2,000,000 Shares
XXXXXXXXX XXXXX INCORPORATED
Common Stock
FORM OF UNDERWRITING AGREEMENT
July 15, 1999
CIBC World Markets Corp.
Xxxxxx Brothers Inc.
X.X. Xxxxxxxx & Co.
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
Xxxxxxxxx Downs Incorporated, a Kentucky corporation (the
"Company"), proposes, subject to the terms and conditions contained herein,
to sell to you and the other underwriters named on Schedule I to this
Agreement (the "Underwriters"), for whom you are acting as representatives
(the "Representatives"), an aggregate of 2,000,000 shares (the "Firm Shares")
of the Company's common stock, no par value (the "Common Stock"). The
respective amounts of the Firm Shares to be purchased by each of the several
Underwriters are set forth opposite their names on Schedule I hereto. In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional 300,000 shares (the "Option Shares") of Common
Stock from it for the purpose of covering over-allotments in connection with
the sale of the Firm Shares. The Firm Shares and the Option Shares are
together called the "Shares."
1. SALE AND PURCHASE OF THE SHARES. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(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 price of $27.48 per share (the "Initial Price"), the number
of Firm Shares set forth opposite the name of such Underwriter on Schedule
I to this Agreement, subject to adjustment in accordance with Section 10
hereof.
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares
at the Initial Price. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage (adjusted by the Representatives
to eliminate fractions) of the total number of Option Shares to be
purchased by the Underwriters as such Underwriter is purchasing of the Firm
Shares. Such option may be exercised only to cover over-allotments in the
sales of the Firm Shares by the Underwriters and may be exercised in whole
or in part at any time on or before 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date (as defined below), and
from time to time thereafter within 30 days after the date of this
Agreement, in each case upon written or telegraphic notice, or verbal or
telephonic notice confirmed by written or telegraphic notice, by the
Representatives to the Company no later than 12:00 noon, New York City
time, on the business day before the Firm Shares Closing Date or at least
two business days before the Option Shares Closing Date (as defined below),
as the case may be, setting forth the number of Option Shares to be
purchased and the time and date (if other than the Firm Shares Closing
Date) of such purchase.
2. DELIVERY AND PAYMENT. Delivery by the Company of the Firm Shares
to the Representatives for the respective accounts of the Underwriters, and
payment of the purchase price by wire transfer of immediately available funds to
the Company against delivery of the certificate(s) therefor to the
Representatives, shall take place at the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time,
on the third business day following the date of this Agreement, or at such time
on such other date, not later than 10 business days after the date of this
Agreement, as shall be agreed upon by the Company and the Representatives (such
time and date of delivery and payment are called the "Firm Shares Closing
Date").
In the event the option with respect to the Option Shares is
exercised, delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the Underwriters and payment of the purchase
price by wire transfer of immediately available funds to the Company, shall take
place at the offices of Xxxxxx, Xxxxx & Bockius LLP specified above at the time
and on the date (which may be the same date as, but in no event shall be earlier
than, the Firm Shares Closing Date) specified in the notice referred to in
Section 1(b) (such time and date of delivery and payment are called the "Option
Shares Closing Date"). The Firm Shares Closing Date and the Option Shares
Closing Date are called, individually, a "Closing Date" and, together, the
"Closing Dates."
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Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the option as described in
Section 1(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission") a Registration Statement (as
hereinafter defined) on Form S-3 (No. 333-79031), including a preliminary
prospectus relating to the Shares, and such amendments thereof as may have
been required to the date of this Agreement. Copies of such Registration
Statement (including all amendments thereto) and of the related Preliminary
Prospectus (as hereinafter defined) have heretofore been delivered by the
Company to you. The term "Preliminary Prospectus" as used in this Agreement
means any preliminary prospectus (as described in Rule 430 of the Rules)
included at any time as a part of the Registration Statement or filed with
the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules. The term "Registration Statement" as
used in this Agreement means the initial registration statement, including
all exhibits, financial schedules and information deemed to be a part of the
Registration Statement through incorporation by reference or otherwise, as
amended at the time and on the date it became effective (the "Effective
Date") and as thereafter amended by post-effective amendments. If the
Company has filed an abbreviated registration statement to register
additional Shares pursuant to Rule 462(b) under the Rules (the "462(b)
Registration Statement") then any reference herein to the Registration
Statement shall be deemed to include such 462(b) Registration Statement. The
term "Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement at the time of effectiveness or, if
Rule 430A of the Rule is relied on, the term Prospectus shall also include
the final prospectus filed with the Commission pursuant to Rule 424(b) of the
Rules.
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus, and are authorized to distribute the Prospectus (as from time to
time amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to, and agrees with, each Underwriter as follows:
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(a) On the Effective Date the Registration Statement complied,
and on the date of the Prospectus, the date any post-effective amendment
to the Registration Statement becomes effective, the date any supplement
or amendment to the Prospectus is filed with the Commission and each
Closing Date, the Registration Statement and the Prospectus (and any
amendment thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and the
Rules and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder; the
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and on the other dates referred to
above, neither the Registration Statement nor the Prospectus nor any
amendment thereof or supplement thereto will contain any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein (as to the Prospectus, in light of the circumstances
under which they were made) not misleading. When any related preliminary
prospectus was first filed with the Commission (whether filed as part of
the Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary prospectus
as amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Rules and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, none of
the representations and warranties in this paragraph 4(a) shall apply to
statements in, or omissions from, the Registration Statement, the
Preliminary Prospectus or the Prospectus made in reliance upon, and in
conformity with, information herein or otherwise furnished in writing by
the Representatives on behalf of the several Underwriters for use in the
Registration Statement or the Prospectus. With respect to the preceding
sentence, the Company acknowledges that the only information furnished
in writing by the Representatives on behalf of the several Underwriters
for use in the Registration Statement or the Prospectus is the
information referred to in Section 7(b) hereof.
