2,000,000 Shares
VIRGINIA GAS COMPANY
Common Stock
(Par Value $0.001 Per Share)
UNDERWRITING AGREEMENT
July __, 1997
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
As Representative of the
Several Underwriters Identified
In Schedule I Hereto,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Ladies and Gentlemen:
Section 1. Introduction. Virginia Gas Company, a
Delaware corporation (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the Underwriters named in
Schedule I hereto (the "Underwriters"), for which ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Incorporated is acting as representative (the "Representative"), an aggregate
of 2,000,000 shares and, at the election of the Underwriters, up to 300,000
additional shares of Common Stock, par value $0.001 per share ("Stock"), of
the Company. The 2,000,000 shares to be sold by the Company are herein
called the "Firm Shares" and the 300,000 additional shares to be sold by the
Company are herein called the "Optional Shares." The Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 3
hereof are herein collectively called the "Shares."
Section 2. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form SB-2 (File No.
333-___________) under the Securities Act of 1933, as amended (the "Act"),
with respect to the Shares, including a form of prospectus subject to
completion, has been prepared by the Company in conformity with the
requirements of the Act and the rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder (the "Rules and
Regulations"). Such registration statement has been filed with the
Commission under the Act and one or more amendments to such registration
statement may also have been so filed. After the execution of this
Agreement, the Company shall file with the Commission a Prospectus (as
hereinafter defined) which
shall have been provided to and approved by the Representative prior to the
filing thereof. As used in this Agreement, the term "Registration Statement"
means such registration statement, as amended and revised at the time when such
registration statement becomes effective, including all financial schedules and
exhibits thereto and any information omitted therefrom pursuant to Rule 430A
under the Act and included in the Prospectus (as hereinafter defined). The term
"Preliminary Prospectus" means each prospectus subject to completion contained
in such Registration Statement or any amendment thereto at the time the
Registration Statement was or is declared effective, or such prospectus subject
to completion filed pursuant to Rule 424(a) under the Act which omits the
information permitted under Rule 430A. The term "Prospectus" means a
prospectus, including any amendments or supplements thereto, relating to the
Registration Statement that includes all the information contained in the most
recently filed Preliminary Prospectus in addition to such information which may
have been omitted in any Preliminary Prospectus pursuant to Rule 430A under the
Act. To the extent the Company relies on Rule 462(b) under the Act ("Rule
462(b)") to increase the maximum aggregate offering price, the Company shall
have made in a timely manner any filing required under Rule 462(b) and such
filing shall be in compliance with such Rule. Copies of the Registration
Statement, any amendment thereto and any Preliminary Prospectus filed with the
Commission have been delivered by the Company to the Representative on behalf of
the Underwriters. The Registration Statement and any post-effective amendment
thereto have been declared effective by the Commission. No stop order
suspending the effectiveness of the Registration Statement, any post-effective
amendment thereto or Rule 462(b) Registration Statement, if any, has been issued
and no proceeding for that purpose has been initiated or threatened by the
Commission.
(b) The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus and has not instituted or
threatened to institute any proceedings with respect to such an order. Each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the Rules and
Regulations, and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through the Representative expressly for use therein.
(c) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects to the
requirements of the Act and the Rules and Regulations of the Commission
thereunder. The Registration Statement and any post-effective amendment
thereto, as of the applicable effective date or dates, and each Prospectus,
as of the date each such prospectus is filed and at all times subsequent
thereto up to and including the Closing Date (as defined in Section 5 hereof)
and the Option Closing Date (as defined in Section 5 hereof), do not contain
an untrue statement of a
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material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through the Representative expressly for use
therein.
(d) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of Delaware
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by reason
of the failure to be so qualified in any such jurisdiction. Each of Virginia
Gas Pipeline Company, Virginia Gas Marketing Company, Virginia Gas
Exploration Company and Virginia Gas Propane Company (each a "Subsidiary" and
together the "Subsidiaries") and each of Virginia Gas Distribution Company
and Virginia Gas Storage Company (each an "Affiliate" and together the
"Affiliates") of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction
of incorporation and each has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or conducts
any business so as to require such qualification, (except for those
jurisdictions in which the failure to so qualify has not had and will not
have a Material Adverse Effect (as hereinafter defined)) and has all power
and authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged. "Material Adverse Effect"
means when used in connection with the Company or any Affiliate, any
development, change or effect that is materially adverse to the business,
properties, assets, net worth, condition (financial or other), results of
operations or, insofar as can be reasonably foreseen, prospects of the
Company and its Subsidiaries, taken as a whole, or of any Affiliate, as the
case may be.
(e) The Company has the duly authorized capitalization
as set forth under the caption "Capitalization" in the Prospectus or most
recently filed Preliminary Prospectus and will have the adjusted
capitalization set forth therein at the Closing Date (as defined in Section
5(a) below), based on the assumptions set forth therein. All of the issued
shares of capital stock of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable. As of the Closing Date, the
securities of the Company conform to the description of the Stock contained
in the Prospectus. With respect to each Subsidiary of the Company, all of
the issued and outstanding shares of capital stock are fully paid and
non-assessable and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims. With respect to each Affiliate, all
of the issued shares of capital stock of each Affiliate owned by the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims, and the percentage owned by the
Company of all of the outstanding shares of
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capital stock of each such Affiliate is as set forth in the Prospectus or most
recently filed Preliminary Prospectus. Other than as disclosed in the
Prospectus, there are no holders of the securities of the Company having rights
to registration thereof or pre-emptive rights to purchase capital stock of the
Company. Except as created hereby or referred to in the Prospectus or most
recently filed Preliminary Prospectus, there are no outstanding options,
warrants, rights or other arrangements requiring the Company at any time to
issue any capital stock.
(f) The unissued Shares to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and non-assessable and will
conform to the description of the Stock contained in the Prospectus. Good
and marketable title to the Shares will pass to the Underwriters on the
Closing Date free and clear of any lien, encumbrance, security interest,
claim or other restriction whatsoever. The Company has received, subject to
notice of issuance, approval to have the Shares listed on The Nasdaq National
Market ("NNM") and the Company knows of no reason or set of facts which is
likely to adversely affect such approval.
(g) The financial statements and the related notes and
schedules thereto included in the Registration Statement and the Prospectus
or the most recent Preliminary Prospectus fairly present in all material
respects the financial condition, results of operations, stockholders' equity
and cash flows of the Company on a consolidated basis and of each Affiliate
at the respective dates and for the respective periods specified therein.
Such financial statements and the related notes and schedules thereto have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise
noted therein) and such financial statements as are audited have been
examined by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, who are independent public accountants
within the meaning of the Act and the Rules and Regulations, as indicated in
their reports filed therewith. The selected financial information and
statistical data set forth under the captions "Prospectus Summary --Summary
Financial Information," "Capitalization," "Selected Consolidated Financial
and Operating Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" in the Prospectus or the
most recent Preliminary Prospectus fairly present, on the basis stated in the
Prospectus or such Preliminary Prospectus, the information included therein
and have been properly derived from the financial statements and other
operating records of the Company and the Subsidiaries and Affiliates.
