EXHIBIT 1
500,000 SHARES
ARTESIAN RESOURCES CORPORATION
CLASS A NON-VOTING COMMON STOCK
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UNDERWRITING AGREEMENT
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Philadelphia, Pennsylvania
May __, 0000
XXXXXX XXXXXXXXXX XXXXX LLC
J.J.B. XXXXXXXX, X.X. XXXXX, INC.,
As Representatives of the Several Underwriters Named in Schedule I hereto
c/o Janney Xxxxxxxxxx Xxxxx LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
Artesian Resources Corporation, a Delaware corporation ("Artesian
Resources"), proposes, subject to the terms and conditions stated herein, to
sell to the several Underwriters named in SCHEDULE I hereto (the
"Underwriters"), for whom Xxxxxx Xxxxxxxxxx Xxxxx LLC and J.J.B. Xxxxxxxx, X.X.
Xxxxx, Inc. are serving as Representatives (the "Representatives"), an aggregate
of 500,000 shares of Artesian Resources' Class A Non-Voting Common Stock, par
value $1.00 per share ("Class A Common Stock"). The Class A Common Stock to be
sold to the Underwriters by Artesian Resources are referred to herein as the
"Firm Shares." The respective amounts of the Firm Shares to be purchased by the
several Underwriters are set forth opposite their names in SCHEDULE I hereto.
The Firm Shares shall be offered to the public at a public offering price of $__
per Firm Share (the "Offering Price").
In order to cover over-allotments in the sale of the Firm Shares, the
Underwriters may, at the Underwriters' election and subject to the terms and
conditions stated herein, purchase ratably in proportion to the amounts set
forth opposite their respective names in SCHEDULE I hereto, for the
Underwriters' own accounts up to 75,000 additional shares of Class A Common
Stock from Artesian Resources. Such 75,000 additional shares of Class A Common
Stock are referred to herein as the "Optional Shares." If any Optional Shares
are purchased, the Optional
Shares shall be purchased for offering to the public at the Offering Price and
in accordance with the terms and conditions set forth herein. The Firm Shares
and the Optional Shares are referred to collectively herein as the "Shares."
Artesian Resources and the Underwriters, intending to be legally bound,
hereby confirm their agreement as follows:
1. REPRESENTATIONS AND WARRANTIES OF ARTESIAN RESOURCES. Artesian Resources
represents and warrants to, and agrees with, the several Underwriters that:
(a) Artesian Resources has prepared, in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Regulations") of the Securities and Exchange
Commission (the "SEC") under the Act in effect at all applicable times, and
has filed with the SEC a registration statement on Form S-2 (File No.
333-87864) and one or more amendments thereto for the purpose of
registering the Shares under the Act. Copies of such registration statement
and any amendments thereto, and all forms of the related prospectus
contained therein, have been delivered to the Representatives. Any
preliminary prospectus included in such registration statement or filed
with the SEC pursuant to Rule 424(a) of the Regulations is hereinafter
called a "Preliminary Prospectus." The various parts of such registration
statement, including all exhibits thereto and the information contained in
the form of a final prospectus filed with the SEC pursuant to Rule 424(b)
of the Regulations in accordance with Section 5(a) of this Agreement and
deemed by virtue of Rule 424 of the Regulations to be part of the
registration statement at the time it was declared effective, each as
amended at the time the registration statement became effective, including
the information (if any) deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A of the Regulations, are
hereinafter collectively called the "Registration Statement." The final
prospectus in the form included in the Registration Statement or first
filed with the SEC pursuant to Rule 424(b) of the Regulations and any
amendments or supplements thereto, including the information (if any)
deemed to be part of that prospectus at the time of effectiveness pursuant
to Rule 430A of the Regulations, is hereinafter called the "Prospectus."
All references to the Registration Statement, the Preliminary Prospectus
and the Prospectus include all documents incorporated therein by reference.
If Artesian Resources has filed an abbreviated registration statement to
register additional Class A Common Stock pursuant to Rule 462(b) under the
Act (the "Rule 462 Registration Statement"), then any reference herein to
the term "Registration Statement" shall be deemed to include such Rule 462
Registration Statement.
(b) The Registration Statement has become effective under the Act, and
the SEC has not issued any stop order suspending the effectiveness of the
Registration Statement nor has the SEC instituted or, to the knowledge of
Artesian Resources, threatened to institute proceedings with respect to
such an order. No stop order suspending the sale of the Shares in any
jurisdiction designated by the Representatives as provided for in Section
5(f) hereof has been issued, and no proceedings for that purpose have been
instituted or, to the knowledge of Artesian Resources, threatened. Artesian
Resources has complied in all material respects with all requests of the
SEC, or requests of which Artesian Resources has been advised of any state
or foreign securities commission in a state or foreign jurisdiction
designated by the Representatives as provided for in Section 5(f) hereof,
for additional information to be included in the Registration Statement,
any Preliminary Prospectus or the Prospectus. The Registration Statement,
on the
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date on which it was declared effective by the SEC (the "Effective Date")
and when any post-effective amendment thereof shall become effective, and
the Prospectus, at the time it is filed with the SEC including, if
applicable, pursuant to Rule 424(b), and on the Closing Date (as defined in
Section 3 hereof) and any Option Closing Date (as defined in Section 4(b)
hereof), conformed and will conform in all material respects to all the
requirements of the Act and the Regulations, and did not and will not, on
any of such dates, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The preceding sentence does not
apply to statements in or omissions from the Registration Statement or the
Prospectus based upon written information furnished to Artesian Resources
by or on behalf of any Underwriter through the Representatives expressly
for use therein or the omission of any information regarding the
Underwriters.
(c) The documents incorporated by reference into the Prospectus
pursuant to Item 12 of Form S-2 under the Act, at the time they were filed
with the SEC, complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended ("Exchange Act") and the
Exchange Act Regulations and did not contain any untrue statement of
material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein not misleading.
(d) There are no legal or governmental proceedings pending or, to the
knowledge of Artesian Resources, threatened to which Artesian Resources or
any of its Subsidiaries is a party or to which any of the properties of
Artesian Resources or any Subsidiary are subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents that
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(e) Artesian Resources is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
has the corporate power and authority to own or lease and operate its
properties and to conduct its current business as described in the
Prospectus, and to execute, deliver and perform this Agreement. Each of
Artesian Water Company, Inc., a Delaware corporation ("Artesian Water"),
Artesian Wastewater Management, Inc., a Delaware corporation ("Artesian
Wastewater"), Artesian Development Corporation, a Delaware corporation
("Artesian Development") and Artesian Water Pennsylvania Inc., a
Pennsylvania corporation ("Artesian PA") is a wholly owned subsidiary of
Artesian Resources and, collectively, shall herein be referred to as the
"Subsidiaries." Each Subsidiary of Artesian Resources has been duly
incorporated and is an existing corporation in good standing under the laws
of the jurisdiction of its incorporation, and has the corporate power and
authority to own or lease and operate its properties and to conduct its
current business. Artesian Resources and the Subsidiaries are duly
qualified to do business as foreign corporations, and are in good standing,
in all jurisdictions in which such qualification is required, except where
the failure to so qualify would not have a material adverse effect on the
general affairs, properties, condition (financial or otherwise), results of
operations, stockholders' equity, business or prospects (collectively, the
"Business Conditions") of Artesian Resources and the Subsidiaries taken as
a whole. References to materiality as applicable to the Subsidiaries shall
mean material to the Business Conditions, operations or assets, as the case
may be, of the Subsidiaries taken as a whole.
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(f) All of the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and are owned by Artesian Resources free and clear of
all liens, encumbrances and security interests, except as otherwise
disclosed in the Prospectus; and no options, warrants or other rights to
purchase, agreements or other obligations to issue, or other rights to
convert any obligations into shares of capital stock or ownership interests
in each of the Subsidiaries or securities convertible into or exchangeable
for capital stock of, or other ownership interests in any of the
Subsidiaries are outstanding, except as disclosed in the Prospectus.
Neither Artesian Resources nor the Subsidiaries owns any stock or other
interest whatsoever, whether equity or debt, in any corporation,
partnership or other entity other than Artesian Resources' ownership of the
Subsidiaries, except that Artesian Wastewater is a member of the limited
liability company, AquaStructure Delaware, LLC and Artesian Resources is a
limited partner in the partnership, Environmental Technologies of Delaware,
L.P.
(g) This Agreement has been duly authorized, executed and delivered by
Artesian Resources and constitutes its legal, valid and binding obligation,
enforceable against Artesian Resources in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and subject
to applicability of general principles of equity and except, as to this
Agreement, as rights to indemnity and contribution may be limited by
federal and state securities laws or principles of public policy.
(h) The execution, delivery and performance of this Agreement and the
transactions contemplated herein, do not and will not, with or without the
giving of notice or the lapse of time, or both, (i) conflict with any term
or provision of Artesian Resources' or the Subsidiaries' respective
Certificate or Articles of Incorporation, as the case may be, or Bylaws;
(ii) result in a breach of, constitute a default under, result in the
termination or modification of, result in the creation or imposition of any
lien, security interest, charge or encumbrance upon any of the properties
of Artesian Resources or the Subsidiaries or require any payment by
Artesian Resources or any of the Subsidiaries or impose any liability on
Artesian Resources or any of the Subsidiaries pursuant to, any contract,
indenture, mortgage, deed of trust, commitment or other agreement or
instrument to which Artesian Resources or any of the Subsidiaries is a
party or by which any of their respective properties are bound or affected
other than this Agreement, except where such breach, default, modification,
termination, lien, security interest, charge, encumbrance, payment or
liability could not reasonably be expected to have a material adverse
effect on the Business Conditions of Artesian Resources or its
Subsidiaries, taken as a whole; (iii) assuming compliance with Blue Sky
laws and the rules of the National Association of Securities Dealers, Inc.