(b) The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the
Registration Statement or preventing or suspending the use of the
Prospectus has been issued and no proceedings for that purpose have been
instituted or are threatened under the Securities Act; any required filing
of the Prospectus and any supplement thereto pursuant to Rule 424(b) of the
Rules has been or will be made in the manner and within the time period
required by such Rule 424(b).
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(c) The documents incorporated by reference in the Registration
Statement and the Prospectus, at the time they were filed with the
Commission, complied in all material respects with the requirements of the
Exchange Act and, when read together and with the other information in the
Registration Statement and the Prospectus, do not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(d) The consolidated financial statements of the Company (including
all notes and schedules thereto) included or incorporated by reference in
the Registration Statement and Prospectus present fairly in all material
respects the financial position, the results of operations, the statements
of cash flows and the statements of stockholders' equity and the other
information purported to be shown therein of the Company at the respective
dates and for the respective periods to which they apply; and such
financial statements and related schedules and notes have been prepared in
conformity with generally accepted accounting principles in the United
States applied on a consistent basis throughout the periods involved,
except as specified therein, and all adjustments necessary for a fair
presentation of the results for such periods have been made. The summary
and selected financial data included in the Prospectus present fairly the
information shown therein as at the respective dates and for the respective
periods specified and the summary and selected financial data have been
presented on a basis consistent with the consolidated financial statements
so set forth in the Prospectus and other financial information.
(e) PricewaterhouseCoopers LLP, whose reports are filed with the
Commission as a part of the Registration Statement, are and, during the
periods covered by their reports, were independent public accountants as
required by the Securities Act and the Rules.
(f) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Kentucky. Each
subsidiary of the Company is a corporation, limited liability company or
limited partnership duly organized or formed, as the case may be, validly
existing and in good standing (where applicable) under the laws of the
state of such subsidiary's organization or formation, as the case may be.
The Company and each of its subsidiaries is duly qualified to do business
and is in good standing (where applicable) as a foreign corporation,
limited liability company or limited partnership, as the case may be, in
each jurisdiction in which the nature of the business conducted by it or
location of the assets or properties owned, leased or licensed by it
requires such qualification, except for such jurisdictions where the
failure to so qualify would not have a
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material adverse effect on the assets, properties, business, results of
operations or financial condition of the Company and its subsidiaries,
taken as a whole (a "Material Adverse Effect"). The Company does not
own, lease or license any asset or property or conduct any business
outside the United States of America. The Company and each of its
subsidiaries has all requisite corporate power and authority, and all
necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or regulatory
bodies or any other person or entity (collectively, the "Permits"), to
own, lease and license its assets and properties and conduct its
businesses, all of which are valid and in full force and effect, as
described in the Registration Statement and the Prospectus except where
the failure to obtain or maintain such Permits would not have a Material
Adverse Effect; the Company and each of its subsidiaries has fulfilled
and performed in all material respects all of its material obligations
with respect to such Permits, and no event has occurred that allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other impairment of the rights of the Company
thereunder, except where such revocation, termination or impairment
would not have a Material Adverse Effect. Except as may be required
under the Securities Act, the rules of the National Association of
Securities Dealers, Inc. ("NASD"), the rules of the National
Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market system and state and foreign Blue Sky laws, no other
Permits are required for the Company to enter into, deliver and perform
this Agreement, and to issue and sell the Shares.
(g) All outstanding shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued and are
fully paid and nonassessable, and except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the subsidiaries
are owned by the Company either directly or through wholly owned
subsidiaries, free and clear of any security interests, claims, liens or
encumbrances. Without limiting the foregoing, all outstanding and
issued shares of capital stock of each subsidiary of the Company have
been pledged pursuant to that certain Credit Agreement dated April 23,
1999 (the "Credit Agreement") among the Company, the Banks party
thereto, PNC Bank, National Association, as Agent, CIBC Xxxxxxxxxxx
Corp., as Syndication Agent and Bank One, Kentucky, N.A., as
Documentation Agent; and all such pledged shares are included in the
description of the assets securing the Company's obligations under the
Credit Agreement set forth in the first full paragraph on page 40 of the
Prospectus under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations -Liquidity and Capital
Resources."
(h) The Company owns or possesses adequate and enforceable rights
to use all trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, patents, licenses, know-how
and other similar rights and proprietary knowledge (collectively,
"Intangibles") described in the Prospectus as
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being owned by it, including service xxxx registrations with respect to
the names "Kentucky Derby," "Xxxxxxxxx Xxxxx," "Xxxxxxxxx Xxxxx Sports
Spectrum," "Kentucky Oaks," "Xxxxxxxxx Xxxxxxx" and the twin xxxxxx
design, or necessary for the conduct of its business except where
failure to own or possess such rights would not have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has received
any notice of, nor is aware of, any infringement of or conflict with
asserted rights of others with respect to any Intangibles which singly
or in the aggregate, if subject to an unfavorable decision, ruling or
finding, would have a Material Adverse Effect.
(i) The Company and each of its subsidiaries has good and marketable
title in fee simple to all items of real property and good title to all
personal property described in the Prospectus as being owned by it and any
real property and buildings described in the Prospectus as being held under
lease by the Company or any of its subsidiaries are held by it under valid
and enforceable leases, free and clear of all liens, encumbrances, claims,
security interests and defects, except such as are (A) described in the
Registration Statement and the Prospectus, (B) arise out of the Credit
Agreement or (C) those which would not have a Material Adverse Effect.
