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$-------------PRINCIPAL AMOUNT OF
---% DEBENTURES DUE 2018
OF
DELTA NATURAL GAS COMPANY, INC.
UNDERWRITING AGREEMENT
----------------------
----------------------, 1998
Xxxxxx X. Xxxxx & Co., L.P.
00000 Xxxxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Dear Sirs:
Delta Natural Gas Company, Inc., a Kentucky corporation (the "Company")
confirms its agreement with Xxxxxx X. Xxxxx & Co., L.P. (the "Underwriter")
as follows:
1. DESCRIPTION OF DEBENTURES. The Company proposes to issue
and sell to the Underwriter $25,000,000 aggregate principal amount of ---%
Debentures due 2018 (the "Debentures") described in the Indenture (as defined
below). The Debentures are more fully described in the Registration
Statement and Prospectus hereinafter defined. The Debentures will be issued
by the Company under its Trust Indenture dated March 1, 1998 (the
"Indenture") between the Company and The Fifth Third Bank, as trustee (the
"Trustee"). No amendments to the Indenture will be made prior to the Closing
Date hereinafter referred to without your prior approval.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents, warrants and agrees that:
(a) The Company meets the requirements for use of Form S-2
under the Securities Act of 1933, as amended (the "Act") and has
prepared and filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-2 (Registration
Statement No. - ) relating to $25,000,000 aggregate
--- --------
principal amount of its Debentures, and the offering thereof in
accordance with the Act as amended and the Trust Indenture Act of 1939
as amended (the "Trust Indenture Act") and has filed such amendments
thereto as may have been required to the date hereof. The
registration statement has been prepared in conformity with the
requirements of the Act and the rules and regulations thereunder (the
"Rules and Regulations") and the Trust Indenture Act and the rules and
regulations thereunder. Copies of that registration statement as
amended to date have been delivered by the Company to you as the
Underwriter. As used in this Agreement, "Preliminary Prospectus"
means each
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prospectus included in that registration statement, or amendments of
such registration statement or prospectus, before that registration
statement, as so amended, became effective under the Act and any
prospectus filed by the Company with the consent of the Underwriter
pursuant to Rule 424(a) of the Rules and Regulations and the documents
incorporated by reference in such preliminary prospectus.
"Registration Statement" means that registration statement including
the prospectus, exhibits and financial statements, and all documents
incorporated by reference therein, including any information deemed by
virtue of Rule 430A(a)(3) of the Rules and Regulations to be part of
such Registration Statement, as of the time such registration
statement or post-effective amendment became effective under the Act
and the Trust Indenture Act; and "Prospectus" means the prospectus
filed with the Commission by the Company with the consent of the
Underwriter pursuant to Rule 424(b) of the Rules and Regulations,
unless no such Rule 424(b) Prospectus is filed, in which case it shall
mean the Prospectus filed as part of the last Registration Statement
filed on or before the effective date thereof. The Commission has not
issued any order preventing or suspending the use of any Preliminary
Prospectus.
(b) Each Preliminary Prospectus, at the time of the filing
thereof, did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which made, not misleading; provided that no
representation or warranty is made as to information contained in or
omitted from any Preliminary Prospectus in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of the Underwriter specifically for inclusion therein. The
Registration Statement has been declared effective by the Commission.
(c) The Registration Statement and the Prospectus in all
material respects: (i) complied as of the date the Registration
became effective, (ii) comply as of the date hereof and (iii) will
comply as of the Closing Date, as hereinafter defined, with
the requirements of the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the Trust Indenture Act and the
rules and regulations of the Commission under such Acts; the
Registration Statement and any amendment thereof, at the time it
became effective, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and the
Prospectus, at the time the Registration Statement became effective
did not, as of the date hereof does not and as of the Closing Date
will not, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
warranties in this Paragraph 2.(c) shall not apply to (A) that part
of the Registration Statement which constitutes the Statement of
Eligibility and Qualification (Form T-1) of the Trustee under the
Trust Indenture Act or (B) statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by
the Underwriter expressly for use in the Registration Statement or
the Prospectus.
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(d) 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 Commission, complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder (the "Exchange Act Rules and Regulations"),
comply in all materials respects with the requirements of the Exchange
Act and the Exchange Act Rules and Regulations and did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements
therein, in the light of the circumstances under which they are made,
not misleading.
(e) Xxxxxx Xxxxxxxx LLP, the accountants whose report appears
in the Prospectus, are independent public accountants as required by
the Act and the Rules and Regulations.