(the "NASD") applicable to the offer and sale of the Shares, violate any
law, rule, regulation, judgment, order or decree of any government or
governmental agency, instrumentality or court, domestic or foreign, having
jurisdiction over Artesian Resources or the Subsidiaries or any of their
respective properties or businesses, except where such violation could not
reasonably be expected to have a material adverse effect on the Business
Conditions of Artesian Resources or its Subsidiaries, taken as a whole; or
(iv) result in a breach, termination or lapse of Artesian Resources' or the
Subsidiaries' corporate power and authority to own or lease and operate
their respective properties and conduct their respective businesses, except
where such breach, termination or lapse could not reasonably be expected to
have a material adverse effect on the Business Conditions of Artesian
Resources or its Subsidiaries, taken as a whole.
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(i) As of March 31, 2002, Artesian Resources had the following
authorized, issued and outstanding capital stock: (i) 1,663,262 shares of
Class A Common Stock; (ii) 391,824 shares of Class B Common Stock, par
value $1 per share, (iii) 10,868 shares of 7% Prior Preferred Stock, par
value $25 per share, (iv) 8,000 shares of Cumulative Prior Preferred Stock,
par value $25 per share, and (v) no shares of Series Preferred Stock, par
value $1 per share. Artesian Resources will have, as of the issuance of the
Firm Shares on the Closing Date, the following as adjusted, authorized,
issue and outstanding capital stock: (i) 2,163,262 shares of Class A Common
Stock; (ii) 391,824 shares of Class B Common Stock, par value $1 per share,
(iii) 10,868 shares of 7% Prior Preferred Stock, par value $25 per share,
(iv) 8,000 shares of Cumulative Prior Preferred Stock, par value $25 per
share, and (v) no shares of Series Preferred Stock, par value $1 per share.
On the Effective Date, the Closing Date and any Option Closing Date, there
will be no options or warrants or other outstanding rights to purchase,
agreements or obligations to issue or agreements or other rights to convert
or exchange any obligation or security into, capital stock of Artesian
Resources or securities convertible into or exchangeable for capital stock
of Artesian Resources, except as described in the Prospectus or the grant
of options after the date of the Prospectus under option plans of Artesian
Resources. The information in the Prospectus insofar as it relates to all
outstanding options and other rights to acquire securities of Artesian
Resources as of the dates referred to in the Prospectus is true and correct
in all material respects.
(j) The currently outstanding shares of Artesian Resources' capital
stock have been duly authorized and are validly issued, fully paid and
non-assessable, and none of such outstanding shares of Artesian Resources'
capital stock has been issued in violation of any preemptive rights of any
security holder of Artesian Resources. The holders of the outstanding
shares of Artesian Resources' capital stock are not subject to personal
liability solely by reason of being such holders. All previous offers and
sales of the outstanding shares of Artesian Resources' capital stock made
by or on behalf of Artesian Resources, whether described in the
Registration Statement or otherwise, were made in conformity with
applicable federal, state and foreign securities laws. The authorized
capital stock of Artesian Resources, including, without limitation, the
outstanding Common Stock, the Shares being issued, and the outstanding
options to purchase shares of Common Stock conform in all material respects
with the descriptions thereof in the Prospectus, and such descriptions
conform in all material respects with the instruments defining the same.
(k) When the Shares have been duly delivered against payment therefor
as contemplated by this Agreement, the Shares will be validly issued, fully
paid and non-assessable, and the holders thereof will not be subject to
personal liability solely by reason of being such holders. The certificates
representing the Shares are in proper legal form under, and conform in all
respects to the requirements of, the Delaware General Corporation law, as
amended (the "DGCL"). Neither the filing of the Registration Statement nor
the offering or sale of Shares as contemplated by this Agreement gives any
security holder of Artesian Resources any rights for or relating to the
registration of any Class A Common Stock or any other capital stock of
Artesian Resources or any rights to convert or have redeemed or otherwise
receive anything of value with respect to any other security of Artesian
Resources.
(l) No consent, approval, authorization, order, registration, license
or permit of, or filing or registration with, any court, government,
governmental agency, instrumentality or
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other regulatory body or official is required for the valid and legal
execution, delivery and performance by Artesian Resources of this Agreement
and the consummation of the transactions contemplated hereby or described
in the Prospectus, except such as may be required for the registration of
the Shares under the Act, the Exchange Act, and for compliance with the
applicable state securities or Blue Sky laws or the Bylaws, rules and other
pronouncements of the NASD.
(m) The Class A Common Stock (including the Shares) is registered
pursuant to Section 12(g) of the Exchange Act. The issued and outstanding
shares of Class A Common Stock are included for quotation on the Nasdaq
National Market. Neither Artesian Resources nor, to Artesian Resources'
knowledge, any other person has taken any action designed to cause, or
likely to result in, the termination of the registration of the Class A
Common Stock under the Exchange Act. Artesian Resources has not received
any notification that the SEC or the NASD is contemplating terminating such
registration or inclusion.
(n) The statements in the Registration Statement and Prospectus,
insofar as they are descriptions of or references to contracts, agreements
or other documents, are accurate in all material respects and present or
summarize fairly, in all material respects, the information required to be
disclosed under the Act or the Regulations, and there are no contracts,
agreements or other documents, instruments or transactions of any character
required to be described or referred to in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement that
have not been so described, referred to or filed, as required.
(o) Each contract or other instrument (however characterized or
described) to which Artesian Resources or any of the Subsidiaries is a
party or by which any of their respective properties or businesses is bound
or affected and which is material to the conduct of Artesian Resources', or
the Subsidiaries' business has been duly and validly executed by Artesian
Resources or the Subsidiaries, as applicable, and, to the knowledge of
Artesian Resources, by the other parties thereto. Each such contract or
other instrument is in full force and effect and is enforceable in all
material respects against the parties thereto in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
subject to applicability of general principles of equity, and neither
Artesian Resources nor any of the Subsidiaries is, and to the knowledge of
Artesian Resources, no other party is, in default thereunder, except where
such default would not have a material adverse effect on the Business
Conditions of Artesian Resources and its Subsidiaries, taken as a whole,
and no event has occurred that, with the lapse of time or the giving of
notice, or both, would constitute a default under any such contract or
other instrument. All necessary consents under such contracts or other
instruments to the disclosure in the Prospectus with respect thereto have
been obtained.
(p) The consolidated financial statements of Artesian Resources
(including the notes thereto) filed as part of the Prospectus and the
Registration Statement present fairly, in all material respects, the
financial position of Artesian Resources as of the respective dates
thereof, and the results of operations and cash flows of Artesian Resources
for the periods indicated therein, all in conformity with generally
accepted accounting principles, except as disclosed therein. The supporting
notes included in the Registration Statement fairly state in all material
respects the information required to be stated therein in relation to the
financial statements taken
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as a whole. The financial information included in the Prospectus under the
captions "Prospectus Summary - Summary Consolidated Financial Information,"
"Selected Consolidated Financial Information," Use of Proceeds" and
"Capitalization" presents fairly the information shown therein and has been
compiled on a basis consistent with that of the financial statements
included in the Registration Statement. The unaudited pro forma adjustments
to financial information included in the Registration Statement have been
properly applied to the historical amounts in the compilation of that
information to reflect the sale by Artesian Resources of 500,000 shares of
Class A Common Stock offered thereby at an assumed offering or actual price
set forth in the Prospectus, and the application of the estimated net
proceeds therefrom.
(q) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated
therein, there has not been (i) any material adverse change (including,
whether or not insured against, any material loss or damage to any material
assets), or development involving a prospective material adverse change, in
the Business Conditions of Artesian Resources; (ii) any material adverse
change, loss, reduction, termination or non-renewal of any material
contract to which Artesian Resources or any of the Subsidiaries is a party;
(iii) any transaction entered into by Artesian Resources or any of the
Subsidiaries not in the ordinary course of its business that is material to
Artesian Resources or any of the Subsidiaries; (iv) any dividend or
distribution of any kind declared, paid or made by Artesian Resources on
its capital stock, except for and to the extent described in the
Prospectus; (v) any liabilities or obligations, direct or indirect,
incurred by Artesian Resources or any of the Subsidiaries that are material
to Artesian Resources or any of the Subsidiaries, (vi) any change in the
capitalization of Artesian Resources or any of the Subsidiaries, other than
the issuance of shares pursuant to the exercise of options or the grant of
options under Artesian Resources' stock option plans; or (vii) any change
in the indebtedness of Artesian Resources or any of the Subsidiaries that
is material to Artesian Resources or the Subsidiaries. Neither Artesian
Resources nor the Subsidiaries has any contingent liabilities or
obligations that are material and that are not expressly disclosed in the
Prospectus.
(r) Artesian Resources has not distributed, and will not
distribute, any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, a Preliminary
Prospectus, the Prospectus and other material, if any, permitted by the
Act and the Regulations. Except for the letter agreement dated May 9,
2002 between Artesian Resources and Xxxxxx Xxxxxxxxxx Xxxxx LLC (the
"Letter Agreement"), neither Artesian Resources nor any of its officers,
directors or affiliates has (i) taken, nor shall Artesian Resources or
such persons take, directly or indirectly, any action designed to, or
that might be reasonably expected to, cause or result in stabilization
or manipulation of the price of the Class A Common Stock, or (ii) since
the filing of the Registration Statement (A) sold, bid for, purchased or
paid anyone any compensation for soliciting purchases of, the Shares or
(B) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of Artesian Resources.
(s) Artesian Resources and the Subsidiaries have filed with the
appropriate federal, state and local governmental agencies, and all foreign
countries and political subdivisions thereof, all material tax returns that
are required to be filed or have duly obtained extensions of time for the
filing thereof and have paid all taxes shown on such returns or otherwise
due and all material assessments received by them to the extent that the
same have become due, other than those being contested in good faith and
for which adequate reserves have
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been provided. Neither Artesian Resources nor any of the Subsidiaries has
executed or filed with any taxing authority, foreign or domestic, any
agreement extending the period for assessment or collection of any income
or other tax and neither of them is a party to any pending action or
proceeding by any foreign or domestic governmental agency for the
assessment or collection of taxes, and no claims for assessment or
collection of taxes have been asserted against Artesian Resources or any of
the Subsidiaries that might materially adversely affect the Business
Conditions of Artesian Resources or any of the Subsidiaries.