(j) There is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board
pending or, to the Company's best knowledge, threatened (and the Company
does not know of any basis therefor) against, or involving the assets,
properties or business of, the Company or its subsidiaries or to which the
Company or its subsidiaries is subject which would have a Material Adverse
Effect, challenges the validity or enforceability of this Agreement or
would be required to be disclosed in the Registration Statement and the
Prospectus that is not so disclosed.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
therein, (i) there has not been any material adverse change with regard to
the assets or properties, business, results of operations, or financial
condition of the Company and its subsidiaries, taken as a whole, (ii)
neither the Company nor any of its subsidiaries has sustained any loss or
interference with its assets, business or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which would have
a Material Adverse Effect; and (iii) since the date of the latest balance
sheet included in the Registration Statement and the Prospectus, except as
described therein, neither the Company nor any of its subsidiaries has (a)
issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except such issuances, liabilities or
obligations incurred in the ordinary course of business and the granting
of 10,000 options to Xxxx Xxxx, (b) entered into any transaction not in the
ordinary course of business or (c) declared or paid any
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dividend or made any distribution on any shares of its stock or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase
or otherwise acquire any shares of its stock.
(l) There is no document, contract or other agreement of a character
required to be described in the Registration Statement or Prospectus or to
be filed as an exhibit to the Registration Statement which is not
described, filed or incorporated by reference as required by the Securities
Act or the Rules. Each description of a document, contract or other
agreement in the Registration Statement and the Prospectus accurately
reflects in all material respects the terms of the underlying document,
contract or agreement required to be described therein. Each agreement
described in the Registration Statement and Prospectus or listed in the
Exhibits to the Registration Statement or incorporated by reference therein
is in full force and effect and is valid and enforceable by and against the
Company or any subsidiary of the Company, as the case may be, in accordance
with its terms except (i) as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles and (ii) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal and state
securities laws or the public policy underlying such laws. No default
exists, and no event has occurred which with notice or lapse of time or
both would constitute a default, in the due performance and observance by
the Company or any subsidiary of the Company, if the subsidiary is a party
thereto, or, to the Company's knowledge, any other party thereto, of any
other agreement or instrument to which the Company or any subsidiary of the
Company is a party or by which it or its properties or business may be
bound or, affected, which default or event would have a Material Adverse
Effect.
(m) None of the Company or its subsidiaries is in violation of any
term or provision of its charter or by-laws or of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a Material Adverse Effect.
(n) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and
sale by the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or provision of, or
constitute a default (or an event which with notice or lapse of time or
both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or any of its
subsidiaries pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the
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Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries or any of their properties or businesses is
bound, or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation applicable to the Company or any of its
subsidiaries, or violate any provision of the charter or by-laws of the
Company or any of its subsidiaries, except for such consents or waivers
as have already been obtained and are in full force and effect or for
any such case that would not have a Material Adverse Effect.
(o) The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the issued
and outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable. There are no statutory preemptive or
other similar rights to subscribe for or to purchase or acquire any shares
of Common Stock of the Company or any of its subsidiaries or any such
rights pursuant to its Articles of Incorporation or by-laws or any
agreement or instrument to or by which the Company or any of its
subsidiaries is a party or is bound. The Shares, when issued and sold
pursuant to this Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and there is no commitment, plan
or arrangement to issue, any shares of stock of the Company or any security
convertible into, or exercisable or exchangeable for, such stock. The
Common Stock and the Shares conform in all material respects to all
statements in relation thereto contained in the Registration Statement and
the Prospectus.
(p) Except as set forth in the Prospectus, no holder of any security
of the Company, has the right to have any security owned by such holder
included in the Registration Statement or to demand registration of any
security owned by such holder during the period ending 180 days after the
date of this Agreement. Each person known to the Company to be a five
percent or greater stockholder, and each director and executive officer of
the Company, has delivered to the Representatives a written lock-up
agreement in the form attached to this Agreement (a "Lock-up Agreement").
(q) All necessary corporate action has been duly and validly taken
by the Company to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares by the Company. This
Agreement has been duly and validly authorized, executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
except (i) as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles and (ii) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal and state
securities laws or the public policy underlying such laws.
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(r) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the net proceeds thereof as
described in the Prospectus, will not be, an "investment company" or a
person directly or indirectly controlled by an "investment company," as
defined in the Investment Company Act of 1940, as amended.
(s) None of the Company or any of its subsidiaries is involved in
any labor dispute or, to the knowledge of the Company, no such dispute is
threatened, which dispute would have a Material Adverse Effect.
(t) No transaction has occurred between or among the Company and any
of its officers, directors, holders of five percent or more of the capital
stock of the Company or any affiliate or affiliates of any such officer, or
director or holder that is required to be described in and is not described
in the Registration Statement and the Prospectus.
(u) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of any of the Shares.
(v) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail and in all
material respects, the transactions in, and dispositions of, the assets of,
and the results of operations of, the Company and its subsidiaries. The
Company and each of its subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles in the United States and to maintain asset
accountability, (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 the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts
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as are prudent and customary in the businesses in which they are engaged
and all such policies of insurance are in full force and effect in all
material respects.
(x) To the best of the knowledge of the Company, there are no
affiliations with the NASD among the Company's officers, directors, or more
of the capital stock of the Company, except as set forth in the
Registration Statement or otherwise disclosed in writing to the
Representatives of the Underwriters.
