EXHIBIT 1.01
EXECUTION VERSION
1,700,000 Shares
Aqua America, Inc.
Common Stock
($.50 Par Value)
UNDERWRITING AGREEMENT
November 9, 2004
X.X. Xxxxxxx & Sons, Inc.
Xxxxxx Xxxxxxxxxx Xxxxx LLC
c/o X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx
Xx. Xxxxx, XX 00000
Ladies and Gentlemen:
Aqua America, Inc., a Pennsylvania corporation (the "COMPANY"), proposes
to sell to the underwriters (the "UNDERWRITERS") named in Schedule I hereto, for
whom X.X. Xxxxxxx & Sons, Inc. are acting as Representatives (the
"REPRESENTATIVES") an aggregate of 1,700,000 shares of the Company's Common
Stock, $.50 par value (the "FIRM SHARES"). The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Company also proposes to sell at the
Underwriters' option an aggregate of up to 255,000 additional shares of the
Company's Common Stock (the "OPTION SHARES") as set forth below.
As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to exercise the over-allotment option in whole or in part for the
accounts of the several Underwriters. The Firm Shares and the Option Shares (to
the extent the aforementioned option is exercised) are herein collectively
called the "SHARES."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to each of the
Underwriters as follows:
(i) The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement (File No. 333-104290),
including a prospectus, relating to the Company's securities in conformity with
the Securities Act of 1933, as amended (the "ACT") and the rules and regulations
(the "RULES AND REGULATIONS") of the Commission thereunder, and has filed with,
or transmitted for filing to, or shall promptly hereafter file with or transmit
for filing to, the Commission a final prospectus supplement (the "PROSPECTUS
SUPPLEMENT") specifically relating to the Shares pursuant to Rule 424 under the
Act. The term "REGISTRATION STATEMENT" means the registration statement,
including the exhibits thereto, as amended to the date of this Agreement. The
term "BASIC PROSPECTUS" means the prospectus dated April 25, 2003 included in
the Registration Statement. The term "PROSPECTUS" means the Basic Prospectus
together with the Prospectus Supplement. As used herein, the terms "Basic
Prospectus" and "Prospectus" shall include in each case the documents, if any,
incorporated by reference therein. The terms "SUPPLEMENT," "AMENDMENT" and
"AMEND" as used herein shall include all documents deemed to be incorporated by
reference in the Prospectus that are filed subsequent to the date of the Basic
Prospectus by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT").
(ii) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the Commonwealth of
Pennsylvania, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement. Each of the
significant subsidiaries of the Company as listed on Schedule II (collectively,
the "SUBSIDIARIES") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement. The Company
and each of the Subsidiaries are duly qualified to transact business in all
jurisdictions in which the conduct of their business requires such
qualification, except for such jurisdictions where the failure to so qualify
would not have a material adverse effect on the earnings, business, management,
properties, assets, rights, operations or condition (financial or otherwise) of
the Company and of the Subsidiaries taken as a whole (a "MATERIAL ADVERSE
EFFECT"). The outstanding shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and non-assessable
and are owned by the Company or another Subsidiary free and clear of all liens,
encumbrances and equities and claims; and no options, warrants or other rights
to purchase, agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in the
Subsidiaries are outstanding, other than those described in the Registration
Statement or described in any document incorporated by reference therein.
(iii) The outstanding shares of Common Stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable;
the Shares to be issued and sold by the Company have been duly authorized and
when issued and paid for as contemplated herein will be validly issued, fully
paid and non-assessable; and no preemptive rights of shareholders exist
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with respect to any of the Shares or the issue and sale thereof, other than
those described in the Registration Statement or described in any document
incorporated by reference therein. Neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any shares of Common Stock.
(iv) All of the Shares conform in all material respects to the
description thereof contained in or incorporated by reference in the
Registration Statement. The form of certificates for the Shares conforms to the
corporate law of the jurisdiction of the Company's incorporation.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor instituted proceedings for that purpose. As of the date it became
effective under the Act, the Registration Statement contained, and the
Prospectus and any amendments or supplements thereto will contain, as of the
date the Prospectus, such amendment or supplement is filed with the Commission,
all statements which are required to be stated therein by, and conforms to, or
will conform to, as the case may be, the requirements of the Act and the Rules
and Regulations. The documents incorporated, or to be incorporated, by reference
in the Prospectus, at the time they became effective or were or will be filed
with the Commission, as the case may be, conformed or will conform, as the case
may be, in all material respects to the requirements of the Exchange Act or the
Act, as applicable, and the rules and regulations of the Commission thereunder.
The Registration Statement did not, as of the date it became effective, contain,
and any amendment thereto will not, as of the date it becomes effective,
contain, any untrue statement of a material fact and did not omit, and will not
omit, to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any amendments
and supplements thereto, as of the date the Prospectus, such amendment or
supplement is filed with the Commission do not contain, and will not contain,
any untrue statement of material fact, and do not omit and will not omit, to
state any 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; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such amendment or supplement,
in reliance upon, and in conformity with, written information furnished to the
Company by any Underwriter specifically for use in the preparation thereof.
(vi) The consolidated financial statements of the Company and its
subsidiaries, together with related notes and schedules as set forth or
incorporated by reference in the Registration Statement, present fairly in all
material respects the financial position and the results of operations and cash
flows of the Company and the consolidated subsidiaries, at the indicated dates
and for the indicated periods. Such financial statements and related schedules
have been prepared in accordance with generally accepted principles of
accounting, consistently applied throughout the periods involved, except as
disclosed therein, in all material respects, and all adjustments necessary for a
fair presentation of results for such periods have been made. The summary
financial and statistical data included or incorporated by reference in the
Registration Statement present fairly in all material respects the information
shown therein and such data has been compiled on a basis
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consistent with the financial statements presented therein and the books and
records of the company.
