EXHIBIT 1.1
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2,650,000 SHARES*
DOVER DOWNS ENTERTAINMENT, INC.
COMMON STOCK
_____________________________
UNDERWRITING AGREEMENT
St. Petersburg, Florida
March ___, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
As Representatives of the Several Underwriters
c/o Raymond ▇▇▇▇▇ & Associates, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Dover Downs Entertainment, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the several Underwriters named in Schedule I hereto (the "Underwriters"), and
certain stockholders of the Company named in Schedule II hereto (the "Selling
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Stockholders") severally and not jointly propose to sell to the Underwriters, an
aggregate of 2,650,000 shares of the Company's Common Stock, par value $.10 per
share (the "Firm Shares"), of which (a) 2,000,000 Firm Shares are to be issued
and sold by the Company, and (b) 650,000 Firm Shares are to be sold by the
Selling Stockholders, each Selling Stockholder selling the number of Firm Shares
set forth opposite such Selling Stockholder's name on Schedule II hereto. In
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addition, the Selling Stockholders have agreed to sell to the Underwriters, upon
the terms and conditions set forth herein, up to an additional 397,500 shares
(the "Additional Shares") of the Company's Common Stock to cover over-allotments
by the Underwriters, if any. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares."
The Company wishes to confirm as follows its agreement with you and the
other several Underwriters, on whose behalf you are acting, in connection with
the several purchases of the Shares from the Company.
1. Registration Statement and Prospectus. The Company has prepared and
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filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder
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* Plus an additional 397,500 shares subject to Underwriters'
over-allotment option.
(collectively, the "Act"), a registration statement on Form S-3 (File No.
333-30060), including a prospectus subject to completion, relating to the
Shares. Such registration statement, as amended at the time when it becomes
effective and as thereafter amended by any post-effective amendment, is referred
to in this Agreement as the "Registration Statement." The prospectus in the
form included in the Registration Statement or, if the prospectus included in
the Registration Statement omits certain information in reliance upon Rule 430A
under the Act and such information is thereafter included in a prospectus filed
with the Commission pursuant to Rule 424(b) under the Act or as part of a
post-effective amendment to the Registration Statement after the Registration
Statement becomes effective, the prospectus as so filed, is referred to in this
Agreement as the "Prospectus." If the Company elects to rely on Rule 434 under
the Act, all references to the Prospectus shall be deemed to include, without
limitation, the form of prospectus and the term sheet contemplated by Rule 434,
taken together, provided to the Underwriters by the Company in reliance on Rule
434 under the Act (the "Rule 434 Prospectus"). If the Company files another
registration statement with the Commission to register a portion of the Shares
pursuant to Rule 462(b) under the Act (the "Rule 462 Registration Statement"),
then any reference to "Registration Statement" herein shall be deemed to include
the registration statement on Form S-3 (File No. 333-30060) and the Rule 462
Registration Statement, as each such registration statement may be amended
pursuant to the Act. The prospectus subject to completion in the form included
in the Registration Statement at the time of the initial filing of such
Registration Statement with the Commission and as such prospectus is amended
from time to time until the date of the Prospectus are collectively referred to
in this Agreement as the "Prepricing Prospectus." Any reference in this
Agreement to the Registration Statement, any Prepricing Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date
of the Registration Statement, such Prepricing Prospectus or the Prospectus, as
the case may be, and any reference to any amendment or supplement to the
Registration Statement, any Prepricing Prospectus or the Prospectus shall be
deemed to refer to and include any documents filed after such date under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") which, upon
filing, are incorporated by reference therein, as required by paragraph (b) of
Item 12 of Form S-3. As used herein, the term "Incorporated Documents" means
the documents which at the time are incorporated by reference in the
Registration Statement, any Prepricing Prospectus, the Prospectus, or any
amendment or supplement thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
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the Firm Shares to the Underwriters and, upon the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions set forth herein, each Underwriter agrees, severally and
not jointly, to purchase from the Company at a purchase price of $____________
per Share (the "purchase price per Share"), the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto.
The Selling Stockholders hereby also agree to sell to the Underwriters, and
upon the basis of the representations, warranties and agreements of the Selling
Stockholders herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right for 30 days from the date of
the Prospectus to purchase from the Selling Stockholders up to 397,500
Additional Shares at the purchase price per Share for the Firm Shares. The
Additional Shares may
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be purchased solely for the purpose of covering over- allotments, if any, made
in connection with the offering of the Firm Shares. If any Additional Shares
are to be purchased, each Underwriter, severally and not jointly, agrees to
purchase the number of Additional Shares (subject to such adjustments as you may
determine to avoid fractional shares) which bears the same proportion to the
total number of Additional Shares to be purchased by the Underwriters as the
number of Shares set forth opposite the name of such Underwriter in Schedule I
hereto bears to the total number of Shares.
3. Terms of Public Offering. The Company has been advised by you that
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the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
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Underwriters of the Firm Shares and payment therefor shall be made at the
offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ at 10:00 a.m., St. Petersburg, Florida time, on March ___,
2000 (the "Closing Date"). The place of closing for the Firm Shares and the
Closing Date may be varied by agreement between the Representative and the
Company.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, at 10:00 a.m.,
Florida time, on such date or dates (the "Additional Closing Date") (which may
be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than three nor later than ten business days after the
giving of the notice hereinafter referred to) as shall be specified in a written
notice, from you on behalf of the Underwriters to the Company and the Selling
Stockholders, of the Underwriters' determination to purchase a number, specified
in such notice, of Additional Shares. Such notice may be given to the Company
by you at any time within 30 days after the date of the Prospectus. The place
of closing for the Additional Shares and the Additional Closing Date may be
varied by agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 1:00 p.m., Florida time, not later than the second
full business day preceding the Closing Date or the Additional Closing Date, as
the case may be. Such certificates shall be made available to you in St.
