EXHIBIT 1
$40,000,000 PRINCIPAL AMOUNT OF
[ ]% INSURED QUARTERLY NOTES DUE APRIL 1, 2021
DELTA NATURAL GAS COMPANY, INC.
FORM OF UNDERWRITING AGREEMENT
[ ], 2006
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Delta Natural Gas Company, Inc., a Kentucky corporation (the
"Company") confirms its agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., L.P. (the
"Underwriter") as follows:
1. Description of Notes. The Company proposes to issue and sell to
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the Underwriter $40,000,000 aggregate principal amount of [ ]% Insured
Quarterly Notes due April 1, 2021 (the "Notes") described in the Indenture
(as defined below). The Notes are more fully described in the Registration
Statement and the Prospectus as hereinafter defined. The Notes will be
issued by the Company under a certain Trust Indenture, dated as of March 1,
2006 (the "Indenture"), between the Company and The Bank of New York Trust
Company, N.A., as trustee (the "Trustee"). No amendments to the Indenture
will be made prior to the Closing Date hereinafter referred to without your
prior approval. The Company understands that the Underwriter proposes to
make a public offering of the Notes as soon as it deems advisable after this
Agreement has been executed and delivered.
2. Representations and Warranties of the Company. The Company
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represents, warrants and agrees as follows:
(a) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act") and has
prepared and filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Registration
Statement No. 333-[ ]) relating to $40,000,000 aggregate principal
amount of its Notes and the offering thereof in accordance with the
Act as amended and the Trust Indenture Act of 1939 as amended (the
"Trust Indenture Act") and has filed such amendments thereto as may
have been required to the date hereof. The registration statement
has been prepared in conformity with the requirements of the Act
and the rules and regulations thereunder (the "Rules and
Regulations") and the Trust Indenture Act and the rules and
regulations thereunder. Copies of that registration statement as
amended to date have been delivered by the Company to you as the
Underwriter. As used in this Agreement, "Preliminary Prospectus"
means each prospectus included in that registration statement, or
amendments of such registration statement or prospectus, before
that registration
statement, as so amended, became effective under the Act and
any prospectus filed by the Company with the consent of the
Underwriter pursuant to Rule 424(a) of the Rules and Regulations
and the documents incorporated by reference in such Preliminary
Prospectus. "Registration Statement" means that registration
statement including the prospectus, exhibits and financial
statements, and all documents incorporated by reference therein,
including any information deemed by virtue of Rule 430A(a)(3) of
the Rules and Regulations to be part of such Registration
Statement, as of the time such registration statement or
post-effective amendment became effective under the Act and the
Trust Indenture Act; and "Prospectus" means the prospectus filed
with the Commission by the Company with the consent of the
Underwriter pursuant to Rule 424(b) of the Rules and Regulations,
unless no such Rule 424(b) Prospectus is filed, in which case it
shall mean the Prospectus filed as part of the last Registration
Statement filed on or before the effective date thereof, and all
documents incorporated by reference therein. The Commission has not
issued any order preventing or suspending the use of any
Preliminary Prospectus.
(b) Each Preliminary Prospectus and each Permitted Free
Writing Prospectus (as defined below), at the time of the filing
thereof, did not and will 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 or any
Permitted Free Writing Prospectus in reliance upon and in
conformity with written information furnished to the Company by or
on behalf of the Underwriter specifically for inclusion therein.
The Registration Statement has been declared effective by the
Commission.
(c) The Registration Statement and the Prospectus in all
material respects: (i) complied as of the date the Registration
Statement became effective, (ii) comply as of the date hereof and
(iii) will comply as of the Closing Date, as hereinafter defined,
with the requirements of the Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the Trust Indenture Act
and the rules and regulations of the Commission under such Acts;
the Registration Statement and any amendment thereof, at the time
it became effective, did not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and the Prospectus, at the time the Registration
Statement became effective did not, as of the date hereof does not
and as of the Closing Date will not, contain an untrue statement of
a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that
the representations and warranties in this paragraph (c) shall not
apply to (A) that part of the Registration Statement which
constitutes the Statement of Eligibility and Qualification (Form
T-1) of the Trustee under the Trust Indenture Act or (B) statements
in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished
to the Company in writing by the Underwriter expressly for use in
the Registration Statement or the Prospectus.
(d) The documents incorporated by reference into the
Prospectus pursuant to Item 12 of Form S-3 under the Act, at the
time they were filed with the Commission, complied in all material
respects with the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder (the "Exchange Act
Rules and Regulations"), comply in all materials respects with the
requirements of the Exchange Act and the Exchange Act Rules and
Regulations and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading.
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(e) Each Permitted Free Writing Prospectus (as defined
below) listed on Schedule I hereto did not and will not include
anything that conflicts with the information contained in the
Registration Statement, the Prospectus and each such Permitted Free
Writing Prospectus, did not and will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading,
except that the Company makes no warranty or representation to the
Underwriter with respect to any statement or omissions made in a
Permitted Free Writing Prospectus in reliance upon and in
conformity with information furnished in writing to the Company by
the Underwriter expressly for use therein.
(f) At the determination date for purposes of the Notes
within the meaning of Rule 164(h) under the Act, the Company was
not an "ineligible issuer" as defined in Rule 405 under the Act.
(g) Deloitte & Touche LLP, the accountants whose report
forms a part of the Registration Statement and the Prospectus, are
independent registered public accountants as required by the Act
and the Rules and Regulations.