(y) Except as would not have a Material Adverse Effect, the Company
and each of its subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local rules, laws and regulations
which are applicable to its business relating to the use, treatment,
disposal of toxic substances and protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses,
(iii)do not own, lease or occupy any property which has been designated as
a Superfund site pursuant to the Comprehensive Environmental Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601,
et. seq.) ("CERCLA") or otherwise designated as a contaminated site under
applicable state or local law and (iv) have not been named as a
"potentially responsible party" under CERCLA. In the ordinary course of
its business, the Company periodically reviews the effect of Environmental
Laws on the business, operations and properties of the Company and its
subsidiaries, in the course of which the Company identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company
has reasonably concluded that such associated costs and liabilities would
not, singly or in the aggregate, have a Material Adverse Effect.
(z) The Company and each of its subsidiaries has filed all Federal,
local and foreign tax returns which are required to be filed through the
date hereof, or has received extensions thereof, and has paid all taxes
shown on such returns and all assessments received by it to the extent that
the same are material and have become due and there are no tax audits or
investigations pending, which if adversely determined would have a Material
Adverse Effect; nor are there any material proposed additional tax
assessments against the Company or any of its subsidiaries.
(aa) The Shares have been duly authorized for quotation on the Nasdaq
National Market System.
(bb) The Company has reviewed its operations and that of its
subsidiaries to
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evaluate the extent to which the business or operations of the Company
or any of its subsidiaries will be affected by the Year 2000 Problem
(that is, any significant risk that computer hardware or software
applications used by the Company and its subsidiaries will not, in the
case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time periods
occurring prior to January 1, 2000); as a result of such review, (i) the
Company does not reasonably believe that (A) there are any issues
related to the Company's preparedness to address the Year 2000 Problem
that are of a character required to be described or referred to in the
Registration Statement or Prospectus which have not been accurately
described in the Registration Statement or Prospectus and (B) the Year
2000 Problem will have a Material Adverse Effect; and (ii) the Company
reasonably believes, and is making due inquiry to confirm, that the
suppliers, vendors, customers or other material third parties used or
served by the Company and such subsidiaries are addressing or will
address the Year 2000 Problem in a timely manner, except to the extent
that a failure to address the Year 2000 by a supplier, vendor, customer
or material third party would not have a Material Adverse Effect.
Any certificate signed by any officer of the Company and delivered to the
Representatives or counsel for the Underwriters in connection with the offering
of the Shares shall be deemed a representation and warranty to each Underwriter
by the Company as to matters covered thereby.
5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in accordance
with Section 6(A)(i) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect, and no
order suspending the effectiveness of the Registration Statement shall be
in effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Commission and the reasonable satisfaction of the
Representatives.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 5(d)
shall be true and
-13-
correct when made and on and as of each Closing Date as if made on
such date, and the Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it at or before such Closing
Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that (i)
the signers of such certificates have carefully examined the Registration
Statement, the Prospectus and this Agreement, and that the representations
and warranties of the Company in this Agreement are true and correct on and
as of such Closing Date with the same effect as if made on such Closing
Date, (ii) the Company has performed all covenants and agreements and
satisfied all conditions contained in this Agreement required to be
performed or satisfied by it at or prior to such Closing Date and (iii) no
stop order suspending the effectiveness of the Registration Statement has
been issued and, to their best knowledge, no proceedings for that purpose
have been instituted or are pending under the Securities Act.
(e) The Representatives shall have received on the Effective Date,
at the time this Agreement is executed and on each Closing Date a signed
letter from PricewaterhouseCoopers, LLP addressed to the Representatives
and dated, respectively, the Effective Date, the date of this Agreement and
each such Closing Date, in form and substance reasonably satisfactory to
the Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Rules, and stating in
effect that:
(i) in their opinion, the financial statements and
financial statement schedules of the Company and its subsidiaries,
Calder Race Course, Inc. and Tropical Park, Inc. included or
incorporated by reference in the Registration Statement and the
Prospectus and audited by them comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act and the Rules;
(ii) they have read the unaudited pro forma condensed
consolidated balance sheet of the Company as of March 31, 1999, and
the unaudited pro forma condensed consolidated statements of income
for the Company for the year ended December 31, 1998, and the
three-month period ended March 31, 1999, included in the Registration
Statement, inquired of officials of the Company who have
responsibility for financial and accounting matters about (A) the
basis for their determination of the pro forma adjustments and (B)
whether the unaudited pro forma condensed consolidated financial
statements referred to in this paragraph (ii) comply as to form in all
material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X and
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proved the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the unaudited pro forma
condensed consolidated financial statements;
(iii) on the basis of the review referred to in clause (ii)
above, nothing came to their attention that caused them to believe
that (a) the unaudited pro forma condensed consolidated financial
statements referred to in (ii) above do not comply as to form in all
material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X and (b) the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of
those statements;
(iv) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, INTERIM FINANCIAL INFORMATION, on the unaudited
condensed interim financial statements of the Company and its
subsidiaries, Calder Race Course, Inc. and Tropical Park, Inc.
