2,100,000 SHARES GAS NATURAL INC. COMMON STOCK UNDERWRITING AGREEMENT
Exhibit 1.1
2,100,000 SHARES
COMMON STOCK
Philadelphia, Pennsylvania
November __, 2010
November __, 2010
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
As Representative of the Several Underwriters
Named in Schedule I hereto
c/o Janney ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
Named in Schedule I hereto
c/o Janney ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Gas Natural Inc., an Ohio corporation (the “Company”), proposes, subject to the terms and
conditions stated herein, to sell an aggregate of 1,760,000 shares of the Company’s Common Stock,
$0.15 par value per share (the “Common Stock”), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Trustee of the ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ Trust under Restated Trust Agreement dated January 13, 1995 (“▇▇▇▇▇▇▇”), proposes to sell
300,000 shares of Common Stock and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (“▇▇▇▇▇” together with ▇▇▇▇▇▇▇ the “Selling
Shareholders” and each individually a “Selling Shareholder”) proposes to sell 40,000 shares of
Common Stock, to the several underwriters named in Schedule I hereto (the “Underwriters”)
for whom ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC is serving as Representative (the “Representative”). The
Common Stock to be sold to the Underwriters by the Company and the Selling Shareholders is referred
to herein as the “Firm Shares.” The respective amounts of the Firm Shares to be purchased by the
several Underwriters are set forth opposite their names in
Schedule I hereto. The Firm
Shares shall be offered to the public at a public offering price of $[___] per Firm Share (the
“Offering Price”).
In order to cover over-allotments in the sale of the Firm Shares, the Underwriters may, at the
Underwriters’ election and subject to the terms and conditions stated herein, purchase for the
Underwriters’ own accounts up to 315,000 additional shares of Common Stock from the
Company. Such 315,000 additional shares of Common Stock are referred to herein as the
“Optional Shares.” If any Optional Shares are purchased, the Optional Shares shall be purchased
for offering to the public at the Offering Price and in accordance with the terms and conditions
set forth herein. The Firm Shares and the Optional Shares are referred to collectively herein as
the “Shares.”
In consideration of the mutual agreements contained in this Underwriting Agreement (the
“Agreement”), the Company, the Selling Shareholder, and the Underwriters, intending to be legally
bound, hereby confirm their agreement as follows:
1. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, the Underwriters that:
(a) The Company has prepared, in accordance with the requirements of the Securities Act of
1933, as amended (the “Act”), and the rules and regulations (the “Regulations”) of the Securities
and Exchange Commission (the “SEC”) thereunder and has filed with the SEC a registration statement
on Form S-1 (File No. 333-167859) and one or more amendments thereto and a prospectus for the
purpose of registering the Shares under the Act. The term “Registration Statement” as used herein
means the registration statement (including all exhibits and information incorporated by reference
therein) as amended to the date of this Agreement, and includes information (if any) contained in a
form of prospectus or prospectus supplement that is deemed retroactively to be part of the
Registration Statement, pursuant to Rule 430B under the Act, to be part of the registration
statement as of the time specified in Rule 430B. If it is contemplated, at the time this Agreement
is executed, that a post-effective amendment to the Registration Statement will be filed and must
be declared effective before the offering of the Shares may commence, the term “Registration
Statement” as used herein shall mean the Registration Statement as amended by such post-effective
amendment. If the Company has filed, or files on or after the date of this Agreement, a
registration statement to register Common Stock pursuant to Rule 462(b) under the Act (the “Rule
462(b) Registration Statement”), then any reference herein to the term “Registration Statement”
shall be deemed to include such Rule 462(b) Registration Statement. The term “Base Prospectus”
shall mean the base prospectus filed as part of the Registration Statement in the form in which it
has most recently been filed with the SEC on or prior to the date of this Agreement. The term
“Preliminary Prospectus” shall mean any preliminary prospectus supplement relating to the Shares,
together with the Base Prospectus, and filed with the SEC pursuant to Rule 424(a) of the
Regulations. The term “Statutory Prospectus” shall mean the Preliminary Prospectus, as amended or
supplemented, immediately prior to the Initial Sale Time (as defined below), including any document
incorporated by reference therein. The term “Prospectus” shall mean the final prospectus
supplement relating to the Shares, together with the Base Prospectus, including any document
incorporated by reference therein, that is first filed pursuant to Rule 424(b) after the effective
time of the Registration Statement (the “Effective Time”). The term “Issuer Free Writing
Prospectus” shall have the meaning ascribed to it in Rule 433 of the Regulations relating to the
Shares, in the form filed or required to be filed with the SEC or, if not required to be filed, in
the form retained in the Company’s records pursuant to Rule 433(g) of the Regulations. The term
“Disclosure Package” shall mean (i) the Statutory Prospectus, (ii) the Issuer Free Writing
Prospectus, if any, identified in Schedule II hereto, and (iii) any other free writing
prospectus defined in Rule 405 of the Regulations that is required to be filed by the Company with
the SEC or retained by the
Company under Rule 433 of the Regulations and that all parties hereto expressly agree to treat
as part of the Disclosure Package (the “Other Free Writing Prospectus”). For purposes of this
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Agreement, the “Initial Sale Time” shall mean 5:00 p.m. (Eastern Time) on the date of this
Agreement. All references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, the Base Prospectus, a Preliminary Prospectus, the Statutory Prospectus,
the Prospectus, the Issuer Free Writing Prospectus, the Other Free Writing Prospectus or any
amendments or supplements to any of the foregoing, shall include any copy thereof filed with the
SEC pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“▇▇▇▇▇”).
(b) The Registration Statement has become effective under the Act, and the SEC has not
issued any stop order suspending the effectiveness of the Registration Statement or preventing or
suspending the use of the Statutory Prospectus or the Prospectus, nor has the SEC instituted or, to
the Company’s knowledge, threatened to institute proceedings with respect to such an order. No
stop order suspending the sale of the Shares in any jurisdiction in which the Underwriter may offer
the Shares has been issued, and no proceedings for that purpose have been instituted or, to the
Company’s knowledge, threatened. The Company has complied in all material respects with all
requests of the SEC, or requests of which the Company has been advised of any state or foreign
securities commission in a state or foreign jurisdiction in which the Underwriter may offer the
Shares, for additional information to be included in the Registration Statement, the Disclosure
Package, or the Prospectus.
(c) (i) The Registration Statement complied at the Effective Time and, as amended or
supplemented, complies on the date hereof and will comply on the Closing Date and any Option
Closing Date, in all material respects, with the requirements of the Act and the Regulations, (ii)
the Registration Statement, at the Effective Time, 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 not misleading, (iii) the Disclosure Package, at the time it was filed and
as of the Initial Sale Time, complied in all material respects with the requirements of the Act and
the Regulations, (iv) the Disclosure Package at the time it was filed and as of the Initial Sale
Time, did not contain any 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, (v) the Prospectus, at the time it is filed and, as amended or supplemented,
as of the Closing Date and any Option Closing Date, will comply in all material respects with the
requirements of the Act and the Regulations, (vi) the Prospectus, at the time it is filed and, as
amended or supplemented, as of the Closing Date and any Option Closing Date, will not contain any
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;
provided, however that the representations and warranties set forth in this section
do not apply to omissions from or statements in the Registration Statement, the Disclosure Package
or the Prospectus based upon and in conformity with written information furnished to the Company by
any Underwriter through the Representative specifically for use therein, it being understood and
agreed that the only information furnished by any Underwriter for use in the Registration
Statement, the Disclosure Package and the Prospectus is the information as described in Section 14
of this Agreement, and (vii) the statistical and market-related data included or incorporated by
reference in the Registration Statement, the Disclosure Package and the Prospectus are based on or
derived from sources that the Company believes to
be reliable and accurate or represent the Company’s good faith estimate that are made on the
basis of data derived from such sources.
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(d) As of the Initial Sale Time, the Disclosure Package complied in all material respects
with the Act and the Regulations and, if filed by electronic transmission pursuant to ▇▇▇▇▇ (except
as may be permitted by Regulation S-T under the Act), was identical to the copy thereof delivered
to the Underwriters for use in connection with the offer and sale of the Shares. The Disclosure
Package, at the Initial Sale Time, did not, and at the Closing Date will 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 were
made, not misleading. The preceding sentence does not apply to omissions from or statements in the
Disclosure Package based upon and in conformity with written information furnished to the Company
by any Underwriter through the Representative specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter for use in the Disclosure
Package is the information as described in Section 14 of this Agreement.
(e) The Company (including its agents and representatives, other than the Underwriters in
their capacity as such) has not used, authorized, approved or referred to and will not use,
authorize, approve or refer to any Issuer Free Writing Prospectus, other than the documents listed
on Schedule II hereto. Each such Issuer Free Writing Prospectus complied when issued in
all material respects with the Act and the Regulations and has been filed in accordance with the
Act and the Regulations (to the extent required thereby). Each Issuer Free Writing Prospectus, as
of its issue date and at all subsequent times through the completion of the public offer and sale
of the Shares or until any earlier date of which the Company notified or notifies the
Representative as described in the next sentence, did not, does not and will not include any
information that, in any material respect, conflicted, conflicts or will conflict with the
information contained in the Registration Statement. If at any time following issuance of an
Issuer Free Writing Prospectus, there occurred or occurs an event or development as a result of
which such Issuer Free Writing Prospectus conflicted or would conflict with the information then
contained in the Registration Statement or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at that subsequent time, not
misleading, (i) the Company has promptly notified or will promptly notify the Representative and
(ii) the Company has promptly amended or will promptly amend or supplement such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission. The foregoing
sentences do not apply to conflicts with, omissions from or statements in any Issuer Free Writing
Prospectus based upon and in conformity with written information furnished to the Company by any
Underwriter through the Representative specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter through the Representative for use in
any Issuer Free Writing Prospectus is the information as set forth in Section 14 of this Agreement.
(f) The Company has not distributed and will not distribute, prior to the later of the
last Option Closing Date (as defined below) and the completion of the Underwriters’ distribution of
the Shares, any offering material in connection with the offering and sale of the Shares other than
the Registration Statement, the Disclosure Package or the Prospectus.
(g) The documents incorporated by reference into the Registration Statement, the
Disclosure Package and the Prospectus pursuant to Item 12 of Form S-1 under the Act or
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hereafter
filed with the SEC, at the time they were filed with the SEC, complied in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
with the rules and regulations promulgated under or pursuant to the Exchange Act and when read
together with the information in the Disclosure Package and the Prospectus, as the case may be, as
of the Initial Sale Time, date of the Prospectus, the Closing Date, and any Option Closing Date, as
applicable, did not, and will not, contain any untrue statement of material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading.
(h) There are no legal or governmental proceedings pending or, to the knowledge of the
Company, threatened to which the Company or any of its Subsidiaries (as defined below) is a party,
or to which any of their respective properties or assets are subject, that are required to be
described in the Registration Statement, the Disclosure Package or the Prospectus that are not so
described, except for such proceedings that, individually or in the aggregate, would not reasonably
be expected to have a material adverse effect on the general affairs, properties, assets,
operations, condition (financial or otherwise), results of operations, shareholders’ equity, or
business (collectively, the “Business Conditions”) of the Company and the Subsidiaries taken as a
whole (a “Material Adverse Effect”). There are no statutes or regulations that are required to be
described in the Registration Statement, the Disclosure Package or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as required, except as would
not reasonably be expected to have a Material Adverse Effect. References to “material” or
“materiality” or “material adverse change” as applicable to the Company or any of its Subsidiaries
shall mean material to the Business Conditions of the Company and the Subsidiaries taken as a
whole.
(i) The Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio, and has all necessary power and authority, to own or lease and
operate its properties and to conduct its current business as described in the Registration
Statement, the Disclosure Package and the Prospectus, and to execute, deliver and perform this
Agreement. Each of Bangor Gas Company, LLC, Energy West Resources, Inc., Energy West Development,
Inc., Frontier Utilities of North Carolina, Inc., Frontier Natural Gas, LLC, Great Plains Natural
Gas Company, Lightning Pipeline Company, Inc., Northeast Ohio Natural Gas Corp., ▇▇▇▇▇▇ Natural Gas
Company, Penobscot Natural Gas Company, Inc., and Energy West, Incorporated, shall herein be
referred to individually as a “Subsidiary” and collectively as the “Subsidiaries.” Each Subsidiary
has been duly incorporated or formed and is a corporation or limited liability company validly
existing and in good standing under the laws of the jurisdiction of its incorporation or formation,
with all necessary power and authority, corporate and otherwise, and all required licenses,
permits, certifications, registrations, approvals, consents and franchises to own or lease and
operate its properties and to conduct its current business as described in the Registration
Statement, the Disclosure Package and the Prospectus. The Company and its Subsidiaries are duly
qualified to do business as foreign entities, and are in good standing, in all jurisdictions in
which such qualification is required, except where the failure to so qualify or to be in good
standing would not have a Material Adverse Effect.