(h) None of the Company, Subsidiaries and Affiliates
have sustained since the date of the latest audited financial statements
included in the Prospectus (or most recent Preliminary Prospectus) any
material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as
set forth or contemplated in the Prospectus; and, since the respective dates
as of which
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information is given in the Registration Statement and the Prospectus (or
Preliminary Prospectus), there has not been any change in the capital stock or
long-term debt of the Company or any of its Subsidiaries or any of its
Affiliates or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its Subsidiaries and Affiliates, otherwise than as set forth or
contemplated in the Prospectus.
(i) The Company and its Subsidiaries and Affiliates have
filed all necessary foreign, federal, state and local income, franchise and
other material tax returns and has paid all taxes shown as due thereunder and
the Company has no knowledge of any tax deficiency which might be assessed
against the Company, any Subsidiary or Affiliate which, if so assessed, would
be reasonably expected to have a Material Adverse Effect on the Company or
any Affiliate.
(j) The Company and each Subsidiary and Affiliate
maintains insurance of the types and in amounts which it reasonably believes
to be adequate for its business in such amounts and with such deductibles as
are customary for companies in the same or similar business, all of which
insurance is in full force and effect.
(k) Other than as set forth in the Prospectus or
the most recent Preliminary Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its Subsidiaries or
Affiliates is a party or of which any property of the Company or any of its
subsidiaries is the subject which (A) questions the validity of the capital
stock of the Company or this Agreement or of any action taken or to be taken
by the Company pursuant to or in connection with this Agreement, (B) is
required to be disclosed in the Registration Statement or Prospectus, or (C)
if determined adversely to the Company or any of its subsidiaries, could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company or any Affiliate and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others. Any such proceedings that
are set forth in the Final or such Preliminary Prospectus are accurately
summarized therein in all material respects.
(l) The Company has full legal right, power and
authority to enter into this Agreement and to consummate the transactions
provided for herein. This Agreement has been duly authorized, executed and
delivered by the Company and, assuming it is a binding agreement of yours,
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to
or affecting the enforcement of creditors' rights and the application of
equitable principles relating to the availability of remedies and except as
rights to indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such laws).
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(m) The Company's execution and performance of this
Agreement, including application of the net proceeds of the offering, if and
when received, as described in the Prospectus under the caption "Use of
Proceeds" as described in the Prospectus or the most recent Preliminary
Prospectus, will not violate any provision of the Company's Articles of
Incorporation or Bylaws or any law, rule or regulation applicable to the
Company or any of its Subsidiaries or Affiliates of any government, court,
regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any Subsidiary or Affiliate or any of its
respective businesses or properties, and will not result in the breach, or be
in contravention, of any loan agreement, lease, franchise, license, note,
bond, other evidence of indebtedness, indenture, mortgage, deed of trust,
voting trust agreement, stockholders' agreement, note agreement or other
agreement or instrument to which the Company or any Subsidiary or Affiliate
is a party or by which their respective property is or may be subject, or any
statute, judgment, decree, order, rule or regulation applicable to the
Company or any of its Subsidiaries or Affiliates of any government,
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having jurisdiction over
the Company or any of its Subsidiaries or Affiliates or any of their
respective businesses, activities or properties, except those, if any, that
are described in the Prospectus (or most recent Preliminary Prospectus) or
those which would not singly or in the aggregate have a Material Adverse
Effect on the Company or any Affiliate.
(n) All executed agreements or copies of executed
agreements filed as exhibits to the Registration Statement to which the
Company, a Subsidiary or Affiliate is a party or by which it is or may be
bound or to which any of its assets, properties or businesses is or may be
subject have been duly and validly authorized, executed and delivered by the
Company, the Subsidiaries or the Affiliates and constitute the legal, valid
and binding agreements of such party, enforceable against it in accordance
with their respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to enforcement of creditors' rights generally, and general equitable
principles relating to the availability of remedies, and except as rights to
indemnity or contribution may be limited by federal or state securities laws
and the public policy underlying such laws). The descriptions in the
Prospectus and Preliminary Prospectus of contracts and other documents are
accurate and fairly present the information required to be shown with respect
thereto by the Act and the Rules and Regulations, and there are no contracts
or other documents which are required by the Act or the Rules and Regulations
to be described in the Prospectus or filed as exhibits to the Registration
Statement which are not described or filed as required, and the exhibits
which have been filed are complete and correct copies of the documents of
which they purport to be copies.
(o) The Company and its Subsidiaries and Affiliates have
good and marketable title in fee simple to all real property and personal
property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property, and do not
interfere with the use made and proposed to be made of such property by the
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Company, its Subsidiaries or Affiliates and any real property and buildings held
under lease by the Company, its Subsidiaries and Affiliates are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company, its Subsidiaries and Affiliates and any
property held by the Company, its Subsidiaries or Affiliate pursuant to any
other form of agreement or instrument, which constitutes a valid and enforceable
agreement or instrument entitling the Company, its Subsidiary or the Affiliate,
as the case may be, to use the property in the manner set forth or contemplated
by the Prospectus.
(p) No consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the sale of the Shares or the consummation by
the Company of the transactions contemplated by this Agreement, except for
the registration under the Act of the Shares and the registration of the
Stock under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), each of which has been made or obtained, and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters, such approval as may be
required from the NNM to have the Shares listed thereon and such approval as
may be required by the National Association of Securities Dealers in
connection with the terms and conditions set forth in this Agreement.
(q) Neither the Company nor any of its Subsidiaries or
Affiliates is in violation of its Certificate of Incorporation or Bylaws;
neither the Company nor any of its Subsidiaries or Affiliates is (or, as a
result of the passage of time or based on its projected plans of operations,
will be) in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which it
is a party or by which it or any of its properties may be bound, which
default may reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, or which could in any way, individually or in the
aggregate, impair or delay the consummation of the transactions contemplated
by this Agreement or the offering of the Shares in the manner contemplated by
the Prospectus.
(r) The statements set forth in the Prospectus (or
Preliminary Prospectus) under the caption "Description of Securities,"
insofar as they purport to constitute a summary of the terms of the Stock,
and under the captions "Shares Eligible For Future Sale," and "Underwriting"
(except, with respect to the statements under the caption "Underwriting," for
information furnished in writing to the Company by the Underwriters through
the Representative expressly for use therein) insofar as they purport to
describe the provisions of the laws and the provisions of documents referred
to therein, are accurate and fairly summarize such provisions in all material
respects.
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(s) The Company is not and, after giving effect to the
offering and sale of the Shares, 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 (the "Investment Company Act").
