▇▇▇▇▇▇'▇ OPERATING COMPANY, INC.
GUARANTEED DEBT SECURITIES
PAYMENT OF PRINCIPAL, INTEREST AND PREMIUM, IF ANY
GUARANTEED BY
▇▇▇▇▇▇'▇ ENTERTAINMENT, INC.
STANDARD UNDERWRITING PROVISIONS
DECEMBER 4, 1998
From time to time, ▇▇▇▇▇▇'▇ Operating Company, a Delaware corporation (the
"COMPANY"), and ▇▇▇▇▇▇'▇ Entertainment, Inc., a Delaware corporation (the
"GUARANTOR"), may enter into one or more underwriting agreements, in the form of
Annex I hereto, that provide for the sale of designated securities to the
several underwriters named therein. The standard provisions set forth herein may
be incorporated by reference in any such underwriting agreement (an
"UNDERWRITING AGREEMENT"). The Underwriting Agreement, including the provisions
incorporated therein by reference, is herein sometimes referred to as this
Agreement. Terms defined in the Underwriting Agreement are used herein as
therein defined.
The terms and rights of any particular issuance of Debt Securities shall be
as specified in the Underwriting Agreement relating thereto and in or pursuant
to the particular indenture, including any supplement thereto (the "INDENTURE")
identified in such Underwriting Agreement.
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Debt Securities and has filed with, or transmitted for filing to, or shall
promptly hereafter file with or transmit for filing to, the Commission a
prospectus supplement (the "PROSPECTUS SUPPLEMENT") specifically relating to the
Offered Securities pursuant to Rule 424 under the Securities Act of 1933, as
amended (the "SECURITIES ACT"). The term "REGISTRATION STATEMENT" means the
registration statement, including the exhibits thereto, as amended to the date
of this Agreement. The term "BASIC PROSPECTUS" means the prospectus included in
the Registration Statement. The term "PROSPECTUS" means the Basic Prospectus
together with the Prospectus Supplement. The term "PRELIMINARY PROSPECTUS" means
a preliminary prospectus supplement specifically relating to the Offered
Securities, together with the Basic Prospectus. As used herein, the terms "Basic
Prospectus," "Prospectus" and "preliminary prospectus" shall include in each
case the documents, if any, incorporated by reference therein. The terms
"SUPPLEMENT," "AMENDMENT" and "AMEND" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").
The term "GAMING LAWS" means any foreign, federal, state or local law and
the rules and regulations thereunder and any similar laws and regulations
governing any aspect of legalized gambling in any foreign, federal, state or
local jurisdiction in which the Company or the Guarantor or any of their
respective subsidiaries conducts business.
1. REPRESENTATIONS AND WARRANTIES. The Company and the Guarantor, jointly
and severally, represent and warrant to and agree with each of the Underwriters
that:
(a) The Registration Statement Nos. 333-52949 and ▇▇▇-▇▇▇▇▇-▇▇ has
become effective; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose
are pending before or threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder, (ii)
each part of the Registration Statement, when such part became effective,
did not contain, and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (iii) the Registration
Statement and the Prospectus comply, and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder and
(iv) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
do not apply (A) to statements or omissions in the Registration Statement
or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the Manager
expressly for use therein or (B) to that part of the Registration Statement
that constitutes the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"), of the
Trustee.
(c) Each of the Company and the Guarantor has been duly incorporated,
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company or the Guarantor and their
respective subsidiaries, taken as a whole.
(d) Each subsidiary of the Company and the Guarantor, respectively,
has been duly organized, is validly existing as a corporation, limited
liability company or partnership in good standing under the laws of the
jurisdiction of its organization, has the power and authority to own its
property and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company or the Guarantor and their
respective subsidiaries, taken as a whole; all of the issued shares of
capital stock or other equity interests of each subsidiary of the Company
and the Guarantor, respectively, have been duly and validly authorized and
issued, are fully paid and non-assessable. Except as set forth in or as
incorporated by reference in the Registration Statement, all of the shares
of capital stock or other equity or partnership interests of each
subsidiary of the Company or the Guarantor which would be considered a
"significant subsidiary" for purposes of Rule 1-02 under Regulation S-X
pursuant to the Securities Act (the "Significant Subsidiaries") are owned
directly or indirectly by the Company or the Guarantor, respectively.
