EXHIBIT 1(a)
500,000 Shares
DELTA NATURAL GAS COMPANY, INC.
Common Stock
UNDERWRITING AGREEMENT
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_________________, 2003
Xxxxxx, Xxxxxxxx & Company, Incorporated
J.J.B. Xxxxxxxx, X.X. Xxxxx
Xxxxxxxx Xxxxxxxx Xxxxxx
BB&T Capital Markets, A Division of Xxxxx & Xxxxxxxxxxxx, Inc.
x/x Xxxxxx, Xxxxxxxx & Company, Incorporated
000 Xxxxx Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Delta Natural Gas Company, Inc., a Kentucky corporation (the
"Company"), confirms its agreement with the underwriters named in Schedule I
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hereto (the "Underwriters") as follows:
1. Description of Stock. The Company proposes to issue and sell to
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the Underwriters 500,000 shares (the "Firm Stock") of the Company's common
stock, $1.00 par value per share (the "Common Stock"). The Company also
proposes to grant to the Underwriters an option to purchase up to an
additional 75,000 shares of the Common Stock (the "Option Stock") on the
terms and conditions contained in this Agreement for the sole purpose of
covering over-allotments. The Firm Stock and the Option Stock, if purchased,
is hereinafter called the "Stock."
2. Representations and Warranties of the Company. The Company
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represents and warrants to each Underwriter as of the date of this Agreement
and as of each of the First Delivery Date (as defined below) and the Second
Delivery Date (as defined below, and together with the First Delivery Date,
the "Delivery Dates") and agrees with each Underwriter 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 (as defined below) on Form S-2 (Registration
Statement No. 333-_______) relating to the Stock, and the offering thereof
in accordance with the 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 (as defined below). Copies of that Registration Statement as
amended to date have been delivered by the Company to you as the
Underwriters. As used in this Agreement, "Preliminary Prospectus" means each
prospectus included in the Registration Statement, or amendments of the
Registration Statement or of the Prospectus, before the Registration
Statement, as so amended, became effective under the Act
and any Prospectus filed by the Company with the consent of the Underwriters
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; "Effective Time" means the date
and the time as of which the Registration Statement, or the most recent
post-effective amendment thereto, if any, became effective under the Act;
"Effective Date" means the date of the Effective Time; "Prospectus" means
the prospectus filed with the Commission by the Company with the consent of
the Underwriters pursuant to Rule 424(b) of the Rules and Regulations and
the documents incorporated by reference in such Prospectus, 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; "Rules and Regulations" means the rules and regulations
adopted by the Commission under either the Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as applicable. The Commission
has not issued and, to the knowledge of the Company, has not threatened, 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 Underwriters 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 Effective Date, (ii) comply as of
the date hereof, and (iii) will comply as of the Delivery Dates, as
hereinafter defined, with the requirements of the Act, the Exchange Act and
the Rules and Regulations; the Registration Statement and any amendment
thereof, at the Effective Time, 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 Delivery Dates will not,
contain any 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 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 Underwriters expressly for use in
the Registration Statement or the Prospectus. The Company has complied in
all material respects with all requests of the Commission for additional
information to be included in the Registration Statement or in any
Preliminary Prospectus or Prospectus. Each Preliminary Prospectus and the
Prospectus delivered to the Underwriters for use in connection with this
offering will, at the time of such delivery, be substantively identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
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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, comply in
all materials respects with the requirements of the Exchange Act and the
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 (as defined in paragraph (j) of this section) 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 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 short-term or
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,
assets, condition (financial or otherwise), 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 each of the Company and its subsidiaries
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its respective ownership of
property or the conduct of its business requires such qualification except
where the failure to be so qualified would not have a material adverse
effect on the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company and its
subsidiaries taken as a whole, and has all power and authority necessary to
own or hold its properties and to conduct the business in which it is
engaged.