included in the Registration Statement;
(v) on the basis of the review referred to in clause (iv)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(1) the unaudited financial statements included in the
Registration Statement do not comply as to form in all
material respects with the applicable accounting
requirements of the Act and the related published Rules
and Regulations or any material modifications should be
made to such unaudited financial statements for them to
be in conformity with generally accepted accounting
principles;
(2) at a specified date not more than three business days
prior to the date of the letter, there was any change
in the capital stock or any increase in the short-term
or long-term indebtedness of the Company and its
consolidated subsidiaries or, at the date of the latest
available balance sheet read by such accountants, there
was any decrease in consolidated net current assets or
net assets, as compared with amounts shown on the
latest balance sheet included in the Prospectus; or
-15-
(3) for the period from the closing date of the latest
income statement included in the Prospectus to the
closing date of the latest available income statement
read by such accountants there were any decreases, as
compared with the corresponding period of the previous
year and with the period of corresponding length ended
the date of the latest income statement included in the
Prospectus, in consolidated net sales or net operating
income in the total or per share amounts of
consolidated net income;
except in all cases set forth in clauses (2) and (3) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
(vi) they have performed certain other procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and reasonably specified by
the Representatives agrees with the accounting records of the Company;
and
(vii) they have performed certain other procedures as a
result of which they determined that the information set forth in the
Prospectus under the captions "Summary Consolidated Selected Financial
Information," "Capitalization," "Selected Consolidated Financial
Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" which is expressed
in dollars (or percentages derived from dollar amounts) and has been
obtained from accounting records which are subject to financial
reporting controls or which have been derived directly from such
accounting records by analysis or computation, is in agreement with
the records or computations made therefrom.
References to the Registration Statement and the Prospectus in this
paragraph (e) are to such documents as amended and supplemented at the
date of the letter.
(f) The Representatives shall have received on the Effective Date, at
the time this Agreement is executed and on each Closing Date a signed
letter from Xxxxxx Xxxxxxxx LLP addressed to the Representatives and dated,
respectively, the Effective Date, the date of this Agreement and each such
Closing Date, in form and substance reasonably satisfactory to the
Representatives, confirming that they are independent accountants within
the meaning of the Securities Act and the Rules, and stating in effect
that:
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(i) in their opinion, the financial statements and
financial statement schedules of Hollywood Park, Inc. included in the
Registration Statement and the Prospectus and audited by them comply
as to form in all material respects with the applicable accounting
requirements of the Securities Act and the Rules;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, INTERIM FINANCIAL INFORMATION, on the unaudited
interim financial statements of Hollywood Park, Inc. included in the
Registration Statement;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statement
of Hollywood Park, Inc., inquiries of officials of Hollywood Park,
Inc. who have responsibility for financial and accounting matters and
other specified procedures, nothing came to their attention that
caused them to believe that:
(1) the unaudited financial statements included in the
Registration Statement do not comply as to form in all
material respects with the applicable accounting
requirements of the Act and the related published Rules
and Regulations or any material modifications should be
made to such unaudited financial statements for them to
be in conformity with generally accepted accounting
principles;
(2) at a specified date not more than three business days
prior to the date of the letter, there was any change
in the capital stock or any increase in the short-term
or long-term indebtedness of Hollywood Park, Inc. and
its consolidated subsidiaries or, at the date of the
latest available balance sheet read by such
accountants, there was any decrease in consolidated net
current assets or net assets, as compared with amounts
shown on the latest balance sheet included in the
Prospectus; or
(3) for the period from the closing date of the latest
income statement included in the Prospectus to the
closing date of the latest available income statement
read by such accountants there were any decreases, as
compared with the corresponding period of the previous
year and with the period of corresponding length ended
the date of the latest income statement included in the
Prospectus, in
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consolidated net sales or net operating income in the
total or per share amounts of consolidated net income;
except in all cases set forth in clauses (2) and (3) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
References to the Registration Statement and the Prospectus in this
paragraph (f) are to such documents as amended and supplemented at the date
of the letter.
(g) The Representatives shall have received on each Closing Date from
Xxxxx, Tarrant & Xxxxx, counsel for the Company, an opinion, addressed to
the Representatives and dated such Closing Date, and stating in effect
that:
(i) Such counsel has acted as principal external counsel to
the Company for more than thirty years, and during the course of such
representation, nothing has come to the attention of such counsel that
would lead such counsel to believe that the Company has not been duly
organized.
(ii) The Company is validly existing as a corporation under
the laws of the Commonwealth of Kentucky. The Company is duly
qualified, and is active or in good standing (where applicable) as a
foreign corporation in each jurisdiction in which the character or
location of its assets or properties (owned, leased or licensed) or
the nature of its businesses makes such qualification necessary,
except for such jurisdictions where the failure to so qualify would
not have a Material Adverse Effect.
(iii) Each of the Company's subsidiaries has been duly
incorporated or formed and is validly existing as a corporation,
limited liability company or limited partnership, as the case may be
and is active or in good standing (where applicable) under the laws of
the jurisdiction of its incorporation or formation. Each subsidiary
of the Company is duly qualified and is active or in good standing
(where applicable) as a foreign corporation, limited liability company
or limited partnership, as the case may be, in each jurisdiction in
which the character or location of its assets or properties (owned,
leased or licensed) or the nature of its business makes such
qualification necessary except for such jurisdictions where the
failure to so qualify would not have a Material Adverse Effect. All
the outstanding shares of capital stock of each corporate subsidiary
of the Company have been duly and validly authorized and issued and
are fully paid and nonassessable, and, except as otherwise set forth
in the Prospectus, to such counsel's knowledge after due
inquiry, all outstanding shares of capital stock of such subsidiaries
are beneficially owned by the Company either directly or through
wholly owned subsidiaries, free and clear of any security interest,
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lien or encumbrance, except as created in connection with the
Credit Agreement.
(iv) Each of the Company and its subsidiaries has, as
applicable, all requisite corporate, partnership or limited liability
company power and authority to own, lease and license its assets and
properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus; and the
Company has all requisite corporate power and authority and all
necessary authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform this
Agreement and to issue and sell the Shares other than those required
under the Securities Act, the rules of the NASD and state and foreign
Blue Sky laws.