Petersburg, Florida for inspection and packaging not later than 9:30 a.m.,
Florida time, on the business day immediately preceding the Closing Date or the
Additional Closing Date, as the case may be. The certificates evidencing the
Firm Shares and any Additional Shares to be purchased hereunder shall be
delivered to you on the Closing Date or the Additional Closing Date, as the case
may be, against payment of the purchase price therefore by wire transfer of
immediately available funds to accounts specified in writing, not later than the
close of business on the day next preceding the Closing Date or the Additional
Closing Date, as the case may be, by the Company and the Selling Stockholders.
Payment for the Firm Shares sold by the Company hereunder shall be delivered by
the Representative to the Company.
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5. Covenants and Agreements.
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5.1 Of the Company. The Company covenants and agrees with the several
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Underwriters as follows:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective, if it has not already
become effective, and will advise you promptly and, if requested by you, will
confirm such advice in writing (i) when the Registration Statement has become
effective and when any post-effective amendment thereto becomes effective, (ii)
if Rule 430A under the Act is employed, when the Prospectus has been timely
filed pursuant to Rule 424(b) under the Act, (iii) of any request by the
Commission for amendments or supplements to the Registration Statement, any
Prepricing Prospectus or the Prospectus or for additional information, (iv) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the Shares
for offering or sale in any jurisdiction or the initiation of any proceeding for
such purposes, and (v) within the period of time referred to in Section 5(e)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of any event that
comes to the attention of the Company that makes any statement made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue in any material respect or that requires the making of any additions
thereto or changes therein in order to make the statements therein (in the case
of the Prospectus, in light of the circumstances under which they were made) not
misleading in any material respect, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented) to comply with the Act or any
other law. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal or lifting of such order at the
earliest possible time. If the Company elects to rely on Rule 434 under the Act,
the Company will provide the Underwriters with copies of the form of Rule 434
Prospectus (including copies of a term sheet that complies with the requirements
of Rule 434 under the Act), in such number as the Underwriters may reasonably
request, and file with the Commission in accordance with Rule 424(b) of the Act
the form of Prospectus complying with Rule 434(b)(2) of the Act before the close
of business on the first business day immediately following the date hereof. If
the Company elects not to rely on Rule 434 under the Act, the Company will
provide the Underwriters with copies of the form of Prospectus, in such number
as the Underwriters may reasonably request, and file with the Commission such
Prospectus in accordance with Rule 424(b) of the Act before the close of
business on the first business day immediately following the date hereof.
(b) The Company will furnish to you, without charge, two signed
duplicate originals of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits thereto, and will also furnish to you, without charge, such number of
conformed copies of the Registration Statement as originally filed and of each
amendment thereto as you may reasonably request.
(c) The Company will not file any Rule 462(b) Registration Statement
or any amendment to the Registration Statement or make any amendment or
supplement to the Prospectus unless (i) you shall have previously been advised
thereof and been given a reasonable opportunity
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to review such filing, amendment or supplement, and (ii) you have not reasonably
objected to such filing, amendment or supplement after being so advised.
(d) Prior to the execution and delivery of this Agreement, the Company
has delivered or will deliver to you, without charge, in such quantities as you
have requested or may hereafter reasonably request, copies of each form of the
Prepricing Prospectus. Consistent with the provisions of Section 5(e) hereof,
the Company consents to the use, in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by dealers, prior to the date
of the Prospectus, of each Prepricing Prospectus so furnished by the Company.
(e) As soon after the execution and delivery of this Agreement as is
practicable and thereafter from time to time for such period as in the
reasonable opinion of counsel for the Underwriters a prospectus is required by
the Act to be delivered in connection with sales by any Underwriter or a dealer,
and for so long a period as you may request for the distribution of the Shares,
the Company will deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
they may reasonably request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the several Underwriters and by all dealers to
whom Shares may be sold, both in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus is required by
the Act to be delivered in connection with sales by any Underwriter or dealer.
If at any time prior to the later of (i) the completion of the distribution of
the Shares pursuant to the offering contemplated by the Registration Statement
or (ii) the expiration of prospectus delivery requirements with respect to the
Shares under Section 4(3) of the Act and Rule 174 thereunder, any event shall
occur that in the judgment of the Company or in the opinion of counsel for the
Underwriters is required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus to
comply with the Act or any other law, the Company will forthwith prepare and,
subject to Sections 5(a) and 5(c) hereof, file with the Commission and use its
best efforts to cause to become effective as promptly as possible an appropriate
supplement or amendment thereto, and will furnish to each Underwriter who has
previously requested Prospectuses, without charge, a reasonable number of copies
thereof.
(f) The Company will cooperate with you and counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may reasonably
designate and will file such consents to service of process or other documents
as may be reasonably necessary in order to effect and maintain such registration
or qualification for so long as required to complete the distribution of the
Shares; provided that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in suits, other than
those arising out of the offering or sale of the Shares, as contemplated by this
Agreement and the Prospectus, in any
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jurisdiction where it is now so subject. In the event that the qualification of
the Shares in any jurisdiction is suspended, the Company shall so advise you
promptly in writing.
(g) The Company will make generally available to its security holders
a consolidated earnings statement (in form complying with the provisions of Rule
158) which need not be audited, covering a twelve-month period commencing after
the effective date of the Registration Statement and the Rule 462 Registration
Statement, if any, and ending not later than 15 months thereafter, as soon as
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act.