(f) The consolidated financial statements of the Company and
its subsidiaries filed as part of the Registration Statement or
included in any Preliminary Prospectus or the Prospectus present
fairly, and the financial statements included in any amendment or
supplement to the Prospectus will present fairly, the financial
condition and results of operations of the Company and its
subsidiaries, at the dates and for the periods indicated, and have
been, and in the case of financial statements included in any
amendment or supplement to the Prospectus will be, prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved. No other financial
statements are required to be set forth in the Registration Statement
or the Prospectus under the Act or the Rules and Regulations
thereunder.
(g) Except as described in or contemplated by the Registration
Statement and the Prospectus, subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, neither the Company nor any of its subsidiaries (as
defined in Paragraph 12) has incurred any material liability or
obligation, direct or contingent, or entered into any material
transaction, whether or not in the ordinary course of business, and
there has not been any material change on a consolidated basis in the
Company's capital stock, or any material increase in the long-term
debt of the Company or any of its subsidiaries, or any issuance of
options, warrants, convertible securities or other rights to purchase
capital stock of such entity, or any material adverse change in, or
any adverse development which materially affects, the business,
properties, financial condition, results of operations, or prospects
of the Company and its subsidiaries taken as a whole.
(h) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing and in good standing under the laws
of its jurisdiction of incorporation, and the Company and each of its
subsidiaries are duly qualified to do business and in good standing as
foreign corporations in each jurisdiction in which their respective
ownership of property or the conduct of their respective businesses
requires such qualification and wherein the failure to be so qualified
would have a material adverse effect on the business of the Company
and each of its subsidiaries, and have all power and authority
necessary to own or hold their properties and to conduct the business
in
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which they are engaged. All outstanding shares of capital stock of
the subsidiaries of the Company are owned directly or indirectly by
the Company and are validly authorized, issued and outstanding, fully
paid and non-assessable with no personal liability attaching to the
ownership thereof, and all of such shares are owned free and clear of
any lien, pledge or encumbrance or any claim of any third party.
(i) The authorized and outstanding capitalization of the
Company as of December 31, 1997 was as set forth in the Registration
Statement and the Prospectus, and there have been no changes in the
authorized or outstanding capitalization of the Company since December
31, 1997 except as contemplated by the Registration Statement and the
Prospectus. All corporate action required to have been taken by the
Company for the due and proper authorization, execution and delivery
of the Indenture and the due and proper authorization, issuance, sale
and delivery of the Debentures have been validly and sufficiently
taken. When the Debentures have been executed, issued, delivered and
paid for in the manner herein described, the Debentures will be duly
issued and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Indenture, and
the Debentures will be enforceable in accordance with their terms
(except insofar as enforcement may be limited by applicable
bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights and remedies generally, as may from time to time be
in effect, and by the availability of specific performance or of other
equitable relief which is subject to the discretion of the court
before which any proceeding may be brought); the Debentures conform to
all statements relating thereto in the Registration Statement, and
holders of the Debentures will not be entitled to preemptive rights.
(j) The Indenture is in due and proper form, has been duly and
validly executed and delivered and is a valid and enforceable
instrument in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and to the extent that general equitable principles may
limit the right to obtain the remedy of specific performance of
certain of the obligations thereunder.
(k) The filing of the Registration Statement and the execution
and delivery by the Company of this Agreement, and the consummation of
the transactions contemplated hereby and thereby, have been duly
authorized by the board of directors of the Company, and all necessary
corporate action to authorize and approve the same has been taken.
This Agreement has been duly executed and delivered by the Company and
is a valid and legally binding obligation of the Company.
(l) The Company, and its subsidiaries have good and marketable
title to, or valid and enforceable leasehold interests in, all items
of real and personal property which are material to the business of
the Company and its subsidiaries taken as a whole, free and clear of
all liens, encumbrances and claims (other than the liens disclosed in
the Prospectus) which might materially interfere with the conduct of
the business of the Company and its subsidiaries taken as a whole.
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(m) Except to the extent disclosed in the Prospectus, neither
the Company, nor any of its subsidiaries, is in violation of its
corporate charter or bylaws or in default under any obligation,
agreement, covenant or condition contained in any mortgage or other
material contract, lease, note, indenture or instrument to which it is
a party or by which it may be bound, the effect of which violation or
default would be material to the Company and its subsidiaries taken as
a whole, or is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it
or its property may be subject the effect of which violation would be
material to the Company and its subsidiaries taken as a whole, or has
failed to obtain any material license, permit, certificate, franchise
or other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business; and the
execution, delivery and performance of this Agreement by the Company,
the sale of the Debentures, compliance by the Company with the
provisions of the Debentures and the Indenture, and the consummation
of the transactions contemplated by this Agreement will not conflict
with, result in the creation or imposition of any lien, charge or
encumbrance upon any of the properties or assets of the Company
pursuant to the terms of, or constitute a breach of or default under,
any agreement, indenture or instrument to which the Company is a
party, or by which the Company is bound, or result in a violation of
the corporate charter or bylaws of the Company or, except to the
extent disclosed in the Prospectus, any law or ordinance to which the
Company or its properties may be subject or of any order, rule or
regulation of any court or governmental agency having jurisdiction
over the Company or its properties, except for conflicts, breaches,
violations or defaults which would be immaterial to the business and
operations of the Company and its subsidiaries taken as a whole and
which would not affect the validity or enforceability of the
Debentures, the Indenture or this Agreement or otherwise adversely
affect the rights, duties or obligations of the Trustee, the
Underwriter or the holders of the Debentures.