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(j) All of 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, directly or
indirectly, by the Company, free and clear of all liens, encumbrances and security interests; 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 each
of the Subsidiaries or securities convertible into or exchangeable for capital stock of, or other
ownership interests in any of the Subsidiaries are outstanding except as disclosed in the
Registration Statement, the Disclosure Package or the Prospectus. Except for shares in the
Subsidiaries, except as described in the Registration Statement, the Disclosure Package or the
Prospectus, or except for its subsidiaries ▇▇▇▇▇▇▇▇ Gas Corp., Cut Bank Gas Company, Energy West
Propane, Inc., Kidren Pipeline LLC and Energy West Properties LLC, neither the Company nor the
Subsidiaries owns any stock or other interest whatsoever, whether equity or debt, in any
corporation, limited liability company, partnership or other entity.
(k) This Agreement has been duly authorized, executed and delivered by the Company and
constitutes its legal, valid and binding obligation, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency or other similar
laws relating to or affecting the enforcement of creditors’ rights generally and subject to
applicability of general principles of equity and except, as to this Agreement, as rights to
indemnity and contribution may be limited by federal and state securities laws or principles of
public policy.
(l) The execution, delivery and performance of this Agreement and the transactions
contemplated herein, do not and will not, with or without the giving of notice or the lapse of
time, or both, (i) conflict with any term or provision of the Company’s or the Subsidiaries’
respective Certificate or Articles of Incorporation, as the case may be, Code of Regulations or
Bylaws, as the case may be, or similar governing documents; (ii) result in a breach of, constitute
a default under, result in the termination or modification of, result in the creation or imposition
of any lien, security interest, charge or encumbrance upon any of the properties of the Company or
the Subsidiaries or require any payment by the Company or any of the Subsidiaries or impose any
liability on the Company or any of the Subsidiaries pursuant to, any contract, indenture, mortgage,
deed of trust, commitment or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of their respective properties are bound or affected other
than this Agreement; (iii) assuming compliance with Blue Sky laws and the rules of the Financial
Industry Regulatory Authority (“FINRA”) applicable to the offer and sale of the Shares, violate any
law, rule, regulation, judgment, order or decree of any government or governmental agency,
instrumentality or court, domestic or foreign, having jurisdiction over the Company or the
Subsidiaries or any of their respective properties or businesses; or (iv) result in a breach,
termination or lapse of the Company’s or the Subsidiaries’ corporate power and authority to own or
lease and operate their respective properties and conduct their respective businesses, except, in
the cases of clauses (ii), (iii) and (iv) above, as would not reasonably be expected to have a
Material Adverse Effect.
(m) At the date or dates indicated in the Registration Statement, the Disclosure Package
or the Prospectus, the Company had or will have the capitalization set forth in the Registration
Statement, the Disclosure Package and the Prospectus under the caption “Capitalization” and will
have, as of the issuance of the Firm Shares on the Closing Date, the as-
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adjusted capitalization set forth therein as of the date indicated in the Registration
Statement, the Disclosure Package and the Prospectus. At the Effective Time and on the Closing
Date and any Option Closing Date, there will be no options or warrants or other outstanding rights
to purchase, agreements or obligations to issue or agreements or other rights to convert or
exchange any obligation or security into, capital stock of the Company or securities convertible
into or exchangeable for capital stock of the Company, except as disclosed in the Registration
Statement, the Disclosure Package and the Prospectus or the grant of options, restricted stock or
restricted stock units after the date of the Registration Statement, the Disclosure Package or the
Prospectus under stock incentive plans or other stock plans of the Company and the sale of Common
Stock pursuant to the Company’s employee stock purchase plan and its common stock purchase and
dividend reinvestment plan. The information in the Registration Statement, Disclosure Package and
the Prospectus insofar as it relates to all outstanding options and restricted stock units and
other rights to acquire securities of the Company as of the dates referred to in the Registration
Statement, the Disclosure Package and the Prospectus, is true and correct in all material respects.
(n) The currently outstanding shares of the Company’s capital stock have been duly
authorized and are validly issued, fully paid and non-assessable, and none of such outstanding
shares of the Company’s capital stock has been issued in violation of any preemptive rights or
similar rights of any security holder of the Company. The holders of the outstanding shares of the
Company’s capital stock are not subject to personal liability solely by reason of being such
holders. All previous offers and sales of the outstanding shares of the Company’s capital stock,
whether described in the Registration Statement, Disclosure Package, the Prospectus or otherwise,
were made in conformity with applicable federal, state and foreign securities laws. The authorized
capital stock of the Company, including, without limitation, the outstanding Common Stock, the
Shares being issued, and the outstanding options to purchase shares of Common Stock conform in all
material respects with the descriptions thereof in the Registration Statement, the Disclosure
Package and the Prospectus, and such descriptions conform in all material respects with the
instruments defining the same. The description of the Company’s stock plans, equity compensation
plans and other equity arrangements, and the rights granted thereunder, set forth in the
Registration Statement, the Disclosure Package and the Prospectus accurately and fairly presents,
in all material respects, the information required to be shown with respect to such plans,
arrangements and rights.
(o) There are no contracts, agreements or understandings between the Company or any of its
Subsidiaries and any person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities being registered pursuant to
any other registration statement filed by the Company under the Act.
(p) The Shares to be sold by the Company have been duly and validly authorized, and, when
issued and delivered against payment therefor as contemplated by this Agreement, the Shares to be
sold by the Company will be validly issued, fully paid and non-assessable and the holders thereof
will not be subject to personal liability solely by reason of being such holders. The certificates
representing the Shares to be sold by the Company are in proper legal form under, and conform in
all material respects to the requirements of the Ohio
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Revised Code. Neither the filing of the Registration Statement nor the offering or sale of
Shares by the Company as contemplated by this Agreement gives any security holder of the Company,
except for the Selling Shareholders, any rights for or relating to the registration of any Common
Stock or any other capital stock of the Company or any other rights to convert or have redeemed or
otherwise receive anything of value with respect to any other security of the Company.
(q) No consent, approval, authorization, order, registration, license or permit of, or
filing or registration with, any court, government, governmental agency, instrumentality or other
regulatory body or official is required for the valid and legal execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions contemplated hereby,
except (i) such as may be required for the registration of the Shares under the Act and the listing
of the Shares on the NYSE Amex Equities, (ii) filings under the Exchange Act, or (iii) filings
required for compliance with the applicable state securities or Blue Sky laws or the bylaws, rules
and other pronouncements of FINRA.
(r) The Common Stock is registered pursuant to Section 12(b) of the Exchange Act. The
issued and outstanding shares of Common Stock are listed on the NYSE Amex Equities. Neither the
Company nor, to the Company’s knowledge, any other person has taken any action designed to cause,
or likely to result in, the termination of the registration of the Common Stock under the Exchange
Act. The Company has not received any notification that the SEC, the NYSE Amex Equities or FINRA
is contemplating terminating such registration or inclusion. References to “knowledge” as
applicable to the Company or any of its Subsidiaries shall mean the actual knowledge of the
executive officers of the Company or its Subsidiaries who are named in the Prospectus.
(s) The statements in the Registration Statement, the Disclosure Package and the
Prospectus, insofar as they are descriptions of or references to contracts, agreements or other
documents, are accurate in all material respects and present or summarize fairly, in all material
respects, the information required to be disclosed under the Act or the Regulations, and there are
no contracts, agreements or other documents, instruments or transactions of any character required
to be described or referred to in the Registration Statement, the Disclosure Package or the
Prospectus or to be filed as exhibits to the Registration Statement that have not been so
described, referred to or filed, as required.
(t) Each contract or other instrument (however characterized or described) to which the
Company or any of the Subsidiaries is a party or by which any of their respective properties or
businesses is bound or affected and which is material to the conduct of the business of the Company
or the Subsidiaries, has been duly and validly executed by the Company or the Subsidiaries, as
applicable and, to the knowledge of the Company, by the other parties thereto. Each such contract
or other instrument is in full force and effect and is enforceable against the parties thereto in
accordance with its terms, except (i) as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors’ rights generally and subject to
applicability of general principles of equity or (ii) where such unenforceability or effectiveness
would not have a Material Adverse Effect. Neither the Company nor any of the Subsidiaries is, and
to the knowledge of the Company, no other party thereto is, in default under any such contract or
other instrument, and no event has occurred that, with the lapse of time or the giving of notice,
or both, would constitute a default under any such
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contract or other instrument, except where such event or default would not have a Material
Adverse Effect. All necessary consents under such contracts or other instruments to the disclosure
in the Registration Statement, Disclosure Package and the Prospectus with respect thereto have been
obtained.
(u) The consolidated financial statements of the Company (including the notes thereto)
filed as part of, or incorporated by reference in, the Prospectus and the Registration Statement,
the Disclosure Package and the Prospectus present fairly, in all material respects, the financial
position of the Company as of the respective dates thereof, and the results of operations and cash
flows of the Company for the periods indicated therein, and have been prepared in conformity with
generally accepted accounting principles of the United States. The supporting notes included in the
Registration Statement, the Disclosure Package and the Prospectus fairly state in all material
respects the information required to be stated therein in relation to the financial statements
taken as a whole. The information included in the Registration Statement, the Disclosure Package
and the Prospectus under the captions “Prospectus Summary — Summary Consolidated Financial Data,”
“Use of Proceeds,” and “Capitalization” presents fairly in all material respects the information
shown therein and has been compiled on a basis consistent with that of the financial statements
incorporated by reference in the Registration Statement, the Disclosure Package and the Prospectus.
The unaudited pro forma adjustments to financial information in the Registration Statement, the
Disclosure Package and the Prospectus have been properly applied in all material respects to the
historical amounts in the compilation of that information to reflect the sale by the Company of the
Shares offered thereby at an assumed offering or actual price set forth in the Registration
Statement, the Disclosure Package or the Prospectus, as the case may be, and the anticipated
application of the estimated net proceeds therefrom substantially in accordance with the
description set forth under the caption “Use of Proceeds” in the Prospectus.
(v) Since the respective dates as of which information is given, or incorporated by
reference, in the Registration Statement, the Disclosure Package and the Prospectus, except as
otherwise stated therein, there has not been (i) any Material Adverse Effect; (ii) any material
adverse change, loss, reduction, termination or non-renewal of any material contract to which the
Company or any of its Subsidiaries is a party; (iii) any transaction entered into by the Company or
any of the Subsidiaries not in the ordinary course of its business that is material to the Company
or any Subsidiary; (iv) any dividend or distribution of any kind declared, paid or made by the
Company on its capital stock, except for and to the extent described in the Registration Statement,
the Disclosure Package and the Prospectus; (v) any liabilities or obligations, direct or indirect,
incurred by the Company or any of the Subsidiaries that are material to the Company or any of the
Subsidiaries; (vi) any change in the capitalization of the Company or any of the Subsidiaries,
except for issuances pursuant to the Company’s employee stock option or equity compensation plans
or purchases by the Company’s dividend reinvestment plan; or (vii) any change in the indebtedness
of the Company or any of the Subsidiaries that is material to the Company or any Subsidiary.
Neither the Company nor any of the Subsidiaries has any contingent liabilities or obligations that
are material and that are not expressly disclosed in the Registration Statement, the Disclosure
Package and the Prospectus.
(w) Neither the Company nor, to the Company’s knowledge, any of its officers, directors or
affiliates has (i) taken, nor shall the Company or such persons take, directly
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or indirectly, any action designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of Common Stock, or (ii) since the filing of
the Prospectus (A) sold, bid for, purchased or paid anyone any compensation for soliciting
purchases of, the Shares or (B) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company, other than payments to the Underwriters as
provided in this Agreement.