(h) During the period ending three years from the date hereof, the
Company will furnish to you and, upon your request, to each of the other
Underwriters, (i) as soon as available, a copy of each proxy statement,
quarterly or annual report or other report of the Company mailed to stockholders
or filed with the Commission, the National Association of Securities Dealers,
Inc. (the "NASD") or The Nasdaq Stock Market or any national securities exchange
and (ii) from time to time such other information concerning the Company as you
may reasonably request.
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provision hereof (except pursuant to a termination
under Section 11 hereof) or if this Agreement shall be terminated by the
Underwriters because of any inability, failure or refusal on the part of the
Company to perform in all material respects any agreement herein or to comply in
all material respects with any of the terms or provisions hereof or to fulfill
in all material respects any of the conditions of this Agreement, the Company
agrees to reimburse you and the other Underwriters for all out-of-pocket
expenses (including travel expenses and reasonable fees and expenses of counsel
for the Underwriters but excluding wages and salaries paid by you) reasonably
incurred by you in connection herewith.
(j) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder in accordance in all material respects with
the statements under the caption "Use of Proceeds" in the Prospectus.
(k) If Rule 430A under the Act is employed, the Company will timely
file the Prospectus pursuant to Rule 424(b) under the Act.
(l) For a period of 90 days after the date of the Prospectus first
filed pursuant to Rule 424(b) under the Act, without your prior written consent,
the Company will not, directly or indirectly, issue, sell, offer or contract to
sell or otherwise dispose of or transfer any shares of Common Stock or
securities convertible into or exchangeable or exercisable for shares of Common
Stock (collectively, "Company Securities") or any rights to purchase Company
Securities, except to the Underwriters pursuant to this Agreement and except for
grants of options pursuant to the Company's 1991 Stock Option Plan and 1996
Stock Option Plan.
(m) Prior to the Closing Date or the Additional Closing Date, as the
case may be, the Company will furnish to you, as promptly as possible, copies of
any unaudited interim
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consolidated financial statements of the Company and its subsidiaries for any
period subsequent to the periods covered by the financial statements appearing
in the Prospectus.
(n) The Company will comply with all provisions of any undertakings
contained in Part II of the Registration Statement pursuant to Regulation S-K.
(o) The Company will not at any time, directly or indirectly take any
action designed, or which might reasonably be expected to cause or result in, or
which will constitute, stabilization or manipulation of the price of the shares
of Common Stock to facilitate the sale or resale of any of the Shares.
(p) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain exemptions
from the application of) the Blue Sky laws of each state where necessary to
permit market making transactions and secondary trading, and will comply with
such Blue Sky laws and will continue such qualifications, registrations and
exemptions in effect for a period of five years the date hereof.
(q) The Company will timely file with the New York Stock Exchange
("NYSE") all documents and notices required by the NYSE of companies that have
or will issue securities that are traded on the NYSE.
5.2 Of Each Selling Stockholder. Each Selling Stockholder covenants and
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agrees with the several Underwriters as follows:
(a) Such Selling Stockholder will execute and deliver a Lock-Up
Agreement, in the form of Exhibit A attached hereto ("Lock-Up Agreement").
(b) Such Selling Stockholder will review the Prospectus and will
comply with all agreements and satisfy all conditions on its part to be complied
with or satisfied pursuant to this Agreement on or prior to the Closing Date and
will advise the Underwriters prior to the Closing Date if any statements to be
made on behalf of such Selling Stockholder in the certificate contemplated by
Section 9(l) hereof would be inaccurate if made as of the Closing Date.
(c) On the Closing Date, all stock transfer and other taxes (other
than income taxes) which are required to be paid in connection with the sale and
transfer of the Firm Shares to be sold by such Selling Stockholder to the
Underwriters hereunder will have been fully paid for by such Selling Stockholder
and all laws imposing such taxes will have been fully complied with.
(d) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated thereunder, with respect
to the transactions herein contemplated, such Selling Stockholder shall deliver
to you at least two days prior to the Closing Date a properly completed and
executed United States Treasury Department Substitute Form W-9.
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6. Representations and Warranties.
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6.1 Of the Company. The Company hereby represents and warrants to each
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Underwriter on the date hereof, and shall be deemed to represent and warrant to
each Underwriter on the Closing Date and the Additional Closing Date, that:
(a) The Company satisfies all of the requirements of the Act for use
of Form S-3 for the offering of Shares contemplated hereby. Each Prepricing
Prospectus included as part of the Registration Statement as originally field or
as part of any amendment or supplement thereto, or filed pursuant to Rule 424(a)
under the Act, complied as to form when so filed in all material respects with
the provisions of the Act, except that this representation and warranty does not
apply to statements in or omissions from such Prepricing Prospectus (or any
amendment or supplement thereto) made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
or on behalf of any Underwriter through you, or any Selling Stockholder,
expressly for use therein. The Commission has not issued any order preventing
or suspending the use of any Prepricing Prospectus.
(b) The Registration Statement (including any Rule 462 Registration
Statement), in the form in which it becomes effective and also in such form as
it may be when any post-effective amendment thereto shall become effective, and
the Prospectus, and any supplement or amendment thereto when filed with the
Commission under Rule 424(b) under the Act, will comply as to form in all
material respects with the provisions of the Act and will not at any such times
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Prospectus (or
any amendment or supplement thereto) made in reliance upon and in conformity
with information: relating to any Underwriter furnished to the Company in
writing by or on behalf of any Underwriter through you expressly for use
therein; or furnished to the Company in writing by or on behalf of any Selling
Stockholder expressly for use therein.