(v) The Company has authorized and, to the best knowledge
of such counsel after due inquiry, outstanding capital stock as set
forth in the Registration Statement and the Prospectus under the
caption "Capitalization;" the certificates evidencing the Shares are
in due and proper legal form and have been duly authorized for
issuance by the Company; and to such counsel's knowledge after
appropriate inquiry, all outstanding shares of Common Stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable. Based on such counsel's representation of
the Company as set forth in (i) above, nothing has come to the attention
of such counsel that would lead such counsel to believe that any share
of Common Stock of the Company was issued in violation of any
preemptive or other similar right. To the best of such counsel's
knowledge after due inquiry, except as discussed in the Registration
Statement and the Prospectus, there are no preemptive rights or any
restriction upon the voting or transfer of any securities of the
Company pursuant to the Company's Articles of Incorporation or by-laws
or other governing documents or any other instrument to which the
Company is a party or by which it may be bound. The Shares when
issued and sold pursuant to this Agreement will be duly and validly
issued, outstanding, fully paid and nonassessable, and none of them
will have been issued in violation of any statutory preemptive or
other similar right. To the best of such counsel's knowledge, after
due inquiry, except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and no commitment, plan or arrangement to
issue, any shares of stock of the Company or any security convertible
into, exercisable for, or exchangeable for stock of the Company. The
Common Stock and the Shares conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus. Except as disclosed in the Prospectus, no holders of
securities of the Company have rights to the registration of such
securities under the Registration Statement.
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(vi) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery and
performance of this Agreement, and the issuance and sale of the
Shares. This Agreement has been duly and validly authorized, executed
and delivered by the Company, and this Agreement constitutes the
legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
(vii) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with notice
or lapse of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or any subsidiary of the Company pursuant to the
terms of, any indenture, mortgage, deed trust, note or other material
agreement or instrument of which such counsel is aware and to which
the Company or any subsidiary of the Company is a party or by which it
or any of its properties or businesses is bound, or any material
franchise, license or permit or any judgment, decree, order, statute,
rule or regulation of which such counsel is aware or violate any
provision of the charter or by-laws of the Company or any subsidiary
of the Company.
(viii) To the best of such counsel's knowledge, no event has
occurred which with notice or lapse of time, or both, would constitute
a default, in the due performance and observance of any term, covenant
or condition by the Company of any indenture, mortgage, deed of trust,
note or any other agreement or instrument to which the Company is a
party or by which it or any of its assets or properties or businesses
may be bound or affected, where the consequences of such default would
have a Material Adverse Effect.
(ix) To the best of such counsel's knowledge, the Company
and its subsidiaries are not in violation of any term or provision of
their respective charters or by-laws or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where
the consequences of such violation would have a Material Adverse
Effect.
(x) No consent, approval, authorization or order of any
court or governmental agency or regulatory body, including the
Kentucky Racing Commission, is required for the execution, delivery or
performance of this Agreement by the Company or the consummation of
the transactions contemplated hereby or thereby, except such as have
been obtained under the
-20-
Securities Act, the rules of the NASD or state gaming laws and such
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
several Underwriters.
(xi) To the best of such counsel's knowledge, there is no
litigation or governmental or other proceeding or investigation,
before any court or before or by any public body or board pending or
threatened against, or involving the assets, properties or businesses
of, the Company which would have a Material Adverse Effect.
(xii) The Capital Stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock."
(xiii) The statements in the Prospectus under the captions
"Description of Capital Stock," "Management's Discussion and Analysis
- Liquidity and Capital Resources," "Business - Pari-Mutuel Industry
Overview -- Other Legislative Changes", "Business - Licensing",
"Business - Service Marks," "Business -Environmental Matters,"
"Business - Management," "Principal Shareholders" and "Certain
Transactions," insofar as such statements constitute a summary of
documents referred to therein or matters of law, are fair summaries in
all material respects and accurately present in all material respects
the information called for by the Securities Act and the Rules
promulgated thereunder with respect to such documents and matters. To
such counsel's knowledge, accurate copies of all contracts and other
documents required to be filed as exhibits to, or described in, the
Registration Statement have been so filed with the Commission or
incorporated by reference therein as permitted by the Rules or are
fairly described in the Registration Statement, as the case may be.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the
laws of the Commonwealth of Kentucky, the General Corporation Law of the
State of Delaware and the Federal laws of the United States; provided that
such counsel shall state that in their opinion the Underwriters and they
are justified in relying on such other opinions. Copies of such
certificates and other opinions shall be furnished to the Representatives
and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which
conferences the contents of the Registration Statement and
-21-
the Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in
the Registration Statement and the Prospectus (except as specified in
the foregoing opinion), on the basis of the foregoing, no facts have
come to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective (except
with respect to the financial statements and the notes and schedules
thereto and other financial and statistical data, as to which such
counsel need express no belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
that the Prospectus as amended or supplemented (except with respect to
the financial statements and notes and schedules thereto and other
financial and statistical data, as to which such counsel need make no
statement) on the date thereof contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(h) The Representatives shall have received on each Closing Date from
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois), counsel for the Company,
an opinion, addressed to the Representatives and dated such Closing Date,
and stating in effect that:
(i) The Registration Statement, all preliminary prospectuses and
the Prospectus and each amendment or supplement thereto (except for
the financial statements and schedules and other financial and
statistical data included therein, as to which such counsel expresses
no opinion) comply as to form in all material respects with the
requirements of the Securities Act, the Rules and the Exchange Act.
The Company meets the requirements for filing the Registration
Statement on Form S-3.
(ii) The Registration Statement is effective under the Securities
Act and no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been instituted or are threatened, pending or contemplated. Any
required filing of the Prospectus and any supplement thereto pursuant
to Rule 424(b) under the Securities Act has been made in the manner
and within the time period required by such Rule 424(b).