(n) No approval or consent of any governmental body other than
(i) as may be required under the Act or the Trust Indenture Act or in
connection or compliance with the provisions of the securities or
"blue sky" laws of any jurisdiction, and (ii) approval by the Kentucky
Public Service Commission which has been obtained, is legally required
for the carrying out by the Company of the provisions of this
Agreement.
(o) Except as described in the Registration Statement and the
Prospectus, there is no litigation or governmental proceeding pending
or, to the knowledge of the Company threatened against the Company or
any of its subsidiaries which, if adversely resolved, could reasonably
be expected to result in any material adverse change in the business,
properties, financial condition, results of operations or prospects of
the Company and its subsidiaries taken as a whole or which is required
to be disclosed in the Registration Statement or the Prospectus.
(p) There are no contracts or other documents which are
required to be filed as exhibits to the Registration Statement by the
Act or by the Rules and Regulations which have not been filed as
exhibits to the Registration Statement.
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(q) Except as disclosed in the Prospectus, the Company and each
of its subsidiaries have sufficient authority under statutory
provisions or by grant of franchises or permits by municipalities or
counties to conduct in all material respects their respective
businesses as presently conducted and as described in the Registration
Statement and Prospectus.
(r) Except as set forth in the Registration Statement and the
Prospectus, the Company and its subsidiaries are in compliance with
all applicable existing federal, state and local laws and regulations
relating to protection of human health or the environment or imposing
liability or standards of conduct concerning any Hazardous Material
("Environmental Laws"), except for such instances of noncompliance
which, either singly or in the aggregate, would not have a material
adverse effect on the condition (financial or otherwise), results of
operations or properties of the Company and its subsidiaries, taken as
a whole. The term "Hazardous Material" means (i) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (ii) any
"hazardous waste" as defined by the Resource Conservation and Recovery
Act, as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl and (v) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material, waste or substance
regulated under or within the meaning of any other law relating to
protection of human health or the environment or imposing liability or
standards of conduct concerning any such chemical, material, waste or
substance.
(s) No material labor dispute with the employees of the Company
or any of its subsidiaries exists or, to the knowledge of the Company,
is imminent; and the Company knows of no existing or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors which might reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its subsidiaries taken as a whole.
(t) Each of the Company and its subsidiaries owns, possesses or
has the right to use all material licenses, trademarks, patents,
patent rights, inventions, copyrights, service marks and trade names
presently employed by it in connection with the businesses now
operated by it, and neither the Company nor any of its subsidiaries
has received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing.
(u) The Company and its subsidiaries maintain insurance covering
their properties, operations, personnel and businesses which insures
against such losses and risks as are adequate in accordance with its
reasonable business judgment to protect the Company and its subsidiaries
and their businesses. Neither the Company nor any of its subsidiaries
has received notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to be
made in order to continue such insurance. All such insurance is
outstanding and duly in force on the date hereof and will be outstanding
and duly in force on the Closing Date.
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(v) Neither the Company nor any of its subsidiaries is an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended.
(w) Except as otherwise disclosed in the Prospectus, the
Company and each of its subsidiaries have all necessary consents,
authorizations, approvals, orders, certificates and permits of and
from, and have made all declarations and filings with, all federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease,
license and use their respective properties and assets and to conduct
their respective businesses in the manner described in the Prospectus,
except to the extent that the failure to obtain or file would not have
a material adverse effect on the Company and its subsidiaries, taken
as a whole.
Any certificate signed by any officer of the Company and delivered to
you or to counsel for the Underwriter shall be deemed a representation and
warranty by the Company to the Underwriter as to the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF DEBENTURES. On the basis
of the representations and warranties contained in, and subject to the terms
and conditions of, this Agreement, the Company agrees to sell to the
Underwriter, and the Underwriter agrees to purchase the Debentures from the
Company. The purchase price for the Debentures will be ---% of the principal
amount thereof.