(x) The Company and the Subsidiaries have filed with the appropriate federal, state and
local governmental agencies, and all foreign countries and political subdivisions thereof, all
material tax returns that are required to be filed or have duly obtained extensions of time for the
filing thereof and have paid all material taxes shown on such returns or otherwise due and all
material assessments received by them to the extent that the same have become due. Neither the
Company nor any of the Subsidiaries has executed or filed with any taxing authority, foreign or
domestic, any agreement extending the period for assessment or collection of any income or other
tax and none of them is a party to any pending action or proceeding by any foreign or domestic
governmental agency for the assessment or collection of taxes, and no claims for assessment or
collection of taxes have been asserted against the Company or any of the Subsidiaries that would
have a Material Adverse Effect.
(y) ▇▇▇▇ & Associates LLP, which has given its report on certain financial statements
included as part of or incorporated by reference in the Registration Statement, the Disclosure
Package and the Prospectus, is an independent registered public accounting firm.
(z) Neither the Company nor any of the Subsidiaries is in violation of, or in default
under, any of the terms or provisions of (i) its Certificate or Articles of Incorporation, as the
case may be, or Code of Regulations or Bylaws, as the case may be, or similar governing
instruments, (ii) any indenture, mortgage, deed of trust, contract, commitment or other agreement
or instrument to which it is a party or by which it or any of its assets or properties is bound or
affected, (iii) any law, rule, regulation, judgment, order or decree of any government or
governmental agency, instrumentality or court, domestic or foreign, having jurisdiction over it or
any of its properties or business, or (iv) any license, permit, certification, registration,
approval, consent or franchise, except, with respect to clause (ii), (iii) or (iv) above, where any
such default would not reasonably be expected to have a Material Adverse Effect.
(aa) Except as expressly disclosed in the Registration Statement, the Disclosure Package
and the Prospectus, there are no claims, actions, suits, protests, proceedings, arbitrations,
investigations or inquiries pending before, or, to the Company’s knowledge, threatened or
contemplated by, any governmental agency, instrumentality, court or tribunal, domestic or foreign,
or before any private arbitration tribunal to which the Company or any of the Subsidiaries is or
may be made a party that could reasonably be expected to affect the validity of any of the
outstanding Common Stock, or that, if determined adversely to the Company or any of the
Subsidiaries would result in a Material Adverse Effect, nor to the Company’s knowledge is there any
reasonable basis for any such claim, action, suit, protest, proceeding, arbitration, investigation
or inquiry. There are no outstanding orders, judgments or decrees of any court, governmental
agency, instrumentality or other tribunal enjoining the Company or any of the Subsidiaries from, or
requiring the Company or any of the Subsidiaries to
10
take or refrain from taking, any action, or to which the Company or any of the Subsidiaries or
their properties, assets or businesses are bound or subject.
(bb) Each of the Company and the Subsidiaries owns, or possesses adequate rights to use,
or can acquire on reasonable terms, all patents, patent applications, trademarks, trademark
registrations, applications for trademark registration, trade names, service marks, licenses,
inventions, copyrights, know-how (including any unpatented and/or unpatentable proprietary or
confidential technology, information, systems, design methodologies and devices or procedures
developed or derived from or for the Company’s or the Subsidiaries’ business), trade secrets,
confidential information, processes and formulations and other proprietary information necessary
for, used in, or proposed to be used in, the conduct of the business of the Company and the
Subsidiaries as described in the Registration Statement, the Disclosure Package and the Prospectus
(collectively, the “Intellectual Property”). Except with respect to that certain coexistence
agreement previously provided to the Representative, to the Company’s knowledge, neither the
Company nor any of the Subsidiaries has infringed, is infringing or has received any notice of
conflict with, the asserted rights of others with respect to the Intellectual Property that if the
subject of an unfavorable decision, ruling or finding, could have a Material Adverse Effect, and
the Company knows of no reasonable basis therefor. To the knowledge of the Company, no other
parties have infringed upon or are in conflict with any Intellectual Property owned by the Company
or its Subsidiaries. Neither the Company nor any of the Subsidiaries is a party to, or bound by,
any agreement pursuant to which royalties, honorariums or fees are payable by the Company or any of
the Subsidiaries to any person by reason of the ownership or use of any Intellectual Property,
except for software and computer applications used in the ordinary course of business.
(cc) Each of the Company and the Subsidiaries has good and marketable title to all
property described in the Registration Statement, the Disclosure Package and the Prospectus as
being owned by it, free and clear of all liens, security interests, charges or encumbrances and the
like, except such as are expressly described or referred to in the Registration Statement, the
Disclosure Package and the Prospectus or such that do not have a Material Adverse Effect. Except
as otherwise disclosed in the Registration Statement, the Disclosure Package and the Prospectus,
all real and personal property owned and leased by the Company and the Subsidiaries, as described
or referred to in the Registration Statement, the Disclosure Package and the Prospectus is held by
the Company or the Subsidiaries, as applicable, under valid and enforceable leases.
Except as disclosed in the Registration Statement, the Disclosure Package and the Prospectus,
the executive offices and facilities of the Company and the Subsidiaries (the “Premises”), and all
operations presently or formerly conducted thereon by the Company or the Subsidiaries or any
predecessors thereof, are now and, since the Company or the Subsidiaries began to use such
Premises, always have been and, to the knowledge of the Company prior to when the Company or the
Subsidiaries began to use such Premises, always had been, in compliance with all federal, state and
local statutes, ordinances, regulations, rules, standards and requirements of common law concerning
or relating to industrial hygiene and the protection of health and the environment (collectively,
the “Environmental Laws”), except to the extent that any failure in such compliance would not have
a Material Adverse Effect. To the Company’s knowledge, there are no conditions on, about, beneath
or arising from the Premises or in close
11
proximity to the Premises or at any other location that (i) might give rise to liability, the
imposition of a statutory lien upon the Company or any of the Subsidiaries, (ii) require a
“Response,” “Removal” or “Remedial Action,” as defined herein, under any of the Environmental Laws
by the Company or any of the Subsidiaries, or (iii) affect the quality of the groundwater withdrawn
by the Company, and that would have a Material Adverse Effect, except as described in the
Registration Statement, the Disclosure Package and the Prospectus. Except as expressly described
in the Registration Statement, the Disclosure Package and the Prospectus, and except as will not
have a Material Adverse Effect, (i) neither the Company nor any of the Subsidiaries has received
notice or has knowledge of any claim, demand, investigation, regulatory action, suit or other
action instituted or threatened against the Company or any of the Subsidiaries or any portion of
the Premises or any parcel in close proximity to the Premises relating to any of the Environmental
Laws and (ii) neither the Company nor any of the Subsidiaries has received any notice of material
violation, citation, complaint, order, directive, request for information or response thereto,
notice letter, demand letter or compliance schedule to or from any governmental or regulatory
agency arising out of or in connection with “hazardous substances” (as defined by applicable
Environmental Laws) on, about, beneath, arising from or generated at the Premises, near the
Premises or at any other location. As used in this subsection, the terms “Response,” “Removal,”
and “Remedial Action” shall have the respective meanings assigned to such terms under Sections
101(23)-101(25) of the Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C. 9601(23)-9601(25).
(dd) Each of the Company and the Subsidiaries believes they are insured with policies in
such amounts and with such deductibles and covering such risks as are generally deemed adequate and
customary for their businesses, including, but not limited to, insurance against accidents,
third-party injury or general liability and insurance covering certain real and personal property
owned or leased by the Company and each of the Subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against. All policies of insurance
insuring the Company or any of the Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and the Subsidiaries are in
compliance with the terms of such policies and instruments in all material respects; and there are
no claims by the Company or any of the Subsidiaries under any such policy or instrument as to which
any insurance company is denying liability or defending under a reservation of rights clause; and,
except as set forth in the Registration Statement, the Disclosure Package and the Prospectus,
neither the Company nor any of the Subsidiaries has been refused any insurance coverage sought or
applied for. The Company has no reason to believe that it or any of the Subsidiaries will not be
able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at no cost that would not result in a Material Adverse Effect.
(ee) Each of the Company and the Subsidiaries maintain effective internal control over
financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.
(ff) Each of the Company and the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurances that: (i) transactions are
12
executed in accordance with management’s general or specific authorization; (ii) transactions
are recorded as necessary in order to permit preparation of financial statements in accordance with
the generally accepted accounting principles of the United States 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.
(gg) Except as disclosed in the Registration Statement, the Disclosure Package and the
Prospectus or in any document incorporated by reference therein, since the end of the Company’s
most recent audited fiscal year, there has been (i) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and (ii) no change in the Company’s
internal control over financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.
(hh) The Company is in compliance in all material respects with all currently effective
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated thereunder
that are applicable, or will be applicable as of the Closing Date (as defined below) and any Option
Closing Date (as defined below), to the Company.
(ii) The Company, the Subsidiaries and any Related Employer (which for purposes of this
subsection means any entity that, with respect to the Company or any of the Subsidiaries, is a
member of a controlled group of corporations within the meaning of Section 414(b) of the Internal
Revenue Code of 1986, as amended (the “Code”), is, individually or collectively, a trade or
business under common control within the meaning of Section 414(c) of the Code, or is a member of
the same affiliated service group within the meaning of Section 414(m) of the Code) have
established, maintain, contribute to, are required to contribute to, are a party to, or are bound
by certain pension, retirement, profit-sharing plans, deferred compensation, bonus, or other
incentive plans, or medical, vision, dental, or other health plans, or life insurance or disability
plans, or any other employee benefit plans, programs, arrangements, agreements, or understandings
(“Plans”), some of which are subject to the Employee Retirement Income Security Act of 1974, as
amended and the rules and regulations thereunder (“ERISA”). Any disclosure regarding the Plans
required under the Act or the Exchange Act has been made in the Registration Statement, the
Disclosure Package and the Prospectus and the documents incorporated therein. All Plans that are
subject to ERISA are in compliance with ERISA, in all material respects, and, to the extent a Plan
is treated by the Company (or, if applicable, by any Subsidiary or Related Employer) as satisfying
the qualification requirements of Section 401(a) of the Code, such Plan is in compliance with the
Code in all material respects and is the subject of a current favorable determination letter from
the Internal Revenue Service as to its tax qualification, or such Plan has been submitted to the
Internal Revenue Service for an updated determination letter and the Company expects that the
Internal Revenue Service will issue a favorable determination letter with respect to the Plan.
Except as disclosed in the Notes to the Consolidated Financial Statements included in the
Prospectus, no Plan is an employee pension benefit plan that is subject to Part 3 of Subtitle B of
Title I of ERISA, a defined benefit plan subject to Title IV of ERISA, or a multiemployer plan.
Except as disclosed in the Notes to the Consolidated Financial Statements included in the
Prospectus, none of the Company, the Subsidiaries or any Related Employer maintains or has
maintained retiree life or retiree health insurance plans that are employee welfare benefit plans
13
providing for continuing benefit or coverage for any employee or any beneficiary of any
employee after such employee’s termination of employment, except as required by Section 4980B of
the Code or comparable state law, and except as disclosed in the Registration Statement, the
Disclosure Package and the Prospectus. No fiduciary or other party in interest with respect to any
of the Plans has caused any of such Plans to engage in a prohibited transaction as defined in
Section 406 of ERISA and Section 4975 of the Code. As used in this subsection, the terms “defined
benefit plan,” “employee benefit plan,” “employee pension benefit plan,” “employee welfare benefit
plan,” “fiduciary,” “multiemployer plan” and “party in interest” shall have the respective meanings
assigned to such terms in Section 3 of ERISA.
(jj) No labor dispute exists with the Company’s or the Subsidiaries’ employees, and to the
Company’s knowledge, no such labor dispute is threatened. The Company currently has no knowledge
of any existing or threatened labor disturbance by the employees of any of the principal suppliers,
contractors or customers of the Company or any of the Subsidiaries that would have a Material
Adverse Effect.
(kk) Except as disclosed in the Registration Statement, the Disclosure Package and the
Prospectus, there are no contracts, agreements or understandings between the Company and/or any
person that would give rise to a valid claim against the Company and/or the Underwriter for a
brokerage commission, finder’s fee or other like payment in connection with the transactions
contemplated herein, or in any contracts, agreements, understandings, payments, arrangements or
issuances with respect to the Company or any of its officers, directors, shareholders, employees or
affiliates that may affect the Underwriter’s compensation as determined by FINRA.