(iii) The Shares have been approved for listing on the Nasdaq
National Market.
(iv) The company is not an "investment company" or an entity
controlled by an "investment company" as such terms are defined in the
-22-\
Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials, and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the
laws of the State of Illinois, the General Corporation Law of the State of
Delaware and the Federal laws of the United States; provided that such
counsel shall state that in their opinion the Underwriters and they are
justified in relying on such other opinions. Copies of such certificates
and other opinions shall be furnished to the Representatives and counsel
for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which
conferences the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing
opinion), on the basis of the foregoing, no facts have come to the
attention of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective (except with respect
to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus as amended or supplemented (except
with respect to the financial statements and notes and schedules thereto
and other financial data, as to which such counsel need make no statement)
on the date thereof contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(i) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and their
counsel, and the Underwriters shall have received from Xxxxxx, Xxxxx &
Bockius LLP a favorable opinion, addressed to the Representatives and dated
such Closing Date, with respect to the Shares, the Registration Statement
and the Prospectus, and such other related matters as the Representatives
may reasonably request, and the Company shall have furnished to Xxxxxx,
Xxxxx & Xxxxxxx LLP such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(j) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(p).
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6. COVENANTS OF THE COMPANY.
(A) The Company covenants and agrees as follows:
(i) The Company shall prepare the Prospectus in a form
approved by the Representatives and file such Prospectus pursuant to
Rule 424(b) under the Securities Act not later than the Commission's
close of business on the second business day following the execution
and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Securities Act.
(ii) The Company shall promptly advise the Representatives
in writing (a) when any amendment to the Registration Statement shall
have become effective, (b) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for any
additional information, (c) of the prevention or suspension of the use
of any preliminary prospectus or the Prospectus or of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (d) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not
file any amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the Representatives a copy
for their review prior to filing and shall not file any such proposed
amendment or supplement to which the Representatives reasonably
object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the
Shares is required to be delivered under the Securities Act and the
Rules, 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 any material fact necessary to make the
statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend or
supplement the Prospectus to comply with the Securities Act or the
Rules, the Company promptly shall prepare and file with the
Commission, subject to paragraph (ii) of this Section 6(A), an
amendment or supplement which shall correct such statement or omission
or an amendment which shall effect such compliance.
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as practicable,
but not later than 45
-24-
days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date
occurs (or 90 days if such 12-month period coincides with the
Company's fiscal year), an earnings statement (which need not be
audited) of the Company, covering such 12-month period, which shall
satisfy the provisions of Section 11(a) of the Securities Act or
Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and all amendments thereof and,
so long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments thereof
and supplements thereto as the Representatives may reasonably request.
(vi) The Company shall cooperate with the Representatives
and their counsel in endeavoring to qualify the Shares for offer and
sale in connection with the offering under the laws of such
jurisdictions as the Representatives may designate and shall maintain
such qualifications in effect so long as required for the distribution
of the Shares; provided, however, that the Company shall not be
required in connection therewith, as a condition thereof, to qualify
as a foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction.
(vii) For a period of three years after the date of this
Agreement, the Company shall supply to the Representatives, and to
each other Underwriter who may so request in writing, copies of such
financial statements and other periodic and special reports as the
Company may from time to time distribute generally to the holders of
any class of its capital stock and to furnish to the Representatives a
copy of each annual or other report it shall be required to file with
the Commission (including the Report required by Rule 463 of the
Rules).
(viii) Without the prior written consent of CIBC World Markets
Corp., for a period of 180 days after the date of this Agreement, each
of the directors and executive officers of the Company shall not sell
and the Company shall not issue, sell or register with the Commission
(other than on Form S-8 or on any successor form), or otherwise
dispose of, directly or indirectly, any equity securities of the
Company (or any securities convertible into or exercisable or
exchangeable for equity securities of the Company), except for the
issuance of the Shares pursuant to the Registration Statement and the
issuance of shares pursuant to the Company's existing stock option
plan, employee stock purchase
-25-
plan or bonus plan as described in the Registration Statement and
the Prospectus.
(ix) On or before completion of this offering, the Company
shall make all filings required under applicable securities laws and
by the Nasdaq National Market System.
(x) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of Proceeds"
in the Prospectus.