Delivery of the Debentures, in definitive form, and payment therefor,
shall be made at 10:00 A.M., St. Louis time, on the third business day after
the Registration Statement shall have been declared effective by the
Commission, or on such later date and time as may be agreed upon in writing
between the Underwriter and the Company, such day and time of delivery and
payment being herein called the "Closing Date." On the Closing Date, the
Debentures shall be delivered by the Company to the Underwriter at The
Depository Trust Company in New York, New York, against payment of the
purchase price therefor in funds immediately available to the order of the
Company. The Company agrees to make available to the Underwriter for
inspection and packaging in New York, New York, at least one full business
day prior to the Closing Date, certificates for the Debentures so to be
delivered in good delivery form and in such denominations and registered in
such names as the Underwriter shall have requested, all such requests to have
been made in writing at least one full business day prior to the Closing
Date.
4. COVENANTS. The Company covenants and agrees with the
Underwriter:
(a) To furnish promptly to the Underwriter and counsel for the
Underwriter one signed copy of the Registration Statement as
originally filed, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
(b) To deliver promptly to the Underwriter such number of
conformed copies of the Registration Statement as originally filed and
each amendment thereto (excluding exhibits other than this Agreement)
and of each Preliminary Prospectus, the Prospectus
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and any amended or supplemented Prospectus as the Underwriter may
reasonably request.
(c) To file promptly with the Commission the Prospectus pursuant
to Rule 424(b) of the Rules and Regulations and to file with the
Commission any amendment to the Registration Statement or the
Prospectus or any supplement to the Prospectus that may, in the
reasonable judgment of the Company or the Underwriter, be required by
the Act or requested by the Commission and approved by the Underwriter
(which approval will not be unreasonably withheld).
(d) Prior to filing with the Commission any amendment to the
Registration Statement or amendment or supplement to the Prospectus,
or to filing any Prospectus pursuant to Rule 424 of the Rules and
Regulations, to furnish a copy thereof to the Underwriter and counsel
for the Underwriter and obtain the consent of the Underwriter to the
filing (which consent will not be unreasonably withheld).
(e) To use its best efforts to cause any required
post-effective amendment to the Registration Statement to become
effective and to advise the Underwriter promptly (i) when any
post-effective amendment to the Registration Statement becomes
effective, (ii) of any request or proposed request by the Commission
for an amendment to the Registration Statement, an amendment or a
supplement to the Prospectus or for any additional information, (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation or
threat of any stop order proceeding, (iv) of receipt by the Company of
any notification with respect to the suspension of the qualification
of the Debentures for sale in any jurisdiction or the initiation or
threat of any proceeding for that purpose, and (v) of the happening of
any event which makes untrue any statement of a material fact made in
the Registration Statement or the Prospectus, or which requires the
making of a change in the Registration Statement or the Prospectus in
order to make any material statement therein not misleading.
(f) If, at any time when a prospectus relating to the
Debentures is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if
it shall be necessary to amend or supplement the Registration
Statement or the Prospectus to comply with the Act or the Exchange Act
or the rules and regulations of the Commission under such Acts, the
Company promptly will prepare and file with the Commission, subject to
Paragraph 4.(d), an amendment or supplement which will correct such
statement or omission or an amendment which will effect such
compliance.
(g) If the Commission shall issue a stop order suspending the
effectiveness of the Registration Statement, to make every reasonable
effort to obtain the lifting of that order at the earliest possible
time.
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(h) As soon as practicable after the effective date of the
Registration Statement, to make generally available to its security
holders and to deliver to the Underwriter an earnings statement,
conforming with the requirements of Section 11(a) of the Act, covering
a period of at least twelve months beginning after the effective date
of the Registration Statement, provided that the Company may comply
with this Paragraph 4.(h) by complying with the safe harbor provisions
of Rule 158 of the Rules and Regulations.
(i) For a period of three years from the effective date of the
Registration Statement, to furnish to the Underwriter copies of all
reports to shareholders and all reports, filings and financial
statements furnished by the Company to any securities exchange
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder.
(j) To endeavor to qualify the Debentures for offer and sale
under the securities laws of such jurisdictions as the Underwriter may
reasonably request, provided that no such qualification shall be
required if as a result thereof the Company would be required to
qualify as a foreign corporation, subject itself to general taxation
or would be made subject to service of general process, in each case
in any jurisdiction in which it is not so qualified or subject; and to
maintain such qualifications in effect so long as required for
the distribution of the Debentures and to arrange for the
determination of the legality of the Debentures for purchase by
institutional investors.