Except as set forth in or as incorporated by reference in the Registration
Statement, all of the shares of capital stock or other equity or
partnership interests of subsidiaries of the Company or the Guarantor held
by the Company or the Guarantor are held free and clear of all liens,
encumbrances, equities or claims except such liens, encumbrances, equities
or claims imposed by Gaming Laws, the terms of any partnership agreement
pertaining to any partnership that is a subsidiary of the Company or which
would not would not have a material adverse effect on the Company or the
Guarantor and their respective subsidiaries, taken as a whole.
(e) This Agreement has been duly authorized, executed and delivered
by each of the Company and the Guarantor.
(f) The Indenture has been duly qualified under the Trust Indenture
Act and has been, or will be by the Closing Date, duly authorized, executed
and delivered by each of the Company and the Guarantor and, assuming due
authorization, execution and delivery thereof by the Trustee, is, or will
be by the Closing Date, a valid and binding agreement of each of the
Company and the Guarantor, respectively, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity.
(g) The Offered Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in accordance
with the terms of the Underwriting Agreement (assuming due authorization,
execution and delivery thereof by the Trustee) will be entitled to the
benefits of the Indenture, and will be valid and binding obligations of the
Company and the Guarantor, respectively, in each case enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
general principles of equity.
(h) The execution and delivery by each of the Company and the
Guarantor of, and the performance by each of the Company and the Guarantor
of its respective obligations under, this Agreement and the Indenture, the
Offered Securities will not contravene any provision of applicable law or
the certificate of incorporation or by-laws of the Company or the
Guarantor, respectively, or any agreement or other instrument binding upon
the Company or any of its subsidiaries, or the Guarantor or any of its
subsidiaries, respectively, that is material to the Company or the
Guarantor and their respective subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or the Guarantor and any of their respective
subsidiaries, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company or the Guarantor of its respective obligations
under this Agreement, the Indenture, the Offered Securities, except such as
has been obtained under the Securities Act, the Exchange Act, and the rules
and regulations thereunder, or as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Offered Securities or as may be required pursuant to Gaming Laws.
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company or the Guarantor and their respective
subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement).
(j) There are no legal or governmental proceedings pending or
threatened to which the Company or the Guarantor and any of their
respective subsidiaries is a party or to which any of the properties of the
Company or the Guarantor or any of their respective subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations, contracts
or other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed or incorporated by reference as
exhibits to the Registration Statement that are not described, filed or
incorporated as required. Neither the Company nor the Guarantor has any
reason to believe that any governmental agency with authority pursuant to
any Gaming Law is investigating the Company, the Guarantor or any of their
respective subsidiaries, other than in ordinary course administrative
reviews, in connection with the Indiana Gaming Commission's review of the
Company and the Guarantor following the Company's acquisition of Showboat,
Inc. or in any ordinary course review of the transactions contemplated
hereby.
(k) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(l) Neither the Company nor the Guarantor is and, after giving effect
to the
offering and sale of the Offered Securities and the application of
the proceeds thereof as described in the Prospectus, will not be an
"investment company" or an entity "controlled by an investment company" as
such terms are defined in the Investment Company Act of 1940, as amended.
(m) The Company and the Guarantor and their respective subsidiaries
(i) are in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure
to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, individually or in the aggregate, have a material adverse effect
on the Company or the Guarantor and their respective subsidiaries, taken as
a whole.
(n) There are no costs or liabilities associated with Environmental
Laws (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) which would, individually or in the aggregate, have a material
adverse effect on the Company or the Guarantor and their respective
subsidiaries, taken as a whole.
(o) Except as disclosed in the Prospectus, each of the Company and
the Guarantor and their respective subsidiaries has sufficient trademarks,
trade names, patent rights, copyrights, or licenses to conduct their
businesses as now conducted in all material respects;
(p) Except as disclosed in or specifically contemplated by the
Prospectus, each of the Company and the Guarantor and their respective
subsidiaries has sufficient licenses, approvals and authorizations required
pursuant to Gaming Laws to conduct their businesses except such licenses,
approvals and authorizations required pursuant to Gaming Laws the absence
of which, either individually or in the aggregate, would not have a
material adverse effect on the Company or the Guarantor and their
respective subsidiaries, taken as a whole;
(q) Each of the Company's and Guarantor's and their respective
subsidiaries' controlling persons, key employees, and, to the Company's or
the Guarantor's knowledge, stockholders, have all necessary permits,
licenses and other authorizations required by Gaming Laws for the Company,
the Guarantor and their respective subsidiaries to conduct their businesses
as now conducted in all material respects; and neither the
Company nor the Guarantor has any knowledge that any of their respective
stockholders is unsuitable or may be deemed unsuitable by any
authorities pursuant to Gaming Laws;
(r) No labor dispute with the employees of the Company or the
Guarantor or any of their respective subsidiaries exists, or to the
knowledge of the Company or the Guarantor, respectively, is imminent which
would, individually or in the aggregate, have a material adverse effect on
the Company or the Guarantor and their respective subsidiaries, taken as a
whole; and
(s) Each of the foregoing representations and warranties would be
true and correct giving effect to the consummation of the acquisition by
Guarantor of Rio Hotel & Casino, Inc. ("Rio") pursuant to that certain
Agreement and Plan of Merger dated as of August 9, 1998, among Guarantor, a
wholly owned subsidiary of Guarantor, and Rio as of the date of this
Agreement.