(t) To the knowledge of Artesian Resources, KPMG LLP, which has given
its report on certain financial statements included as part of the
Registration Statement, is a firm of independent certified public
accountants as required by the Act and the Regulations with respect to
Artesian Resources.
(u) Neither Artesian Resources nor any of the Subsidiaries is in
violation of, or in default under, any of the terms or provisions of (i)
its Certificate or Articles of Incorporation, as the case may be, or Bylaws
or similar governing instruments and (ii) except where any such default
would not reasonably be expected to have a material adverse effect on the
Business Conditions of Artesian Resources or any of the Subsidiaries, (A)
any indenture, mortgage, deed of trust, contract, commitment or other
agreement or instrument to which it is a party or by which it or any of its
assets or properties is bound or affected, (B) any law, rule, regulation,
judgment, order or decree of any government or governmental agency,
instrumentality or court, domestic or foreign, having jurisdiction over it
or any of its properties or business, or (C) any license, permit,
certification, registration, approval, consent or franchise.
(v) Except as expressly disclosed in the Prospectus, there are no
claims, actions, suits, protests, proceedings, arbitrations, investigations
or inquiries pending before, or, to Artesian Resources' knowledge,
threatened or contemplated by, any governmental agency, instrumentality,
court or tribunal, domestic or foreign, or before any private arbitration
tribunal to which Artesian Resources or any of the Subsidiaries is or may
be made a party that could reasonably be expected to affect the validity of
any of the outstanding Class A Common Stock, or that, if determined
adversely to Artesian Resources or any of the Subsidiaries would, in any
case or in the aggregate, result in any material adverse change in the
Business Conditions of Artesian Resources or any of the Subsidiaries, nor
to Artesian Resources' knowledge is there any reasonable basis for any such
claim, action, suit, protest, proceeding, arbitration, investigation or
inquiry. There are no outstanding orders, judgments or decrees of any
court, governmental agency, instrumentality or other tribunal enjoining
Artesian Resources or any of the Subsidiaries from, or requiring Artesian
Resources or any of the Subsidiaries to take or refrain from taking, any
action, or to which Artesian Resources or any of the Subsidiaries or their
properties, assets or businesses are bound or subject.
(w) Each of Artesian Resources and the Subsidiaries owns, or possesses
adequate rights to use, or can acquire on reasonable terms, all patents,
patent applications, trademarks, trademark registrations, applications for
trademark registration, trade names, service marks, licenses, inventions,
copyrights, know-how (including any unpatented and/or unpatentable
proprietary or confidential technology, information, systems, design
methodologies and devices or procedures developed or derived from or for
Artesian Resources' or the Subsidiaries' business), trade secrets,
confidential information, processes and formulations and
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other proprietary information necessary for, used in, or proposed to be
used in, the conduct of the business of Artesian Resources and the
Subsidiaries as described in the Prospectus (collectively, the
"Intellectual Property"), except where the failure to own or possess or
otherwise be able to acquire such Intellectual Property would not have a
material adverse effect on the Business Conditions of Artesian Resources or
its Subsidiaries, taken as a whole. To Artesian Resources' knowledge,
neither Artesian Resources nor any of the Subsidiaries has infringed, is
infringing nor have received any notice of conflict with, the asserted
rights of others with respect to the Intellectual Property that,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could materially adversely affect the Business
Conditions of Artesian Resources or any of the Subsidiaries, and Artesian
Resources knows of no reasonable basis therefor. To the knowledge of
Artesian Resources, no other parties have infringed upon or are in conflict
with any Intellectual Property. Neither Artesian Resources nor any of the
Subsidiaries is a party to, or bound by, any agreement pursuant to which
royalties, honorariums or fees are payable by Artesian Resources or any of
the Subsidiaries to any person by reason of the ownership or use of any
Intellectual Property.
(x) Each of Artesian Resources and the Subsidiaries has good and
marketable title to all property described in the Prospectus as being owned
by it, free and clear of all liens, security interests, charges or
encumbrances and the like, except such as are expressly described or
referred to in the Prospectus or such as do not materially adversely affect
the Business Conditions or the conduct of the business of Artesian
Resources and the Subsidiaries as described in the Prospectus. Each of
Artesian Resources and the Subsidiaries has insured its property against
loss or damage by fire or other casualty, in amounts reasonably believed by
Artesian Resources to be adequate, and maintains insurance against such
other risks as management of Artesian Resources deems appropriate. All real
and personal property leased by Artesian Resources and the Subsidiaries as
described or referred to in the Prospectus, is held by Artesian Resources
and the Subsidiaries as applicable, under valid leases. The executive
offices and facilities of Artesian Resources and the Subsidiaries (the
"Premises"), and all operations presently or formerly conducted thereon by
Artesian Resources or the Subsidiaries or any predecessors thereof, are now
and, since Artesian Resources or the Subsidiaries began to use such
Premises, always have been and, to the knowledge of Artesian Resources
prior to when Artesian Resources or the Subsidiaries began to use such
Premises, always had been, in compliance with all federal, state and local
statutes, ordinances, regulations, rules, standards and requirements of
common law concerning or relating to industrial hygiene and the protection
of health and the environment (collectively, "the Environmental laws"),
except to the extent that any failure in such compliance would not
materially adversely affect the Business Conditions of Artesian Resources
or the Subsidiaries. To the knowledge of Artesian Resources, the facilities
of Artesian Resources and the Subsidiaries produce water of sufficient
quality and quantity to supply the current and planned customers and
service areas of Artesian Resources and the Subsidiaries, and are not
subject to any restriction on groundwater withdrawal under any federal,
state or local law, regulation, rule, order or permit, except as expressly
described in the Prospectus or as provided in State of Delaware and other
regulatory agencies' allocation permits and such as do not materially
adversely affect the Business Conditions or the conduct of the business of
Artesian Resources and the Subsidiaries as described in the Prospectus. To
the knowledge of Artesian Resources, there are no conditions on, about,
beneath or arising from the Premises, in close proximity to the Premises or
at any other location that might give rise to liability, the imposition of
a statutory lien or require a "Response," "Removal" or "Remedial
9
Action," as defined herein, under any of the Environmental laws, or affect
the quality of the groundwater withdrawn by Artesian Resources or the
Subsidiaries, and that would materially adversely affect the Business
Conditions of Artesian Resources, except as described in the Prospectus.
Except as expressly disclosed in the Prospectus, or which will not
materially adversely affect the Business Conditions of Artesian Resources
(i) neither Artesian Resources nor the Subsidiaries has received notice or
has knowledge of any claim, demand, investigation, regulatory action, suit
or other action instituted or threatened against Artesian Resources or the
Subsidiaries or any portion of the Premises or any parcel in close
proximity to the Premises relating to any of the Environmental laws and
(ii) neither Artesian Resources nor the Subsidiaries has received any
notice of material violation, citation, complaint, order, directive,
request for information or response thereto, notice letter, demand letter
or compliance schedule to or from any governmental or regulatory agency
arising out of or in connection with "hazardous substances" (as defined by
applicable Environmental laws) on, about, beneath, arising from or
generated at the Premises, near the Premises or at any other location. As
used in this subsection, the terms "Response," "Removal" and "Remedial
Action" shall have the respective meanings assigned to such terms under
Sections 101(23)-101(25) of the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. 9601(23)-9601(25).
(y) Each of Artesian Resources and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary in
order to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(z) Artesian Resources, the Subsidiaries and any Related Employer
(which for purposes of this Paragraph means any entity that with Artesian
Resources or the Subsidiaries is a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue
Code of 1986 as amended (the "Code"), is, individually or collectively, a
trade or business under common control within the meaning of Section 414(c)
of the Code, or is a member of the same affiliated service group within the
meaning of Section 414(m) of the Code) have established, maintain,
contribute to, are required to contribute to, are a party to, or are bound
by certain pension, retirement, profit-sharing plans, deferred
compensation, bonus, or other incentive plans, or medical, vision, dental,
or other health plans, or life insurance or disability plans, or any other
employee benefit plans, programs, arrangements, agreements, or
understandings, some of which are subject to the Employee Retirement Income
Security Act of 1974 as amended ("ERISA") and the rules and regulations
thereunder ("Plans"). Any disclosure regarding the Plans required under the
Act or the Exchange Act has been made in the Prospectus and the documents
incorporated therein. All Plans that are subject to ERISA are in compliance
with ERISA, in all material respects, and, to the extent a Plan is intended
to be tax-qualified within the meaning of Section 401(a) of the Code, such
Plan is in compliance with the Code in all material respects and is the
subject of a current favorable determination letter from the Internal
Revenue Service as to its tax qualification or such Plan has been submitted
to the Internal Revenue Service for an updated determination letter and
Artesian Resources expects that
10
the Internal Revenue Service will issue a favorable determination letter
with respect to the Plan. No Plan is an employee pension benefit plan that
is subject to Part 3 of Subtitle B of Title I of ERISA, a defined benefit
plan subject to Title IV of ERISA, or a multiemployer plan. None of
Artesian Resources, the Subsidiaries or any Related Employer maintains or
has maintained retiree life or retiree health insurance plans that are
employee welfare benefit plans providing for continuing benefit or coverage
for any employee or any beneficiary of any employee after such employee's
termination of employment, except as required by Section 4980B of the Code
and except as disclosed in the Prospectus. No fiduciary or other party in
interest with respect to any of the Plans has caused any of such Plans to
engage in a prohibited transaction as defined in Section 406 of ERISA and
Section 4975 of the Code. As used in this subsection, the terms "defined
benefit plan," "employee benefit plan," "employee pension benefit plan,"
"employee welfare benefit plan," "fiduciary" and "multiemployer plan" shall
have the respective meanings assigned to such terms in Section 3 of ERISA.
(aa) No labor dispute exists with Artesian Resources' or the
Subsidiaries' employees, and to Artesian Resources' knowledge, no such
labor dispute is threatened. Artesian Resources has no knowledge of any
existing or threatened labor disturbance by the employees of any of the
principal suppliers, contractors or customers of Artesian Resources or any
of the Subsidiaries that would materially adversely affect the Business
Conditions of Artesian Resources or any of the Subsidiaries. None of
Artesian Resources' or the Subsidiaries' employees is covered by a
collective bargaining agreement and no union organizing activity exists
with respect to any of such employees.