(c) The capitalization of the Company is and will be as set forth in
the Prospectus as of the date set forth therein. All the outstanding shares of
Common Stock of the Company have been, and as of the Closing Date will be, duly
authorized and validly issued, are fully paid and nonassessable and are free of
any preemptive or similar rights; except for directors qualifying shares, if
any, and except as set forth in the Prospectus, the Company is not a party to or
bound by any outstanding options, warrants or similar rights to subscribe for,
or contractual obligations to issue, sell, transfer or acquire, any of its
capital stock or any securities convertible into or exchangeable for any of such
capital stock; the Shares to be issued and sold to the Underwriters by the
Company hereunder have been duly authorized and, when issued and delivered to
the Underwriters against full payment therefor in accordance with the terms
hereof will be validly issued, fully paid and nonassessable and free of any
preemptive or similar rights; the capital stock of the Company conforms to the
description thereof in the Registration Statement and the Prospectus (or any
amendment or supplement thereto); and the delivery of certificates for the
Shares against payment therefor pursuant to the terms of this Agreement, will
pass valid title to the Shares, free and clear of any claim,
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encumbrance or defect in title, to the several Underwriters purchasing such
shares in good faith and without notice of any lien, claim or encumbrance. The
certificates for the Shares are in valid and sufficient form.
(d) Each of the Company and its subsidiaries is a corporation duly
organized and validly existing as a corporation in good standing under the laws
of the state of its incorporation with full corporate power and authority to
own, lease and operate its properties and to conduct its business as presently
conducted and as described in the Registration Statement and the Prospectus (and
any amendment or supplement thereto), and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure to so register or
qualify does not have a material adverse effect on the condition (financial or
other), business, properties, net worth, results of operations of the Company
and its subsidiaries (a "Material Adverse Effect").
(e) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and are owned by the Company free and clear of any security
interests, liens, encumbrances, equities or claims. The Company does not have
any subsidiaries and does not own a material interest in or control, directly or
indirectly, any other corporation, partnership, joint venture, association,
trust or other business organization, except as set forth in Exhibit 21 to the
Company's Annual Report on Form 10-K for its fiscal year ended June 30, 1999,
which is incorporated by reference into the Registration Statement. As used in
this Agreement, subsidiaries shall mean direct and indirect subsidiaries of the
Company.
(f) There are no legal or governmental proceedings pending or, to the
best knowledge of the Company, threatened, against the Company or its
subsidiaries or to which the Company or its subsidiaries or any of their
properties are subject, that are required to be described in the Registration
Statement or the Prospectus (or any amendment or supplement thereto) but are not
described as required. Except as described in the Prospectus, there is no
action, suit, inquiry, proceeding or investigation by or before any court or
governmental or other regulatory or administrative agency or commission pending
or, to the best knowledge of the Company, threatened, against or involving the
Company or its subsidiaries, which might individually or in the aggregate
prevent or adversely affect the transactions contemplated by this Agreement or
result in a Material Adverse Effect, nor to the Company's knowledge, is there
any basis for any such action, suit, inquiry, proceeding, or investigation.
There are no agreements, contracts, indentures, leases or other instruments that
are required to be described in the Registration Statement or the Prospectus (or
any amendment or supplement thereto) or to be filed as an exhibit to the
Registration Statement that are not described, filed or incorporated by
reference in the Registration Statement and the Prospectus as required by the
Act. All such contracts to which the Company or any of its subsidiaries is a
party have been duly authorized, executed and delivered by the Company or the
applicable subsidiary, constitute valid and binding agreements of the Company or
the applicable subsidiary and are enforceable against the Company or the
applicable subsidiary in accordance with the terms thereof, except as
enforceability thereof may be limited by (A) the application of bankruptcy,
reorganization, insolvency and other laws affecting creditors' rights generally,
and (B) equitable principles being
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applied at the discretion of a court before which any proceeding may be brought.
Neither the Company nor the applicable subsidiary has received notice or been
made aware that any other party is in breach of or default to the Company under
any of such contracts.
(g) Neither the Company nor any of its subsidiaries is (i) in
violation of (aa) its articles of incorporation or bylaws, (bb) any law,
ordinance, administrative or governmental rule or regulation applicable to the
Company or any of its subsidiaries the violation of which would have a Material
Adverse Effect, or (cc) of any decree of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries; or (ii) in
default in any material respect in the performance of any obligation, agreement
or condition contained in (aa) any bond, debenture, note or any other evidence
of indebtedness, or (bb) any agreement, indenture, lease or other instrument to
which the Company or any of its subsidiaries is a party or by which any of their
properties may be bound, which default would have a Material Adverse Effect; and
there does not exist any state of facts which constitutes an event of default on
the part of the Company or any of its subsidiaries as defined in such documents
or which, with notice or lapse of time or both, would constitute such an event
of default.
(h) The Company's execution and delivery of this Agreement and the
performance by the Company of its obligations under this Agreement have been
duly and validly authorized by the Company, and this Agreement has been duly
executed and delivered by the Company, and this Agreement constitutes a valid
and legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights generally
or by general equitable principles and public policy exceptions, and except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws.
(i) Neither the issuance and sale of the Shares by the Company, the
execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby or thereby
(i) requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except such as may be required
for the registration of the Shares under the Act, the registration of the Common
Stock under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and compliance with the securities or Blue Sky laws of various
jurisdictions, all of which will be, or have been, effected in accordance with
this Agreement and except for the NASD's clearance of the underwriting terms of
the offering contemplated hereby as required under the NASD's Rules of Fair
Practice), (ii) conflicts with or will conflict with or constitutes or will
constitute a breach of, or a default under, the articles of incorporation or
bylaws of the Company or any agreement, indenture, lease or other instrument to
which the Company or any of its subsidiaries is a party or by which any of its
properties may be bound, (iii) violates any statute, law, regulation, ruling,
filing, judgment, injunction, order or decree applicable to the Company or any
of its subsidiaries or any of their properties, or (iv) results in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company.