2. TERMS OF PUBLIC OFFERING. The Company is advised by the Manager that
the Underwriters propose to make a public offering of their respective portions
of the Offered Securities as soon after this Agreement has been entered into as
in the Manager's judgment is advisable. The terms of the public offering of the
Offered Securities are set forth in the Prospectus.
3. PAYMENT AND DELIVERY. Except as otherwise provided in this Section 3,
payment for the Offered Securities shall be made to the Company in Federal or
other funds immediately available at the time and place set forth in the
Underwriting Agreement, upon delivery to the Manager for the respective accounts
of the several Underwriters of the Offered Securities registered in such names
and in such denominations as the Manager shall request in writing not less than
one full business day prior to the date of delivery, with any transfer taxes
payable in connection with the transfer of the Offered Securities to the
Underwriters duly paid.
4. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters are subject to the following conditions:
(a) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's or the Guarantor's securities by any "nationally
recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company or the Guarantor and their
respective subsidiaries, taken as a whole, from that set forth in
the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in the judgment of
the Manager, is material and adverse and that makes it, in the
judgment of the Manager, impracticable to market the Offered
Securities on the terms and in the manner contemplated in the
Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
each of the Company and the Guarantor, to the effect set forth in Section
4(a)(i) above and to the effect that the representations and warranties of
the Company and the Guarantor, respectively, contained in this Agreement
are true and correct as of the Closing Date and that the Company and the
Guarantor, respectively, have complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date. The officer signing and
delivering such certificate may rely upon the best of his or her knowledge
as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of ▇.▇. ▇▇▇▇▇▇▇▇, ▇▇., Senior Vice President and General Counsel of
the Company and the Guarantor, dated the Closing Date, to the effect that:
(i) each of the Company, the Guarantor and the Significant
Subsidiaries has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the
Company or the Guarantor and their respective subsidiaries, taken
as a whole;
(ii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which
the Company or the Guarantor and any of their respective
subsidiaries is a party or to which any of the properties of the
Company or the Guarantor any of their respective subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed or incorporated by reference as exhibits
to the Registration Statement that are not described, filed or
incorporated as required; such counsel does not know of any
investigation by any governmental agency with authority pursuant to
any Gaming Law of the Company, the Guarantor or any of their
respective Subsidiaries, other than in ordinary course
administrative reviews, in connection with the Indiana Gaming
Commission's review of the Company and the Guarantor following the
Company's acquisition of Showboat, Inc. or in any ordinary course
review of the transactions contemplated hereby.
(iii) Each of the Company's and Guarantor's and their
respective subsidiaries' controlling persons, key employees, and,
to the knowledge of such counsel, their stockholders, have all
necessary permits, licenses and other authorizations required by
Gaming Laws for the Company, the Guarantor and their respective
subsidiaries to conduct their businesses as now conducted except
such licenses, approvals and authorizations required pursuant to
Gaming Laws the absence of which, either individually or in the
aggregate, would not have a material adverse effect on the Company
or the Guarantor and their respective subsidiaries, taken as a
whole; and such counsel has no knowledge that any of the respective
stockholders of the Company or the Guarantor is unsuitable or may
be deemed unsuitable by any authorities pursuant to Gaming Laws.