(ll) The Company is not, and after giving effect to the offering and sale of the Shares
and the application of the proceeds therefor described in the Registration Statement, the
Disclosure Package and the Prospectus will not be, 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. None of the Subsidiaries is an “investment company” as defined in the Investment
Company Act of 1940, as amended.
(mm) (i) The Company and the Subsidiaries have received all permits, licenses, franchises,
authorizations, registrations, qualifications and approvals (collectively, “Permits”) of
governmental or regulatory authorities as may be required to own their properties and conduct their
businesses in the manner described in the Registration Statement, the Disclosure Package and the
Prospectus subject to such qualifications as may be set forth in the Registration Statement, the
Disclosure Package and the Prospectus, except for failure to so possess would not have a Material
Adverse Effect; (ii) the Company and the Subsidiaries have fulfilled and performed all of their
material obligations with respect to such Permits, and no event has occurred which allows or, after
notice or lapse of time or both, would allow revocation or termination thereof or result in any
other material impairment of the rights of the holder of any such Permit, subject in each case to
such qualifications as may be set forth in the Registration Statement, the Disclosure Package and
the Prospectus and except where such non performance or noncompliance would not have a Material
Adverse Effect; and (iii) except as described in the Registration Statement, the Disclosure Package
and the Prospectus, such Permits contain no
14
restrictions that materially affect the ability of the Company or the Subsidiaries to conduct
their businesses.
(nn) No statement, representation, warranty or covenant made by the Company or any of the
Subsidiaries in this Agreement or in any certificate or document required by this Agreement to be
delivered to the Underwriters is, or as of the Closing Date or any Option Closing Date will be,
inaccurate, untrue or incorrect in any material respect. No transaction has occurred or is
proposed between or among the Company or any of the Subsidiaries and any of their respective
officers, directors or shareholders or any affiliate of the foregoing that is required to be
described in and is not described in the Registration Statement, the Disclosure Package and the
Prospectus.
(oo) None of the Company, the Subsidiaries, or, to the Company’s knowledge, any officer,
director, employee, partner, agent or other person acting on behalf of the Company or the
Subsidiaries has, directly or indirectly, given or agreed to give any money, property or similar
benefit or consideration to any customer or supplier (including any employee or agent of any
customer or supplier) or official or employee of any agency or instrumentality of any government
(foreign or domestic) or political party or candidate for office (foreign or domestic) or any other
person who was, is or in the future may be in a position to affect the Business Conditions of the
Company or any of the Subsidiaries or any actual or proposed business transaction of the Company or
any of the Subsidiaries that (i) could subject the Company or any of the Subsidiaries to any
liability (including, but not limited to, the payment of monetary damages) or penalty in any civil,
criminal or governmental action or proceeding that would have a Material Adverse Effect or (ii)
with respect to the Company, the Subsidiaries or any officer or director thereof, violates any law,
rule or regulation to which the Company or any of the Subsidiaries is subject.
(pp) The Company’s board of directors has validly appointed an audit committee whose
composition satisfies the requirements of the Exchange Act, and the rules and regulations of the
SEC adopted thereunder as of the Closing Date. The Company’s audit committee has adopted a charter
that satisfies the Exchange Act and the rules and regulations of the SEC adopted thereunder that
are applicable as of the Closing Date.
(qq) At the time of filing the Registration Statement and as of the date of the execution
and delivery of this Agreement (with such date being used as the determination date for purposes
hereof), the Company was not and is not an Ineligible Issuer (as defined in Rule 405 of the Act),
without taking into account any determination by the SEC pursuant to Rule 405 of the Act that it is
not necessary that the Company be considered an Ineligible Issuer.
(rr) Any certificate signed by any officer of the Company or any of the Subsidiaries in
such capacity and delivered to the Representative or to counsel for the Underwriters pursuant to
this Agreement shall be deemed a representation and warranty by the Company or the Subsidiaries as
the case may be, to the Underwriters as to the matters covered thereby.
15
2. Representations and Warranties of the Selling Shareholders. Each of the
Selling Shareholders severally and not jointly represents and warrants to, and agrees with, the
Underwriters and Company that:
(a) Such Selling Shareholder has no reason to believe that the representations and
warranties of the Company in Section 1 of this Agreement are not true and correct.
(b) The sale of such Shares to be sold by such Selling Shareholder hereunder and the
compliance by such Selling Shareholder with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder is bound or to which any of the
property or assets of such Selling Shareholder is subject, nor will such action result in any
violation of the provisions of any trust agreement or declaration of trust of such Selling
Shareholder or any statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over such Selling Shareholder or the property of such Selling Shareholder.
(c) Such Selling Shareholder has valid marketable title to the Shares proposed to be sold
by such Selling Shareholder hereunder on such date and full right, power and authority to enter
into this Agreement and to sell, assign, transfer and deliver such Shares hereunder, free and clear
of all voting trust arrangements, liens, encumbrances, equities, claims and community property
rights; and upon delivery of and payment for such Shares hereunder, the Underwriters will acquire
valid title thereto, free and clear of all voting trust arrangements, liens, encumbrances,
equities, claims and community property rights.
(d) Such Selling Shareholder is not prompted to sell shares of Common Stock by any
information concerning the Company that is not set forth in the Registration Statement, the
Disclosure Package and the Prospectus.
(e) Such Selling Shareholder has not taken and will not take, directly or indirectly, any
action designed to or which might be reasonably expected to cause or result, under the Exchange Act
or otherwise, in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(f) Certificates in negotiable form representing all of the Shares to be sold by such
Selling Shareholder hereunder have been delivered to the Company’s transfer agent, Computershare
(the “Transfer Agent”); subject to the terms and conditions of this Agreement, the obligations of
such Selling Shareholder hereunder shall not be terminated by operation of law, whether, in the
case of an individual Selling Shareholder, by the death or incapacity of such Selling Shareholder
or, in the case of a trust or estate, by death of the trustee(s) or executor(s) or the termination
of such trust, or by the occurrence of any other event. If any individual Selling Shareholder,
trustee, or executor should die or become incapacitated, or any such trust or estate should be
terminated, or if any other event should occur before the delivery of the Shares by such Selling
Shareholder hereunder, certificates representing the Shares to be sold by such Selling
16
Shareholder shall be delivered to the Transfer Agent by or on behalf of such Selling
Shareholder, subject to and in accordance with, the terms and conditions of the Agreement.
(g) Each Preliminary Prospectus, only with respect to the Section entitled Principal and
Selling Shareholders insofar as it has related to such Selling Shareholder, as of its date, has not
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, in light of the circumstances in which
they are made, not misleading; and the Registration Statement at the Effective Time, and at all
times subsequent thereto, up to the Closing Date (defined below), as the case may be, (i) the
Section entitled Principal and Selling Shareholders of the Registration Statement and the
Prospectus and any amendments or supplements thereto as relate to the Selling Shareholder,
contained or will contain all statements that are required to be stated therein in accordance with
the Act and in all material respects conformed or will in all material respects conform to the
requirements of the Act, and (ii) neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, as to the Section entitled Principal and Selling Shareholders
which relates to the Selling Shareholder, included or will include any untrue statement of a
material fact or omitted or will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that neither clause (i) nor (ii)
shall have any effect if information has been given by the Selling Shareholder to the Company and
the Underwriter in writing which would eliminate or remedy any such untrue statement or omission.
(h) Neither the Selling Shareholder nor any person acting on behalf of such Selling
Shareholder (other than, if applicable, the Company and the Underwriters) has used or referred to
or will use or refer to any “free writing prospectus” as defined in Rule 405 under the Act,
relating to the Shares.
3. Purchase and Sale of Firm Shares. On the basis of the representations,
warranties, covenants and agreements contained herein, but subject to the terms and conditions set
forth herein, the Company and the Selling Shareholders shall sell the Firm Shares to the
Underwriters at the Offering Price less the Underwriting Discounts and Commissions shown on the
cover page of the Prospectus, and the Underwriters shall purchase from the Company and the Selling
Shareholders on a firm commitment basis, at the Offering Price less the Underwriting Discounts and
Commissions shown on the cover page of the Prospectus the Firm Shares. The Underwriters shall offer
the Shares to the public as set forth in the Prospectus.
4. Payment and Delivery. The Firm Shares shall be issued in the form of one or
more fully registered global securities (the “Global Securities”) in book-entry form in such
denominations and registered in the name of the nominee of The Depository Trust Company (“DTC”) and
shall be delivered by the Company and the Selling Shareholders through the facilities of DTC for
the account of each Underwriter against payment by such Underwriter on its behalf of the purchase
price therefor by wire transfer of immediately available funds to such accounts as the Company and
Selling Shareholders shall designate in writing (with all costs and expenses incurred by the
Underwriters in connection with such settlement in immediately available funds, including, but not
limited to, interest or cost of funds and expenses, to be borne by the Company and Selling
Shareholders). The closing of the sale and purchase of the Firm Shares shall be held at the
offices of Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ for the respective accounts of the Underwriters. Such payment
and delivery will be made at 10:00 a.m., Cleveland, Ohio time, on the third business day after the
date of this Agreement or at such other time on the same or such other date as shall be agreed upon
by the Company, the Selling Shareholders and the Underwriters. Such time and date are referred to
herein as the “Closing Date.” The Company and the Selling Shareholders shall make the Global
Securities representing the Firm Shares available for examination by the Representative and counsel
for the Underwriters at the Philadelphia correspondent office of the Transfer Agent not less than
one full business day prior to the Closing Date.
5. Option to Purchase Optional Shares.
(a) For the purposes of covering any over-allotments in connection with the distribution
and sale of the Firm Shares as contemplated by the Prospectus, subject to the terms and conditions
herein set forth, the Underwriters are hereby granted an option by the Company to purchase all or
any part of the Optional Shares (the “Over-allotment Option”). The purchase price to be paid for
the Optional Shares shall be the Offering Price less the Underwriting Discounts and Commissions
shown on the cover page of the Prospectus. The Over-allotment Option granted hereby may be
exercised by the Representative on behalf of the Underwriters as to all or any part of the Optional
Shares at any time and from time to time within 30 days after the date of the Prospectus. No
Underwriter shall be under any obligation to purchase any Optional Shares prior to an exercise of
the Over-allotment Option.
(b) The Over-allotment Option granted hereby may be exercised by the Representative on
behalf of the Underwriters by giving notice to the Company by a letter sent by registered or
certified mail, postage prepaid, telex, telegraph, telegram or facsimile (such notice to be
effective when received), addressed as provided in Section 15 hereof, setting forth the number of
Optional Shares to be purchased, the date and time for delivery of and payment for the Optional
Shares and stating that the Optional Shares referred to therein are to be used for the purpose of
covering over-allotments in connection with the distribution and sale of the Firm Shares. If such
notice is given at least two full business days prior to the Closing Date, the date set forth
therein for such delivery and payment shall be not earlier than the Closing Date. If such notice
is given after such two full business day period, the date set forth therein for such delivery and
payment shall be a date selected by the Representative not later than five full business days after
the exercise of the Over-allotment Option. The date and time set forth in such a notice is
referred to herein as an “Option Closing Date,” and a closing held pursuant to such a notice is
referred to herein as an “Option Closing.” Upon each exercise of the Over-allotment Option, and on
the basis of the representations, warranties, covenants and agreements herein contained, and
subject to the terms and conditions herein set forth, the Underwriters shall become severally, but
not jointly obligated to purchase from the Company the number of Optional Shares specified in each
notice of exercise of the Over-allotment Option.
(c) The Optional Shares shall be issued in the form of one or more fully registered Global
Securities in book-entry form in such denominations and registered in the name of the nominee of
DTC or in such names as the Representative may request upon at least 48 hours’ prior notice to the
Company, and shall be delivered by the Company through the facilities of DTC for the respective
accounts of the Underwriters, against payment by such Underwriter on its behalf of the purchase
price therefor by wire transfer of immediately available
18
funds to such accounts as the Company shall designate in writing (with all costs and expenses
incurred by the Underwriter in connection with such settlement in immediately available funds,
including, but not limited to, interest or cost of funds and expenses, to be borne by the Company).
The closing of the sale and purchase of the Optional Shares shall be held at the offices of
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ for the
account of the Underwriter. Such payment and delivery will be made at 10:00 a.m., Cleveland, Ohio
time, on the Option Closing Date. The Company shall make the Global Securities representing the
Optional Shares available for examination by the Representative and counsel for the Underwriters at
the Philadelphia correspondent office of the Transfer Agent not less than one full business day
prior to the Option Closing Date.