(i) The authorized and outstanding capitalization of the
Company as of ____________, 2003 was as set forth in the Registration
Statement and the Prospectus, and there
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have been no changes in the authorized or outstanding capitalization of the
Company since ____________, 2003 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, issuance and
delivery of the Stock and all the issued and outstanding shares of Common
Stock are, and all the shares of the Stock, when issued, delivered and paid
for in the manner described in the Prospectus on the First Delivery Date and
the Second Delivery Date, if any, will be, validly issued and outstanding,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof. None of the shares of the Stock to be sold by the Company
when issued, sold and delivered in accordance with this Agreement will be
subject to any lien, claim, encumbrance, preemptive rights or any other
claim of any third party; and the Stock will conform to the description
thereof contained in the Registration Statement under the caption
"Description of Capital Stock." On the Effective Date, the First Delivery
Date and Second Delivery Date, if any, there will be no options or warrants
or other outstanding rights (contractual or otherwise) to purchase,
agreements or obligations to issue or agreements or other rights to convert
or exchange any obligation or security into, capital stock of the Company or
securities convertible into or exchangeable for capital stock of the
Company, except as described in the Prospectus and the documents
incorporated by reference therein or the grant of options after the date of
the Prospectus under option plans of the Company. The information in the
Prospectus insofar as it relates to all outstanding options and other rights
to acquire securities of the Company as of the Effective Date is, and
immediately prior to the First Delivery Date and the Second Delivery Date,
if any, will be complete and correct in all material respects. All previous
offers and sales of the outstanding shares of capital stock of the Company
were made in conformity with applicable federal, state or foreign securities
laws (except where the failure to so conform would not, in the aggregate,
have a material adverse effect on the business, properties, assets,
condition (financial or otherwise), results of operations or prospects of
the Company and its subsidiaries taken as a whole). The certificates
representing the Stock are in proper legal form under, and conform in all
material respects to the requirements of, Kentucky corporate law.
(j) The issued shares of capital stock of the Company's
subsidiaries 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 Company is legally permitted, pursuant to the
terms of the Act, to offer and sell the Stock pursuant to the Registration
Statement. The Common Stock (including the Stock) is registered pursuant to
Section 12(g) of the Exchange Act. The issued and outstanding shares of
Common Stock are included for quotation on the Nasdaq National Market.
Neither the Company nor, to the best knowledge of the Company, any other
person has taken any action designed to cause, or likely to result in, the
termination of the registration of the Common Stock under the Exchange Act.
The Company has not received any notification from the Commission or the
Nasdaq Stock Market, Inc. that either that agency or entity is contemplating
terminating such registration or inclusion.
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(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) Each of the Company and its subsidiaries has 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.
(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 consent, approval, order, material
license, certificate, franchise or other governmental authorization or
permit necessary to the ownership, maintenance and operation of its
property, assets or conduct of its business; and the execution, delivery and
performance of this Agreement by the Company and its subsidiaries taken as a
whole, the sale of the Stock, 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 and its subsidiaries taken as a whole,
pursuant to the terms of, or constitute a breach of or default under, any
agreement, indenture or instrument to which the Company and its subsidiaries
taken as a whole, is a party, or by which the Company is bound, or result in
a violation of the corporate charter or bylaws of the Company and its
subsidiaries taken as a whole or, except to the extent disclosed in the
Prospectus, any law or ordinance to which the Company and its subsidiaries
taken as a whole, or its properties may be subject or of any order, rule or
regulation of any court or governmental agency having jurisdiction over the
Company and its subsidiaries taken as a whole, or its properties, except for
conflicts, breaches, violations or defaults which would be immaterial to the
business, properties, assets, condition (financial or otherwise), results of
operations or prospects of the Company and its subsidiaries taken as a whole
and which would not affect the validity or enforceability of the Stock or
this Agreement or otherwise adversely affect the rights, duties or
obligations of the Underwriters or the shareholders.
(o) No approval or consent of any governmental body other
than (i) as may be required under the 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.
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(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.
(r) Except as disclosed in the Prospectus, each of the
Company and its subsidiaries has sufficient authority under statutory
provisions or by grant of franchises or permits by municipalities or
counties to conduct in all material respects its business as presently
conducted and as described in the Registration Statement and Prospectus.