(k) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company
will pay (i) the costs incident to the sale and delivery of the
Debentures and any taxes payable in that connection; (ii) the costs
incident to the preparation, printing and filing under the Act of the
Registration Statement, any Preliminary Prospectus, the Prospectus and
any amendments, supplements and exhibits thereto; (iii) the costs of
distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including
exhibits), any Preliminary Prospectus, the Prospectus, and any
amendment or supplement to the Prospectus; (iv) the costs, if any, of
printing and distributing this Agreement; (v) the costs of filings
incident to securing any required review by the National Association
of Securities Dealers, Inc.; (vi) the fees and expenses of qualifying
the Debentures under the securities laws of the several jurisdictions
as provided in this Paragraph 4 and of preparing and printing a Blue
Sky Memorandum (including related fees and expenses of counsel to the
Underwriter); (vii) the cost of printing the Indenture, the Debentures
and the fees of the Trustee; (viii) the fees and expenses of the
Company's accountants and counsel; and (ix) all other costs and
expenses incident to the performance of the obligations of the Company
under this Agreement; provided, however, that except as provided in
sub-parts (v) and (vi) of this Paragraph 4.(k) and in Paragraph 9, the
Underwriter shall pay its own costs and expenses, including the fees
and expenses of its counsel, any transfer taxes on the Debentures
which it may sell and the expenses of advertising any offering of the
Debentures made by the Underwriter.
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(l) Until the termination of the offering of the Debentures, to
file timely all documents, and any amendments to previously filed
documents, required to be filed by it pursuant to the Exchange Act.
(m) To apply the net proceeds of the Debentures as set forth in
the Prospectus.
5. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligations
of the Underwriter hereunder are subject to the accuracy, when made and on
the Closing Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed to the extent
required; at or before the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued,
and prior to that time no stop order proceeding nor any order directed
at any document incorporated by reference in the Prospectus shall have
been initiated or, to the knowledge of the Company, threatened by the
Commission, and no challenge shall have been made to any document
incorporated by reference in the Prospectus; any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied
with; and the Company shall not have filed with the Commission the
Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus without the consent of the Underwriter.
(b) The Underwriter shall not have discovered and disclosed to
the Company on or prior to the Closing Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the reasonable
opinion of the Underwriter or Xxxxxxxxx, Teasdale, Schlafly, & Xxxxx,
counsel for the Underwriter, is material or omits to state a fact
that, in the reasonable opinion of the Underwriter or such counsel, is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the
Debentures, the form of the Registration Statement and the Prospectus,
other than financial statements and other financial data, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all reasonable respects
to Xxxxxxxxx, Teasdale, Schlafly, & Xxxxx, counsel for the
Underwriter; and the Company shall have furnished to such counsel all
documents and information that such counsel may reasonably request to
enable them to pass upon such matters.
(d) Xxxxx, Xxxxxx & Park, as counsel to the Company, shall have
furnished to the Underwriter their opinion, addressed to the
Underwriter and dated the Closing Date, to the effect that:
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(i) Each of the Company and its subsidiaries has been
duly incorporated and is validly existing and in good standing
under the laws of its jurisdiction of incorporation, is duly
qualified to do business and in good standing as a foreign
corporation in each jurisdiction in which its ownership of
property or conduct of business requires such qualification and
wherein the failure to be so qualified would have a material
adverse effect on the business of the Company or such
subsidiary, and has all corporate power and authority necessary
to own or hold its properties and conduct the business in which
it is engaged as described in the Prospectus.
(ii) The Indenture has been duly authorized, qualified
under the Trust Indenture Act, executed and delivered; the
Debentures have been duly authorized, executed, authenticated,
issued and delivered; and the Indenture and the Debentures
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(iii) All corporate action required to have been taken by
the Company for the due and proper authorization, issuance, sale
and delivery of the Debentures has been validly and sufficiently
taken.
(iv) The Indenture and the Debentures conform in all
material respects to the statements concerning them in the
Prospectus.
(v) To the knowledge of such counsel based upon
communications with representatives of the Commission, (A) the
Registration Statement is effective under the Act, and (B) the
Prospectus was timely filed with the Commission as required. To
the knowledge of such counsel, (C) no stop order suspending the
effectiveness of the Registration Statement has been issued, and
(D) no proceeding for that purpose is pending or threatened by
the Commission.
(vi) To the knowledge of such counsel, (A) no order
directed to any document incorporated by reference in the
Prospectus has been issued, and (B) no challenge has been made
to the accuracy or adequacy of any such document.
(vii) The Registration Statement and the Prospectus and
each amendment or supplement, if any, thereto comply as to form
in all material respects with the requirements of the Act and
the Rules and Regulations thereunder and the Trust Indenture Act
and the rules and regulations of the Commission under such act
(except that no opinion need be expressed as to the Trustee's
statement of Qualification and as to the financial statements or
financial data contained therein).