(h) The consolidated financial statements of the Company
and its subsidiaries incorporated by reference in the Registration
Statement and forming a part of any Preliminary Prospectus or the
Prospectus present fairly, and the financial statements forming a
part of 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
forming a part of 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 or incorporated by reference in the Registration Statement
or the Prospectus under the Act or the Rules and Regulations
thereunder.
(i) 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
long-term debt of the Company or any of its subsidiaries, or any
issuance of options, warrants, convertible securities or other
rights to purchase capital stock of such entity, or any material
adverse change in, or any adverse development which materially
affects, the business, properties, financial condition, results of
operations, or prospects of the Company and its subsidiaries taken
as a whole.
(j) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing and in good standing under the
laws of its jurisdiction of incorporation, and the Company and each
of its subsidiaries are duly qualified to do business and in good
standing as foreign corporations in each jurisdiction in which
their respective ownership of property or the conduct of their
respective businesses requires such qualification and wherein the
failure to be so qualified would have a material adverse effect on
the business of the Company and each of its subsidiaries, and have
all power and authority necessary to own or hold their properties
and to conduct the business in which they are engaged.
(k) The authorized and outstanding capitalization of the
Company as of December 31, 2005 was as set forth in the
Registration Statement and the Prospectus, and there have been no
changes in the authorized or outstanding capitalization of the
Company since December 31, 2005
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except as contemplated by the Registration Statement and the
Prospectus. All corporate action required to have been taken by
the Company for the due and proper authorization, execution and
delivery of the Indenture and the due and proper authorization,
issuance, sale and delivery of the Notes have been validly and
sufficiently taken. When the Notes have been executed, issued,
delivered and paid for in the manner described in the Indenture,
the Notes will be duly issued and will constitute valid and legally
binding obligations of the Company entitled to the benefits
provided by the Indenture, and the Notes will be enforceable in
accordance with their terms (except insofar as enforcement may be
limited by applicable bankruptcy, reorganization, insolvency or
other laws affecting creditors' rights and remedies generally, as
may from time to time be in effect, and by the availability of
specific performance or of other equitable relief which is subject
to the discretion of the court before which any proceeding may be
brought); the Notes conform to all statements relating thereto in
the Registration Statement, and holders of the Notes will not be
entitled to preemptive rights.
(l) 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 entirely 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, 2005 ("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.
(m) The Indenture is in due and proper form, has been duly
and validly executed and delivered and is a valid and enforceable
instrument in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights generally and to the extent that general equitable
principles may limit the right to obtain the remedy of specific
performance of certain of the obligations thereunder.
(n) 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.
(o) The Company has duly authorized all necessary action
to be taken by it for the procurement of an irrevocable financial
guarantee insurance policy (the "Insurance Policy") issued by Ambac
Assurance Corporation (the "Insurer"), insuring the payment of
principal and interest on the Notes, when due.
(p) The Company and its subsidiaries have good and
marketable title to, or valid and enforceable leasehold interests
in, all items of real and personal property which are material to
the business of the Company and its subsidiaries taken as a whole,
free and clear of all liens, encumbrances and claims (other than
the liens disclosed in the Registration Statement or the
Prospectus) which might materially interfere with the conduct of
the business of the Company and its subsidiaries taken as a whole.
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(q) Except to the extent disclosed in the Registration
Statement or 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 respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property may be
subject, the effect of which violation would be material to the
Company and its subsidiaries taken as a whole, or has failed to
obtain any material license, permit, certificate, franchise or
other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business; and
the execution, delivery and performance of this Agreement by the
Company, the sale of the Notes, compliance by the Company with the
provisions of the Notes and the Indenture, and the consummation of
the transactions contemplated by this Agreement will not conflict
with, result in the creation or imposition of any lien, charge or
encumbrance upon any of the properties or assets of the Company
pursuant to the terms of, or constitute a breach of or default
under, any agreement, indenture or instrument to which the Company
is a party, or by which the Company is bound, or result in a
violation of the corporate charter or bylaws of the Company or,
except to the extent disclosed in the Registration Statement or the
Prospectus, any law or ordinance to which the Company or its
properties may be subject or of any order, rule or regulation of
any court or governmental agency having jurisdiction over the
Company or its properties, except for conflicts, breaches,
violations or defaults which would be immaterial to the business
and operations of the Company and its subsidiaries taken as a whole
and which would not affect the validity or enforceability of the
Notes, the Indenture or this Agreement or otherwise adversely
affect the rights, duties or obligations of the Trustee, the
Underwriter or the holders of the Notes.
(r) No approval or consent of any governmental body other
than (i) as may be required under the Act or the Trust Indenture
Act or in connection or compliance with the provisions of the
securities or "blue sky" laws of any jurisdiction, and (ii)
approval by the Kentucky Public Service Commission, which has been
obtained, is legally required for the carrying out by the Company
of the provisions of this Agreement.
(s) Except as described in the Registration Statement or
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.
(t) There are no contracts or other documents that are
required to be filed as exhibits to the Registration Statement by
the Act or by the Rules and Regulations or as exhibits to any
reports filed by the Company under the Exchange Act that are
incorporated by reference in the Registration Statement and the
Prospectus, which have not been filed as exhibits to the
Registration Statement or any such reports incorporated by
reference in the Registration Statement and the Prospectus.