(iv) the statements (A) in the Prospectus under the caption
"Regulation and Licensing," (B) in "Item 3 - Legal Proceedings" of
the Company's most recent annual report on Form 10-K incorporated
by reference in the Prospectus and (C) in "Item 1 - Legal
Proceedings" of Part II of the Company's quarterly reports on Form
10-Q, if any, filed since such annual report, in each case insofar
as such statements constitute summaries of the legal matters,
documents or proceedings referred to ▇▇▇▇▇▇▇, fairly present the
information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred
to therein;
(v) no consent, approval, authorization of, or qualification
with any authority pursuant to Gaming Laws is required with respect
to the issuance of the Offered Securities or the transactions
contemplated by this Agreement and the Indenture, except as has
already been obtained.
(vi) the execution and delivery by each of the Company and
the Guarantor of, and the performance by the Company and the
Guarantor of its respective obligations under, this Agreement, the
Indenture and the Offered Securities will not contravene, to the
best of such counsel's knowledge, any agreement or other instrument
binding upon the Company or the Guarantor and any of their
respective subsidiaries that is material to the Company or the
Guarantor and their respective subsidiaries, taken as a whole, or,
to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having
jurisdiction over the Company or the Guarantor or any of their
respective subsidiaries, including without limitation, pursuant to
any Gaming Laws; and
(vii) such counsel is of the opinion that each document, if
any, filed by the Guarantor pursuant to the Exchange Act and
incorporated by reference in the Prospectus (except for financial
statements and schedules included therein as to which such counsel
need not express any opinion) complied when so filed as to
form in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder.
(d) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, outside counsel for the Company and the
Guarantor, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by each of the Company and the Guarantor;
(ii) the Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered
by each of the Company and the Guarantor and, assuming due
authorization, execution and delivery thereof by the Trustee, is a
valid and binding agreement of the Company and the Guarantor,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity;
(iii) the Offered Securities have been duly authorized and,
when executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Underwriters
in accordance with the terms of the Underwriting Agreement,
assuming due authorization, execution and delivery thereof by the
Trustee, will be entitled to the benefits of the Indenture, will
conform in all material respects as to legal matters to the
description thereof contained in the Prospectus and will be valid
and binding obligations of the Company and the Guarantor,
respectively, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of
equity;
(iv) the execution and delivery by each of the Company and
the Guarantor of, and the performance by the Company and the
Guarantor of its respective obligations under, this Agreement, the
Indenture and the Offered Securities will not contravene any
provision of applicable law (excluding the state securities or Blue
Sky laws of the various states and Gaming Laws) or the certificate
of incorporation or by-laws of the Company or the Guarantor,
respectively, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required
for the performance by the Company or the Guarantor of its
respective obligations under this Agreement, the Indenture and the
Offered Securities, except such as may be required by the
securities or Blue Sky laws of the various states in connection
with the offer and sale of the Offered Securities or as may be
required by Gaming Laws;
(v) the statements (A) in the Prospectus under the captions
"Description of the Debt Securities," "Description of Notes," and
"Plan of Distribution" (B) in the Registration Statement under Item
15, in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein;
(vi) such counsel (A) has no reason to believe that (except
for financial statements and schedules as to which such counsel
need not express any belief and except for that part of the
Registration Statement that constitutes the Form T-1 heretofore
referred to) each part of the Registration Statement, when such
part became effective, contained and, as of the date such opinion
is delivered, contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(B) is of the opinion that the Registration Statement and
Prospectus (except for financial statements and schedules included
therein as to which such counsel need not express any opinion)
comply as to form in all material respects with the Securities Act
and the applicable rules and regulations of the Commission
thereunder and (C) has no reason to believe that (except for
financial statements and schedules as to which such counsel need
not express any belief) the Prospectus as of the date such opinion
is delivered contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
(e) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
Sections 4(d)(i), 4(d)(ii), 4(d)(iii), 4(d)(v) (but only as to the
statements in the Prospectus under "Description of the Debt Securities",
"Description of Notes" and "Plan of Distribution") and 4(d)(vi) above.
With respect to Section 4(d)(vi) above, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may state
that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments
or supplements thereto (but not including documents incorporated therein by
reference) and review and discussion of the contents thereof (including
documents incorporated by reference), but are without independent check or
verification, except as specified. With respect to Section 4(d)(vi) above,
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP may state that their opinion and belief are
based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto (but not
including documents incorporated therein by reference) and review and
discussion of the contents thereof (including documents incorporated
therein by reference), but are without independent check or verification,
except as specified.
The opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ described in Section 4(d) above shall
be rendered to the Underwriters at the request of the Company and the
Guarantor and shall so state therein.