(vii) PricewaterhouseCoopers LLP, who have certified certain of
the financial statements filed with the Commission as part of, or incorporated
by reference in, the Registration Statement, are an independent registered
public accounting firm as required by the Act and the Rules and Regulations.
(viii) There are no legal or governmental proceedings pending to
which the Company or the Subsidiaries is a party or of which any property of the
Company or the Subsidiaries is the subject that are required to be disclosed in
the Registration Statement that are not so disclosed as required; and to the
Company's knowledge, no such proceedings are threatened or contemplated.
(ix) Each of the Company and the Subsidiaries has good and
marketable title to all of their respective properties and assets reflected in
the consolidated financial statements hereinabove described except where the
failure to have such title would not have a Material Adverse Effect, subject to
no lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements or described in the Registration
Statement or which are not material in amount. Each of the Company and the
Subsidiaries occupies its leased properties under valid and existing leases,
with only such exceptions with respect to any particular lease as do not
interfere in any material respect with the conduct of the business of the
Company.
(x) Each of the Company and the Subsidiaries has filed all
material Federal, State, local and foreign tax returns, or has filed for
extensions of the due dates for such returns, which have been required to be
filed and paid all taxes indicated by such returns and all assessments received
by it or any of them to the extent that such taxes have become due, or has
received timely extensions thereof, other than any taxes which the Company or
any Subsidiary is contesting in good faith. The Company does not know of any
actual or proposed additional material tax assessments.
(xi) Since the respective dates as of which information is given
or incorporated by reference in the Registration Statement, as it may be amended
or supplemented, except as described therein or in such incorporated
information, there has not been any change or any development that has had or
will have a Material Adverse Effect, whether or not occurring in the ordinary
course of business, and there has not been any material transaction entered into
by the Company or the Subsidiaries, other than transactions in the ordinary
course of business and changes and transactions described in the Registration
Statement, as it may be amended or supplemented. Neither the Company nor either
of the Subsidiaries has any material contingent obligations which are not
disclosed in the Company's financial statements which are included in the
Registration Statement.
(xii) Neither the Company nor any of the Subsidiaries is or with
the giving of notice or lapse of time or both, will be, in violation of or in
default under (i) its Charter or By-Laws, or (ii) under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a party or
by which it, or any of its properties, is bound and, solely with respect to this
clause (ii), which violation or default would have a Material Adverse Effect.
The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment
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of the terms hereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any material indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any of their respective properties is bound, or of the Charter or By-Laws of
the Company or any law, order, rule or regulation, judgement, order, writ or
decree applicable to the Company or any Subsidiary of any court or of any
government, regulatory body or administrative agency or other governmental body
having jurisdiction, except where such breach or default would not, except with
respect to the Charter or By-laws individually or in the aggregate, have a
Material Adverse Effect.
(xiii) The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement has been duly and validly
authorized by all necessary corporate action on the part of the Company, and
this Agreement has been duly executed and delivered by the Company.
(xiv) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect.
(xv) Each of the Company and the Subsidiaries holds, has obtained
or meets the requirements for all material licenses, certificates and permits,
consents, orders, approvals and other authorizations from governmental
authorities which are necessary to the conduct of their businesses and has made
all declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof,
except where the lack thereof would not have a Material Adverse Effect, and
neither the Company nor any such Subsidiary has received any actual written
notice of any proceeding relating to revocation or modification of any such
material license, permit, certificate, consent, order, approval or other
authorization that would materially interfere with its ownership or lease, as
the case may be, or the operation of its properties or the carrying on of its
business as conducted on the date hereof, except as described in the
Registration Statement and the Prospectus or as would not have a Material
Adverse Effect; and each of the Company and its subsidiaries is in material
compliance with all laws and regulations relating to the conduct of its business
as conducted as of the date hereof, except where such noncompliance would not
have a Material Adverse Effect.
(xvi) Neither the Company, nor to the Company's knowledge, any of
its affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares.
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(xvii) Neither the Company nor any Subsidiary is or, after giving
effect to the offering and sale of the Shares contemplated hereunder and the
application of the net proceeds from such sale as described in the Prospectus,
will be an "investment company" or an entity "controlled" by an "investment
company" within the meaning of such terms under the Investment Company Act of
1940 (as amended, the "1940 ACT"), and the rules and regulations of the
Commission thereunder.
(xviii) The Company maintains a system of internal accounting
controls with respect to itself and its consolidated subsidiaries sufficient to
provide reasonable assurances that in all material respects: (i) transactions
are executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xix) The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks relative to the
conduct of their respective businesses as currently conducted and the value of
their respective properties and as is reasonable and customary for companies
engaged in similar businesses, except where the failure to carry or be covered
by such insurance would not have a Material Adverse Effect.
(xx) There are no existing or, to the best knowledge of the
Company, threatened labor disputes with the employees of the Company or any of
the Subsidiaries which are likely to have a Material Adverse Effect.