(u) Except as disclosed in the Registration Statement or
the Prospectus, the Company and each of its subsidiaries have
sufficient authority under statutory provisions or by grant of
franchises or permits by municipalities or counties to conduct in
all material respects their respective businesses as presently
conducted and as described in the Registration Statement and
Prospectus and any document incorporated therein by reference.
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(v) Except as set forth in the Registration Statement and
the Prospectus, the Company and its subsidiaries are not in
violation of or liable under any statute, any rule, regulation,
decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "environmental laws"), own or
operate no real property contaminated with any substance that is
subject to any environmental laws, are not liable for any off-site
disposal or contamination pursuant to any environmental laws, or
are not subject to any claim relating to any environmental laws,
and are not aware of any pending investigation that might lead to
such a claim, which violation, contamination, disposal, liability,
claim or investigation would individually or in the aggregate have
a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations
of the Company and its subsidiaries, taken together as a whole.
(w) 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.
(x) Each of the Company and its subsidiaries owns,
possesses or has the right to use all material licenses,
trademarks, patents, patent rights, inventions, copyrights, service
marks and trade names presently employed by it in connection with
the businesses now operated by it, and neither the Company nor any
of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing.
(y) The Company and its subsidiaries maintain insurance
covering their properties, operations, personnel and businesses
which insures against such losses and risks as are adequate in
accordance with its reasonable business judgment to protect the
Company and its subsidiaries and their businesses. Neither the
Company nor any of its subsidiaries has received notice from any
insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly
in force on the date hereof and will be outstanding and duly in
force on the Closing Date.
(z) 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.
(aa) Except as otherwise disclosed in the Registration
Statement or the Prospectus, the Company and each of its
subsidiaries have all necessary consents, authorizations,
approvals, orders, certificates and permits of and from, and have
made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease,
license and use their respective properties and assets and to
conduct their respective businesses in the manner described in the
Registration Statement or the Prospectus, except to the extent that
the failure to obtain or file would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Underwriter shall be deemed a representation
and warranty by the Company to the Underwriter as to the matters covered
thereby.
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Notwithstanding anything to the contrary in this paragraph 2 or any
other section or part of this Agreement, the Company makes no warranties,
representations or agreements regarding: (i) the accuracy of any information
in or incorporated by reference into the Registration Statement or
prospectus regarding the Insurer or any affiliate or control entity of the
Insurer; (ii) whether any information incorporated by reference into the
Registration Statement or prospectus regarding the Insurer or any affiliate
or control entity of the Insurer complied at the time the information was
filed with the Commission or at any other time with the requirements of the
Exchange Act, the Exchange Act Rules and Regulations or any other state or
federal laws or regulations; (iii) whether any information in or
incorporated by reference into the Registration Statement or prospectus
regarding the Insurer or any affiliate or control entity of the Insurer
meets the requirements for the Company's use of Form S-3 or is otherwise
compliant with the Company's obligations under the Act, Rules and
Regulations or any other state or federal laws or regulations in connection
with the offering contemplated in this Agreement. As used in this immediate
paragraph, "prospectus" includes Prospectus, each Preliminary Prospectus,
prospectus or each Free Writing Prospectus (as those are defined in this
Agreement). As used in this paragraph, "accuracy of any information" means
that the information contains no material misstatement or material omission
of fact.
3. Purchase, Sale and Delivery of Notes. On the basis of the
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representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell to the
Underwriter, and the Underwriter agrees to purchase from the Company, the
Notes. The purchase price for the Notes shall be [ ]% of the principal
amount thereof.
Delivery of the Notes, in definitive form, and payment therefor,
shall be made at 10:00 a.m., St. Louis time, on the third business day after
the Registration Statement shall have been declared effective by the
Commission, or on such later date and time as may be agreed upon in writing
between the Underwriter and the Company, such day and time of delivery and
payment being herein called the "Closing Date." On the Closing Date, the
Notes shall be delivered by the Company to the Underwriter at The Depository
Trust Company in New York, New York, against payment of the purchase price
therefor in funds immediately available to the order of the Company. The
Company agrees to make available to the Underwriter for inspection and
packaging in New York, New York, at least one full business day prior to the
Closing Date, certificates for the Notes so to be delivered in good delivery
form and in such denominations and registered in such names as the
Underwriter shall have requested, all such requests to have been made in
writing at least one full business day prior to the Closing Date.
4. Free Writing Prospectuses.
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(a) The Company represents and agrees that, without the
prior consent of the Underwriter, it has not made and will not make
any offer relating to the Notes that would constitute a "free
writing prospectus" as defined in Rule 405 under the Act, other
than a Permitted Free Writing Prospectus; the Underwriter
represents and agrees that, without the prior consent of the
Company, it has not made and will not make any offer relating to
the Notes that would constitute a "free writing prospectus" as
defined in Rule 405 under the Act, other than a Permitted Free
Writing Prospectus or a free writing prospectus that is not
required to be filed by the Company pursuant to Rule 433; any such
free writing prospectus (which shall include the pricing term sheet
discussed in paragraph 4(b) hereof), the use of which has been
consented to by the Company and the Underwriter, is listed on
Schedule I and herein called a "Permitted Free Writing Prospectus."
(b) The Company agrees to prepare a pricing term sheet,
substantially in the form of Schedule I hereto and approved by the
Underwriter, and to file such pricing term sheet pursuant to Rule
433(d) under the Act within the time period prescribed by such
Rule.
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(c) The Company and the Underwriter have complied and will
comply with the requirements of Rule 433 under the Act applicable
to any free writing prospectus, including timely Commission filing
where required and legending.