6. Certain Covenants and Agreements of the Company. The Company covenants and
agrees with the Underwriter as follows:
(a) The Company will comply with the requirements of Rule 430B.
(b) The Company will not file with the SEC the Prospectus, any amendment or supplement to
the Prospectus or any amendment to the Registration Statement or the Disclosure Package, and will
not use, authorize, refer to or file any Issuer Free Writing Prospectus, unless the Representative
has received a reasonable period of time to review any such proposed amendment, supplement or
Issuer Free Writing Prospectus and consented to the filing thereof, such consent not to be
unreasonably withheld or delayed, and will use its reasonable best efforts to cause any such
amendment to the Registration Statement to be declared effective as promptly as possible. Upon
reasonable request of the Representative or counsel for the Underwriters, the Company will promptly
prepare and file with the SEC, in accordance with the Regulations, any amendments to the
Registration Statement or amendments or supplements to the Prospectus or the Disclosure Package
that may be necessary or advisable in connection with the distribution of the Shares by the
Underwriters and will use their reasonable best efforts to cause any such amendment to the
Registration Statement to be declared effective as promptly as possible. If required, the Company
will file any amendment or supplement to the Prospectus or the Disclosure Package with the SEC in
the manner and within the time period required by Rule 424(b) or Rule 433 under the Act. The
Company will advise the Representative, promptly after receiving notice thereof, of the time when
the Registration Statement or any amendment thereof has been filed or declared effective or the
Prospectus or the Disclosure Package, or any amendment or supplement thereto has been filed and
will provide evidence to the Representative of each filing or effectiveness.
(c) The Company will advise the Representative promptly (i) when any post-effective
amendment to the Registration Statement is filed with the SEC under Rule 462(c) under the Act or
otherwise, (ii) when any Rule 462(b) Registration Statement is filed, (iii) of the receipt of any
comments from the SEC concerning the Registration Statement, (iv) when any post-effective amendment
to the Registration Statement becomes effective, or when any supplement to the Prospectus or the
Disclosure Package or any amended Prospectus or Disclosure Package has been filed, (v) of any
request of the SEC for amendment or supplementation of the Registration Statement, the Disclosure
Package or the Prospectus or for additional information, (vi) during the period when the a
prospectus is required to be delivered under the Act and Regulations (the “Prospectus Delivery
Period”), of the happening of any event as a result of
19
which the Registration Statement or the Prospectus would include 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, in light of the circumstances in which they are made, not misleading, (vii)
during the Prospectus Delivery Period, of the need to amend the Registration Statement or
supplement the Prospectus to comply with the Act, (viii) of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, and (ix) of the suspension of
the approval of the Shares for listing on the NYSE Amex Equities or the qualification of any of the
Shares for offering or sale in any jurisdiction in which the Underwriter intends to make such
offers or sales, or the initiation or threatening of any proceedings for any of such purposes known
to the Company. The Company will use its reasonable best efforts to prevent the issuance of any
such stop order or of any order preventing or suspending such use, and if any such order is issued,
to obtain as soon as possible the lifting thereof.
(d) The Company has delivered to the Representative, without charge, as many copies of
each Preliminary Prospectus as the Representative has reasonably requested. The Company will
deliver to the Representative, without charge, such number of copies of the Registration Statement,
the Disclosure Package and the Prospectus and any supplements or amendments thereto, as the
Representative may reasonably request from time to time during the Prospectus Delivery Period. The
Company hereby consents to the use of such copies of the Disclosure Package and the Prospectus for
purposes permitted by the Act, the Regulations and the securities or Blue Sky laws of the states or
foreign jurisdictions in which the Shares are offered by the Underwriters and by all dealers to
whom Shares may be sold, both in connection with the offering and sale of the Shares and during the
Prospectus Delivery Period. If requested by the Representative in writing, the Company will
furnish to the Representative at least one original signed copy of the Registration Statement as
originally filed and all amendments and supplements thereto, whether filed before or after the
Effective Date, at least one copy of all exhibits filed therewith and of all consents and
certificates of experts, and will deliver to the Representative such number of conformed copies of
the Registration Statement, including financial statements and exhibits, and all amendments
thereto, as the Representative may reasonably request.
(e) The Company will comply with the Act, the Regulations, the Exchange Act and the
Exchange Act rules and regulations thereunder so as to permit the continuation of sales of and
dealings in the Shares for as long as may be necessary to complete the distribution of the Shares
as contemplated hereby.
(f) The Company will furnish such information and pay such filing fees and other expenses
as may be required, including the Company’s counsel’s reasonable legal fees, and otherwise
cooperate in the registration or qualification of the Shares, or exemption therefrom, for offering
and sale by the Underwriters and by dealers under the securities or Blue Sky laws of such
jurisdictions in which the Representative determines to offer the Shares, after consultation with
the Company, and will file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided,
however, that no such qualification shall be required in any jurisdiction where, solely as
a result thereof, the Company would be subject to taxation or qualification as a foreign
corporation doing business in such jurisdiction where it is not now so qualified or to take any
action which would
20
subject it to service of process in suits, other than those arising out of the offering
or sale of the Shares, in any jurisdiction where it is not now so subject. The Company will, from
time to time, prepare and file such statements and reports as are or may be required to continue
such qualification in effect for so long a period as is required under the laws of such
jurisdiction for such offering and sale. The Company will furnish such information and pay such
filing fees and other expenses as may be required, and otherwise cooperate in the listing of the
Shares on the NYSE Amex Equities.
(g) Subject to Section 6(b) hereof, in case of any event occurring at any time within the
Prospectus Delivery Period, as a result of which the Disclosure Package or the Prospectus, as then
amended or supplemented, would contain 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 in
which they are made, not misleading, or, if it is necessary at any time to amend the Disclosure
Package or the Prospectus to comply with the Act or the Regulations or any applicable securities or
Blue Sky laws, the Company promptly will prepare and file with the SEC, and any applicable state
and foreign securities commission, an amendment, supplement or document that will correct such
statement or omission or effect such compliance and will furnish to the Underwriters such number of
copies of such amendments, supplements or documents (in form and substance satisfactory to the
Representative and counsel for the Underwriters) as the Underwriter may reasonably request. For
purposes of this Section 6(g), the Company will provide such information to the Representative, the
Underwriters’ counsel and counsel to the Company as shall be necessary to enable such persons to
consult with the Company with respect to the need to amend or supplement the Registration
Statement, the Disclosure Package or the Prospectus or file any document, and shall furnish to the
Representative and the Underwriters’ counsel such further information as each may from time to time
reasonably request.
(h) The Company agrees that, unless it obtains the prior written consent of the
Representative, which consent will not be unreasonably withheld or delayed, it will not make any
offer relating to the Shares that would constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a “free writing prospectus” (as defined in Rule 405 of the Act) required to be
filed by the Company with the SEC or retained by the Company under Rule 433 of the Act; provided
that the prior written consent of the Representative shall be deemed to have been given in respect
of the free writing prospectuses included in Schedule II hereto. Any such free writing
prospectus consented to by the Representative is hereinafter referred to as a “Permitted Free
Writing Prospectus.” The Company agrees that (i) it has treated and will treat, as the case may
be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) has
complied and will comply, as the case may be, with the requirements of Rules 164 and 433 of the Act
applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the
SEC, legending and record keeping.
(i) The Company will make generally available to its security holders and the Representative,
as soon as practicable but not later than 45 days after the end of the period covered thereby, an
earnings statement that satisfies the provisions of Section 11(a) of the Act and Rule 158
promulgated thereunder and cover a period of at least 12 months beginning with the Company’s first
fiscal quarter occurring after the “effective date” (as defined in Rule 158) of the Registration
Statement); provided, however, that the Company shall have satisfied its
21
obligations under this Section 6(i) if it timely files its Annual Report on Form 10-K for the
fiscal year next ending after such effective date.
(j) Prior to the Closing Date, the Company will issue no press release or other communications
directly or indirectly and hold no press conference with respect to the offering of the Shares
without the prior written consent of the Representative unless in the judgment of the Company,
after consultation with its counsel and after notification to the Representative, such press
release or communication is required by law.
(k) For a period of three years from the date hereof, the Company will deliver to the
Representative: (i) a copy of each report or document, including, without limitation, reports on
Forms 8-K, 10-K and 10-Q (or such similar forms as may be designated by the SEC), proxy statements,
registration statements and any exhibits thereto, filed or furnished to the SEC or any securities
exchange or FINRA, on the date each such report or document is so filed or furnished; (ii) as soon
as practicable, copies of any reports or communications (financial or other) of the Company mailed
to its security holders; and (iii) every material press release in respect of the Company or its
affairs that is released or prepared by the Company; provided, however, that no
reports or documents need to be furnished to the extent they have been filed with the SEC and are
publicly available on ▇▇▇▇▇.
(l) During the course of the distribution of the Shares, the Company and the Subsidiaries will
not and the Company shall cause its officers and directors not to, (i) take, directly or
indirectly, any action designed to, or that could reasonably be expected to, cause or result in
stabilization or manipulation of the price of the Common Stock or (ii) sell, bid for, purchase or
pay anyone any compensation for soliciting purchases of, the Shares.
(m) The Company has delivered agreements executed by the persons listed on Schedule
III hereto (the “Lock up Agreements”) in the form set forth as Exhibit A hereto to the
Representative prior to the date of this Agreement. The Company will issue appropriate stop
transfer instructions to the Transfer Agent for the Common Stock subject to the Lock up Agreements
and a copy of such instructions will be delivered to the Representative.
(n) During the period commencing on the date hereof and ending on the 90th day following the
date of the Prospectus, the Company will not, without the prior written consent of the
Representative, directly or indirectly, sell, offer, contract or grant any options to sell, pledge,
transfer or establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under
the Exchange Act or liquidate or decrease a “call equivalent position” within the meaning of Rule
16a-1(b) under the Exchange Act, or otherwise dispose of or transfer (or enter into any transaction
which is designed to, or would reasonably be expected to, result in the disposition of, or announce
the offering of, or file any registration statement under the Act in respect of, any Common Stock,
options or warrants to acquire Common Stock or securities exchangeable or exercisable for or
convertible into Common Stock (other than as contemplated by this Agreement with respect to the
Shares), provided, however, that the Company may issue Common Stock pursuant to
this Agreement and under any stock option, equity compensation or other stock plan or arrangement,
common share purchase and dividend reinvestment plan described in or filed as an exhibit to the
Registration Statement, the Disclosure Package or the Prospectus, may file registration statements
on Form S-8 or amend its registration on Form S-3,
22
and may enter into an agreement to issue Common Stock if the consummation of the transaction
contemplated by such agreement is subject to the approval of a state public utility regulatory
commission, and provided that no Common Stock is issued pursuant to such agreement during the
90-day restricted period referred to above. Notwithstanding anything contained in this Section
6(n) to the contrary, if (A) during the last 17 days of the 90-day period referenced above, the
Company issues an earnings release or material news or material event relating to the Company
occurs; or (B) prior to the expiration of the 90-day period referenced above, the Company announces
that it will release earnings results during the 16-day period beginning on the last day of such
90-day period, the restrictions imposed by this Section 6(n) shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence
of the materials news or material event.
(o) For a period of three years from the Effective Date (or for such shorter period that any
shares of Common Stock remain outstanding), the Company will use all reasonable efforts to maintain
the listing of the Common Stock (including, without limitation, the Shares) on the NYSE Amex
Equities or on a national securities exchange, except for any failure to maintain such listing
resulting from a sale of all or substantially all of the property and assets of the Company or a
merger, consolidation or other business combination transaction pursuant to which the Company is
not the continuing or surviving entity of such merger, consolidation or transaction.
(p) The Company shall, at its sole cost and expense, supply and deliver to the Representative
and the Underwriters’ counsel, within a reasonable period from the Closing Date, up to four sets of
transaction binders in such form and content as the Underwriter reasonably requests.
(q) The Company will use the net proceeds from the sale of the Shares to be sold by it
hereunder substantially in accordance with the description set forth under the caption “Use of
Proceeds” in the Prospectus.