(xxi) Except as described in the Registration Statement or any of
the documents incorporated by reference therein, the Company and each of its
Subsidiaries (A) are in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS"), (B) have received or meet the
requirements for all material permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective businesses
and (C) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a Material Adverse Effect. Except as
described in the Registration Statement or any of the documents incorporated by
reference therein, there are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries under any Environmental Law which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(xxii) In the ordinary course of its business, the Company reviews
the effect of Environmental Laws on the business, operations and properties of
the Company and each of its
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subsidiaries, in the course of which it identifies and evaluates associated
costs and liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties). Except
as described in the Registration Statement or any of the documents incorporated
by reference therein, on the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or in the
aggregate, have a Material Adverse Effect.
(xxiii) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 and 15d-15 under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company's Chief Executive
Officer and its Chief Financial Officer by others within those entities,
particularly during the period in which reports under the Exchange Act are being
prepared, and such disclosure controls and procedures are effective to perform
the functions for which they were established; the Company's auditors and the
Audit Committee of the Board of Directors have been advised of: (A) any
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting which are reasonably likely to
adversely affect the Company's ability to record, process, summarize, and report
financial data; and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls over financial reporting; and the Company has disclosed any
change in internal control over financial reporting that occurred during the
Company's most recent fiscal quarter that has materially affected or is
reasonably likely to materially affect the Company's internal control over
financial reporting other than (A) changes related to significant deficiencies
that have been identified in connection with preparation for the Company's first
management report on internal control over financial reporting required pursuant
to Item 308(a) of Regulation S-K and (B) any changes in internal controls made
in preparation for such report.
(xxiv) The Company has provided you true, correct, and complete
copies of all documentation pertaining to any extension of credit in the form of
a personal loan made, directly or indirectly, by the Company to any director or
executive officer of the Company, or to any family member or affiliate of any
director or executive officer of the Company; and since July 30, 2002, the
Company has not, directly or indirectly, including through any subsidiary: (A)
extended credit, arranged to extend credit, or renewed any extension of credit,
in the form of a personal loan, to or for any director or executive officer of
the Company, or to or for any family member or affiliate of any director or
executive officer of the Company; or (B) made any material modification,
including any renewal thereof, to any term of any personal loan to any director
or executive officer of the Company, or any family member or affiliate of any
director or executive officer, which loan was outstanding on July 30, 2002.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Company agrees to sell to the Underwriters and
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each Underwriter agrees, severally and not jointly, to purchase, at a net
purchase price of $21.84 per share (representing the public offering price of
$22.70 per share less underwriting discounts and commissions of $0.86 per
share), the number of Firm Shares set forth opposite the name of each
Underwriter in Schedule I hereof, subject to adjustments in accordance with
Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made
in Federal (same day) funds to an account designated by the Company against
delivery of the Firm Shares therefor to the Representatives for the several
accounts of the Underwriters. Such payment and delivery are to be made through
the facilities of The Depository Trust Company, New York New York ("DTC") at
10:00 a.m., New York time, on November 12, 2004 or at such other time and date
not later than five business days thereafter as you and the Company shall agree
upon, such time and date being herein referred to as the "CLOSING DATE." (As
used herein, "BUSINESS DAY" means a day on which the New York Stock Exchange is
open for trading and on which banks in New York are open for business and not
required by law or executive order to be closed.)
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase the Option Shares at the price per share as set forth in the first
paragraph of this Section 2. No Option Shares shall be sold or delivered by the
Underwriters unless the Firm Shares previously have been, or simultaneously with
the Option Shares are, sold and delivered. The option granted hereby may be
exercised in whole or in part by giving written notice (i) at any time before
the Closing Date and (ii) only once thereafter within 30 days after the date of
this Agreement, by you, as the Representatives of the several Underwriters, to
the Company setting forth the number of Option Shares as to which the several
Underwriters are exercising the option and the time and date at which such
Option Shares are to be delivered. The time and date at which the Option Shares
are to be delivered shall be determined by the Representatives but shall not be
earlier than three full business days after written notice of the exercise of
such option, nor in any event prior to the Closing Date (such time and date
being herein referred to as the "OPTION CLOSING DATE"). If the date of exercise
of the option is three or more days before the Closing Date, the notice of
exercise shall set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the number of
Firm Shares being purchased by such Underwriter bears to the total number of
Firm Shares, adjusted by you in such manner as to avoid fractional shares. The
option with respect to the Option Shares granted hereunder may be exercised only
to cover over-allotments in the sale of the Firm Shares by the Underwriters.
You, as Representatives of the Underwriters, may cancel such option at any time
prior to its expiration by giving written notice of such cancellation to the
Company. To the extent, if any, that the option is exercised, payment for the
Option Shares shall be made on the Option Closing Date in Federal (same day)
funds to an account designated by the Company for the Option Shares against
delivery of the Option Shares through the facilities of DTC.
3. OFFERING BY THE UNDERWRITERS.
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It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the public
offering price set forth in the Prospectus. The Representatives may from time to
time thereafter change the public offering price and other selling terms. To the
extent, if at all, that any Option Shares are purchased pursuant to Section 2
hereof, the Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives
for the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees with each of the
Underwriters that:
(i) The Company will (A) use its best efforts to cause
the Registration Statement to remain effective and to prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations a Prospectus
in a form approved by the Representatives, and (B) not file any amendment to the
Registration Statement or supplement to the Prospectus or document incorporated
by reference therein of which the Representatives shall not previously have been
advised and furnished with a copy or to which the Representatives shall have
reasonably objected in writing or which is not in compliance with the Rules and
Regulations and (C) file on a timely basis all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission subsequent to the date of the Prospectus and prior to the termination
of the offering of the Shares by the Underwriters.