(d) The Company agrees that if at any time following
issuance of a Permitted Free Writing Prospectus any event occurred
or occurs as a result of which such Permitted Free Writing
Prospectus would conflict with the information in the Registration
Statement or the Prospectus or include an untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in light of the circumstances then
prevailing, not misleading, the Company will give prompt notice
thereof to the Underwriter and, if requested by the Underwriter,
will prepare and furnish without charge to the Underwriter a free
writing prospectus or other document, which will correct such
conflict, statement or omission; provided, however, that this
representation and warranty shall not apply to any statements or
omissions in a Permitted Free Writing Prospectus made in reliance
upon and in conformity with information furnished in writing to the
Company by the Underwriter, expressly for use therein.
5. Covenants. The Company covenants and agrees with the
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Underwriter:
(a) To furnish promptly to the Underwriter and counsel for
the Underwriter one signed copy of the Registration Statement as
originally filed, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
(b) To deliver promptly to the Underwriter such number of
conformed copies of the Registration Statement as originally filed
and each amendment thereto (excluding exhibits other than this
Agreement) and of each Preliminary Prospectus, Permitted Free
Writing Prospectus, the Prospectus and any amended or supplemented
Prospectus as the Underwriter may reasonably request.
(c) To file promptly with the Commission the Prospectus
pursuant to Rule 424(b) of the Rules and Regulations and to file
with the Commission any amendment to the Registration Statement or
the Prospectus or any supplement to the Prospectus that may, in the
reasonable judgment of the Company or the Underwriter, be required
by the Act or requested by the Commission and approved by the
Underwriter (which approval will not be unreasonably withheld).
Futhermore, the Company will make any other required filings
pursuant to Rule 433(d)(1) of the Act within the time required by
such Rule.
(d) Prior to filing with the Commission any amendment to
the Registration Statement or amendment or supplement to the
Prospectus, or to filing any Prospectus pursuant to Rule 424 of the
Rules and Regulations, or to filing any Permitted Free Writing
Prospectus pursuant to Rule 433(d) under the Act, to furnish a copy
thereof to the Underwriter and counsel for the Underwriter and
obtain the consent of the Underwriter to the filing (which consent
will not be unreasonably withheld).
(e) To use its best efforts to cause any required
post-effective amendment to the Registration Statement to become
effective and to advise the Underwriter promptly (i) when any
post-effective amendment to the Registration Statement becomes
effective, (ii) of any request or proposed request by the
Commission for an amendment to the Registration Statement, an
amendment or a supplement to the Prospectus or for any additional
information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or
the initiation or threat of any stop order proceeding, (iv) of
receipt by the Company of any notification with respect to the
suspension of the qualification of the Notes for sale in any
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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 any Permitted Free Writing Prospectus, or
which requires the making of a change in the Registration Statement
or the Prospectus or any Permitted Free Writing Prospectus in order
to make any material statement therein not misleading.
(f) If, at any time when a prospectus relating to the
Notes is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, or if it shall be necessary to amend or supplement the
Registration Statement or the Prospectus to comply with the Act or
the Exchange Act or the rules and regulations of the Commission
under such Acts, the Company promptly will prepare and file with
the Commission, subject to paragraph 5(d), an amendment or
supplement which will correct such statement or omission or an
amendment which will effect such compliance.
(g) If the Commission shall issue a stop order suspending
the effectiveness of the Registration Statement, to make every
reasonable effort to obtain the lifting of that order at the
earliest possible time.
(h) As soon as practicable after the effective date of the
Registration Statement, to make generally available to its security
holders and to deliver to the Underwriter an earnings statement,
conforming with the requirements of Section 11(a) of the Act,
covering a period of at least twelve months beginning after the
effective date of the Registration Statement, provided that the
Company may comply with this paragraph 5(h) by complying with the
safe harbor provisions of Rule 158 of the Rules and Regulations.
(i) For a period of three years from the effective date of
the Registration Statement, to furnish to the Underwriter copies of
all reports to shareholders and all reports, filings and financial
statements furnished by the Company to any securities exchange
pursuant to requirements of or agreements with such exchange or to
the Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder.
(j) To endeavor to qualify the Notes for offer and sale
under the securities laws of such jurisdictions as the Underwriter
may reasonably request, provided that no such qualification shall
be required if as a result thereof the Company would be required to
qualify as a foreign corporation, subject itself to general
taxation or would be made subject to service of general process, in
each case in any jurisdiction in which it is not so qualified or
subject; and to maintain such qualifications in effect so long as
required for the distribution of the Notes and to arrange for the
determination of the legality of the Notes for purchase by
institutional investors.
(k) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the
Company will pay (i) the costs incident to the sale and delivery of
the Notes 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, any
Permitted Free Writing 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, any Permitted
Free Writing Prospectus, the Prospectus, and any amendment or
supplement to the Prospectus; (iv) the costs of filings incident to
securing any required review by the National Association of
Securities Dealers, Inc.; (v) the fees and expenses
9
of qualifying the Notes under the securities laws of the several
jurisdictions as provided in paragraph 5(j) above and of preparing
and printing a Blue Sky Memorandum (including related fees and
expenses of counsel to the Underwriter); (vi) the cost of printing
the Indenture, the Notes and the fees of the Trustee; (vii) the cost
of qualifying the Notes with The Depository Trust Company; (viii) the
fees and expenses of the Company's accountants and counsel; and
(ix) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement. Except as provided
in paragraph 10, the Underwriter shall bear all other costs and
expenses incurred by it in connection with its offering of the
Notes, including the fees and expenses of its counsel, any transfer
taxes on the Notes which it may sell and the expenses of
advertising any offering of the Notes made by the Underwriter.