(f) The Underwriters shall have received on the Closing Date a
letter, dated the Closing Date, in form and substance satisfactory to the
Underwriters, from the Company's independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in or incorporated by reference
into the Prospectus.
5. COVENANTS OF THE COMPANY AND THE GUARANTOR. In further
consideration of the agreements of the Underwriters herein contained, each of
the Company and the Guarantor covenants with each Underwriter as follows:
(a) To furnish the Manager, without charge, one signed copy of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish the Manager in New York City,
without charge, prior to 10:00 a.m. New York City time on the business day
next succeeding the date of this Agreement and during the period mentioned
in Section 5(c) below, as many copies of the Prospectus, any documents
incorporated by reference therein and any supplements and amendments
thereto or to the Registration Statement as the Manager may reasonably
request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus with respect to the Offered Securities, to furnish to the
Manager a copy of each such proposed amendment or supplement and not to
file any such proposed amendment or supplement to which the Manager
reasonably objects.
(c) If, during such period after the first date of the public
offering of the Offered Securities as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Prospectus to comply with applicable
law, forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Underwriters and to the dealers (whose names and addresses
the Manager will furnish to the Company) to which Offered Securities may
have been sold by the Manager on behalf of the Underwriters and to any
other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Offered Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the Manager
shall reasonably request.
(e) To make generally available to the Company's security holders
and to the Manager as soon as practicable an earning statement covering a
twelve month period beginning on the first day of the first full fiscal
quarter after the date of this Agreement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and the rules
and regulations of the Commission thereunder. If such fiscal quarter is the
last fiscal quarter of the Company's fiscal year, such earning statement
shall be made available not later than 90 days after the close of the
period covered thereby and in all other cases shall be made available not
later than 45 days after the close of the period covered thereby.
(f) During the period beginning on the date of the Underwriting
Agreement and continuing until the date which is thirty (30) days after the
Closing Date, not to offer, sell, contract to sell or otherwise dispose of
any debt securities of the Company or warrants to purchase debt securities
of the Company substantially similar to the Offered Securities (other than
(i) the Offered Securities and (ii) commercial paper issued in the ordinary
course of business), without the prior written consent of the Manager.
(g) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of the Company's and the
Guarantor's obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's and Guarantor's counsel and the
Company's and Guarantor's accountants in connection with the registration
and delivery of the Offered Securities under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery
of the Offered Securities to the Underwriters, including any transfer or
other taxes payable thereon (but excluding any transfer taxes on resale of
any of the Offered Securities by the Underwriters), (iii) the cost of
printing or producing any Blue Sky or legal investment memorandum in
connection with the offer and sale of the Offered Securities under state
law and all expenses in connection with the qualification of the Offered
Securities for offer and sale under state law as provided in Section 5(d)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or legal investment memorandum, (iv) the fees
and disbursements of the Company's and Guarantor's counsel and accountants
and of the Trustee and its counsel, (v) all filing fees and the reasonable
fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Offered
Securities by the National Association of Securities Dealers, Inc., (vi)
any fees charged by the rating agencies for the rating of the Offered
Securities, (vii) the costs and expenses of the Company and the Guarantor
relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Offered Securities,
including, without limitation, expenses associated with the production of
road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and
the Guarantor and any such consultants, and the cost of any aircraft
chartered in connection with the road show, and (viii) all other costs
and expenses incident to the performance of the obligations of the
Company and the Guarantor hereunder for which provision is not
otherwise made in this Section. It is understood, however, that except
as provided in this Section, Section 6 entitled "Indemnity and
Contribution", and the last paragraph of Section 8 below, the
Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, and any advertising expenses
connected with any offers they may make.
6. INDEMNITY AND CONTRIBUTION.
(a) The Company and the Guarantor, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company or the Guarantor shall have furnished
any amendments or supplements thereto), or caused by 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, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Manager expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantor, and their respective
directors, officers who sign the Registration Statement and each person, if any,
who controls the Company or the Guarantor, respectively, within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company and the Guarantor to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through the
Manager expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either Section 6(a) or 6(b), such person
(the "INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying
party shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are incurred.