(ii) The Company will advise the Representatives promptly
of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the use of the Prospectus or of the institution
of any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives
in endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of,
the Representatives, from time to time, as many copies of the Prospectus as the
Representatives may reasonably request. The Company will deliver to, or upon the
order of, the Representatives during the period when
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delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may reasonably request. Upon request, the Company will deliver
to the Representatives at or before the Closing Date, one signed copy of the
Registration Statement and all amendments thereto including all exhibits filed
therewith and all documents incorporated by reference therein, and will deliver
to the Underwriters such additional copies of the Registration Statement and all
amendments thereto, as the Representatives may reasonably request.
(v) Within the time during which a prospectus relating
to the Shares is required to be delivered under the Act, the Company will comply
with the Act and the Rules and Regulations, and the Exchange Act, and the rules
and regulations of the Commission thereunder, so as to permit the completion of
the distribution of the Shares as contemplated in this Agreement and the
Prospectus. If during the period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in the reasonable opinion of the
Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or, if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will either (A) prepare and file with the
Commission an appropriate amendment to the Registration Statement or supplement
to the Prospectus or (B) prepare and file with the Commission an appropriate
filing under the Exchange Act which shall be incorporated by reference in the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with the law.
(vi) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration Statement, an
earning statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations.
(vii) The Company shall not (A) issue, offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, or
file with the SEC any registration statement relating to, any additional shares
of its Common Stock or securities convertible into or exchangeable or
exercisable for any shares of its Common Stock, enter into a transaction which
would have the same effect or publicly disclose the intention to make any such
offer, sale, pledge, disposition or filing, or (B) grant any options whatsoever
in respect of its shares, except grants of employee stock options pursuant to
the terms of a plan in effect on the date of this Agreement, in each case for a
period of 90 days after the date of this Agreement, without the prior written
consent of X.X. Xxxxxxx & Sons, Inc. The foregoing restrictions shall not apply
to any grants of stock options or restricted stock pursuant to the terms of an
equity compensation or similar plan in effect on the date hereof, the issuance
by the Company of up to 50,000 shares of Common Stock under the Company's shelf
registration statements in connection with acquisitions, the issuance by the
Company of up to 1,500,000 shares of Common Stock issued more than 60 days after
the date hereof in connection with acquisitions (or to raise funds for
acquisitions) or the issuance of an
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unlimited amount of shares of our Common Stock under the Company's Dividend
Reinvestment and Direct Stock Purchase Plan.
(viii) The Company will cause each executive officer and
director of the Company to furnish to you, on or prior to the Closing Date, a
letter or letters, in form and substance satisfactory to the Underwriters
("LOCKUP AGREEMENTS"), pursuant to which each such person shall agree not to
offer, sell, sell short or otherwise dispose of, directly or indirectly, any
shares of Common Stock of the Company or other capital stock of the Company, or
any other securities convertible, exchangeable or exercisable for Common Shares
or derivative of Common Shares owned by such person or request the registration
for the offer or sale of any of the foregoing (or as to which such person has
the right to direct the disposition of) for a period of 90 days after the date
of this Agreement, directly or indirectly, except with the prior written consent
of X.X. Xxxxxxx & Sons, Inc.; provided, however, that such restriction shall not
apply to (A) sales by such persons of up to 25,000 shares of Common Stock of the
Company in the aggregate that occur more than 30 days after the date hereof, (B)
sales to the Company in connection with the exercise of options or (C) entering
into a stock trading plan in accordance with the guidelines specified in Rule
10b5-1 of the Securities Exchange Act of 1934, provided any sales of Common
Stock under such plan are subject to the terms of this Lock-Up Agreement.
(ix) The Company shall apply the net proceeds of its sale
of the Shares as set forth in the Prospectus.
(x) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Shares in such a manner as
would require the Company or any of the Subsidiaries to register as an
investment company under the 0000 Xxx.
(xi) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
(xii) The Company will not take, directly or indirectly,
any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
(xiii) The Company will use its best efforts to list,
subject to notice of issuance, the Shares on the New York Stock Exchange.