(l) Until the termination of the offering of the Notes, to
file timely all documents, and any amendments to previously filed
documents, required to be filed by it pursuant to the Exchange Act.
(m) To apply the net proceeds of the Notes as set forth in
the Prospectus.
6. Conditions of Underwriter's Obligations. The obligations of the
---------------------------------------
Underwriter hereunder are subject to the accuracy, when made and on the
Closing Date, of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder, and
to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed to the
extent required; at or before the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall
have been issued, and prior to that time no stop order proceeding
nor any order directed at any document incorporated by reference in
the Prospectus shall have been initiated or, to the knowledge of
the Company, threatened by the Commission, and no challenge shall
have been made to any document incorporated by reference in the
Prospectus; any request of the Commission for inclusion of
additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with; and the
Company shall not have filed with the Commission the Prospectus or
any amendment or supplement to the Registration Statement or the
Prospectus without the consent of the Underwriter. The pricing term
sheet contemplated by paragraph 4(b) hereof, and any other material
required to be filed by the Company pursuant to Rule 433(d) under
the Act, shall have been filed by the Company with the Commission
within the applicable time periods prescribed for such filings by
Rule 433 under the Act.
(b) The Underwriter shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the
Registration Statement or the Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact which, in
the reasonable opinion of the Underwriter or ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, counsel for the Underwriter, is material or omits to state a
fact that in the reasonable opinion of the Underwriter or such
counsel is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement,
the Notes, 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 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriter; and the Company shall have furnished to such counsel
all documents and information that such counsel may reasonably
request to enable them to pass upon such matters.
10
(d) ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ PLLC, as counsel to the Company,
shall have furnished to the Underwriter their opinion, addressed to
the Underwriter and dated the Closing Date, to the effect that:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing and in good standing
under the laws of its jurisdiction of incorporation, is
duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which its
ownership of property or conduct of business requires such
qualification and wherein the failure to be so qualified
would have a material adverse effect on the business of
the Company or such subsidiary, and has all corporate
power and authority necessary to own or hold its
properties and conduct the business in which it is engaged
as described in the Prospectus.
(ii) The Indenture has been duly authorized, qualified
under the Trust Indenture Act, executed and delivered; the
Notes have been duly authorized, executed, authenticated,
issued and delivered; and the Indenture and the Notes
constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general
equity principles;
(iii) All corporate action required to have been taken by
the Company for the due and proper authorization,
issuance, sale and delivery of the Notes has been validly
and sufficiently taken.
(iv) The Indenture and the Notes conform in all material
respects to the statements concerning them in the
Prospectus.
(v) To the knowledge of such counsel, based upon
communications with representatives of the Commission, (A)
the Registration Statement is effective under the Act, and
(B) the Prospectus was timely filed with the Commission as
required.
(vi) To the knowledge of such counsel, (A) no stop order
suspending the effectiveness of the Registration Statement
has been issued, and (B) no proceeding for that purpose is
pending or threatened by the Commission.
(vii) To the knowledge of such counsel, (A) no order
directed to any document incorporated by reference
in the Prospectus has been issued, and (B) no challenge
has been made to the accuracy or adequacy of any such
document (except that no opinion need be expressed
regarding any document incorporated by reference in the
Prospectus from any entity other than the Company).
(viii) The Registration Statement and the Prospectus and
each amendment or supplement, if any, thereto comply as to
form in all material respects with the requirements of the
Act and the Rules and Regulations thereunder and the Trust
Indenture Act and the rules and regulations of the
Commission under such act (except that no opinion need be
expressed as to the Trustee's Statement of Qualification
and as to the financial statements or financial data
contained therein or as to any information in or
incorporated by reference into the Registration Statement,
the Prospectus or any amendment thereto regarding the
Insurer or any affiliate or control entity of the
Insurer).
11
(ix) The statements made in the Prospectus, insofar as
they purport to summarize the provisions of statutes,
legal and governmental proceedings, contracts or other
documents specifically referred to therein are accurate
and fairly present the information called for with respect
thereto by Form S-3 under the Act (except that no opinion
need be expressed as to financial statements or financial
data contained therein or as to any information in or
incorporated by reference into the Prospectus regarding
the Insurer or any affiliate or control entity of the
Insurer).
(x) To such counsel's knowledge, except as disclosed in
the Prospectus, there is no litigation or any governmental
proceeding pending or threatened against the Company or
any of its subsidiaries which could have a material
adverse effect on the Company and its subsidiaries taken
as a whole or which is required to be disclosed in the
Registration Statement or the Prospectus.
(xi) To such counsel's knowledge, there are no contracts
or other documents which are required to be filed as
exhibits to the Registration Statement by the Act or by
the Rules and Regulations which have not been filed as
exhibits to the Registration Statement as permitted by the
Rules and Regulations.
(xii) To such counsel's knowledge, neither the Company nor
any of its subsidiaries is in violation of its corporate
charter or bylaws, or in default under any agreement,
indenture or instrument, the effect of which violation or
default would be material to the Company and its
subsidiaries taken as a whole, or is in violation in any
material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property may
be subject or, except as disclosed in the Prospectus, has
failed to obtain any material license, permit,
certificate, franchise or other governmental authorization
or permit necessary to the ownership of its property or to
the conduct of its business.