-10-
(j) Except as described in the Prospectus, and except for options to
purchase common stock issued pursuant to the Company's 1991 Stock Option Plan
and 1996 Stock Option Plan, neither the Company nor any of its subsidiaries has
outstanding and at the Closing Date (and the Additional Closing Date, if
applicable) will not have outstanding any options to purchase, or any warrants
to subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of Common Stock or any
such warrants or convertible securities or obligations. No holder of securities
of the Company has rights to the registration of any securities of the Company
as a result of or in connection with the filing of the Registration Statement or
the consummation of the transactions contemplated hereby that have not been
satisfied or heretofore waived in writing.
(k) KPMG LLP, the certified public accountants who have certified the
financial statements filed as part of the Registration Statement and the
Prospectus (or any amendment or supplement thereto), are independent public
accountants as required by the Act.
(l) The financial statements, together with related schedules and
notes, included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the financial condition,
results of operations and cash flows of the Company on the basis stated in the
Registration Statement at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and date set forth
in the Registration Statement and Prospectus (and any amendment or supplement
thereto) is accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company. No other
financial statements or schedules are required to be included in the
Registration Statement.
(m) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), (i)
neither the Company nor any of its subsidiaries has incurred any material
liabilities or obligations, indirect, direct or contingent, or entered into any
transaction which is not in the ordinary course of business; (ii) neither the
Company nor any of its subsidiaries has sustained any material loss or
interference with its business or properties from fire, flood, windstorm,
accident or other calamity, whether or not covered by insurance; (iii) neither
the Company nor any of its subsidiaries has paid or declared any dividends or
other distributions with respect to its capital stock and the Company is not in
default under the terms of any class of capital stock of the Company or any
outstanding debt obligations; (iv) there has not been any change in the
authorized or outstanding capital stock of the Company or any material change in
the indebtedness of the Company (other than in the ordinary course of business);
and (v) there has not been any material adverse change, or any development
involving or which may reasonably be expected to result in a material adverse
change, in the condition (financial or otherwise), business, properties, net
worth or result of operations of the Company.
-11-
(n) Each of the Company and its subsidiaries has good and valid title
to all property (real and personal) described in the Prospectus as being owned
by it, free and clear of all liens, claims, security interests or other
encumbrances except (i) such as are described in the financial statements
included in, or elsewhere in, the Prospectus or (ii) such as are not materially
burdensome and do not interfere in any material respect with the use of the
property or the conduct of the business of the Company. All property (real and
personal) held under lease by the Company and its subsidiaries is held by it
under valid, subsisting and enforceable leases with only such exceptions as in
the aggregate are not materially burdensome and do not interfere in any material
respect with the conduct of the business of the Company or its subsidiaries.
(o) The Company has not distributed and will not distribute, and has
not authorized the Underwriters to distribute, any offering material in
connection with the offering and sale of the Shares other than the Prepricing
Prospectus, the Prospectus, or other offering material, if any, as permitted by
the Act.
(p) Other than excepted activity pursuant to Regulation M under the
Exchange Act, the Company has not taken, directly or indirectly, any action
which constituted, or any action designed, or which might reasonably be expected
to cause or result in or constitute, under the Act or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares or for any other purpose.
(q) The Company is not an "investment company," an "affiliated person"
of, or "promoter" or "principal underwriter" for an investment company within
the meaning of the Investment Company Act of 1940, as amended.
(r) Each of the Company and its subsidiaries has all permits,
licenses, franchises, approvals, consents and authorizations of governmental or
regulatory authorities (hereinafter "permit" or "permits") as are necessary to
own its properties and to conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus, except where the failure to have obtained any such permit has not
and will not have a Material Adverse Effect; each of the Company and its
subsidiaries has operated and is operating its business in material compliance
with and not in material violation of all of its obligations with respect to
each such permit and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination of any such permit or
result in any other material impairment of the rights of any such permit,
subject in each case to such qualification as may be set forth in the
Prospectus; and, except as described in the Prospectus, such permits contain no
restrictions that are materially burdensome to the Company or any of its
subsidiaries.
(s) The Company and its subsidiaries maintain 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 conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorizations; and (iv) the recorded
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accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(t) Neither the Company nor any of its subsidiaries, since each has
been a subsidiary of the Company, nor, to the Company's knowledge, any employee
or agent of the Company or any of its subsidiaries, has, directly or indirectly,
(i) made any unlawful contribution to any candidate for political office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal, state or foreign governmental official, or other person
charged with similar public or quasi-public duties, other than payments required
or permitted by the laws of the United States or any jurisdiction thereof or
applicable foreign jurisdictions.
(u) The Company and its subsidiaries are (i) in compliance with any
and all applicable 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 other approvals would not,
singly or in the aggregate, have a Material Adverse Effect. Except as set forth
in the Prospectus, neither the Company nor any of its subsidiaries has been
named as a "potentially responsible party" under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended ("CERCLA").
(v) The Company owns and has full right, title and interest in and to,
or has valid licenses to use, each material trade name, trademark or service
▇▇▇▇ under which the Company conducts all or any material part of its business,
and the Company has not voluntarily created any lien or encumbrance on, or
granted any right or license with respect to, any such trade name, trademark or
service ▇▇▇▇; there is no claim pending against the Company with respect to any
trade name, trademark or service ▇▇▇▇ and the Company has not received notice or
otherwise become aware that any trade name, trademark or service ▇▇▇▇ which it
uses or has used in the conduct of its business infringes upon or conflicts with
the rights of any third party.
(w) The Shares have been duly authorized for trading on the NYSE under
the symbol "DVD," subject to official notice of issuance of the Shares being
sold by the Company, and upon consummation of the offering contemplated hereby
the Company will be in compliance with the designation and maintenance criteria
applicable to NYSE issuers.