5. COSTS AND EXPENSES.
The parties agree that the Underwriters shall not be responsible for
the following expenses: (1) accounting fees of the Company; (2) the fees and
disbursements of counsel for the Company; (3) the cost of printing and
delivering to, or as requested by, the Underwriters copies of the Registration
Statement and the Prospectus, and any supplements or amendments thereto; (4) the
filing fees of the Commission; (5) the filing fees and expenses (including
reasonable legal fees and disbursements) incident to securing any required
review by the NASD of the terms of the sale of the Shares; (6) the Listing Fee
of the New York Stock Exchange; and (7) the expenses, including the
11
reasonable fees and disbursements of counsel for the Underwriters, incurred in
connection with the qualification of the Shares under State securities or Blue
Sky laws. Any transfer taxes imposed on the sale of the Shares to the respective
Underwriters will be paid by the Company. The Company shall not, however, be
required to pay for any of the Underwriters' expenses (other than those related
to qualification under NASD regulation and State securities or Blue Sky laws
described above) except that, if this Agreement shall not be consummated because
the conditions in Section 6 hereof are not satisfied, or because this Agreement
is terminated by the Representatives pursuant to Section 11 hereof, or by reason
of any failure, refusal or inability on the part of the Company to perform any
undertaking or satisfy any condition of this Agreement or to comply with any of
the terms hereof on its part to be performed, unless such failure, refusal or
inability is due primarily to the default or omission of any Underwriter, the
Company shall reimburse the several Underwriters for reasonable out-of-pocket
expenses, including fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company
shall not in any event be liable to any of the several Underwriters for damages
on account of loss of anticipated profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of each of the Underwriters to purchase the
Firm Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the Option
Closing Date, as the case may be, of the representations and warranties of the
Company contained herein, and to the performance by the Company of its covenants
and obligations hereunder and to the following additional conditions:
(a) Any and all filings required by Rule 424 under the Act shall
have been made within the applicable time period prescribed by, and in
compliance with, the Rules and Regulations, and any request of the Commission
for additional information (to be included in the Registration Statement or
otherwise) shall have been disclosed to the Representatives and complied with to
their reasonable satisfaction. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been issued and
no proceedings for that purpose shall have been taken or, to the knowledge of
the Company, shall be contemplated or threatened by the Commission and no
injunction, restraining order or order of any nature by a Federal or state court
of competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinions of Xxxxxx, Xxxxx &
Xxxxxxx LLP ("XXXXXX XXXXX"), counsel for the Company, dated the Closing Date or
the Option Closing Date, as the case may be, addressed to the Underwriters (and
stating that it may be relied upon by counsel to the Underwriters) to the effect
that:
(i) The Company has been duly incorporated and is validly
subsisting as a corporation under the laws of the Commonwealth of Pennsylvania,
with corporate power and authority to own or lease its properties and conduct
its business as described in the Registration
12
Statement; Aqua Pennsylvania, Inc. ("API") has been duly incorporated and is
validly subsisting as a corporation under the laws of the Commonwealth of
Pennsylvania with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; the Company
is duly qualified to transact business in all jurisdictions in which the conduct
of its business requires such qualification, except for such jurisdictions where
the failure to so qualify would not have a materially adverse effect upon the
business of the Company and the Subsidiaries taken as a whole; and the
outstanding shares of capital stock of API have been duly authorized and validly
issued and are fully paid and non-assessable and are owned by the Company; and,
to the best of such counsel's knowledge, the outstanding shares of capital stock
of API are owned free and clear of all liens, encumbrances and equities and
claims.
(ii) The authorized shares of the Company's Common Stock
have been duly authorized; the outstanding shares of the Company's Common Stock,
have been duly authorized and validly issued and are fully paid and
non-assessable; all of the Shares conform in all material respects as to legal
matters to the description thereof contained in the Prospectus; the certificates
for the Shares, assuming they are in the form filed with the Commission, conform
to the requirements of the Pennsylvania Business Corporation Law of 1988, as
amended (the "PBCL"); the shares of Common Stock, including the Option Shares,
if any, to be sold by the Company pursuant to this Agreement have been duly
authorized and will be validly issued, fully paid and non-assessable when issued
and paid for as contemplated by this Agreement, and no preemptive rights of
shareholders exist with respect to any of the Shares or the issue or sale
thereof arising under the Company's Charter, By-laws or the PBCL.
(iii) Based upon the oral advice of a member of the Staff of
the Commission, the Registration Statement has become effective under the Act
and, to the best of the knowledge of such counsel, no stop order proceedings
with respect thereto have been instituted or are pending or threatened under the
Act.
(iv) The Registration Statement, as of the date it became
effective, the Prospectus and each amendment or supplement thereto and document
incorporated by reference therein, as of each of their respective dates, comply
as to form in all material respects with the requirements of the Act or the
Exchange Act as applicable and the applicable rules and regulations thereunder
(except that such counsel need express no opinion as to the financial statements
and related schedules incorporated by reference therein).
(v) The statements under the caption "Description of
Capital Stock" in the Prospectus, insofar as such statements constitute a
summary of documents referred to therein or matters of law, fairly summarize in
all material respects the information called for with respect to such documents
and matters.
(vi) Such counsel does not know of any contracts or
documents required to be filed as exhibits to or incorporated by reference in
the Registration Statement or described in the Registration Statement or the
Prospectus which are not so filed, incorporated by reference or described as
required, and to counsel's knowledge, such contracts and documents as are
13
summarized in the Registration Statement or the Prospectus are fairly summarized
in all material respects.
(vii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or any of the
Subsidiaries except as set forth in the Prospectus.
(viii) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not violate
or result in a breach of any of the terms or provisions of, or constitute a
default under, the Charter or By-Laws of the Company, or any material indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries may be bound and which is known to such counsel.
(ix) This Agreement has been duly authorized, executed and
delivered by the Company.
(x) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD or as required by State
securities and Blue Sky laws as to which such counsel need express no opinion)
except such as have been obtained or made, specifying the same.
(xi) The Company is not and after giving effect to the
offering and the sale of the Shares contemplated hereunder and the application
of the net proceeds from such sale as described in the Prospectus, will not be,
an "investment company" or an entity "controlled" by an "investment company"
within the meaning of such terms under the 1940 Act and the rules and
regulations of the Commission thereunder.