7. Certain Covenants and Agreements of the Selling Shareholders. Each Selling
Shareholder covenants and agrees with the Underwriters as follows:
(a) Not to (and to cause its affiliates, partners or agents not to) take, directly or
indirectly, any action which is designed to stabilize or manipulate or which constitutes or which
might reasonably be expected to cause or result in stabilization or manipulation of the price of
any security of the Company or facilitate the sale or resale of the Shares.
(b) During the period commencing on the date hereof and ending on the 90th day following the
date of the Prospectus, such Selling Shareholder will not, without the prior written consent of the
Representative, directly or indirectly, sell, offer, contract or grant any options to sell, pledge,
transfer or establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under
the Exchange Act or liquidate or decrease a “call equivalent position” within the meaning of Rule
16a-1(b) under the Exchange Act, or otherwise dispose of or transfer (or enter into any transaction
which is designed to, or would reasonably be expected to, result in the disposition of, or announce
the offering of, or file any registration statement under the Act in respect of, any shares of
Common Stock, options or warrants to acquire shares of Common Stock
23
or securities exchangeable or exercisable for or convertible into Common Stock (other than as
contemplated by this Agreement with respect to the Shares). The foregoing sentence shall not apply
to (i) the issuance of Common Stock upon the exercise of an option or warrant or the conversion of
a security outstanding on the date hereof and referred to in the Registration Statement; (ii) the
pledge by such Selling Shareholder of Common Stock to a financial institution in connection with a
bona fide financing transaction; or (iii) transfers of Common Stock to immediate family members or
trusts for the benefit of such family members, provided such transferee enters into a similar
lock-up agreement. Furthermore, such Selling Shareholder has agreed and consented to the entry of
stop transfer instructions with the Transfer Agent against the transfer of the securities held by
such Selling Shareholder except in compliance with the foregoing restrictions. Notwithstanding
anything contained in this Section 7(b) to the contrary, if (A) during the last 17 days of the
90-day period referenced above, the Company issues an earnings release or material news or material
event relating to the Company occurs; or (B) prior to the expiration of the 90-day period
referenced above, the Company announces that it will release earnings results during the 16-day
period beginning on the last day of such 90-day period, the restrictions imposed by this Section
7(b) shall continue to apply until the expiration of the 18-day period beginning on the issuance of
the earnings release or the occurrence of the materials news or material event.
(c) Such Selling Shareholder will pay or will cause to be paid all transfer taxes, stamp
duties and other similar taxes with respect to the Shares, if any, to be sold by such Selling
Shareholder.
8. Payment of Fees and Expenses.
(a) Subject
to the closing of the sale and purchase of the Firm Shares, the
Representative shall
be entitled to reimbursement from the Company of a non-accountable expense allowance equal to
$100,000 (the “Non-Accountable Expense Allowance”). The Representative shall be entitled to
withhold this allowance on the Closing Date related to the purchase of the Firm Shares. In
addition to the payment of the Non-Accountable Expense Allowance, whether or not the transactions
contemplated by this Agreement are consummated and regardless of the reason this Agreement is
terminated, the Company will pay or cause to be paid, and bear or cause to be borne, all costs and
expenses incident to the performance of the obligations of the Company under this Agreement,
including: (i) the fees and expenses of the accountants and counsel for the Company incurred in
the preparation of the Registration Statement and any post-effective amendments thereto (including
financial statements and exhibits), the Disclosure Package, any Preliminary Prospectuses and the
Prospectus and any amendments or supplements thereto; (ii) printing and mailing expenses associated
with the Registration Statement and any post-effective amendments thereto, the Disclosure Package,
any Preliminary Prospectus, the Prospectus, this Agreement and any related documents and any Blue
Sky memorandum (any supplement thereto); (iii) the costs and expenses (other than fees and expenses
of the Underwriters’ counsel) incident to the authentication, issuance, sale and delivery of the
Shares to the Underwriters; (iv) the fees, expenses and all other costs of qualifying the Shares
for sale under the securities or Blue Sky laws of those states in which the Shares are to be
offered or sold; (v) the fees, expenses and other costs of, or incident to, securing any review or
approvals by or from FINRA, (other than the fees and expenses of the Underwriters’ counsel); (vi)
the filing fees of the SEC; (vii) the cost of furnishing to the Representative copies of the
24
Registration Statement, any Issuer Free Writing Prospectuses, any Preliminary Prospectuses and
Prospectuses as herein provided; (viii) if applicable, the Company’s travel expenses in connection
with meetings with the brokerage community and institutional investors; (ix) the costs and expenses
associated with settlement in same day funds (including, but not limited to, interest or cost of
funds expenses), if desired by the Company; (x) any fees or costs payable to the NYSE Amex Equities
as a result of the offering; (xi) the cost of preparing, issuing and delivery to the Underwriter
through the facilities of DTC of any certificates evidencing the Shares; (xii) the costs and
charges of the Transfer Agent; (xiii) the reasonable costs of advertising the offering; (xiv) all
taxes, if any, on the issuance, delivery and transfer of the Shares sold by the Company; and (xv)
all other costs and expenses reasonably incident to the performance of the Company’s obligations
hereunder that are not otherwise specifically provided for in this Section 8(a); provided,
however, the Underwriters shall be responsible for their out-of-pocket expenses, including
the fees and expenses of the Underwriters’ counsel and expenses associated with meetings with the
brokerage community and institutional investors, other than the Company’s travel expenses, postage,
facsimile and telephone charges.
(b) Each Selling Shareholder will pay or cause to be paid, and bear or caused to be borne, all
costs and expenses incident to the performance of the obligations of such Selling Shareholder under
this Agreement, including: (i) any fees and expenses of counsel for such Selling Shareholder; and
(ii) all expenses, stamp duties, transfer taxes and other taxes and duties incident to the sale and
delivery of the Shares to be sold by such Selling Shareholder. It is understood that the Company
shall bear, and such Selling Shareholder shall not be required to pay or to reimburse the Company
for, the cost of any other matters not directly relating to the sale and purchase of the Shares
pursuant to this Agreement.
(c) If (i) the Underwriters are willing to proceed with the offering, and the transactions
contemplated by this Agreement are not consummated because the Company and/or either Selling
Shareholder elect not to proceed with the offering for any reason or (ii) the Representative
terminates this Agreement pursuant to Section 12 hereof, then the Company will reimburse the
Underwriters for their accountable out-of-pocket expenses relating to the offering (including but
not limited to reasonable fees and disbursements to their counsel); provided, however, that such
reimbursement shall not exceed $100,000. The Representative shall present a reasonable accounting
of all expenses for which reimbursement is claimed hereunder.
9. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to
purchase and pay for the Firm Shares that it has agreed to purchase hereunder on the Closing Date,
and to purchase and pay for any Optional Shares as to which it exercises its right to purchase
under Section 5 on an Option Closing Date, is subject at the date hereof, the Closing Date and any
Option Closing Date to the continuing accuracy and fulfillment of the representations and
warranties of the Company and each Selling Shareholder, to the performance by the Company and each
Selling Shareholder of their covenants and obligations hereunder, and to the following additional
conditions:
(a) The Preliminary Prospectus and the Prospectus shall have been filed with the SEC pursuant
to Rule 424(b) of the Regulations within the applicable time period prescribed for such filing by
the Regulations. The Company shall have filed any material required to be filed by the Company
with the SEC in the manner and within the time period required by
25
Rule 433 of the Regulations, including any Issuer Free Writing Prospectus and any Other Free
Writing Prospectus.
(b) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b)
Registration Statement with the SEC in compliance with Rule 462(b) by 10:00 P.M., Washington D.C.
time, on the date of this Agreement, and the Company shall at the time of filing either pay to the
SEC the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for
the payment of such fee pursuant to Rule 111(b) under the Act.
(c) On or prior to the Closing Date or any Option Closing Date, as the case may be, no stop
order or other order preventing or suspending the effectiveness of the Registration Statement
(including any document incorporated by reference therein), the 462(b) Registration or any
post-effective amendment to the Registration Statement or the sale of any of the Shares shall have
been issued under the Act or any state or foreign securities law, and no proceedings for that
purpose shall have been initiated or shall be pending or, to the Representative’s knowledge or the
knowledge of the Company, shall be contemplated by the SEC or by any authority in any state in
which the Representative offers the Shares. Any request on the part of the SEC or any state or
foreign securities authority for additional information shall have been complied with to the
reasonable satisfaction of counsel for the Underwriters.
(d) All corporate proceedings and other matters incident to the authorization, form and
validity of this Agreement, the Shares and the form of the Registration Statement, the Disclosure
Package and the Prospectus, and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be satisfactory in all material respects to counsel for the
Underwriters. The Company and each Selling Shareholder shall have furnished to such counsel all
documents and information that they may have reasonably requested to enable them to pass upon such
matters. The Representative shall have received from the Underwriters’ counsel, Squire, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.P., an opinion, dated as of the Closing Date and any Option Closing Date, as the case
may be, and addressed to the Representative individually and as representative of the Underwriters,
which opinion shall be satisfactory in all respects to the Representative.
(e) The Representative shall have received a copy of an executed Lock-up Agreement from each
of the persons listed on Schedule III hereto, and the Company shall have issued appropriate
stop transfer instructions to the transfer agent and shall have delivered a copy of such
instructions to the Representative.
(f) On the Closing Date and any Option Closing Date, there shall have been delivered to the
Representative the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ PLL, counsel for the Company and Selling
Shareholders, dated as of such date and addressed to the Representative individually and as
representative of the Underwriters to the effect set forth in Exhibit B hereto or to such
effect as is otherwise reasonably satisfactory to the Representative.
(g) At the Closing Date and any Option Closing Date: (i) the Registration Statement and any
post-effective amendment thereto and the Disclosure Package and the Prospectus and any amendments
or supplements thereto shall contain all statements that are required to be stated therein in
accordance with the Act and Regulations shall conform to the
26
requirements of the Act and the Regulations in all material respects, and none of the
Registration Statement nor any post-effective amendment thereto, the Disclosure Package or the
Prospectus and any amendments or supplements thereto shall 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 they are made, not misleading; (ii)
since the respective dates as of which information is given in the Registration Statement, the
Disclosure Package and the Prospectus and any amendments or supplements thereto, except as
otherwise stated therein, there shall have been no material adverse change in the Business
Conditions of the Company or the Subsidiaries from that set forth therein, whether or not arising
in the ordinary course of business; (iii) since the respective dates as of which information is
given in the Registration Statement, the Disclosure Package and the Prospectus or any amendment or
supplement thereto, there shall have been no event or transaction, contract or agreement entered
into by the Company or any of the Subsidiaries other than in the ordinary course of business and as
set forth in the Registration Statement, the Disclosure Package or the Prospectus, that has not
been, but would be required to be, set forth in the Registration Statement, the Disclosure Package
or the Prospectus; (iv) since the respective dates as of which information is given in the
Registration Statement and any post-effective amendment thereto and the Disclosure Package and the
Prospectus and any amendments or supplements thereto, there shall have been no material adverse
change, loss, reduction, termination or non-renewal of any contract to which the Company or any of
the Subsidiaries is a party, that has not been, but would be required to be set forth in the
Registration Statement the Disclosure Package or the Prospectus and which would have a Material
Adverse Effect; and (v) no action, suit or proceeding at law or in equity shall be pending or
threatened against the Company or any of the Subsidiaries that would be required to be set forth in
the Disclosure Package or the Prospectus, other than as set forth therein, and except as set forth
in the Prospectus, no proceedings (other than proceedings pending before a public utilities
commission on the date hereof) shall be pending or threatened against or directly affecting the
Company or any of the Subsidiaries before or by any federal, state or other commission, board or
administrative agency wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect.
(h) The Representative shall have received at the Closing Date and any Option Closing Date
certificates of the Chief Executive Officer and the Chief Financial Officer of the Company dated,
as of the date of the Closing Date or Option Closing Date, as the case may be, and addressed to the
Representative individually and as representative of the Underwriters to the effect that (i) the
representations and warranties of the Company in this Agreement are true and correct, as if made at
and as of the Closing Date or the Option Closing Date, as the case may be, and that the Company has
complied with all the agreements, fulfilled all the covenants and satisfied all the conditions on
its part to be performed, fulfilled or satisfied at or prior to the Closing Date or the Option
Closing Date, as the case may be, and (ii) the signers of the certificate have carefully examined
the Registration Statement, the Disclosure Package and the Prospectus and any amendments or
supplements thereto, and the conditions set forth in Section 9 hereof have been satisfied.