Such firm shall be designated in writing by the Manager, in the case of
parties indemnified pursuant to Section 6(a) above, and by the Company, in
the case of parties indemnified pursuant to Section 6(b) above. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified arty for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section
6(a) or 6(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) 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 hand from the offering of the Offered Securities or (ii) if the allocation
provided by clause 6(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 6(d)(i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Offered Securities shall be deemed to be
in the same respective proportions as the net proceeds from the offering of such
Offered Securities (before
deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus Supplement, bear to the
aggregate Public Offering Price of the Offered Securities. The relative fault
of the Company on the one hand and the Underwriters on the other hand shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute pursuant to
this Section 6 are several in proportion to the respective principal amounts
of Offered Securities they have purchased hereunder, and not joint.
(e) The Company, the Guarantor and the Underwriters agree that
it would not be just or equitable if contribution pursuant to this Section 6
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 in Section 6(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 6 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 6 and the representations, warranties and other statements of the
Company and the Guarantor contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or the Company or the Guarantor, or their respective
officers or directors or any person controlling the Company or the Guarantor,
respectively, and (iii) acceptance of and payment for any of the Offered
Securities.
7. TERMINATION. This Agreement shall be subject to termination by notice
given by the Manager to the Company, if (a) after the execution and delivery of
the Underwriting Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange or the Chicago Board of Trade,
(ii) trading of any securities of the Company or the Guarantor shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have
been declared by either Federal or New York State authorities or (iv) there
shall have occurred any outbreak or escalation of hostilities or any change
in financial markets or any calamity or crisis that, in the judgment of the
Manager, is material and adverse and (b) in the case of any of the events
specified in clauses 7(a)(i) through 7(a)(iv), such event, individually or
together with any other such event, makes it, in the judgment of the Manager,
impracticable to market the Offered Securities on the terms and in the manner
contemplated in the Prospectus.
8. DEFAULTING UNDERWRITERS. If, on the Closing Date, any one or more of
the Underwriters shall fail or refuse to purchase Offered Securities that it has
or they have agreed to purchase hereunder on such date, and the aggregate amount
of Offered Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
amount of the Offered Securities to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the amount of
Offered Securities set forth opposite their respective names in the Underwriting
Agreement bears to the aggregate amount of Offered Securities set forth opposite
the names of all such non-defaulting Underwriters, or in such other proportions
as the Manager may specify, to purchase the Offered Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; PROVIDED that in no event shall the amount of Offered Securities
that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 8 by an amount in excess of one-ninth of such
amount of Offered Securities without the written consent of such Underwriter.
If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Offered Securities and the aggregate amount of Offered Securities with
respect to which such default occurs is more than one-tenth of the aggregate
amount of Offered Securities to be purchased on such date, and arrangements
satisfactory to the Manager and the Company for the purchase of such Offered
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either the Manager or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or the Guarantor to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company or the Guarantor shall be unable to perform its
obligations under this Agreement, the Company and the Guarantor will reimburse
the Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder.
9. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
10. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
11. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
ANNEX 1
TO
STANDARD UNDERWRITING PROVISIONS
UNDERWRITING AGREEMENT
[Date]
▇▇▇▇▇▇'▇ Entertainment, Inc.
▇▇▇▇▇▇'▇ Operating Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
We (the "MANAGER") are acting on behalf of the underwriter or underwriters
(including ourselves) named below (such underwriter or underwriters being herein
called the "UNDERWRITERS"), and we understand that ▇▇▇▇▇▇'▇ Operating Company,
Inc., a Delaware corporation (the "COMPANY") and ▇▇▇▇▇▇'▇ Entertainment, Inc., a
Delaware corporation (the "GUARANTOR"), propose to issue and sell [Currency and
Principal Amount] aggregate initial offering price of [Full title of Debt
Securities] (the "DEBT SECURITIES") [(The Debt Securities are collectively
referred to herein as the "OFFERED SECURITIES.")] The Debt Securities will be
issued pursuant to the provisions of an Indenture dated as of December __, 1998
(the "INDENTURE") between the Company and IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company (the
"TRUSTEE").
Subject to the terms and conditions set forth or incorporated by reference
herein, the Company hereby agrees to sell to the several Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase from the Company the
respective principal amounts of Debt Securities set forth below opposite their
names at a purchase price of ____% of the principal amount of Debt Securities [,
plus accrued interest, if any, from [Date of Offered Securities] to the date of
payment and delivery](1):
------------
(1) To be added only if the transaction does not close "flat" (i.e., when
the purchaser pays accrued interest on the debt security at closing). Unless
otherwise provided in the Debt Securities, accrued interest, if any, will be
computed on the basis of a 360-day year of twelve 30-day months.