(s) Except as set forth in the Registration Statement and
the Prospectus, neither the Company nor any of its subsidiaries is 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, shareholders' 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 business 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) Each of the Company and its subsidiaries maintains
insurance covering their properties, operations, personnel and business
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
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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 First Delivery
Date and the Second Delivery Date, if any.
(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) Neither the Company nor any of its affiliates has
taken, within the 90-day period preceding the date of this Agreement, and
the Company agrees that during the 90-day period following the date of this
Agreement it will not take (and it will not permit its affiliates to take),
directly or indirectly, any action which has constituted or might reasonably
be expected to cause or result in stabilization or manipulation of the price
of the Common Stock of the Company.
(y) The Company and its subsidiaries have timely and
properly prepared and filed all necessary federal, state, local and foreign
tax returns which are required to be filed and have paid all taxes shown as
due thereon and have paid all other taxes and assessments to the extent that
the same shall have become due, except such as are being contested in good
faith. The Company has no knowledge of any tax deficiency which has been or
might be assessed against the Company or any of its subsidiaries which, if
the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the business, properties, assets, condition
(financial or otherwise), results of operations or prospects of the Company
and its subsidiaries taken as a whole.
(z) Except as otherwise disclosed in the Prospectus, each
of the Company and its subsidiaries has all necessary consents,
authorizations, approvals, orders, certificates and permits of and from, and
has made all declarations and filings with, all federal, state, local and
other governmental authorities, all self-regulatory organizations and all
courts and other tribunals, to own, lease, license and use its properties
and assets and to conduct its business in the manner described in the
Prospectus, except to the extent that the failure to 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 Underwriters shall be deemed a
representation and warranty by the Company to the Underwriters as to the
matters covered thereby.
3. Purchase of the Stock by the Underwriters. 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
Underwriters, and the Underwriters, severally and not jointly, agree to
purchase the number of shares of the Firm Stock set forth opposite that
Underwriter's name in Schedule I hereto from the Company. In addition, the
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Company grants to the Underwriters, solely for the purpose of covering
over-allotments in the sale of the Firm Stock, an option to purchase all or
any portion of the Option Stock exercisable as provided in section 5 hereof.
The purchase price of both the Firm Stock and the Option Stock to be paid by
the Underwriters to the Company shall be $ per share.
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The Underwriters are to make a public offering of the Firm
Stock and such of the Option Stock as the Underwriters may determine on or
as soon after the Effective Date as the Underwriters deem it advisable for
the Underwriters to so do. The Stock is to be initially offered to the
public at the public offering price set forth on the cover page of the
Prospectus (such price being hereinafter called the "public offering
price"). The Underwriters may from time to time increase or decrease the
public offering price after the initial public offering to such extent as
the Underwriters, in their sole discretion, deem advisable. The Underwriters
may enter into one or more agreements as the Underwriters, in their sole
discretion deem advisable, with one or more broker-dealers who shall act as
dealers in connection with such public offering.
4. Default by the Underwriters. If, on the First Delivery Date or
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the Second Delivery Date, as the case may be, any Underwriter defaults in
the performance of its obligations under this Agreement and the total number
of shares of the Firm Stock or Option Stock, as the case may be, which the
defaulting Underwriter or Underwriters agreed but failed to purchase does
not exceed 15% of the total number of shares of Firm Stock or Option Stock,
as the case may be, which the Underwriters are obligated to purchase at such
date, the remaining non-defaulting Underwriters shall be obligated,
severally, to purchase the Firm Stock or the Option Stock, as the case may
be, which the defaulting Underwriter agreed but failed to purchase on such
date in the respective proportions which the number of shares of the Firm
Stock set forth opposite the name of each remaining non-defaulting
Underwriter in Schedule I hereto bears to the total number of shares of the
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Firm Stock set forth opposite the names of all the remaining non-defaulting
Underwriters in Schedule I hereto.