(viii) The statements made in the Prospectus, insofar as
they purport to summarize the provisions of statutes, legal and
governmental proceedings,
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contracts or other documents specifically referred to therein
are accurate and fairly present the information called for with
respect thereto by Form S-2 under the Act (except that no
opinion need be expressed as to financial statements or
financial date continued therein).
(ix) To such counsel's knowledge, except as disclosed in
the Prospectus, there is no litigation or any governmental
proceeding pending or threatened against the Company or any of
its subsidiaries which could have a material adverse effect on
the Company and its subsidiaries taken as a whole or which is
required to be disclosed in the Registration Statement or the
Prospectus.
(x) To such counsel's knowledge, there are no contracts
or other documents which are required to be filed as exhibits to
the Registration Statement by the Act or by the Rules and
Regulations which have not been filed as exhibits to the
Registration Statement as permitted by the Rules and
Regulations.
(xi) To such counsel's knowledge, neither the Company
nor any of its subsidiaries is in violation of its corporate
charter or bylaws, or in default under any agreement, indenture
or instrument, the effect of which violation or default would be
material to the Company and its subsidiaries taken as a whole,
or is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to
which it or its property may be subject or, except as disclosed
in the Prospectus, has failed to obtain any material license,
permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its
property or to the conduct of its business.
(xii) This Agreement has been duly authorized, executed
and delivered by the Company. The Agreement and the
transactions contemplated by this Agreement will not conflict
with any agreement of the Company or its subsidiaries known to
counsel, will not create a lien or encumbrance upon any property
of the Company or its subsidiaries, will not violate the
articles of incorporation or bylaws of the Company or its
subsidiaries and will not violate any law or governmental
ordinance, order or regulation, except to the extent that such
conflict, lien, encumbrance or violation would have a no
material adverse effect on the Company and its subsidiaries
taken as a whole.
(xiii) No approval or consent of any governmental body,
other than (i) as may be required under the Act or the Trust
Indenture Act of 1939 or in connection or compliance with the
provisions of the securities or "blue sky" laws of any
jurisdiction, and (ii) approval by the Public Service Commission
of Kentucky ("PSC"), which approval by the PSC has been
obtained, is legally required for the issue and sale of the
Debentures by the Company or for the carrying out by the Company
of the provisions of this Agreement.
Such counsel also shall confirm that during the preparation of the
Registration Statement and Prospectus, such counsel has participated in
conferences with your representatives and
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counsel for the Underwriter, and with officers and representatives of the
Company, at which conferences the contents of the Registration Statement and
Prospectus were discussed, reviewed and revised. On the basis of the
information which was developed in the course thereof, considered in light of
such counsel's understanding of applicable law and the experience gained by
such counsel thereunder, such counsel shall confirm that nothing came to such
counsel's attention that would lead such counsel to believe that either the
Registration Statement or Prospectus or any amendment or supplement thereto
(other than the financial statements and notes thereto, or any related
schedules therein, as to which such counsel need express no opinion) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(e) On the Closing Date, there shall have been furnished to you
a certificate, dated such date, from the Company, signed on behalf of
the Company by the President and Chief Executive Officer and the
Treasurer, stating that to the knowledge of the officers signing such
certificate:
(i) The representations, warranties and agreements of
the Company in Paragraph 2 are true and correct as of such date;
the Company has complied with all its agreements contained
herein; and the conditions set forth in Paragraph 5.(a) have
been fulfilled;
(ii) Neither the Registration Statement, as of its
effective date, nor the Prospectus, as of its date, included any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which
should have been set forth in a supplement to or amendment of
the Prospectus which has not been set forth in such a supplement
or amendment; and
(iii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for
that purpose have been instituted or are pending or threatened,
under the Act.
(f) On the date of this Agreement and on the Closing Date,
Xxxxxx Xxxxxxxx LLP, shall have furnished to you letters dated such
dates substantially in the form of a draft of such letter previously
delivered to you.
(g) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, there shall
not have been any change specified in the letter referred to in
Paragraph 5.(f) which makes it impractical or inadvisable in the
reasonable judgment of the Underwriter to proceed with the public
offering or delivery of the Debentures as contemplated by the
Prospectus.
(h) The Underwriter shall have received from Xxxxxxxxx,
Teasdale, Xxxxxxxx & Xxxxx, counsel for the Underwriter, such opinion
or opinions, dated the Closing Date,
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with respect to the issuance and sale of the Debentures, the
Indenture, the Registration Statement, the Prospectus, and other
related matters as the Underwriter may reasonably require, and the
Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to the Underwriter and Armstrong, Teasdale, Schlafly & Xxxxx,
counsel for the Underwriter.