(xiii) This Agreement has been duly authorized, executed
and delivered by the Company. The Agreement and the
transactions contemplated by this Agreement will not
conflict with any agreement of the Company or its
subsidiaries known to counsel, will not create a lien or
encumbrance upon any property of the Company or its
subsidiaries, will not violate the articles of
incorporation or bylaws of the Company or its subsidiaries
and will not violate any law or governmental ordinance,
order or regulation, except to the extent that such
conflict, lien, encumbrance or violation would have no
material adverse effect on the Company and its
subsidiaries taken as a whole.
(xiv) No approval or consent of any governmental body,
other than (i) as may be required under the Act or the
Trust Indenture Act of 1939 or in connection or compliance
with the provisions of the securities or "blue sky" laws
of any jurisdiction, and (ii) approval by the Public
Service Commission of Kentucky ("PSC"), which approval by
the PSC has been obtained, is legally required for the
issue and sale of the Notes by the Company or for the
carrying out by the Company of the provisions of this
Agreement.
Such counsel also shall confirm that during the preparation of the
Registration Statement and Prospectus and any Permitted Free
Writing Prospectus, such counsel has participated in conferences
with your representatives and counsel for the Underwriter, and with
officers and representatives of the Company, at which conferences
the contents of the Registration Statement and Prospectus and any
Permitted Free Writing 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
12
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 any Permitted Free Writing
Prospectus or the Prospectus or any amendment or supplement thereto
(other than the financial statements and notes thereto, or any
related schedules therein, or any document from any entity other
than the Company incorporated by reference in the Registration
Statement, any Permitted Free Writing Prospectus or the Prospectus
or any amendment or supplement thereto, 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) ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, as counsel to the
Trustee, shall have furnished to the Underwriter their opinion,
addressed to the Underwriter and dated the Closing Date, to the
effect that:
(i) the Trustee is a national banking association formed
under the laws of the United States and is authorized
thereunder to transact the business of banking;
(ii) the Trustee has the corporate trust power and
authority to execute, deliver and perform its duties under
the Indenture, has duly executed and delivered the
Indenture, and, insofar as the laws governing the trust
powers of the Trustee are concerned and assuming due
authorization, execution and delivery thereof by the
Company, the Indenture constitutes a legal, valid and
binding agreement of the Trustee, enforceable against the
Trustee in accordance with its terms;
(iii) the execution, delivery and performance by the
Trustee of the Indenture do not conflict with or
constitute a breach of the articles of association or
bylaws of the Trustee; and
(iv) no approval, authorization or other action by, or
filing with, any governmental authority of the United
States of America or the State of New York having
jurisdiction over the trust powers of the Trustee is
required in connection with the execution and delivery by
the Trustee of the Indenture or the performance by the
Trustee of its duties thereunder, except such as have been
obtained, taken or made.
(f) Counsel for the Insurer shall have furnished to the
Underwriter his opinion, addressed to the Underwriter and dated the
Closing Date, to the effect that:
(i) The Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the
State of Wisconsin and is licensed and authorized to issue
the Insurance Policy and to perform its obligations under
the Insurance Policy under the laws of the State of
Wisconsin.
(ii) The Insurance Policy has been duly executed and is a
valid and binding obligation of the Insurer enforceable in
accordance with its terms.
(iii) The Insurance Policy is exempt from the registration
requirements of the Act.
(iv) The information in the Prospectus under the heading
"The Policy and the Insurer" insofar as such statements
constitute a description of the Insurance Policy,
accurately summarize the Insurance Policy.
13
(g) On the Closing Date, there shall have been furnished
to you a certificate, dated such date, from the Company, signed on
behalf of the Company by the President and Chief Executive Officer
and the Vice President - Finance, Secretary and Treasurer, stating
that to the knowledge of the officers signing such certificate:
(i) The representations, warranties and agreements of the
Company in paragraph 2 are true and correct as of such
date; the Company has complied with all its agreements
contained herein; and the conditions set forth in
paragraph 6(a) have been fulfilled;
(ii) Neither the Registration Statement, as of its
effective date, nor the Prospectus, as of its date, nor
any Permitted Free Writing Prospectus 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 (except
that no opinion need be expressed regarding any
information in or incorporated by reference into the
Registration Statement or prospectus regarding the Insurer
or any affiliate or control entity of the Insurer); and
(iii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings
for that purpose have been instituted or are pending or
threatened, under the Act.
(h) On the date of this Agreement and on the Closing Date,
Deloitte & Touche LLP, shall have furnished to you letters dated
such dates substantially in the forms heretofore approved by you.
(i) 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 6(h) which makes it impractical or
inadvisable in the reasonable judgment of the Underwriter to
proceed with the public offering or delivery of the Notes as
contemplated by the Prospectus.
(j) The Underwriter shall have received from ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriter, such opinion or
opinions, dated the Closing Date, with respect to the issuance and
sale of the Notes, the Indenture, the Registration Statement, the
Prospectus, and other related matters as the Underwriter may
reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(k) On or prior to the Closing Date, there shall have been
furnished to you satisfactory evidence that the Insurance Policy
has been issued by the Insurer.
(l) On the Closing Date, Insurer shall have furnished to
the Underwriter and the Company a certificate of a duly authorized
officer of Insurer to the effect that the information set forth in
or incorporated by reference in the Prospectus under the caption
"THE POLICY AND THE INSURER" and in Appendix B thereto does not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statement therein, in light of the circumstances
under which they were made, not misleading.