In rendering such opinion Xxxxxx Xxxxx may rely as to matters
governed by the laws of states other than Pennsylvania or Federal laws on local
counsel in such jurisdictions, provided that in each case Xxxxxx Xxxxx shall
state that they believe that they and the Underwriters are justified in relying
on such other counsel. In addition to the matters set forth above, the
Underwriters shall receive a statement from such counsel to the effect that
nothing has come to the attention of such counsel which leads them to believe
that (i) the Registration Statement, at the time it became effective under the
Act, contained an 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 (except that such counsel need express no view as to
financial statements, schedules and statistical information therein), and (ii)
the Prospectus, or any supplement thereto, on the date it was filed pursuant to
the Rules and Regulations and as of the Closing Date or the Option Closing Date,
as the case may be, contained or contains an untrue statement of a material fact
or omitted or omits 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 (except that such counsel need express no view as to
financial statements, schedules and statistical information therein). With
respect to
14
such statement, Xxxxxx Xxxxx may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
(c) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinions of Xxx X. Xxxxx, Esq.,
Executive Vice President - General Counsel for the Company, dated the Closing
Date or the Option Closing Date, as the case may be, addressed to the
Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
(i) The Company has been duly incorporated and is validly
subsisting as a corporation under the laws of the Commonwealth of Pennsylvania,
with corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement; API has been duly
incorporated and is validly subsisting as a corporation under the laws of the
Commonwealth of Pennsylvania, with corporate power and authority to own or lease
its properties and conduct its business as described in the Registration
Statement; the Company and API are duly qualified to transact business in all
jurisdictions in which the conduct of their business requires such
qualification, except for such jurisdictions where the failure to so qualify
would not have a Materially Adverse Effect; and the outstanding shares of
capital stock of API have been duly authorized and validly issued and are fully
paid and non-assessable and are owned by the Company; and, to the best of such
counsel's knowledge, the outstanding shares of capital stock of API are owned
free and clear of all liens, encumbrances and equities and claims, and no
options, warrants or other rights to purchase, agreements or other obligations
to issue or other rights to convert any obligations into any shares of capital
stock or of ownership interests in API are outstanding.
(ii) Except as described in or contemplated by the
Prospectus or the documents incorporated by reference therein, there are no
outstanding securities of the Company convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of capital stock of
the Company and there are no outstanding or authorized options, warrants or
rights of any character obligating the Company to issue any shares of its
capital stock or any securities convertible or exchangeable into or evidencing
the right to purchase or subscribe for any shares of such stock; and except as
described in the Prospectus or the documents incorporated by reference therein,
no holder of any securities of the Company or any other person has the right,
contractual or otherwise, which has not been satisfied or effectively waived, to
cause the Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, any of the Shares or the right to have any Common Shares
or other securities of the Company included in the Registration Statement or the
right, as a result of the filing of the Registration Statement, to require
registration under the Act of any shares of Common Stock or other securities of
the Company.
(iii) Each of the Company and the Subsidiaries owns,
possesses, has obtained or meets the requirements for all licenses, permits,
certificates, consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof
except where the lack thereof would not have a Material Adverse Effect, and
neither the
15
Company nor any such Subsidiary has received any actual written notice of any
proceeding relating to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization that would
materially interfere with its ownership or lease, as the case may be, or the
operation of its properties or the carrying on of its business as conducted on
the date hereof, except as described in the Registration Statement and the
Prospectus or as would not have a Material Adverse Effect; and to the best of
his knowledge, each of the Company and the Subsidiaries is in material
compliance with all laws and regulations relating to the conduct of its business
as conducted as of the date of the Prospectus except where such noncompliance
would not have a Material Adverse Effect.
(d) The Representatives shall have received from Xxxxx Xxxx &
Xxxxxxxx ("XXXXX XXXX"), counsel for the Underwriters, an opinion dated the
Closing Date or the Option Closing Date, as the case may be, substantially to
the effect specified in subparagraph (ix) of Paragraph (b) of this Section. In
rendering such opinion Xxxxx Xxxx may rely as to all matters governed other than
by the laws of the State of New York or Federal laws on the opinion of counsel
referred to in Paragraph (b) of this Section. In addition to the matters set
forth above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them to believe
that (i) the Registration Statement, or any amendment thereto, as of the date
hereof contained an 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 (ii) the Prospectus, or any supplement thereto, on
the date hereof and as of the Closing Date or the Option Closing Date, as the
case may be, contained or contains an untrue statement of a material fact or
omitted or omits 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 (except that such counsel need express no view as to
financial statements, schedules and statistical information therein). With
respect to such statement, Xxxxx Xxxx may state that their belief is based upon
the procedures set forth therein, but is without independent check and
verification.
(e) You shall have received, on the Closing Date and, if
applicable, the Option Closing Date, a letter dated the Closing Date or the
Option Closing Date, as the case may be, in form and substance satisfactory to
you, of PricewaterhouseCoopers LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating that in their opinion the financial
statements and schedules examined by them and included in the Registration
Statement comply in form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and Regulations; and
containing such other statements and information as is ordinarily included in
accountants' "comfort letters" to Underwriters with respect to the financial
statements and certain financial and statistical information contained in the
Registration Statement and Prospectus.
(f) The Representatives shall have received on the Closing Date
and, if applicable, the Option Closing Date, as the case may be, a certificate
or certificates of Xxxxxxxx XxXxxxxxxxxx, President and Chairman of the Company,
and Xxxxx Xxxxxxxx, Chief Financial Officer of the Company, solely in their
respective capacities as such, to the effect that, as of the Closing Date or the
Option Closing Date, as the case may be, each of them severally represents as
follows:
16
(i) The Registration Statement has become effective under
the Act and no stop order suspending the effectiveness of the Registration
Statement has been issued, and, to his knowledge after due inquiry, no
proceedings for such purpose have been taken or are, to his knowledge,
contemplated or threatened by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to
Rule 424 under the Act have been made by the Closing Date or the Option Closing
Date as and when required by such rules;
(iv) He has carefully examined the Registration Statement
and the Prospectus and, in his opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, 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 an amendment of the Prospectus which has not been so set forth
in such supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
change or any development that has had or will have a Material Adverse Effect.