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If the aggregate number of shares of Firm Stock or Option
Stock, as the case may be, with respect to which such default shall occur
exceeds 15% of the total number of shares of Firm Stock or Option Stock, as
the case may be, which the Underwriters are obligated to purchase at such
date, the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the non-defaulting Underwriters who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Firm Stock or all the Option Stock, as the
case may be, to be purchased under this Agreement on such date. If the
remaining Underwriters or other underwriters satisfactory to the remaining
Underwriters do not elect to purchase the Stock which the defaulting
Underwriter or Underwriters agreed but failed to purchase, then this
Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company (except that the Company will
continue to be liable for the payment of expenses as set forth in paragraph
6(m) and the indemnity and contribution provisions contained in section 8),
unless the Company and the remaining non-defaulting Underwriters make an
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election in writing within 24 hours after the First Delivery Date or the
Second Delivery Date, as the case may be, to proceed with the offering
contemplated by this Agreement notwithstanding such default. In the event
that the Company and the remaining non-defaulting Underwriters so elect,
each such remaining non-defaulting Underwriter shall continue to be
obligated, upon the conditions set forth in this Agreement and subject to
the provisions of the next paragraph, to purchase (severally and not
jointly) the number of shares of Firm Stock and Option Stock, as the case
may be, provided for by section 3 hereof.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company for damages caused
by its default. If other underwriters are obligated
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or agree to purchase the Stock of a defaulting or withdrawing Underwriter,
or the Company and the remaining non-defaulting Underwriters elect to
proceed with the offering contemplated hereby notwithstanding such default,
either the remaining Underwriters or the Company may postpone the First
Delivery Date or the Second Delivery Date, as the case may be, for up to
seven full business days in order to effect any changes that, in the opinion
of counsel for the Company or counsel for the Underwriters, may be necessary
in the Registration Statement, the Prospectus or in any other document or
agreement, and to file promptly any necessary amendments or supplements to
the Registration Statement or the Prospectus.
5. Delivery of Stock. Delivery of and payment for the Firm Stock
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shall be made at the offices of Xxxxxxxx Xxxxxx LLP, One XX Xxxx Xxxxx, Xx.
Xxxxx, Xxxxxxxx 00000 at 10:00 a.m., St. Louis, Missouri time, on the third
business day following the Effective Date or on such later date and time as
may be agreed upon in writing between the Underwriters and the Company (the
"First Delivery Date"). On the First Delivery Date, the certificates shall
be delivered by the Company to the Underwriters 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 Underwriters for inspection and
packaging in New York, New York, at least one full business day prior to the
First Delivery Date, certificates for the Firm Stock so to be delivered in
good delivery form and in such denominations and registered in such names as
the Underwriters shall have requested, all such requests to have been made
in writing at least one full business day prior to the First Delivery Date.
At any time on or before the 30th day after the date on
which this Agreement becomes effective, the option granted in section 3 may
be exercised in whole or from time to time in part by written notice being
given by the Underwriters to the Company. Such notice shall set forth the
aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be
registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Underwriters, when the
shares of Option Stock are to be delivered (the "Second Delivery Date");
provided, however, that the Second Delivery Date shall not be earlier than
the First Delivery Date nor earlier than the second business day after the
date on which the option shall have been exercised nor later than the third
business day after the date on which the option shall have been exercised.
Delivery of and payment for the Option Stock shall be made
at the offices of Xxxxxxxx Xxxxxx LLP, One XX Xxxx Xxxxx, Xx. Xxxxx,
Xxxxxxxx 00000 at 10:00 a.m., St. Louis, Missouri time, on the Second
Delivery Date. On the Second Delivery Date, the certificates shall be
delivered by the Company to the Underwriters 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 Underwriters for inspection and packaging in New
York, New York, at least one full business day prior to the Second Delivery
Date, certificates for the Option Stock so to be delivered in good delivery
form and in such denominations and registered in such names as the
Underwriters shall have requested, all such requests to have been made in
writing in the aforesaid written notice.