14
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to the Underwriter and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriter.
If any of the conditions specified in this paragraph 6 shall not
have been fulfilled when and as provided in this Agreement, or if any of the
opinions or certificates mentioned above or elsewhere in this Agreement
shall not be in all material respects reasonably satisfactory in form and
substance to the Underwriter and its counsel, this Agreement and all
obligations of the Underwriter hereunder may be canceled at, or at any time
prior to, the Closing Date by the Underwriter.
7. Indemnification and Contribution.
--------------------------------
(a) The Company shall indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter
within the meaning of the Act from and against any loss, claim,
damage or liability, joint or several, and any action in respect
thereof, to which the Underwriter or any such controlling person
may become subject, under the Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based
upon, any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the
Registration Statement, any Permitted Free Writing Prospectus, the
Prospectus, or the Registration Statement or Prospectus as amended
or supplemented, or arises out of, or is based upon, the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and shall reimburse the Underwriter and each such
controlling person for any legal and other expenses reasonably
incurred by the Underwriter or such controlling person for any
legal and other expenses reasonably incurred by the Underwriter or
such controlling person in investigating or defending or preparing
to defend against any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus or in the Registration
Statement or any Permitted Free Writing Prospectus or the
Prospectus or any amendment or supplement thereto (i) regarding the
Insurer or any affiliate or control entity of the Insurer or (ii)
in reliance upon and in conformity with written information
furnished to the Company by the Underwriter specifically for
inclusion therein; and provided further that as to any Preliminary
Prospectus this indemnity agreement shall not inure to the benefit
of the Underwriter or any person controlling the Underwriter on
account of any loss, claim, damage, liability or action arising
from the sale of Notes to any person by the Underwriter if the
Underwriter failed to send or give a copy of any Prospectus, as the
same may be amended or supplemented, to that person within the time
required by the Act, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact in such Preliminary Prospectus was corrected
in such Prospectus, unless such failure resulted from
non-compliance by the Company with paragraph 5(b) hereof. The
foregoing indemnity is in addition to any liability which the
Company may otherwise have to the Underwriter or any controlling
person of the Underwriter.
(b) The Underwriter agrees to indemnify and hold harmless
the Company, its directors and officers who signed the Registration
Statement and any person who controls the Company within the
meaning of the Act from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to
which the Company or any such director, officer or controlling
person may become subject, under the Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the
Registration Statement, any Permitted Free Writing Prospectus, the
Prospectus or the Registration Statement or Prospectus
15
as amended or supplemented, or is based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by the Underwriter
specifically for inclusion therein, and shall reimburse the Company
for any legal and other expenses reasonably incurred by the Company
or any such director, officer or controlling person in
investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action. The foregoing indemnity
agreement is in addition to any liability which the Underwriter may
otherwise have to the Company.
(c) Promptly after receipt by an indemnified party under
this paragraph 7 of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof
is to be made against the indemnifying party under this paragraph
7, notify the indemnifying party in writing of the claim or the
commencement of that action, provided that the failure to notify
the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this
paragraph 7. If any such claim or action shall be brought against
an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate
therein, and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified
party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there
may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available
to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action
on behalf of such indemnified party or parties. After notice from
the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this paragraph 7
for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense other than
reasonable costs of investigation, unless (i) the indemnified party
shall have employed such counsel in connection with the assumption
of legal defenses in accordance with the proviso to the next
preceding sentence, (ii) the indemnified party shall have
reasonably concluded that there may be a conflict of interest
between the indemnifying party and the indemnified party in the
conduct of the defense of such action (in which case the
indemnifying party shall not have the right to direct the defense
of such action on behalf of the indemnified party), (iii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the
action or (iv) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the
indemnifying party.
(d) If the indemnification provided for in this paragraph
7 shall for any reason be unavailable to an indemnified party under
paragraph 7(a) or 7(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriter on the other from
the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriter on the
other with respect to the statements or omissions which resulted in
such loss, claim, damage or liability,
16
or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriter on the other hand with
respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes
(before deducting expenses) received by the Company bears to the
total underwriting discounts and commissions received by the
Underwriter with respect to such offering, in each case as set
forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriter, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company and the Underwriter agree that it would not be just and
equitable if contributions pursuant to this paragraph 7(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 7(d) shall be deemed to include, for purposes of this
paragraph 7(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 7(d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total
price at which the Notes underwritten by it and distributed to the
public was offered to the public exceeds the amount of any damages
which the Underwriter has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The Underwriter confirms that the statements with
respect to the public offering of the Notes set forth on the cover
page of, and under the caption "Underwriting" in, the Prospectus
are correct and were furnished in writing to the Company by the
Underwriter for inclusion in the Registration Statement and the
Prospectus.
(f) The agreements contained in this paragraph 7 and the
representations, warranties and agreements of the Company contained
in paragraphs 2, 4 and 5 shall survive the delivery of the Notes
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.