PRINCIPAL AMOUNT OF
NAME DEBT SECURITIES
------------------------------------------------ -------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
[Insert syndicate list]
Total . . . . . . . . . . . . . . . .
The Underwriters will pay for the Offered Securities upon delivery
thereof at [office] at ______ a.m. (New York City time) on ___________, 199_,
or at such other time, not later than 5:00 p.m. (New York City time) on
__________, 199_, as shall be designated by the Manager. The time and date of
such payment and delivery are hereinafter referred to as the Closing Date.
The Offered Securities shall have the terms set forth in the Prospectus
dated June 8, 1998, and the Prospectus Supplement dated ____________, 199_,
including the following:
Terms of Debt Securities
Maturity Date: _____________ ___, _____
Interest Rate: _____________ ___, _____
Redemption Provisions: _____________ ___, _____
Interest Payment Dates: ______________ ___ and
______________ ___
commencing
_____________ ___, _____
[(Interest accrues from: _____________ ___, _____)](2)
Form and Denomination: ______________
--------------------
(2) To be added only if the transaction does not close flat.
[Other Terms:]
All provisions contained in the document entitled ▇▇▇▇▇▇'▇ Operating
Company, Inc. Underwriting Agreement Standard Provisions (Debt Securities)
dated December 4, 1998, a copy of which is attached hereto, are herein
incorporated by reference in their entirety and shall be deemed to be a part
of this Agreement to the same extent as if such provisions had been set forth
in full herein, except that (i) if any term defined in such document is
otherwise defined herein, the definition set forth herein shall control, (ii)
all references in such document to a type of security that is not an Offered
Security shall not be deemed to be a part of this Agreement and (iii) all
references in such document to a type of agreement that has not been entered
into in connection with the transactions contemplated hereby shall not be
deemed to be a part of this Agreement.
Please confirm your agreement by having an authorized officer sign a copy
of this Agreement in the space set forth below.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
Acting severally on behalf of itself and the several Underwriters
named herein
By:
-----------------------------------------------------
Name:
Title:
Accepted:
▇▇▇▇▇▇'▇ OPERATING COMPANY, INC.
By:
-------------------------------
Name:
Title:
▇▇▇▇▇▇'▇ ENTERTAINMENT, INC.
By:
--------------------------------
Name:
Title:
UNDERWRITING AGREEMENT
December 4, 1998
▇▇▇▇▇▇'▇ Entertainment, Inc.
▇▇▇▇▇▇'▇ Operating Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
We (the "MANAGER") are acting on behalf of the underwriters (including
ourselves) named below (such underwriters being herein called the
"UNDERWRITERS"), and we understand that ▇▇▇▇▇▇'▇ Operating Company, Inc., a
Delaware corporation (the "COMPANY"), and ▇▇▇▇▇▇'▇ Entertainment, Inc., a
Delaware corporation (the "GUARANTOR"), propose to issue and sell Seven Hundred
Fifty Million Dollars ($750,000,000) aggregate initial offering price of 7.875%
Senior Subordinated Notes due December 15, 2005 (the "DEBT SECURITIES" or
"NOTES"). The Debt Securities will be issued pursuant to the provisions of an
Indenture, dated as of December 9, 1998, and a Supplemental Indenture, dated as
of December 9, 1998 (the "INDENTURE") among the Company, the Guarantor and IBJ
▇▇▇▇▇▇▇▇ Bank & Trust Company (the "TRUSTEE")
Subject to the terms and conditions set forth or incorporated by reference
herein, the Company and the Guarantor hereby agree to sell to the several
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company and the Guarantor the respective principal amounts of
Debt Securities set forth below opposite their names at a purchase price of 100%
of the principal amount of Debt Securities, plus accrued interest, if any, from
December 9, 1998 to the date of payment and delivery.
PRINCIPAL AMOUNT OF
NAME DEBT SECURITIES
---------------------------------------------------- -----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated $435,000,000
BT ▇▇▇▇. ▇▇▇▇▇ Incorporated 82,500,000
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC 82,500,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 82,500,000
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. 22,500,000
Fleet Securities, Inc. 22,500,000
▇▇ ▇▇▇▇▇ Securities Corporation 22,500,000
------------
Total . . . . . . . . . . . . . . . . . . . . . . $750,000,000
The Underwriters will pay for such Debt Securities upon delivery thereof
at the facilities of The Depositary Trust Company at 10:00 a.m. (New York
City time) on December 9, 1998, or at such other time, not later than 5:00
p.m. (New York City time) on December 9, 1998, as shall be designated by the
Manager. The time and date of such payment and delivery are hereinafter
referred to as the Closing Date.