(t) Each of the Company and its Subsidiaries and
Affiliates owns or is licensed or otherwise has sufficient right to use the
proprietary knowledge, inventions, patents, trademarks, service marks, trade
names, logo marks and copyrights ("Intellectual Property") currently used in
the conduct of their business, except for those patents, trademarks, service
marks, trade names, logo marks or copyrights with respect to which the
failure to own or license same would not have a Material Adverse Effect on
the Company or any Affiliate. To the best knowledge of the Company, none of
the activities engaged in by the Company or its Subsidiaries or Affiliates
infringes upon or otherwise conflicts with Intellectual Property rights of
others, except for any such conflicts that would not have a Material Adverse
Effect on the Company or on any Affiliate and no claims have been asserted
against the Company, any Subsidiaries or any Affiliate by any person with
respect to the use of any such Rights or challenging or questioning the
validity or effectiveness of any such Rights.
(u) No labor disturbance by, or labor dispute with, the
employees of the Company, its Subsidiaries or Affiliates exists or is
threatened or imminent which may have a Material Adverse Effect on the
Company or any Affiliate.
(v) Since its inception, the Company has not incurred
any liability arising under, or as a result of the application of ,the
provisions of the Act.
(w) The Company, its Subsidiaries and Affiliates have
not violated any applicable environmental, safety, health or similar law
applicable to the business of the Company, nor any federal or state law
relating to discrimination in the hiring, promotion or pay of employees, nor
any applicable federal or state wages and hours law, nor any provisions of
the Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations promulgated thereunder, the consequences of which violation
would reasonably be expected to have a Material Adverse Effect on the Company
or any Affiliate.
(x) Each of the Company and its Subsidiaries and
Affiliates hold all franchises, licenses, permits, approvals, certificates
and other authorizations from federal, state and other governmental or
regulatory authorities necessary to the ownership, leasing and operation of
its properties or required for the present conduct of its business or for the
conduct of its business as contemplated by the Prospectus, and such
franchises, licenses, permits, approvals, certificates and other governmental
authorizations are in full force and effect and each of the Company and its
Subsidiaries and Affiliates is in compliance therewith in all material
respects except where the failure so to obtain, maintain or comply would not
have a Material Adverse Effect on the Company or any Affiliate.
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(y) The books, records and accounts and systems of
internal accounting controls of the Company currently comply with the
requirements of Section 13(b)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(z) Neither the Company nor any of its officers,
directors or affiliates (within the meaning of the Rules and Regulations) has
taken, directly or indirectly, any action designed to stabilize or manipulate
the price of any security of the Company, or which has constituted or which
might in the future reasonably be expected to, cause or result in,
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of the Shares or otherwise.
(aa) The minute books of the Company, its Subsidiaries
and Affiliates are current and contain a materially correct and complete
record of all corporate action taken by the respective Boards of Directors
and stockholders of the Company and the Subsidiaries and Affiliates and all
signatures contained therein are true signatures of the persons whose
signatures they purport to be.
(ab) Except as described in the Prospectus, the Company
is unaware of any loss or threatened loss of any key customer, supplier, or
account which is material to the Company, its Subsidiaries or Affiliates.
(ac) The employee benefit plans, including employee
welfare benefit plans of the Company and the Subsidiaries and Affiliates
("Employee Plans") have been operated in compliance with the applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Internal Revenue Code of 1986, as amended (the "Code"), all
regulations, rulings and announcements promulgated or issued thereunder and
all other applicable governmental laws and regulations (except to the extent
such noncompliance would not have a Material Adverse Effect on the Company or
an Affiliate). No reportable event under Section 4043(b) of ERISA or any
prohibited transaction under Section 406 of ERISA has occurred with respect
to any employee benefit plan maintained by the Company or its Subsidiaries or
Affiliates. There are no pending or, to the Company's knowledge, threatened
claims by or on behalf of any employee benefit plan, by any employee or
beneficiary covered under any such plan or by any governmental agency or
otherwise involving such plans or any of their respective fiduciaries (other
than for routine claims for benefits). All Employee Plans that are group
health plans have been operated in compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code in all
material respects.
Section 3. Purchase of Securities by the Underwriters.
On the basis of the representations, warranties, covenants and agreements
herein contained, but subject to the terms and conditions herein set forth,
(A) the Company agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at a purchase price per share of $_______, the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto and (B) in
the event and to the extent that the Underwriters shall exercise the election
to purchase Optional
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Shares as provided below, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly,
to purchase from the Company, at the purchase price per share set forth in
clause (A) of this Section 3, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so
as to eliminate fractional shares)
The Company hereby grants to the Underwriters the right
to purchase at their election up to 300,000 Optional Shares, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering over-allotments in the sale of the Firm Shares. Any such election
to purchase Optional Shares may be exercised only by written notice from the
Representative to the Company, given within a period of 30 calendar days
after the date of this Agreement and setting forth the aggregate number of
Optional Shares to be purchased and the date on which such Optional Shares
are to be delivered, as determined by you but in no event earlier than the
Closing Date (as defined in Section 5 hereof) or, unless you and the Company
otherwise agree in writing, no earlier than two nor later than ten business
days after the date of such notice.
Section 4. Offering of the Shares by the Underwriters.
Upon the authorization by the Representative of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale
upon the terms and conditions set forth in the Prospectus.
Section 5. Delivery of and Payment for the Shares.
(a) The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representative, for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor in Federal (same day) funds. The Company will cause
the certificates representing the Shares to be made available for checking
and packaging at least twenty-four hours prior to the Closing Date (as
defined below) with respect thereto at the office of ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Incorporated, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ (the "Designated
Office"). The time and date of such delivery and payment shall be, with
respect to the Firm Shares, at ________ a.m., EST, on ______________, 1997 or
such other time and date as the Representative and the Company may agree
upon, and, with respect to the Optional Shares, ______ a.m., EST, on the date
specified by the Representative in the written notice of the Underwriters'
election to purchase such Optional Shares, or such other time and date as the
Representative and the Company may agree upon. Such time and date for
delivery of the Firm Shares is herein called the "Closing Date", such time
and date for delivery of the Optional Shares, if not the Closing Date, is
herein called the "Option Closing Date."
(b) The documents to be delivered at the Closing
Date or the Option Closing Date, as the case may be, by or on behalf of the
parties hereto pursuant to Section
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8 hereof, including the cross-receipt for the Shares and any additional
documents requested by the Underwriters will be delivered at the offices of
▇▇▇▇▇▇▇, Baetjer and ▇▇▇▇▇▇, LLP, 1800 Mercantile Bank & Trust Building, Two
▇▇▇▇▇▇▇ Plaza, Baltimore, Maryland 21201 (the "Closing Location"), and the
Shares will be delivered at the Designated Office, on the Closing Date or the
Option Closing Date, as the case may be.
(c) A meeting will be held at the Closing Location at
2:00 p.m., EST, on the business day next preceding the Closing Date or the
Option Closing Date, as the case may be, or at such other time as is mutually
agreed upon by the parties hereto, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto.