8. Termination by the Underwriter. The obligations of the
------------------------------
Underwriter hereunder may be terminated by the Underwriter, in its absolute
discretion, by notice given to and received by the Company prior to delivery
of and payment for the Notes, if prior to that time (a)(i) the Company shall
have failed, refused or been unable to perform any agreement on its part to
be performed hereunder, (ii) any other condition to the Underwriter's
obligations hereunder is not fulfilled, (iii) the Company sustains a loss,
whether or not insured, by reason of fire, flood, accident or other
calamity, which, in the reasonable opinion of the Underwriter, substantially
affects the value of the properties of the Company or which materially
interferes with the operation of the business of the Company, (iv) trading
generally shall have been suspended or materially limited on or by the New
York Stock Exchange, American Stock Exchange or the Nasdaq National Market
or trading in any securities of the Company shall have been suspended by any
securities exchange or in the over the counter market, (v) a banking
moratorium is declared by the United States, or by New York, Missouri or
Kentucky state authorities, (vi) an outbreak of major hostilities or other
national or international calamity occurs, (vii) any action is taken by any
government in respect of its monetary affairs which, in the reasonable
opinion of the Underwriter, has a material adverse effect on the United
States securities markets, or (viii) there is a pending or threatened
material legal or governmental proceeding against the Company, other than
proceedings described in the
17
Registration Statement or amendments or supplements thereto delivered to the
Underwriter prior to the execution of this Agreement, which in the
reasonable opinion of the Underwriter has a material adverse effect upon the
Company, and (b) with respect to the events specified in clauses (a)(i)
through (a)(iii) hereof, such event singly or together with other such
events makes it, in your reasonable judgment, impractical to market the
Notes on the terms and in the manner contemplated in the Prospectus.
9. Termination by the Company. The obligation of the Company to
--------------------------
deliver the Notes 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(r) and paragraph 6(d)(xiv) hereof
shall be in full force and effect substantially in the form in which
originally entered; the Indenture shall be qualified under the Trust
Indenture Act as and to the extent required by such Act; and no stop order
suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for that purpose shall then be pending before, or
threatened by, the Commission.
In case any of the conditions specified above in this paragraph 9
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 5(k) and paragraph 10 hereof.
10. Expenses Following Termination. If the sale of Notes provided
------------------------------
for herein is not consummated because of any refusal, inability or failure
on the part of the Company to comply with any of the terms or to fulfill any
of the conditions of this Agreement, or if for any reason the Company shall
be unable to perform all its obligations under this Agreement, the Company
shall not be liable to the Underwriter for damages arising out of the
transactions covered by this Agreement, provided however that (i) the
Company shall remain liable to the extent provided in paragraphs 5(k), 7(a)
and 7(d) hereof and (ii) except where termination occurs pursuant to Section
9 hereof, the Company shall pay the out-of-pocket expenses incurred by the
Underwriter in contemplation of the performance by it of its obligations
hereunder, including the fees and disbursements of its counsel and travel,
postage, telegraph and telephone expenses, up to a maximum amount of
$60,000.
11. Notices. The Company shall be entitled to act and rely upon any
-------
request, consent, notice or agreement given or made by the Underwriter. Any
notice to the Underwriter shall be sufficient if given in writing or by
telecopy addressed to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., L.P., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇; any notice to the
Company shall be sufficient if given in writing or by telecopy addressed to
the Company at: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
12. Parties. This Agreement shall inure to the benefit of and be
-------
binding upon the Underwriter, the Company and their respective successors.
This Agreement and the terms and provisions hereof are for the sole benefit
of only those persons, except that (a) the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall
also be deemed to be for the benefit of the person or persons, if any, who
control the Underwriter within the meaning of Section 15 of the Act, and (b)
the indemnities and agreements of the Underwriter contained in paragraph 7
of this Agreement shall be deemed to be for the benefit of directors of the
Company, officers of the Company who have signed the Registration Statement
and any person controlling the Company. Nothing in this Agreement is
intended or shall be construed to give any person other than the persons
referred to in this paragraph any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
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13. Defined Terms. For purposes of this Agreement, "business day"
-------------
means any day on which the New York Stock Exchange is open for trading.
14. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and assigns
and the officers and directors and controlling persons referred to in
paragraph 7 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 Notes from the
Underwriter.
15. 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.
16. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Missouri.
[The Remainder of This Page Left Intentionally Blank.]
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If the foregoing correctly sets forth the agreement between the
Company and the Underwriter, please indicate your acceptance in the space
provided for that purpose.
Very truly yours,
DELTA NATURAL GAS COMPANY, INC.
By:
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, President & Chief Executive Officer
Accepted:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO., L.P.
By:
-----------------------------------------
[ ]
Principal
20
SCHEDULE I
PRICING TERM SHEET
(To Prospectus dated [ ], 2006)
ISSUER: Delta Natural Gas Company, Inc.
SECURITY: Insured Quarterly Notes
MATURITY DATE: April 1, 2021
RATING: AAA by Standard & Poor's
COUPON: [ ]%, paid quarterly
REDEMPTION TERMS: Callable in whole or in part anytime on
or after April 1, 2009, at par (100%)
ESTATE FEATURE: Begins upon issuance of the Notes
PROCEEDS TO ISSUER: [ ]% of principal amount ($[ ] per note)
EXPECTED SETTLEMENT DATE: [ ], 2006
UNDERWRITER: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., L.P.
The issuer has filed a registration statement (including a prospectus) with
the SEC for the offering to which this communication relates. Before you
invest, you should read the prospectus in that registration statement and
other documents the issuer has filed with the SEC for more complete
information about the issuer and this offering. You may get these documents
for free by visiting ▇▇▇▇▇ on the SEC Web site at ▇▇▇.▇▇▇.▇▇▇.
Alternatively, the issuer, any underwriter or any dealer participating in
the offering will arrange to send you the prospectus if you request it by
calling toll-free at [ ].
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