(B) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation,
printing, filing and distribution of the Registration Statement, including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statement and the Prospectus, and the
printing, filing and distribution of this Agreement; (ii) the preparation and
delivery of certificates for the Shares to the Underwriters; (iii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the various jurisdictions referred to in Section
6(A)(vi), including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Representatives and to the Underwriters of copies
of each preliminary prospectus, the Prospectus and all amendments or supplements
to the Prospectus, and of the several documents required by this Section to be
so furnished, as may be reasonably requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to whom Shares
may be sold; (v) the filing fees of the NASD in connection with its review of
the terms of the public offering and reasonable fees and disbursements of
counsel for the Underwriters in connection with such review; (vi) the furnishing
(including costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of all reports and information required by Section
6(A)(vii); (vii) inclusion of the Shares for quotation on the Nasdaq National
Market System; and (viii) all transfer taxes, if any, with respect to the sale
and delivery of the Shares by the Company to the Underwriters. Subject to the
provisions of Section 9, the Underwriters agree to pay, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of the
obligations of the Underwriters under this Agreement not payable by the Company
pursuant to the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter
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and each person, if any, who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or
several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which it
may become subject under the Securities Act, the Exchange Act or other
Federal or state laws or regulations, at common law or otherwise,
insofar as such losses, claims, damages or liabilities arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment thereof or supplement
thereto, or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided,
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of
any losses, claims, damages or liabilities arising from the sale of the
Shares to any person by such Underwriter if such untrue statement or
omission or alleged untrue statement or omission was made in such
preliminary prospectus, the Registration Statement or the Prospectus, or
such amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives
on behalf of any Underwriter specifically for use therein, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section
7(b) below. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, each director of the Company, and each officer of
the Company who signs the Registration Statement, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only insofar
as such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or omission or alleged untrue statement or
omission which was made in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement
thereto, contained in (i) the concession and reallowance figures appearing
in the 3rd and 5th paragraph under the caption "Underwriting" and (ii) the
stabilization information contained in the 15th paragraph under the
caption "Underwriting"; provided, however, that the obligation of each
Underwriter to indemnify the Company (including any controlling person,
director or officer thereof) shall be limited to the net proceeds received
by the Company from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an
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indemnifying party or parties under this Section, notify each such
indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No indemnification
provided for in Section 7(a) or 7(b) shall be available to any party who
shall fail to give notice as provided in this Section 7(c) if the party
to whom notice was not given was unaware of the proceeding to which such
notice would have related and was prejudiced by the failure to give such
notice but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability that
it may have to any indemnified party for contribution or otherwise than
under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and
the approval by the indemnified party of such counsel, which approval
shall not be unreasonably withheld, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in
writing by the indemnifying parties, (ii) the indemnified party shall
have reasonably concluded that there may be a conflict of interest
between the indemnifying parties and the indemnified party in the
conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on
behalf of the indemnified party) or (iii) the indemnifying parties shall
not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of
which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying parties but in no event will the
indemnifying parties be liable for fees and expenses of more than two
counsel, one of whom shall be local counsel, separate from the
indemnifying parties' counsel, for all indemnified parties in connection
with any one or separate but similar or related actions arising out of
the same general allegations. An indemnifying party shall not be liable
for any settlement of any action, suit, proceeding or claim effected
without its written consent, which consent shall not be unreasonably
withheld or delayed.
8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a) or 7(b) is due in accordance with its terms but for any reason is
held to be unavailable or insufficient to hold harmless an indemnified party
under Section 7(a) or 7(b), then each indemnifying party shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
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legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by any person entitled hereunder
to contribution from any person who may be liable for contribution) to which the
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares or, if such allocation
is not permitted by applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided in
Section 7 hereof, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts but before deducting expenses) received by the
Company, as set forth in the table on the cover page of the Prospectus, bear to
(y) the underwriting discounts received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company or
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact related 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 statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to above. Notwithstanding
the provisions of this Section 8, (i) in no case shall any Underwriter (except
as may be provided in the Agreement Among Underwriters) be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder; and (ii) the Company shall be liable
and responsible for any amount in excess of such underwriting discount;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as such Underwriter, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom
-29-
contribution may be sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriter's obligations to contribute
pursuant to this Section 8 are several in proportion to their respective
underwriting commitments and not joint.
9. TERMINATION. This Agreement may be terminated with respect to
the Shares to be purchased on a Closing Date by the Representatives by notifying
the Company at any time
(a) in the absolute discretion of the Representatives at or before
any Closing Date: (i) if, on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with the
offering; (iii) if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as to make
it, in the judgment of the Representatives, inadvisable or impracticable to
market the Shares; (iv) if trading in the Shares has been suspended by the
Commission or trading generally on the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. or the Nasdaq National Market has been
suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for
securities shall have been required, by said exchanges or by order of the
Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; (v) if a banking moratorium has
been declared by any state or Federal authority; or (vi) if, in the
judgment of the Representatives, there has occurred a Material Adverse
Effect, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required
by this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (y) if this Agreement
is terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by
-30-
it under this Agreement, without some reason sufficient hereunder to justify
cancellation or termination of its obligations under this Agreement, shall be
relieved of liability to the Company or to the other Underwriters for damages
occasioned by its failure or refusal.
10. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable, or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase such
Shares on the terms herein set forth in proportion to their respective
obligations hereunder; provided that in no event shall the maximum number
of Shares that any Underwriter has agreed to purchase pursuant to Section 1
be increased pursuant to this Section 10 by more than one-ninth of such
number of Shares without the written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to one additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections
-31-
6(B), 7, 8 and 9. The provisions of this Section shall not in any way affect
the liability of any defaulting Underwriter to the Company or the
nondefaulting Underwriters arising out of such default. A substitute
underwriter hereunder shall become an Underwriter for all purposes of this
Agreement.
11. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(B), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC World Markets Corp., Xxx Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Legal Department with a
copy to Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxxxxx, Esq., and (b) if to the Company, to its agent for
service as such agent's address appears on the cover page of the Registration
Statement with copies to Xxxxx, Xxxxxxx & Xxxxx, Citizens Plaza, Louisville, KY
40202-2898, Attention: Xxxxxx X. Xxxxx and Skadden, Arps, Slate, Xxxxxxx & Xxxx
(Illinois), 000 X. Xxxxxx Xx., Xxxxx 0000, Xxxxxxx, XX 00000, Attention:
Xxxxxxx X. Xxxxxx.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
-32-
[signature page to follow]
-33-
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
XXXXXXXXX DOWNS INCORPORATED
By
-----------------------------
Name:
Title:
Confirmed:
CIBC World Markets Corp.
------------------------------
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I
annexed hereto.
By CIBC World Markets Corp.
By
------------------------------
Name:
Title:
-34-
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
-----------------
CIBC World Markets Corp.
Xxxxxx Brothers Inc.
X.X. Xxxxxxxx & Co.
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
_______________
Total
===============