If any of the conditions specified in this Paragraph 5 shall not have
been fulfilled when and as provided in this Agreement, or if any of the
opinions or certificates mentioned above or elsewhere in this Agreement shall
not be in all material respects reasonably satisfactory in form and substance
to the Underwriter and its counsel, this Agreement and all obligations of the
Underwriter hereunder may be canceled at, or at any time prior to, the
Closing Date by the Underwriter.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Act from and against any loss, claim, damage or liability,
joint or several, and any action in respect thereof, to which the Underwriter
or any such controlling person may become subject, under the Act or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, any untrue statement or alleged untrue statement of
a material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, or the Registration Statement or Prospectus as
amended or supplemented, or arises out of, or is based upon, the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse the Underwriter and each such controlling person for any legal and
other expenses reasonably incurred by the Underwriter or such controlling
person for any legal and other expenses reasonably incurred by the
Underwriter or such controlling person in investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus
or in the Registration Statement or the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written
information furnished to the Company by the Underwriter specifically for
inclusion therein; and provided further that as to any Preliminary Prospectus
this indemnity agreement shall not inure to the benefit of the Underwriter or
any person controlling the Underwriter on account of any loss, claim, damage,
liability or action arising from the sale of Debentures to any person by the
Underwriter if the Underwriter failed to send or give a copy of any
Prospectus, as the same may be amended or supplemented, to that person within
the time required by the Act, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact in such Preliminary Prospectus was corrected in such
Prospectus, unless such failure resulted from non-compliance by the Company
with Paragraph
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4.(b) hereof. The foregoing indemnity is in addition to any liability which
the Company may otherwise have to the Underwriter or any controlling person
of the Underwriter.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, its directors and officers who signed the Registration Statement and
any person who controls the Company within the meaning of the Act from and
against any loss, claim, damage or liability, joint or several, or any action
in respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based
upon, any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus or the Registration Statement or Prospectus as amended or
supplemented,or is based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by the Underwriter specifically for inclusion
therein, and shall reimburse the Company for any legal and other expenses
reasonably incurred by the Company or any such director, officer or
controlling person in investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action. The foregoing
indemnity agreement is in addition to any liability which the Underwriter may
otherwise have to the Company.
(c) Promptly after receipt by an indemnified party under this
Paragraph 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Paragraph 6, notify the indemnifying party
in writing of the claim or the commencement of that action, provided that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Paragraph 6. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein, and, to the
extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party; provided, however, if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel
to assume such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Paragraph 6 for any legal or
other expenses subsequently incurred by the indemnified party in connection
with the defense other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
party and the indemnified party in the conduct of the defense of such action
(in which case the indemnifying party shall not have the
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right to direct the defense of such action on behalf of the indemnified
party), (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action or
(iv) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
(d) If the indemnification provided for in this Paragraph 6
shall for any reason be unavailable to an indemnified party under Paragraph
6.(a) or 6.(b) in respect of any loss, claim, damage or liability, or any
action in respect thereof, referred to therein, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriter on the other from the
offering of the Debentures or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand
and the Underwriter on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriter
on the other hand with respect to such offering shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Debentures
(before deducting expenses) received by the Company bears to the total
underwriting discounts and commissions received by the Underwriter with
respect to such offering, 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 whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriter, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriter agree
that it would not be just and equitable if contributions pursuant to this
Paragraph 6.(d) were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Paragraph 6.(d) shall be
deemed to include, for purposes of this Paragraph 6.(d), 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 Paragraph 6.(d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at
which the Debentures underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which the Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The Underwriter confirms that the statements with respect
to the public offering of the Debentures set forth on the cover page of, and
under the caption "Underwriting"
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in, the Prospectus are correct and were furnished in writing to the Company
by the Underwriter for inclusion in the Registration Statement and the
Prospectus.
(f) The agreements contained in this Paragraph 6 and the
representations, warranties and agreements of the Company contained in
Paragraphs 2 and 4 shall survive the delivery of the Debentures and shall
remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of
any indemnified party.