6. Covenants. The Company covenants and agrees with the
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Underwriters:
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(a) To furnish promptly to each of the Underwriters and
counsel for the Underwriters a 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 Underwriters such number of
conformed copies of the Registration Statement as originally filed and each
amendment thereto (in each case excluding exhibits other than this
Agreement) and of each Preliminary Prospectus, the Prospectus and any
amended or supplemented Prospectus as the Underwriters 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 and file any document under the Exchange
Act before the termination of the offering of the Stock by the Underwriters
if such document would be deemed to be incorporated by reference into any
Preliminary Prospectus or the Prospectus that may, in the reasonable
judgment of the Company and the Underwriters, be required by the Act or
requested by the Commission and approved by the Underwriters (which approval
shall not be unreasonably withheld). Prior to filing with the Commission any
Preliminary Prospectus, any amendment to the Registration Statement, any
supplement to the Prospectus, any Prospectus pursuant to Rule 424 of the
Rules and Regulations, or any other document under the Exchange Act if such
document would be deemed to be incorporated by reference into any
Preliminary Prospectus or the Prospectus, to (i) furnish a copy thereof to
the Underwriters and counsel for the Underwriters, (ii) obtain the consent
of the Underwriters to the filing, which consent shall not be unreasonably
withheld, and (iii) promptly advise the Underwriters when any such amendment
to the Registration Statement becomes effective.
(d) To use its best efforts to cause any required
post-effective amendment to the Registration Statement to become effective
and to advise the Underwriters 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 Stock 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.
(e) If, at any time when a prospectus relating to the
Stock 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
- 10 -
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, the Company promptly will prepare
and file forthwith at its own expense with the Commission, subject to
paragraph (c) above, an amendment or supplement which will correct such
statement or omission or an amendment which will effect such compliance. The
Company shall furnish to the Underwriters a reasonable number of copies of,
such amendment or supplement or other filing that will correct such
statement or omission or effect such compliance. The Company will use its
best efforts to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement by the Commission. 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.
(f) To cause the Stock to be listed for quotation on the
Nasdaq National Market beginning on the Effective Date, and to file with the
Nasdaq National Market all documents and notices required by the Nasdaq
National Market of companies that have securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
National Market.
(g) 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 Underwriters an earning statement, conforming with the
requirements of Section 11(a) of the Act, covering a period of at least 12
months beginning after the effective date of the Registration Statement,
provided that the Company may comply with this paragraph by complying with
the safe harbor provisions of Rule 158 of the Rules and Regulations.
(h) For a period of three years from the Effective Date of
the Registration Statement, to furnish to the Underwriters copies of all
reports to shareholders and all reports, filings and financial statements
furnished by the Company to the principal national securities exchange,
automated quotation system or over-the-counter market upon which its Common
Stock may be listed or traded pursuant to requirements of or agreements with
such exchange or market or filed with the Commission pursuant to the
Exchange Act or the Rules and Regulations.
(i) To cause each officer and each director of the Company
to furnish and to use its best efforts to cause each shareholder who owns
beneficially one percent or more of the outstanding Common Stock of the
Company to furnish to the Company, on or prior to the date of this
Agreement, a letter or letters, substantially in the form attached hereto as
Exhibit A (the "Lock-up Letters"), and to impose stop transfer instructions
---------
with the transfer agent for the Company in accordance with the Lock-up
Letters.
(j) To endeavor to qualify the Stock for offer and sale
under the securities laws of such jurisdictions as the Underwriters 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 Stock and to arrange for the
determination of the legality of the Stock for purchase by institutional
investors.
- 11 -
(k) Without the prior written consent of the Underwriters
(which consent shall not be unreasonably withheld), not to sell or otherwise
dispose of, or offer or contract to sell any shares of Common Stock or sell
or grant any rights, options, warrants or securities convertible with
respect to Common Stock within 180 days after the Effective Date except for
(i) the sale of the Stock to the Underwriters pursuant to this Agreement,
(ii) the grant or exercise of options pursuant to the Company's stock option
plans as described in the Registration Statement and Prospectus consistent
with past practice, and (iii) the issuance by the Company of its securities
in connection with a merger, acquisition or similar transaction.