(g) The Company shall have furnished to the Representatives such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have been duly
listed, subject to notice of issuance, on the New York Stock Exchange. The
Lockup Agreements described in Section 4(a)(viii) are in full force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Xxxxx Xxxx, counsel
for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
In such event, the Company and the Underwriters shall not be under
any obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
17
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of
the Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
(1) to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act, against any
losses, claims, damages or liabilities to which such Underwriter or any
such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus or any amendment
or supplement thereto, or (ii) 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 in the light of the circumstances
under which they were made; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement, or omission or alleged omission, made in the
Registration Statement, the Prospectus or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Representatives specifically for use in the
preparation thereof; and
(2) to reimburse each Underwriter and each such controlling person
upon demand for any legal or other out-of-pocket expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental
inquiry related to the offering of the Shares, whether or not such
Underwriter or controlling person is a party to any action or proceeding.
In the event that it is finally judicially determined that the
Underwriters were not entitled to receive payments for legal and other
expenses pursuant to this subparagraph, the Underwriters will promptly
return all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims,
18
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that each Underwriter will
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically for use
in the preparation thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a) or (b). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own counsel
at its own expense. Notwithstanding the foregoing, the indemnifying party shall
pay as incurred (or within 30 days of presentation) the fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (iii) the
indemnifying party shall have failed to assume the defense and employ counsel
acceptable to the indemnified party within a reasonable period of time after
notice of commencement of the action. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all such indemnified parties. Such firm shall be
designated in writing by the Representatives in the case of parties indemnified
pursuant to Section 8(a) and by the Company in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with
19
such consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(d) To the extent the indemnification provided for in this Section
8 is unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings 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 shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, 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 Section 8(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 8(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter and (ii) 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
20
such fraudulent misrepresentation. The Underwriters' obligations in this Section
8(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement, the
Prospectus or any supplement or amendment thereto, each party against whom
contribution may be sought under this Section 8 hereby consents to the
jurisdiction of any court having jurisdiction over any other contributing party,
agrees that process issuing from such court may be served upon it by any other
contributing party and consents to the service of such process and agrees that
any other contributing party may join it as an additional defendant in any such
proceeding in which such other contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may
be, any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company), you, as
Representatives of the Underwriters, shall use your reasonable efforts to
procure within 36 hours thereafter one or more of the other Underwriters, or any
others, to purchase from the Company such amounts as may be agreed upon and upon
the terms set forth herein, the Shares which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as such
Representatives, shall not have procured such other Underwriters, or any others,
to purchase the Shares agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Shares to be purchased on
the Closing Date or the Option Closing date, as the case may be, the other
Underwriters shall be obligated, severally, in proportion to the respective
numbers of Shares which they are obligated to purchase hereunder, to purchase
the Shares which such defaulting Underwriter or Underwriters failed to purchase,
or (b) if the aggregate number of shares of Shares with respect to which such
default shall occur exceeds 10% of the Shares to be purchased on the Closing
Date or the Option Closing Date, as the case may be, the Company or you as
Representatives will have the right, by written notice given within the next
36-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of any non-defaulting Underwriter or of the
Company except to the extent provided in Sections 5 and 8 hereof.
21
In the event of a default by any Underwriter or Underwriters, as set forth in
this Section 9, the Closing Date or Option Closing Date, as the case may be, may
be postponed for such period, not exceeding seven days, as the Company or you,
as Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to X.X. Xxxxxxx & Sons, Inc.,
Xxx Xxxxx Xxxxxxxxx, Xx. Xxxxx, XX 00000, Attention: Xxx Xxxxx.
To the Company:
Aqua America, Inc.
000 X. Xxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxx X. Xxxxx, Esq.
Executive Vice President and General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
11. TERMINATION.
This Agreement may be terminated by you, as Representatives, by
written notice to the Company (a) at any time prior to the Closing Date or any
Option Closing Date (if different from the Closing Date and then only as to
Option Shares) if any of the following has occurred: (i) since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or any development occurs that has had a
Material Adverse Effect, (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your reasonable
judgment, make it impracticable or inadvisable to market the Shares or to
enforce contracts for the sale of the Shares, (iii) suspension of trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market or limitation on prices (other than limitations on
22
hours or numbers of days of trading) for securities on any such exchange, (iv)
the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which in
your reasonable opinion would create a Material Adverse Effect, (v) the
declaration of a banking moratorium by United States or New York State
authorities, (vi) any downgrading, or placement on any watch list for possible
downgrading, in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Exchange Act), (vii) the suspension of trading of the
Company's Common Stock by the New York Stock Exchange, the Commission, or any
other governmental authority or (viii) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
Any such termination shall be without liability of any party to any
other party except that the provisions of Section 5 and 8 hereof shall at all
times be effective.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus Supplement consists of following information set
forth under the caption "Underwriting" in the Prospectus Supplement: the fifth
paragraph (beginning "The underwriters may..."), the second, third and fourth
sentence of the seventh paragraph (beginning "We have been advised..."), the
tenth paragraph (beginning "In connection with this offering..."), the eleventh
paragraph (beginning "Short sales..."), the twelfth paragraph (beginning "Naked
short sales..."), the thirteenth paragraph (beginning "Stabilizing..."), the
fourteenth paragraph (beginning "The underwriters may..."), the fifteenth
paragraph (beginning "Purchases to cover...") and the seventeenth paragraph
(beginning "In connection with this...").