(x) The Company and each of its subsidiaries have filed all tax
returns required to be filed (other than certain state or local tax returns, as
to which the failure to file, singly or in the aggregate, would not have a
Material Adverse Effect), which returns are complete and correct, and neither
the Company nor any subsidiary is in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect thereto,
other than defaults that, singly or in the aggregate, would not have a Material
Adverse Effect. Except as disclosed in the
-13-
Prospectus, all deficiencies asserted as a result of any federal, state, local
or foreign tax audits have been paid or finally settled and no issue has been
raised in any such audit which, by application of the same or similar
principles, reasonably could be expected to result in a proposed deficiency for
any other period not so audited. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any federal, state,
local or foreign tax return for any period. On the Closing Date, and Additional
Closing Date, if any, all stock transfer and other taxes which are required to
be paid in connection with the sale of the shares to be sold by the Company to
the Underwriters will have been fully paid by the Company and all laws imposing
such taxes will have been complied with.
(y) Except as set forth in the Prospectus, there are no transactions
with "affiliates" (as defined in Rule 405 promulgated under the Act) or any
officer, director or security holder of the Company (whether or not an
affiliate) which are required by the Act and the applicable rules and
regulations thereunder to be disclosed in the Registration Statement.
(z) The Company has procured Lock-Up Agreements from each of the
Company's most senior executive officers and directors and the Selling
Stockholders.
(aa) Neither the Company nor any of its subsidiaries (i) conduct
business or have affiliates which conduct business in or with Cuba, (ii) plan to
commence doing business in or with Cuba after the effective date of the
Registration Statement or (iii) are required by Florida law to report a material
change in information previously reported to the State of Florida regarding
business conducted in or with Cuba.
(bb) No officer, director, nominee for director or shareholder of the
Company has a direct or indirect affiliation or association with any member of
the NASD.
6.2 Of the Selling Stockholders. Each Selling Stockholder hereby,
---------------------------
represents and warrants, severally as to itself and not jointly, to each
Underwriter on the date hereof, and shall be deemed to represent and warrant to
each Underwriter on the Closing Date and the Additional Closing Date, that:
(a) Such Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement and has, and on the
Closing Date will have, good and valid title to such Shares, free of all
restrictions on transfer, liens, encumbrances, security interests, equities and
claims whatsoever.
(b) Such Selling Stockholder has, and on the Closing Date will have,
full legal right, power and authority, and all authorization and approval
required by law, to enter into this Agreement and the Custody Agreement and
Power of Attorney signed by such Selling Stockholder and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as
Custodian, relating to the deposit of the Shares to be sold by such Selling
Stockholder and appointing certain individuals as such Selling Stockholder's
attorneys-in-fact (the "Attorneys") to the extent set forth therein (the
"Custody Agreement and Power of Attorney") and to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder in the manner provided
herein.
-14-
(c) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder. The Custody Agreement and Power of
Attorney of such Selling Stockholder has been duly authorized, executed and
delivered by such Selling Stockholder and is a valid and binding agreement of
such Selling Stockholder, enforceable as to such Selling Stockholder in
accordance with its terms, except to the extent enforceability may be limited by
laws relating to creditors' rights generally or by general equitable principals,
and except as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws and, pursuant to such Power of Attorney, such
Selling Stockholder has, among other things, authorized the Attorneys, or any
one of them, to execute and deliver on such Selling Stockholder's behalf this
Agreement and any other document that they, or any one of them, may deem
necessary or desirable in connection with the transactions contemplated hereby
and thereby and to deliver the Shares to be sold by such Selling Stockholder
pursuant to this Agreement.
(d) The execution, delivery and performance by such Selling
Stockholder of this Agreement and the Custody Agreement and Power of Attorney of
such Selling Stockholder by or on behalf of such Selling Stockholder, the
compliance by such Selling Stockholder with all the provisions hereof and
thereof and the consummation by such Selling Stockholder of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
organizational documents of such Selling Stockholder, if such Selling
Stockholder is not an individual, or any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder or any property of such Selling
Stockholder is bound or (iii) violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over such Selling Stockholder or any property
of such Selling Stockholder.
(e) The information in the Prospectus under the caption "Selling
Stockholders" which specifically relates to such Selling Stockholder does not,
and will not on the Closing Date, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(f) At any prior to the Closing Date, if there is any change in the
information referred to in Section 6.2(e), such Selling Stockholder will
immediately notify you of such change.
(g) Except for activity which is permissible pursuant to Regulation M
under the Exchange Act, such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
(h) Upon delivery of and payment for the Shares to be sold by such
Selling Stockholder pursuant to this Agreement, good and valid title to such
Shares will pass to the
-15-
Underwriters, free of all restrictions on transfer, liens, encumbrances,
security interests, equities and claims whatsoever.
7. Expenses. Whether or not the transactions contemplated hereby are
--------
consummated or this Agreement becomes effective or is terminated, the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement and the
Prospectus and amendments and supplements thereto and the mailing and delivering
of copies thereof and of any Prepricing Prospectus to the Underwriters and
dealers; (ii) the printing and delivery (including, without limitation, postage,
air freight charges and charges for counting and packaging) of such copies of
the Registration Statement, the Prospectus, each Prepricing Prospectus, the Blue
Sky memoranda, the Master Agreement Among Underwriters, this Agreement, the
Selected Dealers Agreement and all amendments or supplements to any of them as
may be reasonably requested for use in connection with the offering and sale of
the Shares; (iii) consistent with the provisions of Section 5.1(e), all expenses
in connection with the qualification of the Shares for offering and sale under
state securities laws or Blue Sky laws, including reasonable attorneys' fees and
out-of-pocket expenses of the counsel for the Underwriters in connection
therewith; (iv) the filing fees incident to securing any required review by the
NASD of the fairness of the terms of the sale of the Shares and the reasonable
fees and disbursements of the Underwriters' counsel relating thereto; (v) the
cost of preparing stock certificates; (vi) the costs and charges of any transfer
agent or registrar; (vii) the cost of the tax stamps, if any, in connection with
the issuance and delivery of the Shares to the respective Underwriters; (viii)
all other fees, costs and expenses referred to in Item 14 of the Registration
Statement, (ix) the transportation, lodging, graphics and other expenses
incidental to the Company's preparation for and participation in the "roadshow"
for the offering contemplated hereby, and (x) all other costs and expenses
incident to the performance of the obligations of the Company hereunder which
are not otherwise specifically provided for in this Section 7. Notwithstanding
the foregoing, in the event that the proposed offering is terminated for the
reasons set forth in Section 5.1(i) hereof, the Company agrees to reimburse the
Underwriters as provided in Section 5.1(i).