Section 6. Covenants of the Company. The Company
covenants and agrees with each of the Underwriters as follows:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto to become effective as promptly as
practicable. If required, the Company will file the Prospectus and any
amendment or supplement thereto with the Commission in the manner and within
the time period required by Rule 424(b). During any time when a prospectus
relating to the shares is required to be delivered under the Act, the Company
will comply with all requirements imposed upon it by the Act and the Rules
and Regulations to the extent necessary to permit the continuance of sales of
or dealings in the Shares in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented. With respect to any
registration statement, prospectus, amendment, or supplement to be filed with
the Commission in connection with the Shares, the Company will provide a copy
of each such document to the Representative a reasonable time prior to the
date such document is proposed to be filed with the Commission and will not
file any such document without the consent of the Representative. In the
event that the Registration Statement is effective at the time of execution
of this Agreement but the total number of Shares subject to this Agreement
exceeds the number of Shares covered by the Registration Statement, the
Company will promptly file with the Commission on the date hereof a
registration statement pursuant to Rule 462(b) in accordance with the
requirements of such Rule and will make payment of the filing fee therefor in
accordance with the requirements of Rule 111(b) under the Act.
(b) The Company will advise the Representative promptly
(A) when the Registration Statement, as amended, has become effective; (B) if
the provisions of Rule 430A promulgated under the Act will be relied upon,
when the Prospectus has been filed in accordance with said Rule 430A; (C)
when any post-effective amendment to the Registration Statement becomes
effective; (D) of any request made by the Commission for amending the
Registration Statement, for supplementing any Preliminary Prospectus or
Prospectus or for additional information; and (E) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto or any order preventing or
suspending the use of any
-11-
Preliminary Prospectus or Prospectus or any amendment or supplement thereto or
the institution or threat of any investigation or proceeding for that purpose,
and will use its best efforts to prevent the issuance of any such order and, if
issued, to obtain the lifting thereof as soon as possible.
(c) The Company will cooperate with the Representative,
its counsel and the Underwriters in qualifying or registering the Shares for
sale, or obtaining an exemption therefrom, under the Blue Sky laws of such
jurisdictions as the Representative shall designate, and will continue such
qualifications or registrations or exemptions in effect so long as reasonably
requested by the Representative to effect the distribution of the Shares.
The Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not presently qualified.
(d) The Company consents to the use of the Prospectus
(and any amendment or supplement thereto) by the Underwriters and all dealers
to whom the Shares may be sold, in connection with the offering or sale of
the Shares and for such period of time thereafter as the Prospectus is
required by law to be delivered in connection therewith. If, at any time
when a prospectus relating to the Shares is required to be delivered under
the Act, any event occurs as a result of which the Prospectus, as then
amended or supplemented, would include any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein not misleading, or if it becomes necessary at any time to amend or
supplement the Prospectus to comply with the Act or the Rules and
Regulations, the Company promptly will so notify the Representative and,
subject to Section 7(a) hereof, will prepare and file with the Commission an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus which will correct such statement or omission or effect such
compliance, each such amendment or supplement to be reasonably satisfactory
to counsel to the Underwriters.
(e) As soon as practicable, but in any event not later
than 45 days after the end of the 12-month period beginning on the day after
the end of the fiscal quarter of the Company during which the effective date
of the Registration Statement occurs (90 days in the event that such quarter
is the Company's last fiscal quarter), the Company will make generally
available to its security holders, in the manner specified in Rule 158(b) of
the Rules and Regulations, and to the Representative, an earnings statement
which will be in the detail required by, and will otherwise comply with, the
provisions of Section 11(a) of the Act and Rule 158(a) of the Rules and
Regulations, which statement need not be audited unless required by the Act
or the Rules and Regulations, covering a period of at least 12 consecutive
months after the effective date of the Registration Statement.
(f) During a period of five years after the date hereof,
the Company will deliver to the Representative:
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(i) as soon as practicable after filing with the
Commission, all such reports, forms or other documents as may be required
from time to time, under the Act, the Rules and Regulations, the Exchange Act
and the rules and regulations thereunder;
(ii) as soon as they are available, copies of all
information (financial or other) mailed to stockholders;
(iii) as soon as they are available, copies of
all reports and financial statements furnished to or filed with the National
Association of Securities Dealers, Inc. ("NASD") or any securities exchange
or market;
(iv) every press release and every material news
item or article of interest to the financial community in respect of the
Company or its affairs which was released or prepared by the Company; and
(v) any additional information of a public nature
concerning the Company or its business which the Representative may
reasonably request.
During such five-year period the foregoing financial statements will be on a
consolidated basis to the extent that the accounts of the Company and its
subsidiaries are consolidated, and will be accompanied by similar financial
statements for any significant subsidiary or affiliate which is not so
consolidated.
(g) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same entity as the Transfer Agent) for its Stock.
(h) The Company will furnish, without charge, to the
Representative or on the Representative's order, at such place as the
Representative may designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or post-effective amendments
thereto, and any registration statement filed pursuant to Rule 462(b) (two of
which copies will be signed and will include all financial statements and
exhibits) and the Prospectus, and all amendments and supplements thereto in
each case as soon as available and in such quantities as the Representative
may reasonably request. The Company will provide or cause to be provided to
the Representative and upon request to each Underwriter, a copy of the report
on Form SR filed by the Company if required by Rule 463 under the Act.
(i) Except pursuant to this Agreement, the Company will
not, directly or indirectly, without the prior written consent of the
Representative issue, offer, sell, offer to sell, contract to sell, grant any
option to purchase, pledge or otherwise dispose (or announce any issuance,
offer, sale, offer of sale, contract of sale, grant of any option to
purchase, pledge or other disposition) of any shares of Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Stock for a period of 180 days after the
-13-
date hereof, other than issuances pursuant to the exercise of stock options or
warrants outstanding on the date hereof.
(j) The Company will cause the Shares to be duly
approved for listing on the NNM prior to the Closing Date. The Company shall
take all necessary and appropriate action such that the Common Shares are
authorized for quotation on the NNM as soon as practicable after the
effectiveness of the Registration Statement and the Common Shares shall
remain so authorized for at least thirty-six (36) months thereafter.
(k) Neither the Company nor any of its officers or
directors, nor affiliates of any of them (within the meaning of the Rules and
Regulations) will take, directly or indirectly, any action designed to, or
which might in the future reasonably be expected to, cause or result in, or
which will constitute, stabilization or manipulation of the price of any
securities of the Company.
(l) The Company will apply the net proceeds of the
offering received in the manner set forth under the caption "Use of Proceeds"
in the Prospectus.
(m) The Company will timely file all such reports, forms
or other documents as may be required from time to time, under the Act, the
Rules and Regulations, the Exchange Act and the rules and regulations
thereunder, and all such reports, forms and documents so filed will comply as
to form and substance with the applicable requirements under the Act, the
Rules and Regulations, the Exchange Act and the rules and regulations
thereunder.