23
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
15. SUBMISSION TO JURISDICTION
Except as set forth below, no claim arising out of or in any way
relating to this Agreement may be commenced, prosecuted or continued in any
court other than the courts of the State of New York located in the City and
County of New York or in the United States District Court for the Southern
District of New York, which courts shall have jurisdiction over the adjudication
of such matters, and the Company consents to the jurisdiction of such courts and
personal service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any claim arising out of
or in any way relating to this Agreement is brought by any third party against
any Underwriter or any indemnified party. Each Underwriter and the Company (on
its behalf and, to the extent permitted by applicable law, on behalf of its
shareholders and affiliates) waives all right to trial by jury in any action,
proceeding or counterclaim (whether based upon contract, tort or otherwise) in
any way arising out of or relating to this Agreement. The Company agrees that a
final judgment in any such action, proceeding or counterclaim brought in any
such court shall be conclusive and binding upon the Company and may be enforced
in any other courts in the jurisdiction of which the Company is or may be
subject, by suit upon such judgment.
* * *
24
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
AQUA AMERICA, INC.
By: XXXXXXXX XXXXXXXXXXXX
________________________________
Name: Xxxxxxxx XxXxxxxxxxxx
Title: Chairman, Chief
Executive Officer and
President
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
X.X. XXXXXXX & SONS, INC.
By: XXXXXXX X. XXXXX
_____________________________
Name: Xxxxxxx X. Xxxxx
Title: Sr. Vice President
Director of Syndicate
On behalf of the Underwriters listed in
Schedule I hereto
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------
X.X. Xxxxxxx & Sons, Inc. 935,000
Xxxxxx Xxxxxxxxxx Xxxxx LLC 765,000
----------
Total 1,700,000
S-1
SCHEDULE II
SIGNIFICANT SUBSIDIARIES
Aqua Pennsylvania, Inc.
Aqua Utilities, Inc.
S-2
SCHEDULE III
FORM OF LOCK-UP AGREEMENT
The undersigned, being one of the executive officers or directors
(together, the "RESTRICTED GROUP") of Aqua America, Inc. (the "COMPANY"),
understands that X.X. Xxxxxxx & Sons, Inc. and Xxxxxx Xxxxxxxxxx Xxxxx LLC (the
"UNDERWRITERS"), propose to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with the Company providing for the public offering by
the Underwriters of common stock (the "COMMON STOCK"), of the Company (the
"PUBLIC OFFERING").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
agrees that, without the prior written consent of X.X. Xxxxxxx & Sons, Inc., the
undersigned will not, directly or indirectly offer, sell, pledge, contract to
sell, (including any short sale), grant any option to purchase or otherwise
dispose of any shares of Common Stock (including, without limitation, shares of
Common stock of the Company which may be deemed to be beneficially owned by the
undersigned on the date hereof in accordance with the rules and regulations of
the Securities and Exchange Commission, shares of Common Stock which may be
issued upon exercise of a stock option or warrant and any other security
convertible into or exchangeable for Common Stock) or enter into any Hedging
Transaction (as defined below) relating to the Common Stock (each of the
foregoing referred to as a "DISPOSITION") for a period from the date hereof
until and including the date that is 90 days after the date of the final
prospectus relating to the Public Offering (the "LOCK-UP PERIOD"); provided
however, that such restriction shall not apply to (i) sales by members of the
Restricted Group of up to a group aggregate amount of 25,000 shares of the
Company's common stock that occur more than 30 days after the date of the
Underwriting Agreement, (ii) sales by the undersigned of Common Stock to the
Company in connection with the exercise of options or (iii) entering into a
stock trading plan in accordance with the guidelines specified in Rule 10b5-1 of
the Securities Exchange Act of 1934, provided any sales of Common Stock under
such plan are subject to the terms of this Lock-Up Agreement. The foregoing
restriction is expressly intended to preclude the undersigned from engaging in
any Hedging Transaction or other transaction which is designed to or reasonably
expected to lead to or result in a Disposition during the Lock-Up Period even if
the securities would be disposed of by someone other than the undersigned.
"HEDGING TRANSACTION" means any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including, without limitation, any put
or call option) with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from the Common Stock.
Notwithstanding the foregoing, the undersigned may transfer (a) shares of
Common Stock acquired in open market transactions by the undersigned after the
completion of the Public Offering, and (b) any or all of the shares of Common
Stock or other Company securities if the transfer is by (i) gift, will or
intestacy, or (ii) distribution to partners, members or shareholders of
S-3
the undersigned; provided, however, that in the case of a transfer pursuant to
clause (b) above, it shall be a condition to the transfer that the transferee
execute an agreement stating that the transferee is receiving and holding the
securities subject to the provisions of this letter agreement.
The undersigned agrees that the Company may, and that the undersigned
will, (i) with respect to any shares of Common Stock or other Company securities
for which the undersigned is the record holder, cause the transfer agent for the
Company to note stop transfer instructions with respect to such securities on
the transfer books and records of the Company and (ii) with respect to any
shares of Common Stock or other Company securities for which the undersigned is
the beneficial holder but not the record holder, cause the record holder of such
securities to cause the transfer agent for the Company to note stop transfer
instructions with respect to such securities on the transfer books and records
of the Company.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this letter agreement. All authority
herein conferred or agreed to be conferred shall survive the death or incapacity
of the undersigned and any obligations of the undersigned shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
S-4