8. Indemnification and Contribution. Subject to the limitations in this
--------------------------------
paragraph below, the Company agrees to indemnify and hold harmless you and each
other Underwriter, the directors, officers, employees and agents of each
Underwriter, and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation and attorneys'
fees and expenses (collectively, ("Damages") arising out of or based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
any Prepricing Prospectus or in the Registration Statement or the Prospectus or
in any amendment or supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, except to the extent
that any such Damages arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
furnished in writing to the Company by or on behalf of any Underwriter, or by or
on behalf of the Selling Stockholders, as
-16-
the case may be, through you expressly for use in connection therewith, or (ii)
any inaccuracy in or breach of the representations and warranties of the Company
contained herein or any failure of the Company to perform its obligations
hereunder or under law; provided, however, that with respect to any untrue
-------- -------
statement or omission made in any Prepricing Prospectus, the indemnity agreement
contained in this paragraph shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter or to any officer,
director, employee or agent of any Underwriter) from whom the person asserting
any such Damages purchased the Shares concerned if both (y) a copy of the
Prospectus was not sent or given to such person at or prior to the written
confirmation of the sale of such Shares to such person as required by the Act,
and (z) the untrue statement or omission in the Prepricing Prospectus was
corrected in the Prospectus. This indemnification shall be in addition to any
liability that the Company may otherwise have.
Subject to the limitations in this paragraph below, each Selling
Stockholder, severally and not jointly, agrees to indemnify and hold harmless
you and each other Underwriter, the directors, officers, employees and agents of
each Underwriter, and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation and attorneys'
fees and expenses (collectively, ("Damages") arising out of or based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
any Prepricing Prospectus or in the Registration Statement or the Prospectus or
in any amendment or supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, except to the extent
that any such Damages arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
furnished in writing to the Company by or on behalf of any Underwriter through
you expressly for use in connection therewith, or (ii) any inaccuracy in or
breach of the representations and warranties of such Selling Stockholder
contained herein or any failure of such Selling Stockholder to perform its
obligations hereunder or under law; provided, however, that with respect to any
-------- -------
untrue statement or omission made in any Prepricing Prospectus, the indemnity
agreement contained in this paragraph shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter or to
any officer, director, employee or agent of any Underwriter) from whom the
person asserting any such Damages purchased the Shares concerned if both (y) a
copy of the Prospectus was not sent or given to such person at or prior to the
written confirmation of the sale of such Shares to such person as required by
the Act, and (z) the untrue statement or omission in the Prepricing Prospectus
was corrected in the Prospectus. This indemnification shall be in addition to
any liability that the Selling Stockholders or any Selling Stockholder may
otherwise have. Notwithstanding anything to the contrary herein, in no event
shall any Selling Stockholder's obligation under this Section exceed the total
net proceeds from the offering received by such Selling Stockholder (computed
without deduction for any taxes on such amount.)
In addition to their other obligations under this Section 8, each of the
Company and the Selling Stockholders, severally and not jointly, agrees that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based
-17-
upon any statement or omission, or any inaccuracy in the representations and
warranties of the Company or the Selling Stockholders herein or failure to
perform their respective obligations hereunder, all as set forth in this Section
8, the party against whom indemnification is being sought will reimburse each
Underwriter on a quarterly basis for all reasonable legal or other out-of-pocket
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding (to the extent documented by
reasonably itemized invoices therefor), notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligation
of the Company or a Selling Stockholder to reimburse each Underwriter for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the person(s) from whom it was received, together
with interest compounded daily determined on the basis of the base lending rate
announced from time to time by The Wall Street Journal (the "Prime Rate"). Any
such interim reimbursement payments which are not made to the Underwriters
within 30 days of a request for reimbursement shall bear interest at the Prime
Rate from the date of such request.
If any action or claim shall be brought against any Underwriter or any
person controlling any Underwriter in respect of which indemnity may be sought
jointly and severally against the Company and the Selling Stockholders, such
Underwriter or such controlling person shall promptly notify in writing the
party(s) against whom indemnification is being sought (the "indemnifying party"
or "indemnifying parties"), and such indemnifying party(s) shall assume the
defense thereof, including the employment of counsel reasonably acceptable to
such Underwriter or such controlling person and the payment of all reasonable
fees and expenses incurred by such counsel. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person,
unless (i) the indemnifying party(s) has (have) agreed in writing to pay such
fees and expenses, (ii) the indemnifying party(s) has (have) failed to assume
the defense and employ counsel reasonably acceptable to the Underwriter or such
controlling person or (iii) the named parties to any such action (including any
impleaded parties) include both such Underwriter or such controlling person and
the indemnifying party(s), and such Underwriter or such controlling person shall
have been advised by its counsel that one or more legal defenses may be
available to the Underwriter which may not be available to the Company or the
Selling Stockholders, or that representation of such indemnified party and any
indemnifying party(s) by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the indemnifying party(s) shall not have
the right to assume the defense of such action on behalf of such Underwriter or
such controlling person (but the Company and the Selling Stockholders, as
applicable, shall not be liable for the fees and expenses of more than one
counsel for the Underwriters and such controlling persons)). The indemnifying
party(s) shall not be liable for any settlement of any such action effected
without its (their several) written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
the indemnifying party(s) agrees to indemnify and hold harmless any Underwriter
and any such controlling person from and against any loss, claim, damage,
liability
-18-
or expense by reason of such settlement or judgment, but in the case of a
judgment only to the extent stated in the immediately preceding paragraph.