(n) Except as described in the Prospectus, the Company
will not, prior to the Option Closing Date, incur any liability or
obligation, direct or contingent, or enter into any material transaction,
other than in the ordinary course of business or, if there is no Option
Closing Date, then prior to the First Closing Date.
(o) The Company will not acquire any of the Company's
capital stock prior to the Option Closing Date nor will the Company declare
or pay any dividend or make any other distribution upon its capital stock
payable to its holders of record on a date prior to the Option Closing Date
or, if there is no Option Closing Date, then prior to the Closing Date.
(p) The Company will comply or cause to be complied with
the conditions to the obligations of the Underwriters set forth in Section 8
hereof.
(q) The Company shall promptly prepare and file with the
Commission, from time to time, such reports as may be required to be filed by
the Rules and Regulations.
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Section 7. Expenses.
(a) If the Underwriters purchase the Firm Shares, in
accordance with the terms of this Agreement, the Company will pay the
Representative out of the first proceeds of the offering contemplated hereby
a non-accountable expense allowance of one percent (1%) of the gross proceeds
raised from this offering to compensate the Representative for its expenses
in connection with the transactions contemplated by this Agreement.
(b) If the purchase of the Firm Shares as herein
contemplated is not consummated for any reason other than the Underwriters'
default under this Agreement or other than by reason of Section 11(a), the
Company shall reimburse the several Underwriters for their out-of-pocket
expenses (including but not limited to reasonable counsel fees and
disbursements) in connection with any investigation made by them, and any
preparation made by them in respect of marketing of the Shares or in
contemplation of the performance by them of their obligations hereunder.
Section 8. Conditions of the Underwriters' Obligations.
The obligations of each Underwriter to purchase and pay for the Shares set
forth opposite the name of such Underwriter in Schedule I is subject to the
continuing accuracy of the representations and warranties of the Company
herein as of the date hereof and as of the Closing Date and the Option
Closing Date, if any, as if they had been made on and as of the Closing Date
or the Option Closing Date, as the case may be; the accuracy on and as of the
Closing Date and the Option Closing Date, as applicable, of the statements of
officers of the Company made pursuant to the provisions hereof; the
performance by the Company on and as of the Closing Date and the Option
Closing Date, as applicable, of their respective covenants and agreements
hereunder; and the following additional conditions:
(a) The Registration Statement shall have been declared
effective, and the Prospectus (containing the information omitted pursuant to
Rule 430A) shall have been filed with the Commission not later than the
Commission's close of business on the second business day following the date
hereof or such later time and date to which the Representative shall have
consented. No stop order suspending the effectiveness of the Registration
Statement or any amendment thereto shall have been issued, and no proceedings
for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representative, shall be contemplated by the
Commission. The Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representative shall not have advised the
Company that the Registration Statement, or any amendment thereto, contains
an untrue statement of fact which, in the Representative's opinion, is
material, or omits to state a fact which, in the Representative's opinion, is
material and is required to be stated therein or is necessary to make the
statements therein not misleading, or that the Prospectus, or any supplement
thereto, contains an untrue statement of fact which in the Representative's
opinion, is
-15-
material, or omits to state a fact which, in the Representative's opinion, is
material and is required to be stated thein or is necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading
(c) On or prior to the Closing Date and the Option
Closing Date, if any, the Representative shall have received from counsel to
the Underwriters, such opinion or opinions with respect to the issuance and
sale of the Firm Shares, the Registration Statement and the Prospectus and
such other related matters as the Representative reasonably may request and
such counsel shall have received such documents and other information as they
request to enable them to pass upon such matters.
(d) On the Closing Date and the Option Closing Date, if
any, the Underwriters shall have received the opinion, dated the Closing
Date, of Bright & ▇▇▇▇▇▇, P.C., counsel to the Company, to the effect set
forth below:
(i) The Company, each Subsidiary and each Affiliate
(A) is a duly organized and validly existing corporation in good standing
under the laws of its respective jurisdiction of incorporation with full
power and authority (corporate and other) to own or lease its properties and
to conduct its business as described in the Prospectus, and (B) is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which it owns or leases property or is subject to no
material liability or disability by reason of the failure to be so qualified
in any such jurisdiction.
(ii) The Company has authorized capital stock as set
forth in the Prospectus; the securities of the Company conform in all
material respects to the description thereof contained in the Prospectus; the
outstanding shares of Stock have been duly authorized and validly issued by
the Company, are fully paid and nonassessable, and are free of any preemptive
or other rights to subscribe for any of the Shares pursuant to the Company's
certificate or bylaws or any agreement known to such counsel after reasonable
investigation and due inquiry. The Company has duly authorized the issuance
and sale of the Shares to be sold by it hereunder; such Shares, when issued
by the Company and paid for in accordance with the terms hereof, will be
validly issued, fully paid and non assessable and will conform in all
material respects to the description thereof contained in the Prospectus.
(iii) The shares have been duly approved for
listing on the NNM.
(iv) The Registration Statement is effective under
the Act. Any required filing of a registration statement pursuant to Rule
462(b) has been made in the manner and within the time period required by
Rule 462(b). The Prospectus has been filed with the Commission pursuant to
the appropriate subparagraph of Rule 424(b) under the Act and no stop order
suspending the effectiveness of the Registration Statement or
-16-
any amendment thereto has been issued, and no proceedings for that purpose have
been instituted or are pending or, to the best knowledge of such counsel, are
threatened or contemplated under the Act.
(v) The registration statement originally filed with respect to
the Shares and each amendment thereto, each Preliminary Prospectus and
Prospectus and, if any, each amendment and supplement thereto (except for the
financial statements, schedules and other financial data included therein, as to
which such counsel need not express any opinion), complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations.
(vi) The descriptions and summaries contained in the Prospectus
of contracts and other documents, are accurate and fairly represent in all
material respects the information required to be shown by the Act and the Rules
and Regulations. To the best knowledge of such counsel, there are no contracts
or documents which are required by the Act to be described in the Prospectus or
to be filed as exhibits to the Registration Statement which are not described or
filed as required by the Act and the Rules and Regulations.
(vii) To the best knowledge of such counsel, there is not
pending or threatened against the Company any action, suit, proceeding or
investigation before or by any court, regulatory body, or administrative agency
or any other governmental agency or body, domestic or foreign, of a character
required to be disclosed in the Registration Statement or the Prospectus which
is not so disclosed therein.
(viii) The statements set forth in the Prospectus under the
captions "Business," "Management," "Shares Eligible for Future Sale," and
"Description of Securities," insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to therein, provide a fair
summary of such legal matters, documents and proceedings which is accurate in
all material respects.