(bb) Neither Artesian Resources nor the Subsidiaries has incurred any
liability for any finder's fees or similar payments in connection with the
transactions contemplated herein other than as disclosed in the Prospectus.
(cc) Artesian Resources is familiar with the Investment Company Act of
1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and Artesian Resources intends
to conduct, its affairs in such a manner as to ensure that it will not be
an "investment company" or an entity " controlled" by an investment company
within the meaning of the 1940 Act and the rules and regulations
thereunder.
(dd) Artesian Resources and its Subsidiaries have received all
permits, licenses, franchises, authorizations, registrations,
qualifications and approvals (collectively, "Permits") of governmental or
regulatory authorities as may be required of them to own their properties
and conduct their businesses in the manner described in the Prospectus,
subject to such qualifications as may be set forth in the Prospectus,
except to the extent that failure to receive such Permits would not have a
material adverse effect on the Business Conditions of Artesian Resources or
its Subsidiaries; and Artesian Resources and its Subsidiaries have
fulfilled and performed all of their material obligations with respect to
such Permits, and no event has occurred which allows or, after notice or
lapse of time or both, would allow revocation or termination thereof or
result in any other material impairment of the rights of the holder of any
such Permit, subject in each case to such qualifications as may be set
forth in the Prospectus; and, except as described in the Prospectus, such
Permits contain no restrictions that materially affect the ability of
Artesian Resources and its Subsidiaries to conduct their businesses.
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(ee) No statement, representation, warranty or covenant made by
Artesian Resources or any of the Subsidiaries in this Agreement or in any
certificate or document required by this Agreement to be delivered to the
Representatives is, or as of the Closing Date or any Option Closing Date
will be, inaccurate, untrue or incorrect in any material respect. No
transaction has occurred or is proposed between or among Artesian Resources
or any of the Subsidiaries and any of their respective officers, directors
or stockholders or any affiliate of the foregoing, or any affiliate of the
foregoing that is required to be described in and is not described in the
Registration Statement and the Prospectus.
(ff) None of Artesian Resources, the Subsidiaries or any officer,
director, employee, partner, agent or other person acting on behalf of
Artesian Resources or the Subsidiaries has, directly or indirectly, given
or agreed to give any money, property or similar benefit or consideration
to any customer or supplier (including any employee or agent of any
customer or supplier) or official or employee of any agency or
instrumentality of any government (foreign or domestic) or political party
or candidate for office (foreign or domestic) or any other person who was,
is or in the future may be in a position to affect the Business Conditions
of Artesian Resources or any of the Subsidiaries or any actual or proposed
business transaction of Artesian Resources or any of the Subsidiaries that
(i) could subject Artesian Resources or any of the Subsidiaries to any
liability (including, but not limited to, the payment of monetary damages)
or penalty in any civil, criminal or governmental action or proceeding that
would have a material adverse effect on the Business Conditions of Artesian
Resources or any of the Subsidiaries or (ii) with respect to Artesian
Resources, the Subsidiaries, or any officer or director thereof, violates
any law, rule or regulation to which Artesian Resources or any of the
Subsidiaries is subject.
Any certificate signed by any officer of Artesian Resources or any of the
Subsidiaries in such capacity and delivered to the Representatives or to counsel
for the Underwriters pursuant to this Agreement shall be deemed a representation
and warranty by Artesian Resources or the Subsidiaries as the case may be, to
the several Underwriters as to the matters covered thereby.
2. PURCHASE AND SALE OF FIRM SHARES. On the basis of the representations,
warranties, covenants and agreements contained herein, but subject to the terms
and conditions set forth herein, Artesian Resources shall sell the Firm Shares
to the several Underwriters at the Offering Price less the Underwriting
Discounts and Commissions shown on the cover page of the Prospectus, and the
Underwriters, severally and not jointly, shall purchase from Artesian Resources
on a firm commitment basis, at the Offering Price less the Underwriting
Discounts and Commissions shown on the cover page of the Prospectus, the
respective amounts of the Firm Shares set forth opposite their names on SCHEDULE
I hereto. Except as provided in Sections 4 and 12 hereof, the agreement of each
Underwriter is to purchase only that number of Shares specified with respect to
that Underwriter in SCHEDULE I hereto. The Underwriters shall offer the Shares
to the public as set forth in the Prospectus.
3. PAYMENT AND DELIVERY. The Firm Shares shall be issued in the form of one
or more fully registered global securities (the "Global Securities") in
book-entry form in such denominations and registered in the name of the nominee
of The Depository Trust Company ("DTC") or in such names as the Representatives
may request upon at least 48 hours' prior
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notice to Artesian Resources, and shall be delivered by or on behalf of Artesian
Resources to the Representatives for the account of such Underwriter, against
payment by such Underwriter on its behalf of the purchase price therefor by wire
transfer of immediately available funds to such accounts as Artesian Resources
shall designate in writing (with all costs and expenses incurred by the
Underwriters in connection with such settlement in immediately available funds,
including, but not limited to, interest or cost of funds and expenses, to be
borne by Artesian Resources). The closing of the sale and purchase of the Firm
Shares shall be held at the offices of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx for the respective accounts of
the Underwriters. Such payment and delivery will be made at 10:00 a.m.,
Philadelphia, Pennsylvania time, on the third business day after the date of
this Agreement, or at such other time on the same or such other date, not later
than seven business days thereafter as shall be designated in writing by the
Representatives. Such time and date are referred to herein as the "Closing
Date." Artesian Resources shall make the Global Securities representing the Firm
Shares available for examination by the Representatives and counsel for the
Underwriters at the Philadelphia correspondent office of Artesian Resources'
transfer agent not less than one full business day prior to the Closing Date.
4. OPTION TO PURCHASE OPTIONAL SHARES.
(a) For the purposes of covering any over-allotments in connection
with the distribution and sale of the Firm Shares as contemplated by the
Prospectus, subject to the terms and conditions herein set forth, the
several Underwriters are hereby granted an option by Artesian Resources to
purchase all or any part of the Optional Shares (the "Over-allotment
Option"). The purchase price to be paid for the Optional Shares shall be
the Offering Price less the Underwriting Discounts and Commissions shown on
the cover page of the Prospectus. The Over-allotment Option granted hereby
may be exercised by the Representatives on behalf of the several
Underwriters as to all or any part of the Optional Shares at any time and
from time to time within 30 days after the date of the Prospectus. No
Underwriter shall be under any obligation to purchase any Optional Shares
prior to an exercise of the Over-allotment Option.
(b) The Over-allotment Option granted hereby may be exercised by the
Representatives on behalf of the several Underwriters by giving notice to
Artesian Resources by a letter sent by registered or certified mail,
postage prepaid, telex, telegraph, telegram or facsimile (such notice to be
effective when received), addressed as provided in Section 14 hereof,
setting forth the number of Optional Shares to be purchased, the date and
time for delivery of and payment for the Optional Shares and stating that
the Optional Shares referred to therein are to be used for the purpose of
covering over-allotments in connection with the distribution and sale of
the Firm Shares. If such notice is given at least two full business days
prior to the Closing Date, the date set forth therein for such delivery and
payment shall be not earlier than the Closing Date. If such notice is given
after two full business days prior to the Closing Date, the date set forth
therein for such delivery and payment shall be a date selected by the
Representatives not later than five full business days after the exercise
of the Over-allotment Option. The date and time set forth in such a notice
is referred to herein as an "Option Closing Date," and a closing held
pursuant to such a notice is referred to herein as an "Option Closing."
Upon each exercise of the Over-allotment Option, and on the basis of the
representations, warranties, covenants and agreements herein contained, and
subject to the terms and conditions herein set forth, the several
Underwriters shall become severally, but not jointly, obligated to
13
purchase from Artesian Resources the number of Optional Shares specified in
each notice of exercise of the Over-allotment option (allocated among them
in accordance with Section 4(c) hereof).
(c) The number of Optional Shares to be purchased by each Underwriter
pursuant to each exercise of the Over-allotment Option shall be the number
that bears the same ratio to the aggregate number of Optional Shares being
purchased through such Over-allotment Option exercise as the number of Firm
Shares opposite the name of such Underwriter in SCHEDULE I hereto bears to
the total number of all Firm Shares. Notwithstanding the foregoing, the
number of Optional Shares purchased and sold pursuant to each exercise of
the Over-allotment Option shall be subject to such adjustment as the
Representatives may approve to eliminate fractional shares and subject to
the provisions for the allocation of Optional Shares purchased for the
purpose of covering over-allotments set forth in the agreement entered into
by and among the Underwriters in connection herewith (the "Agreement Among
Underwriters").
(d) The Optional Shares shall be issued in the form of one or more
Global Securities in book-entry form in such denominations and registered
in the name of the nominee of DTC or in such names as the Representatives
may request upon at least 48 hours' prior notice to Artesian Resources, and
shall be delivered by or on behalf of Artesian Resources to the
Representatives for the account of such Underwriter, against payment by
such Underwriter on its behalf of the purchase price therefor by wire
transfer of immediately available funds to such accounts as Artesian
Resources shall designate in writing (with all costs and expenses incurred
by the Underwriters in connection with such settlement in immediately
available funds, including, but not limited to, interest or cost of funds
and expenses, to be borne by Artesian Resources). The closing of the sale
and purchase of the Optional Shares shall be held at the offices of Xxxxxxx
Xxxxx Xxxxxxx & Ingersoll, LLP, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx for the respective accounts of the Underwriters. Such payment
and delivery will be made at 10:00 a.m., Philadelphia, Pennsylvania time,
on the Option Closing Date. Artesian Resources shall make the Global
Securities representing the Optional Shares available for examination by
the Representatives and counsel for the Underwriters at the Philadelphia
correspondent office of Artesian Resources' transfer agent not less than
one full business day prior to the Option Closing Date.