(i) At the time this Agreement is executed and at the Closing Date and any Option Closing
Date, as the case may be, ▇▇▇▇ & Associates LLP shall have furnished to the Representative on
behalf of the Underwriters, at the request of the Company, letters, dated the respective dates of
delivery thereof, and addressed to the Representative on behalf of the
27
Underwriters, in form and substance reasonably satisfactory to the Representative in all
respects (including, without limitation, the non-material nature of the changes or decreases, if
any, referred to in clause (iii) below):
(i) confirming they are independent certified public accountants within the meaning of the Act
and the Regulations, and stating that the section of the Registration Statement under the caption
“Experts” is correct insofar as it relates to them;
(ii) stating that, in their opinion, the consolidated financial statements, schedules and
notes of the Company audited by them and included in the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the Act and the
Regulations;
(iii) stating that, on the basis of specified procedures, which included a reading of the
latest available unaudited interim consolidated financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial statements), a reading
of the minutes of the meetings of the shareholders and the Boards of Directors of the Company and
the Subsidiaries and the Audit, Corporate Governance and Nominating, and Compensation Committees of
such Boards and inquiries to certain officers and other employees of the Company and the
Subsidiaries responsible for operational, financial and accounting matters and other specified
procedures and inquiries, nothing has come to their attention that, except as specified in their
letter, would cause them to believe (x) that at a specified date not more than five business days
prior to the date of such letter, there was any change in the capital stock or increase in
long-term debt of the Company (other than increases that the Registration Statement disclosed have
occurred or may occur), in each case, as compared with the amounts shown in the Company’s December
31, 2009 audited balance sheets or any later dated Company balance sheet included in the
Registration Statement or (y) that for the periods from and including January 1, 2010 to the date
of the latest available unaudited financial statements of the Company, if any, there were any
decreases, as compared to the corresponding periods in the prior year, in operating income or total
or per share amounts of net income, except in all instances for changes, decreases or increases
that the Registration Statement discloses have occurred or may occur.
(iv) stating that they have compared specific dollar amounts (or percentages derived from such
dollar amounts), numbers of shares and other numerical data and financial information set forth in
the Registration Statement that have been reasonably specified by the Representative prior to the
date of this Agreement (in each case to the extent that such dollar amounts, percentages and other
information is derived from the general accounting records subject to the internal controls of the
Company’s or the Subsidiaries’ accounting systems, or has been derived directly from such
accounting records by analysis or comparison or has been derived from other records and analyses
maintained or prepared by the Company or the Subsidiaries) with the results obtained from the
application of readings, inquiries and other appropriate procedures set forth in the letter, and
found them to be in agreement. All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included in the Registration
Statement for purposes of this subsection.
28
(v) provided, that the letter delivered on the Closing Date or the Option Closing Date, as the
case may be, shall use a “cut-off” date no more than five business days prior to such Closing Date
or such Option Closing Date, as the case may be.
(j) All corporate and other proceedings and other matters incident to the authorization, form
and validity of this Agreement and the form of the Registration Statement and Prospectus and all
other legal matters related to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all respects to counsel to the Underwriters. The Company shall have
furnished to such counsel all documents and information that they shall have reasonably requested
to enable them to pass upon such matters.
(k) FINRA shall have confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) The Shares shall have been included for listing on the NYSE Amex Equities.
(m) At the Closing Date and any Option Closing Date, the Representative shall have been
furnished such additional documents, information and certificates as they shall have reasonably
requested.
All such opinions, certificates, letters and documents shall be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance to the
Representative and the Underwriters’ counsel. The Company and each Selling Shareholder,
respectively, shall furnish the Representative with such conformed copies of such opinions,
certificates, letters and other documents as it shall reasonably request. If any condition to the
Underwriters’ obligations hereunder to be fulfilled prior to or at the Closing Date or any Option
Closing Date, as the case may be, is not fulfilled, the Representative on behalf of the
Underwriters may terminate this Agreement with respect to the Closing Date or such Option Closing
Date, as applicable, or, if it so elects, waive any such conditions which have not been fulfilled
or extend the time for their fulfillment. Any such termination shall be without liability of the
Underwriters to the Company and Selling Shareholders.
10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, and each person, if any,
who controls each Underwriter within the meaning of the Act and the Exchange Act, against any and
all loss, liability, claim, damage and expense whatsoever, including, but not limited to, any and
all reasonable expenses incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever or in connection with any investigation or inquiry
of, or action or proceeding that may be brought against, the respective indemnified parties,
arising out of or based upon any breach of the representations and warranties of the Company made
in this Agreement or any untrue statements or alleged untrue statements of material fact contained
in the Registration Statement, any Preliminary Prospectus, the Disclosure Package or the
Prospectus, any application or other document filed in any jurisdiction in order to qualify all or
any part of the Shares under the securities laws thereof or filed with the SEC or FINRA (in this
Section 10 collectively called
29
“application”), or the omission or alleged omission from any of the foregoing of a material
fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading; provided, however, that the foregoing
indemnity shall not apply in respect of any statement or omission made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter expressly for use
in any Preliminary Prospectus, the Registration Statement or Prospectus, or any amendment or
supplement thereto, or in any application or in any communication to the SEC, as the case may be
and provided further that the foregoing indemnification with respect to any Preliminary Prospectus
shall not inure to the benefit of such Underwriter if a copy of the Prospectus (as then amended and
supplemented) was not sent or given by or on behalf of such Underwriter to the person asserting any
losses, claims, damages or liabilities, and if the Prospectus (as amended and supplemented) would
have cured the defect giving rise to such losses, claims, damages or liabilities. The obligations
of the Company under this Section 10(a) will be in addition to any liability the Company may
otherwise have. The indemnification obligations of the Company and the Selling Shareholders shall
be several and not joint.
(b) Each Selling Shareholder shall indemnify and hold harmless each Underwriter, and each
person, if any, who controls each Underwriter within the meaning of the Act and the Exchange Act
against any and all loss, liability, claim, damage and expense whatsoever, including, but not
limited to, any and all reasonable expenses incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever or in connection with any
investigation or inquiry of, or action or proceeding that may be brought against, the respective
indemnified parties, arising out of or based upon any breach of the representations and warranties
of such Selling Shareholder made in this Agreement or any untrue statements or alleged untrue
statements of material fact contained in the Registration Statement, any Preliminary Prospectus,
the Disclosure Package or the Prospectus, any application or other document filed in any
jurisdiction in order to qualify all or any part of the Shares under the securities laws thereof or
filed with the SEC or FINRA (in this Section 10 collectively called “application”), or the omission
or alleged omission from any of the foregoing of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which they are made, not
misleading, but only with respect to any and all loss, liability, claim, damage or expense
resulting from statements or omissions, or alleged statements or omissions, if any, made in any
Preliminary Prospectus, the Disclosure Package, the Registration Statement or the Prospectus or any
amendment or supplement thereof or any application or in any communication to the SEC in reliance
upon, and in conformity with written information furnished to each Underwriter by such Selling
Shareholder expressly for use in any Preliminary Prospectus, the Disclosure Package, the
Registration Statement or the Prospectus or any amendment or supplement thereof, or any application
or in any communication to the SEC, as the case may be and provided further that the foregoing
indemnification with respect to any Preliminary Prospectus shall not inure to the benefit of the
Underwriter if a copy of the Prospectus (as then amended and supplemented) was not sent or given by
or on behalf of the Underwriter to the person asserting any losses, claims, damages or liabilities,
and if the Prospectus (as amended and supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities. The obligations of each Selling Shareholder under this
Section 10(b) will be in addition to any liability such Selling Shareholder may otherwise have.
The indemnification obligations of the Company and each Selling Shareholder shall be several and
not joint.
30
(c) Each Underwriter severally and not jointly shall indemnify and hold harmless the Company,
each Selling Shareholder, each of the directors of the Company, each of the officers of the Company
who shall have signed the Registration Statement, and each other person, if any, who controls the
Company or such Selling Shareholder within the meaning of the Act and the Exchange Act, to the same
extent as the foregoing indemnities from the Company and each Selling Shareholder to the
Underwriters, but only with respect to any and all loss, liability, claim, damage or expense
resulting from statements or omissions, or alleged statements or omissions, if any, made in any
Preliminary Prospectus, the Disclosure Package, the Registration Statement or the Prospectus or any
amendment or supplement thereof or any application or in any communication to the SEC in reliance
upon, and in conformity with written information furnished to the Company and Selling Shareholders
by any Underwriter through the Representative expressly for use in any Preliminary Prospectus, the
Disclosure Package, the Registration Statement or the Prospectus or any amendment or supplement
thereof, or any application or in any communication to the SEC, as the case may be. The
obligations of each Underwriter under this Section 10(c) will be in addition to any liability which
such Underwriter may otherwise have.
(d) If any action, inquiry, investigation or proceeding is brought against any person in
respect of which indemnification may be sought pursuant to Section 10(a), (b) or (c) hereof, such
person (hereinafter called the “indemnified party”) shall, promptly after notification of, or
receipt of service of process for, such action, inquiry, investigation or proceeding, notify in
writing the party or parties against whom indemnification is to be sought (hereinafter called the
“indemnifying party”) of the institution of such action, inquiry, investigation or proceeding. The
indemnifying party, upon the request of the indemnified party, shall assume the defense of such
action, inquiry, investigation or proceeding, including, without limitation, the employment of
counsel (reasonably satisfactory to such indemnified party) and payment of expenses. No
indemnification provided for in this Section 10 shall be available to any indemnified party who
shall fail to give such notice if the indemnifying party does not have knowledge of such action,
inquiry, investigation or proceeding to the extent that such indemnifying party has been materially
prejudiced by the failure to give such notice, but the omission to so notify the indemnifying party
shall not relieve the indemnifying party otherwise than under this Section 10. Such indemnified
party shall have the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party unless the employment of
such counsel shall have been authorized in writing by the indemnifying party in connection with the
defense of such action or if the indemnifying party shall not have, within a reasonable period of
time in light of the circumstances, employed counsel reasonably satisfactory to the indemnified
party, to have charge of the defense of such action, inquiry, investigation or proceeding or if
such indemnified party or parties shall have been advised by counsel that there may be a conflict
between the positions of the indemnifying party or parties and of the indemnified party or parties
or that there may be legal defenses available to such indemnified party or parties different from
or in addition to those available to the indemnifying party or parties, in any of which events the
indemnified party or parties shall be entitled to select counsel to conduct the defense to the
extent determined by such counsel to be necessary to protect the interests of the indemnified party
or parties, and the reasonable fees and expenses of such counsel shall be borne by the indemnifying
party. The indemnifying party shall be responsible for the fees and disbursements of only one such
counsel so engaged by the indemnified party or parties as a group. Expenses covered by the
indemnification in this
31
Section 10 shall be paid by the indemnifying party promptly after written request is submitted by the
indemnified party. In the event that it is determined that the indemnified party was not entitled
to receive payments for expenses pursuant to this Section 10, the indemnified party shall return
all sums that have been paid pursuant hereto. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending or threatened action
in respect of which any indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party unless such settlement includes an unconditional
release of such indemnified party from all liability on any claims that are the subject matter of
such action. Anything in this Section 10 to the contrary notwithstanding an indemnifying party
shall not be liable for any settlement of a claim affected without its written consent, which
consent shall not be unreasonably withheld.
(e) If the indemnification provided for in this Section 10 is unavailable or insufficient to
hold harmless an indemnified party under Section 10(a), (b) or (c) hereof in respect of any losses,
liabilities, claims, damages or expenses (or actions, inquiries, investigations or proceedings in
respect thereof) referred to therein, except by reason of the failure to give notice as required in
Section 10(d) hereof (provided that the indemnifying party does not have knowledge of the action,
inquiry, investigation or proceeding and to the extent such party has been materially prejudiced by
the failure to give such notice), then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, liabilities, claims, damages or
expenses (or actions, inquiries, investigations or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the Company, the Selling
Shareholders, and the Underwriters 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, the Selling Shareholders, and the Underwriters in connection with the
statements or omissions which resulted in such losses, liabilities, claims or expenses (or actions,
inquiries, investigations or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company, the Selling Shareholders,
and the Underwriters shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company and the Selling Shareholders bear
to the total underwriting discount 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, the Selling Shareholders, or the Underwriters and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders, and the Underwriters agree that it would not be just
and equitable if contributions to this Section 10(e) were determined by pro rata allocation or by
any other method of allocation that does not take account of the equitable considerations referred
to above in this Section 10(e). The amount paid or payable by an indemnified party as a result of
the losses, liabilities, claims, damages or expenses (or actions, inquiries, investigations or
proceedings in respect thereof) referred to above in this Section 10(e)
32
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 Section 10(e), (i) no Underwriter shall not 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
such fraudulent misrepresentation.