(l) Until the termination of the offering of the Stock, to
file timely all documents, and any amendments to previously filed documents,
required to be filed by it pursuant to the Exchange Act.
(m) 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 authorization, issuance, sale and delivery
of the Stock 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 Stock under the securities laws
of the several jurisdictions and of preparing and printing a Blue Sky
Memorandum (including related fees and expenses of counsel to the
Underwriter); (vii) the costs of the listing or qualification of the Stock
on the Nasdaq National Market and related filing fees; (viii) the fees and
expenses of the Company's accountants and counsel; (ix) the travel expenses
of the Company in connection with informational meetings and presentations
for the brokerage community and institutional investors; (x) registrar and
transfer agent costs and fees; (xi) the costs of printing certificates for
the Stock; and (xii) 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 this paragraph and in section
8 and section 11 hereof, each Underwriter shall pay its own costs and
expenses, including the fees and expenses of its counsel, any transfer taxes
on the Stock which it may sell and the expenses of advertising any offering
of the Stock made by such Underwriter.
(n) To apply the net proceeds of the Stock as set forth in
the Prospectus.
7. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters hereunder are subject to the accuracy, when made and on the
First Delivery Date and the Second Delivery Date, if any, 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:
- 12 -
(a) The Prospectus shall have been timely filed with the
Commission; at or before the First Delivery Date and Second Delivery Date,
if any, 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 the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus with the
Commission without the consent of the Underwriters.
(b) No Underwriter shall have discovered and disclosed to
the Company on or prior to the First Delivery Date or the Second Delivery
Date, if any, that the Registration Statement or the Prospectus or any
amendment or supplement thereto contains any untrue statement of a fact
which, in the reasonable opinion of the Underwriters or Xxxxxxxx Xxxxxx LLP,
counsel for the Underwriters, is material or omits to state a fact that, in
the reasonable opinion of the Underwriters 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
Stock and 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 Xxxxxxxx Xxxxxx LLP,
counsel for the Underwriters; 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 for the Company,
shall have furnished to the Underwriters their opinion, addressed to the
Underwriters and dated the First Delivery Date and Second Delivery Date, if
any, 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) All corporate action required to have been
taken by the Company for the due and proper authorization, issuance, sale
and delivery of the Stock has been validly and sufficiently taken.
- 13 -
(iii) The Stock conforms in all material respects
to the statements concerning it in the Prospectus.
(iv) 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.
(v) 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.
(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.
(viii) 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).
(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.
- 14 -
(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 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 (A) as may be required under the Act or in connection or
compliance with the provisions of the securities or "Blue Sky" laws of any
jurisdiction, and (B) 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 Stock by the Company or for the carrying out
by the Company of the provisions of this Agreement.
(xiv) To the knowledge of counsel, at the date or
dates indicated in the Prospectus, the Company had the duly authorized and
outstanding capitalization set forth in the Prospectus under the caption
"Capitalization" and all the authorized shares of Common Stock, including
the Stock, were duly authorized, and all the issued and outstanding shares
of Common Stock were, and all the shares of the Stock, when issued,
delivered and paid for in the manner described in the Prospectus will be
validly issued and outstanding, fully paid and nonassessable with no
personal liability attaching to the ownership thereof. Such counsel shall
also confirm that none of the shares of the Stock to be sold by the Company
when issued, sold and delivered in accordance with this Agreement will be
subject to any lien, claim, encumbrance, preemptive rights or any other
claim of any third party; and the Stock conforms to the description thereof
contained in the Registration Statement under the caption "Description of
Capital Stock." To the knowledge of counsel, there are no options or
warrants or other outstanding rights (contractual or otherwise) to purchase,
agreements or obligations to issue or agreements or other rights to convert
or exchange any obligation or security into, capital stock of the Company or
securities convertible into or exchangeable for capital stock of the
Company, except as described in the Prospectus and the documents
incorporated by reference therein or the grant of options after the date of
the Prospectus under option plans of the Company. All previous offers and
sales of the outstanding shares of capital stock of the Company were made in
conformity with applicable federal, state or foreign securities laws. The
certificates representing the Stock are in proper legal form under, and
conform in all material respects to the requirements of, Kentucky corporate
law.