(ix) The Company has full legal right, power, and authority to
enter into this Agreement and to consummate the transactions provided for
herein. This Agreement has been duly authorized, executed and delivered by the
Company. This Agreement, assuming due authorization, execution and delivery by
each other party hereto, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally or by
general principles of equity relating to the availability of remedies and except
as rights to indemnity and contribution may be limited by federal or state
securities laws or the public policy underlying such laws.
(x) The Company's execution or delivery of this Agreement, its
performance hereof, its consummation of the transactions contemplated herein or
its application of the net proceeds of the offering in the manner set forth
under the caption
-17-
"Use of Proceeds" in the Prospectus will not conflict with or result in any
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon, any property or asset of the Company or any Subsidiary or
Affiliate pursuant to the terms of (A) the certificate or bylaws of the Company
or any Subsidiary or Affiliate; (B) the terms of any indenture, mortgage, deed
of trust, voting trust agreement, stockholders agreement, note agreement or
other agreement or instrument known to such counsel after reasonable
investigation, to which the Company or any Subsidiary or Affiliate is a party or
by which it is or may be bound or to which any of its properties may be subject;
(C) any statute, rule or regulation of any regulatory body or administrative
agency or other governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or Affiliate or any of their
businesses, activities or properties; or (D) any order or decree of any
government, arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having such jurisdiction.
(xi) No consent, approval, authorization or order of any court,
regulatory body or administrative agency or other governmental agency or body,
domestic or foreign has been or is required for the Company's performance of
this Agreement or the consummation of the transactions contemplated hereby,
except such as may be required under federal securities laws in connection with
the purchase and distribution by the Underwriters of the Shares.
(xii) To the best of such counsel's knowledge, the conduct of
the businesses of the Company or of any Subsidiary or Affiliate is not in
violation of any federal, state or local statute, administrative regulation or
other law, which violation could have a Material Adverse Effect on the Company
or any Affiliate. The Company and each Subsidiary and Affiliate possess all
licenses, permits, approvals and other governmental authorizations required for
the conduct of its business, as described in the Prospectus except where the
absence of any such license, permit, approval or authorization would not be
likely, in the opinion of such Counsel, to have a Material Adverse Effect on the
Company or any Affiliate. Such licenses, permits and other governmental
authorizations possessed by the Company or its Subsidiaries or Affiliates are in
full force and effect and, to such counsel's knowledge after due inquiry, the
Company and each Subsidiary and Affiliate is in all material respects complying
therewith. To such counsel's knowledge, after due inquiry, there is no reason
why the Company would not receive, or would be unlikely to receive such
licenses, permits, approvals and other governmental authorization as would be
required for the conduct of the Company's business as contemplated by the
Prospectus.
(xiii) To the knowledge of such counsel, each of the Company,
its Subsidiaries and Affiliates, as the case may be, has good and marketable
title, except as otherwise stated in the Prospectus, to all the real property
owned by the Company or a Subsidiary or Affiliate as set forth in the
Prospectus, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind or nature whatsoever except those, if any, referred to in the Prospectus
(or reflected in the financial statements included therein) or which, in
-18-
the aggregate, are not material to the Company and its business or any Affiliate
and its business and do not materially affect the value of such property; and
the real properties held or used by the Company or a Subsidiary or Affiliate
under material leases or other material agreements as set forth in the
Prospectus are held by it under valid, subsisting and enforceable leases or
other agreements with respect to which neither the Company nor any Subsidiary or
Affiliate is in default, except to the extent that the enforceability of the
rights and remedies of the Company or a Subsidiary or Affiliate under any such
lease or other agreement may be limited by bankruptcy, insolvency, or similar
laws generally affecting the rights of creditors and by equitable principles
limiting the right to specific performance or other equitable relief.
(xiv) Each of the businesses conducted by the Company or any
Subsidiary or Affiliate are either not subject to regulation by the Federal
Energy Regulatory Commission under the Natural Gas Act or have qualified for an
exemption therefrom and continue to be so qualified.
(xv) To the best of such counsel's knowledge, upon due inquiry,
the Company and each Subsidiary and Affiliate are not in material violation of
any applicable federal, state or local environmental law.
(xvi) The Prospectus fairly and accurately describes each
permit, consent, and authorization, the absence of which would have a Material
Adverse Effect on the Company and its ability to complete the P-25 and P-24
pipelines, to expand the storage capacities of the Saltville and Early Grove
facilities, and otherwise to expand the business operations of the Company, its
Subsidiaries and Affiliates as described in the Prospectus.
In addition, such counsel shall state that, based upon reasonable
inquiry nothing has come to such counsel's attention that causes such counsel to
believe that either the Registration Statement as of the date it is or was
declared effective and as of the Closing Date or the Option Closing Date, as the
case may be, or the Prospectus as of the date thereof and as of the Closing Date
or the Option Closing Date, as the case may be, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein ore necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need not express any belief with respect to
the financial statements, schedules and other financial or statistical data).
In rendering any such opinions, such counsel may rely, as to matters
of fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (d) shall include any amendment or supplement thereto at the date of
such opinion.
-19-
(e) On or prior to the Closing Date and the Option Closing Date, if
any, counsel to the Underwriters shall have been furnished such documents,
certificates and opinions as they may reasonably require in order to evidence
the accuracy, completeness or satisfaction of any of the representations or
warranties of the Company or conditions herein contained.
(f) At the time that this Agreement is executed by the Company the
Underwriters shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter as of the
date of this Agreement in form and substance satisfactory to the Representative
(the "Original Letter"), and on the Closing Date and the Option Closing Date, if
any, the Underwriters shall have received from such firm a letter dated the
Closing Date or Option Closing Date, as applicable, stating that, as of a
specified date not earlier than five days prior to the date of such letter,
nothing has come to the attention of such firm to suggest that the statements
made in the Original Letter are not true and correct.
(g) On the Closing Date, and the Option Closing Date, if any, the
Underwriters shall have received a certificate, dated the Closing Date or the
Option Closing Date, as applicable, of the principal executive officer and the
principal financial or accounting officer of the Company to the effect that each
of such persons has carefully examined the Registration Statement and the
Prospectus and any amendments or supplements thereto and this Agreement, and
that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date (or
Option Closing Date), and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this Agreement on its part
to be performed or satisfied at or prior to the Closing Date (or Option Closing
Date);
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose have
been instituted or are pending or, to the best knowledge of each of such
persons, are contemplated or threatened under the Act and any and all filings
required by Rule 424, Rule 430A and Rule 462(b) have been timely made;
(iii) The Registration Statement and Prospectus and, if any,
each amendment and each supplement thereto, contain all statements and
information required to be included therein, and neither the Registration
Statement nor any amendment thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and neither the
Prospectus (or any supplement thereto) or any Preliminary Prospectus includes or
included any untrue statement of a material fact or omits or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and
-20-
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus up to and including
the Closing Date (or the Option Closing Date), the Company has not incurred,
other than in the ordinary course of its business or as described in the
Prospectus or in an amended or supplemented Prospectus, any material liabilities
or obligations, direct or contingent; the Company has not purchased any of its
outstanding capital stock or paid or declared any dividends or other
distributions on its capital stock; the Company has not entered into any
transactions not in the ordinary course of business; and there has not been any
change in the capital stock or long-term debt or any increase in the short-term
borrowings (other than any increase in short-term borrowings in the ordinary
course of business) of the Company or any material adverse change to the
business, properties, assets, net worth, condition (financial or other), results
of operations or, insofar as can be reasonably foreseen, prospects of the
Company; the Company has not sustained any material loss or damage to its
property or assets, whether or not insured; there is no litigation which is
pending or threatened against the Company which is required under the Act or the
Rules and Regulations to be set forth in an amended or supplemented Prospectus
which has not been set forth; and there has not occurred any other event
required to be set forth in an amended or supplemented Prospectus which has not
been set forth.