7. TERMINATION BY THE UNDERWRITER. The obligations of the
Underwriter hereunder may be terminated by the Underwriter, in its absolute
discretion, by notice given to and received by the Company prior to delivery
of and payment for the Debentures, if prior to that time (a)(i) the Company
shall have failed, refused or been unable to perform any agreement on its
part to be performed hereunder, (ii) any other condition to the Underwriter's
obligations hereunder is not fulfilled, (iii) the Company sustains a loss,
whether or not insured, by reason of fire, flood, accident or other calamity,
which, in the reasonable opinion of the Underwriter, substantially affects
the value of the properties of the Company or which materially interferes
with the operation of the business of the Company, (iv) trading generally
shall have been suspended or materially limited on or by the New York Stock
Exchange or American Stock Exchange or the National Association of Securities
Dealers or trading in any securities of the Company shall have been suspended
by any securities exchange or in the over the counter market, (v) a banking
moratorium is declared by the United States, or by New York, Missouri or
Kentucky state authorities, (vi) an outbreak of major hostilities or other
national or international calamity occurs, (vii) any action is taken by any
government in respect of its monetary affairs which, in the reasonable
opinion of the Underwriter, has a material adverse effect on the United
States securities markets, or (viii) there is a pending or threatened
material legal or governmental proceeding against the Company, other than
proceedings described in the Registration Statement or amendments or
supplements thereto delivered to the Underwriter prior to the execution of
this Agreement, which in the reasonable opinion of the Underwriter has a
material adverse effect upon the Company, and (b) with respect to the events
specified in clauses (a)(i) through (a)(iii) hereof, such event singly or
together with other such events makes it, in your reasonable judgment,
impractical to market the Debentures on the terms and in the manner
contemplated in the Prospectus.
8. TERMINATION BY THE COMPANY. The obligation of the Company
to deliver the Debentures upon payment therefor shall be subject to the
following conditions:
On the Closing Date the orders of the Kentucky Public Service
Commission referred to in Paragraph 2.(n) and Paragraph 5.(d)(xiii) hereof
shall be in full force and effect substantially in the form in which
originally entered; the Indenture shall be qualified under the Trust
Indenture Act as and to the extent required by such Act; and no stop order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for that purpose shall then be pending before, or
threatened by, the Commission.
In case any of the conditions specified above in this Paragraph 8 shall
not have been fulfilled, this Agreement may be terminated by the Company by
delivering written notice of
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termination to the Underwriter. Any such termination shall be without
liability of any party to any other party except to the extent provided in
Paragraph 4.(k) and Paragraph 9 hereof.
9. EXPENSES FOLLOWING TERMINATION. If the sale of Debentures
provided for herein is not consummated because of any refusal, inability or
failure on the part of the Company to comply with any of the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform all its obligations under this Agreement,
the Company shall not be liable to the Underwriter for damages arising out of
the transactions covered by this Agreement, provided however that (i) the
Company shall remain liable to the extent provided in Paragraphs 4.(k), 6.(a)
and 6.(d) hereof and (ii) except where termination occurs pursuant to Section
8 hereof, the Company shall pay the out-of-pocket expenses incurred by the
Underwriter in contemplation of the performance by it of its obligations
hereunder, including the fees and disbursements of its counsel and travel,
postage, telegraph and telephone expenses, up to a maximum amount of $40,000.
10. NOTICES. The Company shall be entitled to act and rely upon
any request, consent, notice or agreement given or made by the Underwriter.
Any notice to the Underwriter shall be sufficient if given in writing or by
telecopy addressed to Xxxxxx X. Xxxxx & Co., 00000 Xxxxxxxxxx Xxxx,
Xx. Xxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxxx; any notice to the
Company shall be sufficient if given in writing or by telecopy addressed to
the Company at: 0000 Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000 (Attention:
Xxxxx X. Xxxxxxxx).
11. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriter, the Company and their respective successors.
This Agreement and the terms and provisions hereof are for the sole benefit
of only those persons, except that (a) the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall
also be deemed to be for the benefit of the person or persons, if any, who
control the Underwriter within the meaning of Section 15 of the Act, and (b)
the indemnities and agreements of the Underwriter contained in Paragraph 6 of
this Agreement shall be deemed to be for the benefit of directors of the
Company, officers of the Company who have signed the Registration Statement
and any person controlling the Company. Nothing in this Agreement is
intended or shall be construed to give any person other than the persons
referred to in this paragraph any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
12. DEFINED TERMS. For purposes of this Agreement, (a) "business
day" means any day on which the New York Stock Exchange is open for trading,
and (b) "subsidiary" shall have the meaning set forth in Rule 405 of the
Rules and Regulations.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns
and the officers and directors and controlling persons referred to in
Paragraph 6 hereof, and no other person will have any right or obligation
hereunder. The term "successors and assigns" as used in this Agreement shall
not include any purchaser, as such purchaser, of any of the Debentures from
the Underwriter.
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14. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, all of which, when taken together, shall constitute one and the
same agreement among the parties to such counterparts.
15. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri.
If the foregoing correctly sets forth the agreement between the Company
and the Underwriter, please indicate your acceptance in the space provided
for that purpose.
Very truly yours,
DELTA NATURAL GAS COMPANY, INC.
By:
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President and Chief Executive Officer
Accepted:
XXXXXX X. XXXXX & CO., L.P.
By:
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Name:
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Title:
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