(xv) To the knowledge of counsel, after due
inquiry, neither the filing of the Registration Statement or any amendment
thereto nor the offer and sale of the Stock to the Underwriters as
contemplated by this Agreement gives rise to any rights, nor do any rights
exist, for or relating to the registration under the Act of any securities
of the Company.
In addition to the above opinions, 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 Underwriters, and with officers and
representatives of the Company, at which conferences the contents of the
Registration Statement
- 15 -
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 each of the First Delivery Date and the Second
Delivery Date, if any, there shall have been furnished to the Underwriters a
certificate, dated such delivery 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 certificates:
(i) The representations, warranties and
agreements of the Company in section 2 are true and correct as of such date;
the Company has complied with all its agreements contained herein; and
satisfied all the conditions set forth herein on its part to be performed or
satisfied at or prior to such Delivery Date.
(ii) Neither the Registration Statement nor the
Prospectus, as of the Effective 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.
(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) The Company shall have furnished to the Underwriters
on the date of this Agreement and on each of the First Delivery Date and the
Second Delivery Date, if any, a letter of Deloitte & Touche LLP, addressed
to the Underwriters and dated such Delivery Date substantially in the form
heretofore approved by the Underwriters.
(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 7(f) which makes it impractical or inadvisable in the reasonable
judgment of the Underwriters to proceed with the public offering or delivery
of the Stock as contemplated by the Prospectus.
(h) The Lock-up Letters described in section 6(i) shall be
in full force and effect.
- 16 -
(i) The Underwriters shall have received from Xxxxxxxx
Xxxxxx LLP, counsel for the Underwriters, such opinion or opinions, dated
the First Delivery Date and the Second Delivery Date, if any, with respect
to the sale of the Stock, the Registration Statement, the Prospectus and
other related matters as the Underwriters 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 Underwriters and Xxxxxxxx Xxxxxx LLP, counsel for the
Underwriters.
If any of the conditions specified in this section 7 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 Underwriters and its counsel, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
prior to, the First Delivery Date by the Underwriters.
8. Indemnification and Contribution.
--------------------------------
(a) The Company shall indemnify and hold harmless each
Underwriter, each person, if any, who controls (within the meaning of the
Act) any Underwriter from and against any loss, claim, damage or liability,
joint or several, and any action in respect thereof, to which any
Underwriter or control person may become subject, under or as a result of
(i) the Act, (ii) any condition to the Underwriters' obligations hereunder
not being fulfilled, (iii) the Company sustaining a loss, whether or not
insured, by reason of fire, flood, accident or other calamity, which, in the
reasonable opinion of the Underwriters, 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 being
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 being suspended, 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 Underwriters and
each such control person for any legal and other expenses reasonably
incurred by such Underwriter or control person for any legal and other
expenses reasonably incurred by such Underwriter or control 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
Underwriters specifically for inclusion therein; and
- 17 -
provided further that as to any Preliminary Prospectus, this indemnity
agreement shall not inure to the benefit of any Underwriters or any control
person on account of any loss, claim, damage, liability or action arising
from the sale of Stock to any person by such Underwriter if such 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 6(b) hereof. The foregoing
indemnity is in addition to any liability which the Company may otherwise
have to the Underwriters or any control person of the Underwriters.
(b) Each Underwriter, severally but not jointly, 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 or any action in respect thereof, to which the Company or any such
director, officer or control 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 Underwriters 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
control 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 Underwriters may
otherwise have to the Company.
