect.
Very truly yours,
Xxxxxx & Xxxxxx L.L.P.
34