5. CERTAIN COVENANTS AND AGREEMENTS OF ARTESIAN RESOURCES. Artesian
Resources covenants and agrees with the several Underwriters as follows:
(a) If Rule 430A of the Regulations is employed, Artesian Resources
will timely file the Prospectus pursuant to and in compliance with Rule
424(b) of the Regulations and will advise the Representatives of the time
and manner of such filing.
(b) Artesian Resources will not file with the SEC, the Prospectus, any
amendment or supplement to the Prospectus or any amendment to the
Registration Statement, unless the Representatives have been advised or to
which the Representatives shall reasonably object after being so advised,
and will use its best efforts to cause any such amendment to the
Registration Statement to be declared effective as promptly as possible.
Upon reasonable request of the Representatives or counsel for the
Underwriters, Artesian Resources will promptly prepare and file with the
SEC, in accordance with the Regulations of the SEC, any amendments to the
14
Registration Statement or amendments or supplements to the Prospectus that
may be necessary or advisable in connection with the distribution of the
Shares by the several Underwriters and will use its best efforts to cause
any such amendment to the Registration Statement to be declared effective
as promptly as possible. If required, Artesian Resources will file any
amendment or supplement to the Prospectus with the SEC in the manner and
within the time period required by Rule 424(b) under the Act. Artesian
Resources will advise the Representatives, promptly after receiving notice
thereof, of the time when the Registration Statement or any amendment
thereof has been filed or declared effective or the Prospectus or any
amendment or supplement thereto has been filed and will provide evidence to
the Representatives of each filing or effectiveness.
(c) Artesian Resources will advise the Representatives immediately,
and confirm such advice in writing, (i) when any post-effective amendment
to the Registration Statement is filed with the SEC under Rule 462(c) under
the Act or otherwise, (ii) any Rule 462(b) Registration Statement is filed,
(iii) of the receipt of any comments from the SEC concerning the
Registration Statement, (iv) when any post-effective amendment to the
Registration Statement becomes effective, or when any supplement to the
Prospectus or any amended Prospectus has been filed, (v) of any request of
the SEC for amendment or supplementation of the Registration Statement or
Prospectus or for additional information, (vi) during the period when the
Prospectus is required to be delivered under the Act and Regulations, of
the happening of any event as a result of which the Registration Statement
or the Prospectus would include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein not
misleading, (vii) during the period noted in clause (vi) above, of the need
to amend the Registration Statement or supplement the Prospectus to comply
with the Act, (viii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of the Prospectus, and (ix) of the
suspension of the qualification of any of the Shares for offering or sale
in any jurisdiction in which the Underwriters intend to make such offers or
sales, or the initiation or threatening of any proceedings for any of such
purposes known to Artesian Resources. Artesian Resources will use its best
efforts to prevent the issuance of any such stop order or of any order
preventing or suspending such use, and if any such order is issued, to
obtain as soon as possible the lifting thereof.
(d) Artesian Resources has delivered to the Representatives, without
charge, as many copies of each Preliminary Prospectus as the
Representatives have reasonably requested. Artesian Resources will deliver
to the Representatives, without charge, from time to time during the period
when delivery of the Prospectus is required under the Act, such number of
copies of the Prospectus (as supplemented or amended) as the
Representatives may reasonably request. Artesian Resources hereby consents
to the use of such copies of the Preliminary Prospectus and the Prospectus
for purposes permitted by the Act, the Regulations and the securities or
Blue Sky laws of the states or foreign jurisdictions in which the Shares
are offered by the several Underwriters and by all dealers to whom Shares
may be sold, both in connection with the offering and sale of the Shares
and for such period of time thereafter as the Prospectus is required by the
Act to be delivered in connection with sales by any Underwriter or dealer.
Artesian Resources has furnished or will furnish to the Representatives at
least one original signed copy of the Registration Statement as originally
filed and of all amendments and supplements thereto, whether filed before
or after the Effective Date, at least one copy of all exhibits filed
therewith and of all consents and certificates of experts, and will deliver
to the
15
Representatives such number of conformed copies of the Registration
Statement, including financial statements and exhibits, and all amendments
thereto, as the Representatives may reasonably request.
(e) Artesian Resources will comply with the Act, the Regulations, the
Exchange Act and the Exchange Act Regulations so as to permit the
continuance of sales of and dealings in the Shares for as long as may be
necessary to complete the distribution of the Shares as contemplated
hereby.
(f) Artesian Resources will furnish such information and pay such
filing fees and other expenses as may be required, and otherwise cooperate
in the registration or qualification of the Shares, or exemption therefrom,
for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions in which the
Representatives determine to offer the Shares, after consultation with
Artesian Resources, and will file such consents to service of process or
other documents necessary or appropriate in order to effect such
registration or qualification; provided, however, that no such
qualification shall be required in any jurisdiction where, solely as a
result thereof, Artesian Resources would be subject to taxation or
qualification as a foreign corporation doing business in such jurisdiction
where it is not now so qualified or to take any action which would subject
it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject. Artesian Resources will, from time to time, prepare and file such
statements and reports as are or may be required to continue such
qualification in effect for so long a period as is required under the laws
of such jurisdictions for such offering and sale. Artesian Resources will
furnish such information and pay such filing fees and other expenses as may
be required, and otherwise cooperate in the inclusion of the Shares for
quotation on the Nasdaq National Market. Artesian Resources will, from time
to time, prepare and file such statements and reports as are or may be
required to continue such qualification in effect for a period of three
years from the Effective Date.
(g) Subject to Section 5(b) hereof, in case of any event (occurring at
any time within the period during which, in the opinion of counsel for the
Underwriters, a prospectus is required to be delivered under the Act or the
Regulations), as a result of which any Preliminary Prospectus or the
Prospectus, as then amended or supplemented, would contain, in the opinion
of counsel for the Underwriters, an untrue statement of a material fact, or
omit to state any material fact necessary in order to make the statements
therein not misleading, or, if it is necessary at any time to amend any
Preliminary Prospectus or the Prospectus to comply with the Act or the
Regulations or any applicable securities or Blue Sky laws, Artesian
Resources promptly will prepare and file with the SEC, and any applicable
state and foreign securities commission, an amendment, supplement or
document that will correct such statement or omission or effect such
compliance and will furnish to the several Underwriters such number of
copies of such amendments, supplements or documents (in form and substance
satisfactory to the Representatives and counsel for the Underwriters) as
the Representatives may reasonably request. For purposes of this Section
5(g), Artesian Resources will provide such information to the
Representatives, the Underwriters' counsel and counsel to Artesian
Resources as shall be necessary to enable such persons to consult with
Artesian Resources with respect to the need to amend or supplement the
Registration Statement, Preliminary Prospectus or Prospectus or file
16
any document, and shall furnish to the Representatives and the
Underwriters' counsel such further information as each may from time to
time reasonably request.
(h) Artesian Resources will make generally available to its security
holders not later than 45 days after the end of the fiscal quarter first
occurring after the first anniversary of the Effective Date, an earnings
statement of Artesian Resources (which need not be audited unless required
by the Act or the Regulations) that shall comply with Section 11(a) of the
Act and Rule 158 thereunder and cover a period of at least 12 consecutive
months.
(i) For a period of three years from the Effective Date, Artesian
Resources will deliver to the Representatives and, upon request, to each of
the Underwriters: (i) a copy of each report or document, including, without
limitation, reports on Forms 8-K, 10-K and 10-Q (or such similar forms as
may be designated by the SEC), registration statements and any exhibits
thereto, filed or furnished to the SEC or any securities exchange or the
NASD, promptly after the date each such report or document is so filed or
furnished; (ii) as soon as practicable, copies of any reports or
communications (financial or other) of Artesian Resources mailed to its
security holders; and (iii) every material press release in respect of
Artesian Resources or its affairs that is released or prepared by Artesian
Resources.
(j) During the course of the distribution of the Shares, Artesian
Resources and its Subsidiaries will not and Artesian Resources shall cause
its officers and directors not to, (i) take, directly or indirectly, any
action designed to, or that could reasonably be expected to, cause or
result in stabilization or manipulation of the price of the Common Stock or
(ii) sell, bid for, purchase or pay anyone any compensation for soliciting
purchases of, the Shares.
(k) Artesian Resources has caused each person listed on SCHEDULE II
hereto to execute an agreement (a "Lock-up Agreement") in form and
substance satisfactory to the Representatives and the Underwriters' counsel
which provides that from the date of the Lock-up Agreement and for a period
of 90 days from the Effective Date, such persons will not, without the
prior written consent of the Representatives, directly or indirectly, sell,
offer or contract to sell, pledge, grant any option for sale or purchase
of, agree to sell or otherwise dispose of (collectively, "Disposition") any
shares of Common Stock (or any securities convertible into or exercisable
or exchangeable for any shares of Common Stock) beneficially owned by such
persons now or on the Effective Date, or with respect to which such persons
now or on the Effective Date has the power of Disposition, or enter into a
transaction which would have the same effect, or enter into any swap, hedge
or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of Common Stock, whether any such
aforementioned transaction is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise, or publicly disclose the
intention to make any such Disposition, or enter into any such transaction,
swap, hedge or other arrangement. The foregoing agreement shall not apply
to (i) bona fide gifts of securities provided, the recipient of such gift
or contribution agrees in writing as a condition precedent to such gift or
contribution to be bound by the terms thereof, or (ii) transfers of
securities to affiliates of the transferor if the transfers do not involve
a public distribution or public offering and provided, the transferee
agrees in writing as a condition precedent to such transfer to be bound by
the terms thereof. Artesian Resources has delivered such agreements to the
Representatives prior to the date of this Agreement.
17
Appropriate stop transfer instructions will be issued by Artesian Resources
to the transfer agent for the Common Stock and a copy of such instructions
will be delivered to the Representatives.
