EXHIBIT 1(a)
$20,000,000 Principal Amount of
______% Debentures due 2022
DELTA NATURAL GAS COMPANY, INC.
UNDERWRITING AGREEMENT
November __, 2002
Xxxxxx X. Xxxxx & Co., L.P.
00000 Xxxxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Ladies and Gentlemen:
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
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the Underwriter $20,000,000 aggregate principal amount of ____% Debentures due
2022 (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 ___________, 2002 (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,
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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. 333-_______)
relating to $20,000,000 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 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 Statement 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 (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) Deloitte & Touche 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 (j)) 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 which they are engaged.
(i) The authorized and outstanding capitalization of the Company as of
____________, 2002 was as set forth in the Registration Statement and the
Prospectus, and there have been no
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changes in the authorized or outstanding capitalization of the Company since
____________, 2002 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 issued shares of capital stock of the Company's subsidiary have
been duly authorized and validly issued, are fully paid and nonassessable
with no personal liability attaching to the ownership thereof and are owned
by the Company free and clear of any security interests, liens,
encumbrances, equities or claims. The Company does not have any subsidiaries
and does not own a material interest in or control, directly or indirectly,
any other corporation, partnership, joint venture, association, trust or
other business organization, except those set forth in exhibit 21 to the
Annual Report on Form 10-K of the Company for the fiscal year ended June 30,
2002 ("Company's 10-K"). As used in this Agreement, subsidiaries shall mean
those subsidiaries set forth in exhibit 21 to the Company's 10-K.
(k) 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.
(l) 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.
(m) 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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(n) 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.
(o) 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.
(p) 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.
(q) 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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(r) 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.
(s) Except as set forth in the Registration Statement and the Prospectus,
the Company and its subsidiaries are not in violation of or liable under any
statute, any rule, regulation, decision or order of any governmental agency
or body or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any real
property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to
any environmental laws and the Company is not aware of any pending
investigation which might lead to such a claim which violation,
contamination, liability or claim would individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, taken together as a whole.
(t) 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.
(u) 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.
(v) 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.
(w) 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.
(x) 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
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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
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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:
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(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 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).
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(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.
(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.
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(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(k) 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.
(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.
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5. Conditions of Underwriter's Obligations. The obligations of the
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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 Xxxxxxxx LLP, 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 Xxxxxxxx LLP, 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, LLP, 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:
(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
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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.
(vi) To the knowledge of such counsel, (A) no stop order suspending
the effectiveness of the Registration Statement has been issued, and (B) no
proceeding for that purpose is pending or threatened by the Commission.
(vii) 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.
(viii) 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).
(ix) The statements made in the Prospectus, insofar as they purport to
summarize the provisions of statutes, legal and governmental proceedings,
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).
(x) 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.
(xi) 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.
11
(xii) 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.
(xiii) 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 no material adverse effect on the Company and its subsidiaries
taken as a whole.
(xiv) 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 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 Vice President -
Finance, Secretary and Treasurer, stating that to the knowledge of the
officers signing such certificate:
12
(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, Deloitte &
Touche LLP, shall have furnished to you letters dated such dates
substantially in the forms heretofore approved by 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 Xxxxxxxx LLP,
counsel for the Underwriter, such opinion or opinions, dated the Closing
Date, 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 Xxxxxxxxx Xxxxxxxx LLP, 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.
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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 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,
American Stock Exchange or the Nasdaq National Market or trading in any
securities of the Company shall have been suspended by any 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 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
14
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 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
15
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" 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 securities exchange or in the over the counter market, (v) a banking
moratorium is declared by
16
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(o) and paragraph 5(d)(xiv) 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 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
$60,000.
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., L.P., 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).
17
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, "business day" means
-------------
any day on which the New York Stock Exchange is open for trading.
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.
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:
-----------------------------------------
President and Chief Executive Officer
Accepted:
XXXXXX X. XXXXX & CO., L.P.
By:
----------------------------
Xxxxx X. Xxxxxxxx
Principal
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