References to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented at the date of
this certificate.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus up to and including the
Closing Date and the Option Closing Date, as applicable, there has not been (i)
any change or decrease specified in the letter or letters referred to in
paragraph (f) of this Section 8 or (ii) any change, or any development involving
a prospective change, in the business or properties of the Company which change
or decrease in the case of clause (i) or change or development in the case of
clause (ii) makes it impractical or inadvisable in the Representative's judgment
to proceed with the public offering or the delivery of the Shares as
contemplated by the Prospectus.
(i) No order suspending the sale of the Shares in any jurisdiction
designated by you pursuant to Section 6(c) hereof has been issued on or prior to
the Closing Date or the Option Closing Date, as the case may be, and no
proceedings for that purpose have been instituted or, to your knowledge or that
of the Company, have been or are contemplated.
(j) The Representative shall have received from each person who is a
director or officer of the Company or who owns more than five percent (5%) of
the outstanding shares of Stock (either directly or through exercise of
currently exercisable stock options or warrants), assuming exercise of currently
exercisable stock options and warrants on a fully diluted basis, an agreement to
the effect that such person will not,
-21-
directly or indirectly, without the prior written consent of the Representative,
on behalf of the Underwriters, offer, sell, offer to sell, contract to sell,
grant any option to purchase, pledge or otherwise dispose (or announce any
offer, sale, offer of sale, contract of sale, grant of an option to purchase,
pledge or other disposition) of any shares of Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Stock for a
period of 180 days after the date of this Agreement.
(k) The Shares shall have been duly authorized for listing on the
NNM.
(l) The Company shall have furnished the Underwriters with such
further opinions, letters, certificates or documents as the Representative or
counsel for the Underwriters may reasonably request.
All opinions, certificates, letters and documents to be furnished by the
Company will comply with the provisions hereof only if they are reasonably
satisfactory in all material respects to the Underwriters and to counsel for the
Underwriters. The Company shall furnish the Underwriters with manually signed
or conformed copies of such opinions, certificates, letters and documents in
such quantities as you reasonably request. The certificates delivered under
this Section 8 shall constitute representations, warranties and agreements of
the Company as to all matters set forth therein as fully and effectively as if
such matters had been set forth in Section 2 of this Agreement.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at either the Closing Date or the Option Closing Date is not so
satisfied, this Agreement at the Representative's election will terminate upon
notification to the Company without liability on the part of any Underwriter
(including the Representative) or the Company, except for the expenses to be
paid by the Company pursuant to Section 7 hereof and except to the extent
provided in Section 9 hereof.
Section 9. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which such Underwriter or such controlling person may
become subject, under the Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities, or actions arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or the Prospectus or any Preliminary Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements not misleading and will reimburse, as incurred,
such Underwriter or such controlling persons in connection with investigating,
defending or appearing as a third
-22-
party witness in connection with any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in any of such documents in reliance upon and in
conformity with information furnished in writing to the Company on behalf of
such Underwriter through the Representative expressly for use therein, and
provided, further, that such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) from whom the person asserting any
such loss, claim, damage, liability or action purchased Shares which are the
subject thereof to the extent that any such loss, claim, damage, liability or
action (i) results from the fact that such Underwriter failed to send or give a
copy of the Prospectus (as amended or supplemented) to such person at or prior
to the confirmation of the sale of such Shares to such person in any case where
such delivery is required by the Act and (ii) arises out of or is based upon an
untrue statement or omission of a material fact contained in such Preliminary
Prospectus that was corrected in the Prospectus (as amended and supplemented),
unless such failure resulted from non-compliance by the Company with Section
6(h) hereof. The indemnity agreement in this paragraph (a) shall be in addition
to any liability which the Company may otherwise have.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any and all losses, claims, damages or liabilities
(and actions in respect thereof) to which the Company or any such director,
officer, or controlling person may become subject, under the Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with information furnished in writing by
that Underwriter through the Representative to the Company expressly for use
therein; and will reimburse, as incurred, all legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action. The Company acknowledges that the statements with respect
to the public offering of the Shares set forth in the paragraphs under the
caption "Underwriting" and the stabilization legend in the Prospectus have been
furnished by the Underwriters to the Company expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus. The indemnity agreement
-23-
contained in this paragraph (b) shall be in addition to any liability which the
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against one or more indemnifying parties
under this Section 8, notify such indemnifying party or parties of the
commencement thereof; but the failure so to notify the indemnifying party shall
not relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under paragraph (a) or (b) of this Section 8 to
the extent that the indemnifying party was not adversely affected by such
omission. In case any such action is brought against an indemnified party and
it notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties against which a claim is to be made will be
entitled to participate therein and, to the extent that it or they may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party has reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and otherwise to participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses (other than the reasonable costs of investigation)
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party has employed such counsel in connection
with the assumption of such different or additional legal defenses in accordance
with the proviso to the immediately preceding sentence, (ii) the indemnifying
party has not employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party.
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages, expenses
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) (i) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified, on the other hand, from the offering of
the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each of the contributing parties, on the one hand, and
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the party to be indemnified, on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. In any case where the
Company is a contributing party and the Underwriters are the indemnified party,
the relative benefits received by the Company on the one hand, and the
Underwriters, on the other hand, shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Shares (before deducting
expenses) bear to the total underwriting discounts received by the Underwriters
hereunder, in each case as set forth in the table on the cover page of the
Prospectus. 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 or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this paragraph (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph (d), the Underwriters shall not
be required to contribute any amount in excess of the underwriting discount
applicable to the Shares purchased by the Underwriters hereunder. The
Underwriters' obligations to contribute pursuant to this paragraph (d) are
several in proportion to their respective underwriting obligations, and not
joint. No person guilty of fraudulent misrepresentations (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. For purposes of this
paragraph (d), (i) each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter and (ii) each director of
the Company, each officer of the Company who has signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect to which claim for
contribution may be made against another party or parties under this paragraph
(d), notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation (x) it or
they may have hereunder or otherwise than under this paragraph (d) or (y) to the
extent that such party or parties were not adversely affected by such omission.