(l) As of the date of the Lock-up Agreement and for a period of 90
days after the Effective Date, Artesian Resources will not, without the
prior written consent of the Representatives, issue or make a Disposition
of any Common Stock or any securities convertible into or exercisable or
exchangeable for any Common Stock or enter into a transaction which would
have the same effect or enter into any swap, hedge or other arrangement
that transfers, in whole or in part, any of the economic consequences of
ownership of Common Stock, whether any such aforementioned transaction is
to be settled by delivery of Common Stock or such other securities, in cash
or otherwise, or publicly disclose the intention to issue or make any such
Disposition or enter into any such transaction, swap, hedge or other
arrangement, except (i) the issuance of Class A Common Stock upon the
exercise of currently outstanding options and warrants as described in the
Registration Statement, (ii) the grant of options to purchase Class A
Common Stock under Artesian Resources' currently outstanding stock option
plans and the issuance of Class A Common Stock upon the exercise thereof
and (iii) the issuance of Class A Common Stock under Artesian Resources'
Dividend Reinvestment Plan and 401(k) Plan. The foregoing agreement shall
not apply to (i) bona fide gifts of securities provided, the recipient of
such gift or contribution agrees in writing as a condition precedent to
such gift or contribution to be bound by the terms thereof, or (ii)
transfers of securities to affiliates of the transferor if the transfers do
not involve a public distribution or public offering and provided, the
transferee agrees in writing as a condition precedent to such transfer to
be bound by the terms thereof.
(m) For a period of three years from the Effective Date, Artesian
Resources will use all reasonable efforts to maintain the listing of the
Class A Common Stock (including, without limitation, the Shares) on the
Nasdaq National Market or on a national securities exchange.
(n) Artesian Resources shall, at its sole cost and expense, supply and
deliver to the Representatives and the Underwriters' counsel, within a
reasonable period from the Closing Date, transaction binders in such number
and in such form and content as the Representatives reasonably request.
(o) Artesian Resources will use the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectus.
6. PAYMENT OF FEES AND EXPENSES.
(a) Whether or not the transactions contemplated by this Agreement are
consummated and regardless of the reason this Agreement is terminated, Artesian
Resources will pay or cause to be paid, and bear or cause to be borne, all costs
and expenses incident to the performance of the obligations of Artesian
Resources under this Agreement, including: (i) the fees and expenses of the
accountants and counsel for Artesian Resources incurred in the preparation of
the Registration Statement and any post-effective amendments thereto (including
financial statements and exhibits), Preliminary Prospectuses and the Prospectus
and any amendments or supplements thereto; (ii) printing and mailing expenses
associated with the
18
Registration Statement and any post-effective amendments thereto, any
Preliminary Prospectus, the Prospectus, this Agreement, the Agreement Among
Underwriters, the Underwriters' Questionnaire, the power of attorney executed by
each of the Underwriters, the Selected Dealer Agreement and related documents
and the Preliminary Blue Sky Memorandum (and any supplement thereto); (iii) the
fees, expenses and all other costs of qualifying the Shares for sale under the
securities or Blue Sky laws of those states or foreign jurisdictions in which
the Shares are to be offered or sold, including the reasonable fees and expenses
of Underwriters' counsel and such local counsel as may have been reasonably
required and retained for such purpose; (iv) the fees, expenses and other costs
of, or incident to, securing any review or approvals by or from the NASD,
including the reasonable fees and expenses of the Underwriters' counsel,
provided that the aggregate fees and expenses for Underwriters' counsel and
local counsel under this clause (iv) and clause (iii) above shall not exceed
$10,000; (v) the filing fees of the SEC; (vi) the cost of furnishing to the
Underwriters copies of the Registration Statement, Preliminary Prospectuses and
Prospectuses as herein provided; (vii) Artesian Resources' travel expenses in
connection with meetings with the brokerage community and institutional
investors; (viii) the costs and expenses associated with settlement in same day
funds (including, but not limited to, interest or cost of funds expenses), if
desired by Artesian Resources; (ix) any fees or costs payable to the Nasdaq
National Market as a result of the offering; (x) the cost of preparing, issuing
and delivery to the Underwriters of any certificates evidencing the Shares; (xi)
the costs and charges of any transfer agent; (xii) the reasonable costs of
advertising the offering; (xiii) all taxes, if any, on the issuance, delivery
and transfer of the Shares sold by Artesian Resources; and (xiv) all other costs
and expenses reasonably incident to the performance of Artesian Resources'
obligations hereunder that are not otherwise specifically provided for in this
Section 6(a); provided, however, that, except as specifically set forth in
Section 6(c) hereof, the Underwriters shall be responsible for their
out-of-pocket expenses, including those associated with meetings with the
brokerage community and institutional investors, other than Artesian Resources'
travel expenses, and the fees and expenses of their counsel for other than with
respect to Blue Sky and NASD matters.
(b) Artesian Resources shall pay as due any state or foreign registration,
qualification and filing fees and any accountable out-of-pocket disbursements in
connection with such registration, qualification or filing in the states and
foreign jurisdictions in which the Representatives determine to offer or sell
the Shares.
(c) On the Closing Date, Artesian Resources shall pay the Representatives a
non-accountable expense allowance in the amount of $65,000 in accordance with
the terms of the Letter Agreement.
(d) If (i) the Underwriters are willing to proceed with the offering, and
the transactions contemplated by this Agreement are not consummated because
Artesian Resources elects not to proceed with the offering for any reason or
(ii) the Representatives terminate this Agreement pursuant to Section 11(b)
hereof, then Artesian Resources will reimburse the Representatives for their
accountable out-of-pocket expenses relating to the offering (including, but
not limited to, the fees and disbursements to its counsel) not to exceed
$150,000.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligation of each
Underwriter to purchase and pay for the Firm Shares that it has agreed to
purchase hereunder on the Closing
19
Date, and to purchase and pay for any Optional Shares as to which it exercises
its right to purchase under Section 4 on an Option Closing Date, is subject at
the date hereof, the Closing Date and any Option Closing Date to the continuing
accuracy and fulfillment of the representations and warranties of Artesian
Resources, to the performance by Artesian Resources of its covenants and
obligations hereunder, and to the following additional conditions:
(a) If required by the Regulations, the Prospectus shall have been filed
with the SEC pursuant to Rule 424(b) of the Regulations within the applicable
time period prescribed for such filing by the Regulations. On or prior to the
Closing Date or any Option Closing Date, as the case may be, no stop order or
other order preventing or suspending the effectiveness of the Registration
Statement (including any document incorporated by reference therein) or the sale
of any of the Shares shall have been issued under the Act or any state or
foreign securities law, and no proceedings for that purpose shall have been
initiated or shall be pending or, to the Representatives' knowledge or the
knowledge of Artesian Resources, shall be contemplated by the SEC or by any
authority in any jurisdiction designated by the Representatives pursuant to
Section 5(f) hereof. Any request on the part of the SEC or any state or foreign
securities authority for additional information shall have been complied with to
the reasonable satisfaction of counsel for the Underwriters.
(b) All corporate proceedings and other matters incident to the
authorization, form and validity of this Agreement, the Shares and the form of
the Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be
satisfactory in all material respects to counsel for the Underwriters. Artesian
Resources shall have furnished to such counsel all documents and information
that they may have reasonably requested to enable them to pass upon such
matters. The Representatives shall have received from the Underwriters' counsel,
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP an opinion, dated as of the Closing Date
and any Option Closing Date, as the case may be, and addressed to the
Representatives individually and as representatives of the several Underwriters,
which opinion shall be satisfactory in all respects to the Representatives.
(c) The Representatives shall have received a copy of an executed Lock-up
Agreement from Artesian Resources and each of the persons listed on SCHEDULE II
hereto.
(d) On the Closing Date and any Option Closing Date, there shall have been
delivered to the Representatives signed opinions of Xxxxxx, Xxxxx & Bockius LLP
and Xxxxxx Xxxxxxx Arsht & Xxxxxxx, counsels for Artesian Resources, dated as of
each such date and addressed to the Representatives individually and as
representatives of the several Underwriters to the effect as is reasonably
satisfactory to the Representatives.
(e) At the Closing Date and any Option Closing Date: (i) the Registration
Statement and any post-effective amendment thereto and the Prospectus and any
amendments or supplements thereto shall contain all statements that are required
to be stated therein in accordance with the Act and the Regulations and in all
material respects shall conform to the requirements of the Act and the
Regulations, and neither the Registration Statement nor any post-effective
amendment thereto nor the Prospectus and any amendments or supplements thereto
shall 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; (ii)
20
since the respective dates as of which information is given in the Registration
Statement and any post-effective amendment thereto and the Prospectus and any
amendments or supplements thereto, except as otherwise stated therein, there
shall have been no material adverse change in the Business Conditions of
Artesian Resources from that set forth therein, whether or not arising in the
ordinary course of business; (iii) since the respective dates as of which
information is given in the Registration Statement and the Prospectus or any
amendment or supplement thereto, there shall have been no event or transaction,
contract or agreement entered into by Artesian Resources or any of the
Subsidiaries other than in the ordinary course of business and as set forth in
the Registration Statement or Prospectus, that has not been, but would be
required to be, set forth in the Registration Statement or Prospectus; (iv)
since the respective dates as of which information is given in the Registration
Statement and any post-effective amendment thereto and the Prospectus and any
amendments or supplements thereto, there shall have been no material adverse
change, loss, reduction, termination or non-renewal of any contract to which
Artesian Resources or any of the Subsidiaries is a party, that has not been, but
would be required to be set forth in the Registration Statement or Prospectus;
and (v) no action, suit or proceeding at law or in equity shall be pending or
threatened against Artesian Resources or any of the Subsidiaries that would be
required to be set forth in the Prospectus, other than as set forth therein, and
no proceedings shall be pending or threatened against or directly affecting
Artesian Resources or any of the Subsidiaries before or by any federal, state or
other commission, board or administrative agency wherein an unfavorable
decision, ruling or finding would materially adversely affect the Business
Conditions of Artesian Resources.
(f) The Representatives shall have received at the Closing Date and any
Option Closing Date certificates of the Chief Executive Officer and the Chief
Financial Officer of Artesian Resources dated as of the date of the Closing Date
or Option Closing Date, as the case may be, and addressed to the
Representatives, individually and as representatives of the several
Underwriters, to the effect that (i) the representations and warranties of
Artesian Resources in this Agreement are true and correct, as if made at and as
of the Closing Date or the Option Closing Date, as the case may be, and that
Artesian Resources has complied with all the agreements, fulfilled all the
covenants and satisfied all the conditions on its part to be performed,
fulfilled or satisfied at or prior to the Closing Date or the Option Closing
Date, as the case may be, and (ii) the signers of the certificate have carefully
examined the Registration Statement and the Prospectus and any amendments or
supplements thereto, and the conditions set forth in Section 7 hereof have been
satisfied.