The Debt Securities shall have the terms set forth in the Prospectus dated
June 8, 1998, and the Prospectus Supplement dated December 4, 1998, including
the following:
TERMS OF DEBT SECURITIES:
MATURITY DATE: December 15, 2005
INTEREST RATE: 7.875%
INTEREST PAYMENT DATES: June 15 and December 15 commencing June 15, 1999
INTEREST ACCRUES FROM: December 9, 1998
FORM AND DENOMINATION: Registered, $1,000
REDEMPTION PROVISIONS:
The Notes are redeemable, in whole or in part, at the option of the
Company at any time, at a redemption price equal to the greater of (a)
100% of the principal amount of the Notes then outstanding to be redeemed
or (b) the sum of the present values of the remaining scheduled payments of
principal and interest thereon (not including any portion of such payments
of interest accrued as of the date of redemption) discounted to such date
of redemption on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate plus 50 basis points,
as calculated by an Independent Investment Banker, plus, in either of the
above cases, accrued and unpaid interest thereon on the date of redemption
(the "Redemption Date").
As used herein:
"Adjusted Treasury Rate" means, with respect to any Redemption Date:
(a) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months before or
after the Remaining Life (as defined below), yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Adjusted Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the
nearest month); or (b) if such release (or any successor release) is not
published during the week preceding the calculation date or does not
contain such yields, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, calculated using a
price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Redemption Date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the securities to be redeemed that
would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of the Notes (the
"Remaining Life").
"Comparable Treasury Price" means, with respect to any Redemption
Date, (1) the average of five Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest Reference Treasury
Dealer Quotations, or (2) if the Independent Investment Banker obtains
fewer than five such Reference Treasury Dealer Quotations, the average of
all such quotations.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means (a) each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, BT Alex. Brown Incorporated, NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., Fleet
Securities, Inc. and ▇▇ ▇▇▇▇▇ Securities Corporation, and their respective
successors; provided that, if the foregoing ceases to be a primary U.S.
Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company will substitute therefor another
Primary Treasury Dealer and (b) any other Primary Treasury Dealer selected
by the Trustee after consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Independent Investment Banker, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Independent
Investment Banker at 5:00 p.m., New York City time, on the third Business
Day preceding such Redemption Date.
The Company will mail a notice of redemption at least 30 days but not
more than 60 days before the Redemption Date to each holder of Notes to be
redeemed. If the Company elects to partially redeem the Notes, the Trustee
will select in a fair and appropriate manner the Notes to be redeemed.
Unless the Company defaults in payment of the redemption price, on and
after the Redemption Date, interest will cease to accrue on the Notes or
portions thereof called for redemption.
The mandatory disposition pursuant to gaming laws provisions of the
Indenture will also be applicable to the Notes.
GUARANTEE:
The Guarantor will irrevocably and unconditionally guarantee, on an
unsecured senior subordinated basis, the payment of all obligations of the
Company under the Notes. If the Company defaults in the payment of the
principal of, premium, if any, or interest on such Notes when and as the
same shall become due, whether upon maturity, acceleration, call for
redemption or otherwise, without the necessity of action by the Trustee or
any holder of such Notes, the Guarantor shall be required promptly and
fully to make such payment.
SINKING FUND PROVISIONS:
No sinking fund provisions.
OTHER TERMS:
All provisions contained in the document entitled ▇▇▇▇▇▇'▇ Operating
Company, Inc. Underwriting Agreement Standard Provisions (Debt Securities)
dated December 4, 1998, a copy of which is attached hereto, are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been
set forth in full herein, except that (i) if any term defined in such
document is otherwise defined herein, the definition set forth herein shall
control, (ii) all references in such document to a type of security that is
not a Debt Security shall not be deemed to be a part of this Agreement and
(iii) all references in such document to a type of agreement that has not
been entered into in connection with the transactions contemplated hereby
shall not be deemed to be a part of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Please confirm your agreement by having an authorized officer sign a copy
of this Agreement in the space set forth below.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
Acting severally on behalf of itself and the several Underwriters
named herein
By: /s/ ▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇
Title: Principal
Accepted:
▇▇▇▇▇▇'▇ OPERATING COMPANY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇'▇ ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