The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may otherwise have.
Section 10. Representations, etc. to Survive Delivery. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers and the Underwriters,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriters, and will survive delivery of and
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payment for the Shares. Any successors to the Underwriters shall be entitled to
the indemnity, contribution and reimbursement agreements contained in this
Agreement.
Section 11. Effective Date and Termination.
(a) This Agreement shall become effective at ______ a.m., EST, on the
first business day following the date hereof, or at such earlier time after the
Registration Statement becomes effective as the Representative, in its sole
discretion, shall release the Shares for the sale to the public unless prior to
such time the Representative shall have received written notice from the Company
that it elects that this Agreement shall not become effective, or the
Representative shall have given written notice to the Company that the
Representative on behalf of the Underwriters elect that this Agreement shall not
become effective; provided, however, that the provisions of this Section 11 and
of Section 7 and Section 9 hereof shall at all times be effective. For purposes
of this Section 11(a), the Shares to be purchased hereunder shall be deemed to
have been so released upon the earlier of notification by the Representative to
securities dealers releasing such Shares for offering or the release by the
Representative for publication of the first newspaper advertisement which is
subsequently published relating to the Shares.
(b) This Agreement (except for the provisions of Sections 7 and 9
hereof) may be terminated by the Representative by notice to the Company in the
event that the Company has failed to comply in any respect with any of the
provisions of this Agreement required on its part to be performed at or prior to
the Closing Date or the Option Closing Date, or if any of the representations or
warranties of the Company are not accurate in any respect or if the covenants,
agreements or conditions of, or applicable to the Company herein contained have
not been complied with in any respect or satisfied within the time specified on
the Closing Date or the Option Closing Date, respectively, or if prior to the
Closing Date or the Option Closing Date:
(i) the Company shall have sustained a loss by strike, fire,
flood, accident or other calamity of such a character as to interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss was insured;
(ii) trading in the Stock shall have been suspended by the
Commission or the NNM or trading in securities generally on the New York Stock
Exchange or the NNM shall have been suspended or a material limitation on such
trading shall have been imposed or minimum or maximum prices shall have been
established on either such exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
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(iv) there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power or an outbreak or
escalation of any other insurrection or armed conflict involving the United
States; or
(v) there shall have been a material adverse change in (A)
general economic, political or financial conditions or (B) the present or
prospective business or condition (financial or other) of the Company that, in
each case, in the Representative's judgment makes it impracticable or
inadvisable to make or consummate the public offering, sale or delivery of the
Company's Shares on the terms and in the manner contemplated in the Prospectus
and the Registration Statement.
(c) Termination of this Agreement under this Section 12 or Section 13
after the Firm Shares have been purchased by the Underwriters hereunder shall be
applicable only to the Additional Shares. Termination of this Agreement shall
be without liability of any party to any other party other than as provided in
Sections 7 and 9 hereof.
Section 12. Substitution of Underwriters. If one or more of the
Underwriters shall fail or refuse (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 8 or
11 hereof) to purchase and pay for (a) in the case of the Closing Date, the
number of Firm Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to the Representative of such Firm Shares in accordance with the
terms hereof or (b) in the case of the Option Closing Date, the number of
Additional Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to the Representative of such Additional Shares in accordance with
the terms hereof, and the number of such Shares shall not exceed 10% of the Firm
Shares or Additional Shares required to be purchased on the Closing Date or the
Option Closing Date, as the case may be, then, each of the non-defaulting
Underwriters shall purchase and pay for (in addition to the number of such
Shares which it has severally agreed to purchase hereunder) that proportion of
the number of Shares which the defaulting Underwriter or Underwriters shall have
so failed or refused to purchase on such Closing Date or Option Closing Date, as
the case may be, which is the percentage set forth next to each such
Underwriter's name on Schedule I. In such case, the Representative, on behalf
of the Underwriters, shall have the right to postpone the Closing Date or the
Option Closing Date, as the case may be, to a date not exceeding seven full
business days after the date originally fixed as such Closing Date or the Option
Closing Date, as the case may be, pursuant to the terms hereof in order that any
necessary changes in the Registration Statement, the Prospectus or any other
documents or arrangements may be made.
If one or more of the Underwriters shall fail or refuse (otherwise than for
a reason sufficient to justify the termination of this Agreement under the
provisions of Section 8 or 11 hereof) to purchase and pay for (a) in the case of
the Closing Date, the number of Firm Shares agreed to be purchased by such
-27-
Underwriter or Underwriters upon tender to you of such Firm Shares in accordance
with the terms hereof or (b) in the case of the Option Closing Date, the number
of Additional Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to you of such Additional Shares in accordance with the terms
hereof, and the number of such Shares shall exceed 10% of the Firm Shares or
Additional Shares required to be purchased by all the Underwriters on the
Closing Date or the Option Closing Date, as the case may be, then (unless within
48 hours after such default arrangements to your satisfaction shall have been
made for the purchase of the defaulted Shares by an Underwriter or Underwriters)
and subject to the provisions of Section 11(b) hereof, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or on
the part of the Company except as otherwise provided in Sections 7 and 9 hereof.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this paragraph. Nothing in this Section
12, and no action taken hereunder, shall relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
Section 13. Notices. All communications hereunder shall be in writing
and if sent to the Representative shall be mailed or delivered or sent by
facsimile transmission and confirmed by letter to ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Incorporated at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇ (facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇) or, if sent to the
Company, shall be mailed or delivered or sent by facsimile transmission and
confirmed by letter to the Company at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇).
Section 14. Successors. This Agreement shall inure to the benefit of
and be binding upon the Company and each Underwriter and the Company's and each
Underwriter's respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person, except that the representatives, warranties, indemnities and
contribution agreements of the Company contained in this Agreement shall also be
for the benefit of any person or persons, if any, who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and except that the Underwriters' indemnity and contribution agreements shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement and any person or persons, if
any, who control the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. No purchaser of Shares from the Underwriters
will be deemed a successor because of such purchase.
Section 15. Applicable Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland,
without giving effect to the choice of law or conflict of law principles
thereof. Each party hereto consents to the jurisdiction of each court in which
any action is commenced seeking indemnity or contribution pursuant to Section 9
above and agrees to accept, either directly or through an agent, service of
process of each such court.
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Section 16. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
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If the foregoing is in accordance with your understanding, please sign
and return to us ___ counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination, upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Virginia Gas Company
By:_________________________________
Name:____________________________
Title:_____________________________
Accepted as of the date hereof
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, INCORPORATED
___________________________
___________________________
___________________________
By: ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, INCORPORATED
On behalf of each of the Underwriters
By:___________________________
Name:
Title:
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SCHEDULE I
NUMBER OF SHARES TO BE
PURCHASED BY EACH UNDERWRITER
Number of Firm Shares to
be Purchased from the
Name of Underwriter Percentage Company
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Incorporated
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