(g) At the time this Agreement is executed and at the Closing Date and any
Option Closing Date the Representatives shall have received a letter, dated the
date of delivery thereof, addressed to the Representatives, individually and as
representatives of the several Underwriters, in form and substance satisfactory
to the Representatives in all respects (including, without limitation, the
non-material nature of the changes or decreases, if any, referred to in clause
(iii) below) from KPMG LLP:
(i) confirming they are independent certified public accountants
within the meaning of the Act and the Regulations, and stating that the
section of the Registration Statement under the caption "Experts" is
correct insofar as it relates to them;
21
(ii) stating that, in their opinion, the consolidated financial
statements, schedules and notes of Artesian Resources audited by them and
included in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Regulations;
(iii) stating that, on the basis of specified procedures, which
included a reading of the latest available unaudited interim consolidated
financial statements of Artesian Resources (with an indication of the date
of the latest available unaudited interim financial statements), a reading
of the minutes of the meetings of the stockholders and the Boards of
Directors of Artesian Resources and the Subsidiaries and the Audit and
Personnel, Compensation and Benefits Committees of such Boards and
inquiries to certain officers and other employees of Artesian Resources and
the Subsidiaries responsible for operational, financial and accounting
matters and other specified procedures and inquiries, nothing has come to
their attention that would cause them to believe that at a specified date
not more than five business days prior to the date of such letter, there
was any change in the capital stock (other than (1) the issuance of Class A
Common Stock upon the exercise of currently outstanding options and
warrants as described in the Prospectus, (2) the grant of options to
purchase Class A Common Stock under Artesian Resources' currently
outstanding stock options plans and the issuance of Class A Common Stock
upon the exercise thereof and (3) the issuance of Class A Common Stock
under Artesian Resources' Dividend Reinvestment Plan and 401(k) Plan),
increase in long-term debt of Artesian Resources or any decrease in
consolidated net current assets or stockholders equity of Artesian
Resources as compared with the amounts shown in the March 31, 2002 balance
sheets of Artesian Resources included in the Registration Statement or that
for the periods from March 31, 2002 to the date of the latest available
unaudited financial statements of Artesian Resources, if any, and to a
specified date not more than five days prior to the date of the letter,
there were any decreases, as compared to the corresponding periods in the
prior year, in operating income or total or per share amounts of net
income, except in all instances for changes, decreases or increases that
the Registration Statement discloses have occurred or may occur and except
for such other changes, decreases or increases which the Underwriters shall
in their sole discretion accept.
(iv) stating that they have compared specific dollar amounts (or
percentages derived from such dollar amounts), numbers of shares and other
numerical data and financial information set forth in the Registration
Statement that have been reasonably specified by the Representatives prior
to the date of this Agreement (in each case to the extent that such dollar
amounts, percentages and other information is derived from the general
accounting records subject to the internal controls of Artesian Resources'
or the Subsidiaries' accounting systems, or has been derived directly from
such accounting records by analysis or comparison or has been derived from
other records and analyses maintained or prepared by Artesian Resources or
the Subsidiaries) with the results obtained from the application of
readings, inquiries and other appropriate procedures set forth in the
letter, and found them to be in agreement.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Registration
Statement for purposes of this subsection.
22
(h) All corporate and other proceedings and other matters incident to the
authorization, form and validity of this Agreement and the form of the
Registration Statement and Prospectus and all other legal matters related to
this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all respects to counsel to the Underwriters. Artesian Resources
shall have furnished to such counsel all documents and information that they
shall have reasonably requested to enable them to pass upon such matters.
(i) The Shares shall have been included for quotation on the Nasdaq
National Market.
(j) At the Closing Date and any Option Closing Date, the Representatives
shall have been furnished such additional documents, information and
certificates as they shall have reasonably requested.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Representatives and the Underwriters' counsel.
Artesian Resources shall furnish the Representatives with such conformed copies
of such opinions, certificates, letters and other documents as they shall
reasonably request. If any condition to the Underwriters' obligations hereunder
to be fulfilled prior to or at the Closing Date or any Option Closing Date, as
the case may be, is not fulfilled, the Representatives may on behalf of the
several Underwriters, terminate this Agreement with respect to the Closing Date
or such Option Closing Date, as applicable, or, if they so elect, waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment. Any such termination shall be without liability of the Underwriters
to Artesian Resources.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) Artesian Resources shall indemnify and hold harmless each Underwriter,
and each person, if any, who controls each Underwriter within the meaning of the
Act, against any and all loss, liability, claim, damage and expense whatsoever,
including, but not limited to, any and all reasonable expenses incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever or in connection with any investigation or
inquiry of, or action or proceeding that may be brought against, the respective
indemnified parties, arising out of or based upon any breach of Artesian
Resources' representations and warranties made in this Agreement or any untrue
statements or alleged untrue statements of material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, any
application or other document filed in any jurisdiction in order to qualify all
or any part of the Shares under the securities laws thereof or filed with the
SEC or the Nasdaq National Market (in this Section 8 collectively called
"application"), or the omission or alleged omission from any of the foregoing of
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the foregoing
indemnity shall not apply in respect of any statement or omission made in
reliance upon and in conformity with written information furnished to Artesian
Resources by any Underwriter through the Representatives expressly for use in
any Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment or supplement thereto, or in any application or in any communication
to the SEC, as the case may be; and further provided, however, that the
23
indemnification contained in this Section 8(a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) on account of any such loss, claim,
liability or expense arising from the sale of the Shares by such Underwriter to
any person if a copy of the Prospectus shall not have been delivered or sent to
such person within the time required by the Act and the regulations thereunder,
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus, provided that Artesian Resources has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending. The obligations of Artesian Resources under
this Section 8(a) will be in addition to any liability Artesian Resources may
otherwise have.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless Artesian Resources, each of the directors of Artesian Resources, each
of the officers of Artesian Resources who shall have signed the Registration
Statement, and each other person, if any, who controls Artesian Resources within
the meaning of the Act to the same extent as the foregoing indemnities from
Artesian Resources to the several Underwriters, but only with respect to any and
all loss, liability, claim, damage or expense resulting from statements or
omissions, or alleged statements or omissions, if any, made in any Preliminary
Prospectus, Registration Statement or Prospectus or any amendment or supplement
thereof or any application or in any communication to the SEC in reliance upon,
and in conformity with written information furnished to Artesian Resources by
any Underwriter through the Representatives expressly for use in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment or
supplement thereof or any application or in any communication to the SEC, as the
case may be. The obligations of each Underwriter under this Section 8(b) will be
in addition to any liability which such Underwriter may otherwise have.
(c) If any action, inquiry, investigation or proceeding is brought against
any person in respect of which indemnification may be sought pursuant to Section
8(a) or (b) or Section 9 hereof, such person (hereinafter called the
"indemnified party") shall, promptly after notification of, or receipt of
service of process for, such action, inquiry, investigation or proceeding,
notify in writing the party or parties against whom indemnification is to be
sought (hereinafter called the "indemnifying party") of the institution of such
action, inquiry, investigation or proceeding. The indemnifying party, upon the
request of the indemnified party, shall assume the defense of such action,
inquiry, investigation or proceeding, including, without limitation, the
employment of counsel (reasonably satisfactory to such indemnified party) and
payment of expenses. No indemnification provided for in Section 8 or Section 9
shall be available to any indemnified party who shall fail to give such notice
if the indemnifying party does not have knowledge of such action, inquiry,
investigation or proceeding to the extent that such indemnifying party has been
materially prejudiced by the failure to give such notice, but the omission to so
notify the indemnifying party shall not relieve the indemnifying party otherwise
than under Section 8 or Section 9. Such indemnified party shall have the right
to employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless the
employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action or if the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party or if such indemnified party or parties shall have been
advised by counsel that
24
there may be a conflict between the positions of the indemnifying party or
parties and of the indemnified party or parties or that there may be legal
defenses available to such indemnified party or parties different from or in
addition to those available to the indemnifying party or parties, in any of
which events the indemnified party or parties shall be entitled to select
counsel to conduct the defense to the extent determined by such counsel to be
necessary to protect the interests of the indemnified party or parties, and the
reasonable fees and expenses of such counsel shall be borne by the indemnifying
party. The indemnifying party shall be responsible for the fees and
disbursements of only one such counsel so engaged by the indemnified party or
parties. Expenses covered by the indemnification in Section 8 and Section 9, as
the case may be, shall be paid by the indemnifying party as they are incurred by
the indemnified party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action 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 includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. Notwithstanding anything in Section 8 or Section 9 to the
contrary, an indemnifying party shall not be liable for any settlement of a
claim effected without its written consent, which consent shall not be
unreasonably withheld.
(d) If the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under Section 8(a) or (b)
hereof in respect of any losses, liabilities, claims, damages or expenses (or
actions, inquiries, investigations or proceedings in respect thereof) referred
to therein, except by reason of the failure to give notice as required in
Section 8(c) hereof (provided that the indemnifying party does not have
knowledge of the action, inquiry, investigation or proceeding and to the extent
such party has been materially prejudiced by the failure to give such notice),
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, liabilities, claims, damages
or expenses (or actions, inquiries, investigations or proceedings in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by Artesian Resources on the one hand and the Underwriters on the other
from the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of Artesian Resources on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, liabilities, claims or expenses (or
actions, inquiries, investigations or proceedings in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by Artesian Resources on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by Artesian Resources bears to the total
underwriting discount and commissions received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault 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 Artesian
Resources on the one hand or the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
25
Artesian Resources and the Underwriters agree that it would not be just and
equitable if contributions to this Section 8(d) 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 above in this Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, liabilities,
claims, damages or expenses (or actions, inquiries, investigations or
proceedings in respect thereof) referred to above in this Section 8(d) shall be
deemed to include 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(d), (i) the
provisions of the Agreement Among Underwriters shall govern contribution among
Underwriters, (ii) no Underwriter (except as provided in the Agreement Among
Underwriters) shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, and (iii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 8(d) to
contribute are several in proportion to their individual underwriting
obligations and not joint.