11. Representations and Agreements to Survive Delivery. Except as the context
otherwise requires, all representations, warranties and agreements contained in this Agreement
shall be deemed to be representations, warranties and agreements at the Closing Date and any Option
Closing Date. All such representations, warranties and agreements of the Underwriters, the
Company, and the Selling Shareholders, including, without limitation, the indemnity and
contribution agreements contained in Section 10 hereof and the agreements contained in Sections 8,
11 and 12 hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Underwriter or any controlling person, and shall survive
delivery of the Shares and termination of this Agreement, whether before or after the Closing Date
or any Option Closing Date.
12. Effective Date of This Agreement and Termination Hereof.
(a) This Agreement shall become effective at 10:00 a.m., Cleveland, Ohio time, on the first
business day following the Effective Time or at the time of the public offering by the Underwriters
of the Shares, whichever is earlier, except that the provisions of Sections 8, 10, 11 and 12 hereof
shall be effective upon execution hereof. The time of the public offering, for the purpose of this
Section 12, shall mean the time when any of the Shares are first released by the Underwriters for
offering by dealers. The Representative, the Company and the Selling Shareholders may prevent the
provisions of this Agreement (other than those contained in Section 8, 10, 11 and 12) from becoming
effective without liability of any party to any other party, except as noted below, by giving the
notice indicated in Section 12(c) hereof before the time the other provisions of this Agreement
become effective.
(b) The Representative shall have the right to terminate this Agreement at any time prior to
the Closing Date or any Option Closing Date as provided in Sections 9 and 13 or if any of the
following have occurred: (a) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any development involving
a prospective material adverse change in or affecting the Business Conditions of the Company and
the Subsidiaries, whether or not arising in the ordinary course of business, that would, in the
Representative’s reasonable opinion, make the offering or delivery of the Shares impracticable; (b)
any outbreak or escalation of hostilities or other national or international calamity or crisis or
change in economic, political or financial market conditions if the effect on the financial markets
of the United States of such outbreak, calamity, crisis or change would, in the Representative’s
reasonable opinion, make the offering or delivery of the Shares impracticable; (c) any suspension
or limitation of trading generally in securities on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ Global Market or the over the counter market or any setting of minimum
prices for trading or the promulgation of any federal or state statute, regulation, rule or order
of any court or other governmental authority
33
that in the Underwriter’s reasonable opinion materially and adversely affects trading on such
exchange or over the counter market; (d) the enactment, publication, decree or other promulgation
of any federal or state statute, regulation, rule or order of any court or other governmental
authority which in the Underwriter’s reasonable opinion materially and adversely affects or will
materially or adversely affect the Business Conditions of the Company and the Subsidiaries taken as
a whole; (e) declaration of a banking moratorium by the United States, New York, Ohio or
Pennsylvania authorities; (f) the taking of any action by any federal, state or local government or
agency in respect of its monetary or fiscal affairs that in the Representative’s reasonable opinion
has a material adverse effect on the securities markets in the United States; or (g) trading in any
securities of the Company shall have been suspended or halted by FINRA or the SEC.
(c) If the Representative elects to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 12, the Representative shall notify the
Company promptly by telephone or facsimile, confirmed by letter or otherwise in writing.
13. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their obligation to purchase
Firm Shares or Optional Shares hereunder, and if the Firm Shares or Optional Shares with respect to
which such default relates do not exceed in the aggregate 10% of the number of Firm Shares or
Optional Shares, as the case may be, that all the Underwriters have agreed to purchase on the
relevant Closing Date or Option Closing Date, then the Representative may make arrangements
satisfactory to the Company and each Selling Shareholder for the purchase of such Firm Shares or
Optional Shares by other persons, including any of the Underwriters, but if no such arrangements
are made by the relevant Closing Date or Option Closing Date, such Firm Shares or Optional Shares
to which the default relates shall be purchased by the Representative and any non-defaulting
Underwriter in proportion to their respective commitments hereunder (in addition to the number of
Firm Shares and Optional Shares they are obligated to purchase pursuant to Section 3 hereof).
(b) If any Underwriter or Underwriters shall default in its or their obligation to purchase
Firm Shares or Optional Shares hereunder, and if such default relates to more than 10% of the Firm
Shares or Optional Shares, as the case may be, the Representative may make arrangements for another
party or parties (including a non-defaulting Underwriter) to purchase such Firm Shares or Optional
Shares to which such default relates, on the terms contained herein. In the event that the
Representative does not arrange for the purchase of the Firm Shares or Optional Shares to which a
default relates as provided in this Section 13, this Agreement may be terminated by the
Representative or by the Company or Selling Shareholders without liability on the part of the
non-defaulting Underwriters (except as provided in Section 10 hereof) or the Company (except as
provided in Sections 8 and 10 hereof) or the Selling Shareholders (except as provided in Section 10
hereof); provided that if such default occurs with respect to Optional Shares after the Closing
Date, this Agreement will not terminate as to the Firm Shares or any Optional Shares purchased
prior to such termination. Nothing herein shall relieve a defaulting Underwriter of its
obligations hereunder, including but not limited to its liability, if any, to the
34
other Underwriters and to the Company or the Selling Shareholders for damages occasioned by
its default hereunder.
(c) If the Firm Shares or Optional Shares to which the default relates are to be purchased by
the non-defaulting Underwriters, or are to be purchased by another party or parties, the
Representative or the Company shall have the right to postpone the Closing Date or any Option
Closing Date, as the case may be, for a reasonable period but not in any event exceeding seven
days, in order to effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the Company agrees to
file promptly any amendment to the Registration Statement or supplement to the Prospectus that in
the opinion of counsel for the Underwriters may thereby be made necessary. The terms
“Underwriters” and “Underwriter” as used in this Agreement shall include any party substituted
under this Section 13 with like effect as if it had originally been a party to this Agreement with
respect to such Firm Shares and/or Optional Shares.
14. Information Furnished by the Underwriter. The date the Underwriters expect to
deliver the Firm Shares on the cover page, the identity of the Underwriter set forth on the cover
page and in the first paragraph under the heading “Underwriting,” the concession and reallowance
figures appearing in the third paragraph under the heading “Underwriting,” the representations with
respect to stabilization activities in the seventh paragraph under the heading “Underwriting,” the
eighth through tenth paragraphs under the heading “Underwriting” regarding short sales, the
representations of the Underwriter in the eleventh paragraph under the heading “Underwriting” and
the statement regarding discretionary authority in the twelfth paragraph under the heading
“Underwriting” constitute the only written information furnished by reference or on behalf of the
Underwriter referred to in Sections 1(c), (d) and (e) and 10 hereof.
15. Notice. All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to any Underwriter, shall be mailed, delivered, telexed,
faxed, telegrammed, telegraphed or telecopied and confirmed to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., facsimile
number (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., facsimile number (▇▇▇) ▇▇▇-▇▇▇▇;
if sent to ▇▇▇▇▇▇▇ shall be mailed, delivered, faxed, telexed, telegrammed, telegraphed or
telecopied and confirmed to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
facsimile number ▇▇▇-▇▇▇-▇▇▇▇; if sent to ▇▇▇▇▇, shall be mailed, delivered, telexed, telegrammed,
telegraphed or telecopied and confirmed to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, facsimile number ▇▇▇-▇▇▇-▇▇▇▇;and if sent to the Company, shall be mailed, delivered,
telexed, telegrammed, telegraphed or telecopied and confirmed to Gas Natural Inc., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, facsimile number ▇▇▇-▇▇▇-▇▇▇▇,
with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ PLL, Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., facsimile
number (▇▇▇) ▇▇▇-▇▇▇▇.
16. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters, the Selling Shareholders, and the Company and the controlling
persons, directors and officers thereof, and their respective successors, assigns, heirs and legal
representatives, and no other person shall have or be construed to have any legal or equitable
35
right, remedy or claim under or in respect of or by virtue of this Agreement or any provision
herein contained. The terms “successors” and “assigns” shall not include any purchaser of the
Shares merely because of such purchase.
17. Definition of Business Day. For purposes of this Agreement, “business day” means
any day on which the NYSE Amex Equities is opened for trading.
18. Counterparts. This Agreement may be executed in one or more counterparts
(including by means of facsimile signature pages), and all such counterparts will constitute one
and the same instrument. This Agreement and any signed agreement or instrument entered into in
connection with this Agreement, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine, shall be treated in all manner and respects as an
original agreement or instrument and shall be considered to have the same binding legal effect as
if it were the original signed version thereof delivered in person. At the request of any party,
the other party shall re-execute original forms thereof and deliver them to the other party. No
party shall raise the use of a facsimile machine to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the use of a facsimile
machine as a defense to the formation of a contract and each such party forever waives any such
defense.
19. Construction. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and performed entirely within
such state.
20. Amendments or Waivers. No amendment or waiver of any provision of this Agreement,
and no consent or approval to any departure therefrom, shall in any event be effective unless the
same shall be in writing and signed by the parties thereto.
21. Partial Unenforceability. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or enforceability of any
other Section, paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.
22. Consent to Jurisdiction. Any legal suit, action or proceeding arising out of or
based upon this Agreement or the transactions contemplated hereby must be instituted in the federal
courts of the United States of America or the state courts in the Borough of Manhattan in each case
located in the City of New York, and the parties irrevocably submit to the exclusive jurisdiction
(except for proceedings instituted in regard to the enforcement of a judgment of any such court, as
to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding.
Service of any process, summons, notice or document by certified mail to such party’s address set
forth above shall be effective service of process for any suit, action or other proceeding brought
in any such court. The parties irrevocably and unconditionally waive any objection to the laying
of venue of any suit, action or other proceeding brought in any such court that has been brought in
an inconvenient forum.
36
23. Entire Agreement. This Agreement constitutes the entire agreement of the parties
to this Agreement with respect to the subject matter hereof and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations with respect to the
subject matter hereof.
24. Sophisticated Parties; No Fiduciary Relationship. Each of the parties hereto
acknowledges that it is a sophisticated business person who was adequately represented by counsel
during negotiations regarding the provisions hereof, including, without limitation, the
indemnification and contribution provisions of Section 10, and is fully informed regarding said
provisions. Each of the parties hereto further acknowledges that the provisions of Section 10
hereto fairly allocate the risks in light of the ability of the parties to investigate the Company,
its affairs and its business in order to assure that adequate disclosure has been made in the
Registration Statement, the Disclosure Package and the Prospectus (and any amendments and
supplements thereto), as required by the Act and the Exchange Act. Each of the Company and Selling
Shareholder acknowledges and agrees that in connection with all aspects of each transaction
contemplated by this Agreement, the Company and the Selling Shareholders, on the one hand, and the
Underwriters, on the other hand, have an arms-length business relationship that creates no
fiduciary duty on the part of the Underwriter and all of the parties expressly disclaim any
fiduciary relationship.
[Signature Page Follows]
37
If the foregoing correctly sets forth your understanding of our agreement, please sign and
return to the Company the enclosed duplicate hereof, whereupon it will become a binding agreement
in accordance with its terms.
| Very truly yours, GAS NATURAL INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST (under Restated Trust Agreement Dated January 13, 1995) |
||||
| By: | ||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee | |||
| Title: | Selling Shareholder | |||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Selling Shareholder |
||||
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
accepted as of the date first above written.
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC |
||||
| By: | ||||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. | |||
| Title: | Managing Director Head of Infrastructure Group |
|||
If the foregoing correctly sets forth your understanding of our agreement, please sign and
return to the Company the enclosed duplicate hereof, whereupon it will become a binding agreement
in accordance with its terms.
| Very truly yours, GAS NATURAL INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST
(under Restated Trust Agreement Dated January 13, 1995) |
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| By: | ||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee | |||
| Title: | Selling Shareholder | |||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Selling Shareholder |
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The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
accepted as of the date first above written.
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC |
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| By: | ||||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. | |||
| Title: | Managing Director Head of Infrastructure Group |
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