(c) Promptly after receipt by an indemnified party under
this section 8 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 section 8, 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 section 8. 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
- 18 -
party shall not be liable to the indemnified party under this section 8 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 section 8
shall for any reason be unavailable to an indemnified party under paragraph
8(a) or 8(b) in respect of any loss, claim, damage or liability, or any
action in respect thereof, 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 Underwriters on the other hand from the offering of the
Stock, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on the
other hand 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 Underwriters 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 Stock (before
deducting expenses) received by the Company bears to the total underwriting
discounts and commissions received by the Underwriters 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 Underwriters, 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 Underwriters agree
that it would not be just and equitable if contributions pursuant to this
paragraph 8(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 8(d) shall be
deemed to include, for purposes of this paragraph 8(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 8(d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Stock underwritten by each of them, respectively, and distributed
to the public was offered to the public exceeds the amount of any damages
which such Underwriter has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged
- 19 -
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 Underwriters confirm that the statements with
respect to the public offering of the Stock 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 Underwriters for inclusion in the
Registration Statement and the Prospectus.
(f) The agreements contained in this section 8 and the
representations, warranties and agreements of the Company contained in
sections 2 and 6 shall survive the delivery of the Stock 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.
9. Termination by the Underwriters. The obligations of the
-------------------------------
Underwriters hereunder may be terminated by the Underwriters, in their
absolute discretion, by notice given to and received by the Company prior to
delivery of and payment for the Stock, 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 listed on a securities exchange or in the over the counter
market, (ii) a banking moratorium is declared by the United States, or by
New York, Missouri or Kentucky state authorities, (iii) an outbreak of major
hostilities or other national or international calamity occurs, (iv) any
action is taken by any government in respect of its monetary affairs which,
in the reasonable opinion of the Underwriters, has a material adverse effect
on the United States securities markets, or (v) 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 Underwriters prior to the execution
of this Agreement, which in the reasonable opinion of the Underwriters 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 Stock on the terms and in the manner contemplated
in the Prospectus.
10. Termination by the Company. The obligation of the Company to
--------------------------
deliver the Stock 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 7(d)(xiii) hereof
shall be in full force and effect substantially in the form in which
originally entered; 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 10
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 6(m) and paragraph 11 hereof.
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11. Expenses Following Termination. If the sale of Stock 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 Underwriters 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 paragraph 6(m) and
section 8 hereof, and (ii) the Company shall pay the out-of-pocket expenses
incurred by the Underwriters 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.
12. Notices. The Company shall be entitled to act and rely upon any
-------
request, consent, notice or agreement given or made by the Underwriters. Any
notice to the Underwriters shall be sufficient if given in writing or by
telecopy addressed to Xxxxxx, Xxxxxxxx & Company, Inc., 000 Xxxxx Xxxxxxxx,
Xx. Xxxxx, Xxxxxxxx 00000; telecopy ____________ (Attention: _________); 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; telecopy ____________ (Attention: Xxxxx X. Xxxxxxxx).
13. Parties. This Agreement shall inure to the benefit of and be
-------
binding upon the Underwriters, 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 control persons, and (b) the
indemnities and agreements of the Underwriters contained in section 8 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 control person. 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.
14. Defined Terms. For purposes of this Agreement, "business day"
-------------
means any day on which the New York Stock Exchange is open for trading.
15. 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
section 8 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 shares of Stock
from the Underwriter.
16. 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.
17. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Kentucky.
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[SIGNATURE PAGE TO FOLLOW]
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If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
Delta Natural Gas Company, Inc.
By:
-------------------------------------
President and Chief Executive Officer
Confirmed and accepted as of
the date first above mentioned:
Xxxxxx, Xxxxxxxx & Company, Incorporated
For itself and as the representative of the
several Underwriters named on Schedule I
----------
hereto:
By:
------------------------------------
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SCHEDULE I
----------
Underwriters Number of
------------ Shares
---------
Xxxxxx, Xxxxxxxx & Company, Incorporated
J.J.B. Xxxxxxxx, X.X. Xxxxx
Xxxxxxxx Xxxxxxxx Xxxxxx
BB&T Capital Markets, A Division of Xxxxx & Xxxxxxxxxxxx, Inc.
-------
Total 500,000
=======
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