9. QUALIFIED INDEPENDENT UNDERWRITER. Artesian Resources hereby confirms
that at its request Xxxxxx Xxxxxxxxxx Xxxxx LLC ("JMS") has without compensation
acted as "qualified independent underwriter" (in such capacity, the "QIU")
within the meaning of Rule 2720 of the Conduct Rules of the National Association
of Securities Dealers, Inc. in connection with the offering of the Shares.
Artesian Resources, in accordance with Section 8 hereof, will indemnify and hold
harmless the QIU against any losses, claims, damages or liabilities, joint or
several, to which the QIU may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon the QIU's acting (or alleged failing to
act) as such "qualified independent underwriter" and will reimburse the QIU for
any legal or other expenses reasonably incurred by the QIU in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred.
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Date and any Option Closing Date. All such
representations, warranties and agreements of the Underwriters and Artesian
Resources, including, without limitation, the indemnity and contribution
agreements contained in Section 8 and Section 9 hereof and the agreements
contained in Sections 6, 10 and 11 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any controlling person, and shall survive delivery of the Shares
and termination of this Agreement, whether before or after the Closing Date or
any Option Closing Date.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION HEREOF.
(a) This Agreement shall become effective at 10:00 a.m., Philadelphia,
Pennsylvania time, on the first business day following the Effective Date or at
the time of the public offering by the Underwriters of the Shares, whichever is
earlier, except that the provisions
26
of Sections 6, 8, 9, 10 and 11 hereof shall be effective upon execution hereof.
The time of the public offering, for the purpose of this Section 11, shall mean
the time when any of the Shares are first released by the Underwriters for
offering by dealers. The Representatives and Artesian Resources may prevent the
provisions of this Agreement (other than those contained in Sections 6, 8, 9, 10
and 11) hereof from becoming effective without liability of any party to any
other party, except as noted below, by giving the notice indicated in Section
11(c) hereof before the time the other provisions of this Agreement become
effective.
(b) The Representatives shall have the right to terminate this Agreement at
any time prior to the Closing Date or any Option Closing Date as provided in
Sections 7 and 12 hereof or if any of the following have occurred: (i) since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, any material adverse change or any development involving a
prospective material adverse change in or affecting the Business Conditions of
Artesian Resources or any of the Subsidiaries, whether or not arising in the
ordinary course of business, that would, in the Representatives' opinion, make
the offering or delivery of the Shares impracticable; (ii) any outbreak of
hostilities or other national or international calamity or crisis or change in
economic, political or financial market conditions if the effect on the
financial markets of the United States of such outbreak, calamity, crisis or
change would, in the Representatives' reasonable opinion, make the offering or
delivery of the Shares impracticable; (iii) any suspension or limitation of
trading generally in securities on the Nasdaq National Market or any setting of
minimum prices for trading or the promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority that in
the Representatives' reasonable opinion materially and adversely affects trading
on such exchange or the over-the-counter market; (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
the Representatives' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of Artesian Resources;
(v) declaration of a banking moratorium by the United States, New York or
Pennsylvania authorities; (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs that in
the Representatives' reasonable opinion has a material adverse effect on the
securities markets in the United States; or (vii) trading in any securities of
Artesian Resources shall have been suspended or halted by the Nasdaq National
Market or the SEC.
(c) If the Representatives elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 11, the
Representatives shall notify Artesian Resources hereof promptly by telephone,
telex, telegraph, telegram or facsimile, confirmed by letter.
12. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Optional Shares hereunder, and if the Firm
Shares or Optional Shares with respect to which such default relates do not
exceed in the aggregate 10% of the number of Firm Shares or Optional Shares, as
the case may be, that all Underwriters have agreed to purchase on the relevant
Closing Date or Option Closing Date, then the Representatives may make
arrangements satisfactory to Artesian Resources for the purchase of such Firm
Shares by
27
other persons, including any of the Underwriters, but if no such arrangements
are made by the relevant Closing Date or Option Closing Date, such Firm Shares
or Optional Shares to which the default relates shall be purchased severally by
the non-defaulting Underwriters in proportion to their respective commitments
hereunder.
(b) If such default relates to more than 10% of the Firm Shares or Optional
Shares, as the case may be, the Representatives may in their discretion arrange
for another party or parties (including a non-defaulting Underwriter) to
purchase such Firm Shares or Optional Shares to which such default relates, on
the terms contained herein. In the event that the Representatives do not arrange
for the purchase of the Firm Shares or Optional Shares to which a default
relates as provided in this Section 12, this Agreement may be terminated by the
Representatives or by Artesian Resources without liability on the part of the
non-defaulting several Underwriters (except as provided in Section 8 hereof) or
Artesian Resources (except as provided in Sections 6 and 8 hereof); provided
that if such default occurs with respect to Optional Shares after the Closing
Date, this Agreement will not terminate as to the Firm Shares or any Optional
Shares purchased prior to such termination. Nothing herein shall relieve a
defaulting Underwriter of its liability, if any, to the other several
Underwriters and to Artesian Resources for damages occasioned by its default
hereunder.
(c) If the Firm Shares or Optional Shares to which the default relates are
to be purchased by the non-defaulting Underwriters, or are to be purchased by
another party or parties, the Representatives or Artesian Resources shall have
the right to postpone the Closing Date or any Option Closing Date, as the case
may be, for a reasonable period but not in any event exceeding seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents and
arrangements, and Artesian Resources agrees to file promptly any amendment to
the Registration Statement or supplement to the Prospectus that in the opinion
of counsel for the Underwriters may thereby be made necessary. The terms
"Underwriters" and "Underwriter" as used in this Agreement shall include any
party substituted under this Section 12 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares and/or Optional
Shares.
13. INFORMATION FURNISHED BY UNDERWRITERS. The statement set forth on the
last paragraph at the bottom of the cover page of the Prospectus regarding the
terms of the Offering by the Underwriters, the identity of the Underwriters set
forth in the first paragraph under the heading "Underwriting," the concession
and reallowance figures appearing in the third paragraph under the heading
"Underwriting," the representations with respect to stabilization activities in
the eighth paragraph under the heading "Underwriting," the ninth, tenth and
eleventh paragraphs under the heading "Underwriting" regarding stabilization,
passive market making, syndicate covering transactions, penalty bids and
discretionary authority and the representation that JMS will act as a QIU in
connection with this Offering in the sixteenth paragraph under the heading
"Underwriting" constitute the only written information furnished by reference or
on behalf of any Underwriter referred to in Sections 1(b) and 8 hereof.
14. NOTICE. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and, if sent to any Underwriter,
shall be mailed, delivered, telexed, telegrammed, telegraphed or telecopied and
confirmed to such Underwriter, c/o Janney Xxxxxxxxxx Xxxxx LLC, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention:
28
Xx. Xxxxxxx X. Xxxxx-Xxxxxx, facsimile number (000) 000-0000, with a copy to
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxx, Esquire, facsimile number (215)
864-8999; and if sent to Artesian Resources, shall be mailed, delivered,
telexed, telegrammed, telegraphed or telecopied and confirmed to Artesian
Resources Corporation, 000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000, Attention:
Xxxx X. Xxxxxx, facsimile number (000) 000-0000, with a copy to Xxxxxx, Xxxxx &
Bockius LLP, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000, Attention: Xxxxxx X.
Xxxxxx, Esquire, facsimile number (000) 000-0000.
15. PARTIES. This Agreement shall inure solely to the benefit of, and shall
be binding upon, the several Underwriters, Artesian Resources and the
controlling persons, directors and officers thereof, and their respective
successors, assigns, heirs and legal representatives, and no other person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained. The terms "successors" and "assigns" shall not include any purchaser
of the Shares merely because of such purchase.
16. DEFINITION OF BUSINESS DAY. For purposes of this Agreement, "business
day" means any day on which the Nasdaq National Market is opened for trading.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and all such counterparts will constitute one and the same
instrument.
18. CONSTRUCTION. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applicable to
agreements made and performed entirely within such Commonwealth.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto concerning the subject hereof and supercedes all
prior or contemporaneous oral or written communications with respect hereto,
except for such agreements between the Company and JMS pursuant to the Letter
Agreement; and provided, however, that to the extent that any terms or
provisions of this Agreement may be inconsistent with those contained in the
Letter Agreement, then the terms and provisions of this Agreement shall
control.
29
If the foregoing correctly sets forth your understanding of our agreement,
please sign and return to Artesian Resources the enclosed duplicate hereof,
whereupon it will become a binding agreement in accordance with its terms.
Very truly yours,
ARTESIAN RESOURCES CORPORATION
By:
---------------------------------------
Xxxxx X. Xxxxxx
Vice President, Chief Financial Officer
and Treasurer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
XXXXXX XXXXXXXXXX XXXXX LLC J.J.B. XXXXXXXX, X.X. XXXXX, INC.
By: By:
-------------------------------------------------- -------------------------------------
Name: Name:
Title: Title:
On behalf of each of the Underwriters named in On behalf of each of the Underwriters named in
Schedule I hereto Schedule I hereto
30
SCHEDULE I
Schedule of Underwriters
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- -------------------
Xxxxxx Xxxxxxxxxx Xxxxx LLC.........................
-----------
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc....................
-----------
Total...............................................
===========
SCHEDULE II
Persons Who Are to Deliver Lock-Up Agreements
Lock-Up Agreements are to be delivered by the following persons and
entities immediately prior to the time the SEC declares the Registration
Statement effective:
Artesian Resources Corporation
Xxxxxxx X. Xxxxxxxxx
Xxxxxx X. XxXxxxxx
Xxxx X. Xxxxxxxxx, Xx.
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxxxx, XX
Xxxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxx Xxxxxx
Xxxxxx X. Xxxxxx, Xx.
Xxxxxx Xxxxxx Xxxxxxx
Xxxx X. Xxxxxxx
Xxxxxxx X. Xxxx