Each Underwriter agrees, severally and jointly, to indemnify and hold
harmless the Selling Stockholders and the Company, their respective directors,
and their respective officers who sign the Registration Statement, and any
person who controls the Selling Stockholders or the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
as the foregoing several indemnity from the Company and the Selling Stockholders
to each Underwriter, but only with respect to information furnished in writing
by or on behalf or such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action or claim shall be brought or
asserted against the Selling Stockholders or the Company, any of their
respective directors, any of their respective officers, or any such controlling
person based on the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Underwriter pursuant to this paragraph, such
Underwriter shall have the rights and duties given to the Company and the
Selling Stockholders by the immediately preceding paragraph (except that if the
Company and the Selling Stockholders shall have assumed the defense thereof such
Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at such Underwriter's expense), and the Selling
Stockholders and the Company, its directors, any such officers, and any such
controlling persons, shall have the rights and duties given to the Underwriters
by the immediately preceding paragraph.
If the indemnification provided for in this Section 8 is unavailable or
insufficient for any reason whatsoever to an indemnified party under the first,
second or fourth paragraph of this Section 8 in respect of any Damages referred
to therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such Damages (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Stockholders,
respectively, on the one hand, and the Underwriters on the other hand, from the
offering and sale of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative and several fault of the Company and the Selling Stockholders
on the one hand, and the Underwriters on the other hand, in connection with the
statements or omissions that resulted in such Damages as well as any other
relevant equitable considerations. The relative and several benefits received
by the Company and the Selling Stockholders on the one hand, and the
Underwriters on the other hand, shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus; provided that, in the event that the Underwriters shall have
purchased any Additional Shares hereunder, any determination of the relative
benefits received by the Selling Stockholders or the Underwriters from the
offering of the Shares shall include the net proceeds (before deducting
expenses) received by the Selling Stockholders, and the underwriting discounts
and commissions received by the Underwriters, from the sale of such Additional
Shares, in each case computed on the basis of the respective amounts set forth
in the notes to the table on the cover page
-19-
of the Prospectus. The relative fault of the Company and the Selling
Stockholders 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 on the one hand
or by the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 8 was
determined by a 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 into account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the Damages 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 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price to the public of the Shares underwritten by it and distributed to the
public exceeds the amount of any Damages which 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 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 8 are several in proportion to the respective numbers of Firm Shares set
forth opposite their names in Schedule I hereto (or such numbers of Firm Shares
increased as set forth in Section 10 hereof) and not joint.
Notwithstanding the second paragraph of this Section 8, any Damages for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as Damages are incurred after receipt of reasonably itemized invoices therefor.
The indemnity, contribution and reimbursement agreements contained in this
Section 8 and the several, and not joint, representations and warranties of the
Company and the Selling Stockholders set forth in this Agreement shall remain
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter,
the Company, its directors or officers or any person controlling the Company,
(ii) acceptance of any Shares and payment therefor hereunder and (iii) any
termination of this Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or to the Selling Stockholders, the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of this indemnity, contribution and reimbursement agreements
contained in this Section 8.
It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in the second paragraph of this
Section 8, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
pursuant to the Code of Arbitration Procedure of the NASD. Any such arbitration
must be commenced by service of a written demand for arbitration or written
notice of intention to arbitrate, therein electing the arbitration tribunal. In
the event the party demanding
-20-
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in the second and fifth
paragraphs of this Section 8, and would not resolve the ultimate propriety or
enforceability of the obligation to reimburse expenses which is created by the
provisions of the second paragraph of this Section 8.
9. Conditions of Underwriters' Obligations. The several obligations of
---------------------------------------
the Underwriters to purchase the Firm Shares hereunder subject to the following
conditions:
(a) The Registration Statement shall have become effective not later
than 12:00 noon, New York City time, on the date hereof, or at such later date
and time as shall be consented to in writing by you, and all filings required by
Rules 424(b), 430A and 462 under the Act shall have been timely made.
(b) You shall be reasonably satisfied that since the respective dates
as of which information is given in the Registration Statement and Prospectus,
(i) there shall not have been any change in the capital stock of the Company or
any material change in the indebtedness (other than in the ordinary course of
business) of the Company, (ii) except as set forth or contemplated by the
Registration Statement or the Prospectus, no material oral or written agreement
or other transaction shall have been entered into by the Company which is not in
the ordinary course of business or which could reasonable be expected to result
in a material reduction in the future earnings of the Company, (iii) no loss or
damage (whether or not insured) to the property of the Company shall have been
sustained which had or could reasonably be expected to have a Material Adverse
Effect, (iv) no legal or governmental action, suit or proceeding affecting the
Company or any of its properties which is material to the Company or which
affects or could reasonably be expected to affect the transactions contemplated
by this Agreement shall have been instituted or threatened, and (v) there shall
not have been any material change in the condition (financial or otherwise),
business, management, results of operations of the Company or its subsidiaries
which makes it impractical or inadvisable in your judgment to proceed with the
public offering or purchase the Shares as contemplated hereby.
(c) You shall have received on the Closing Date (and the Additional
Closing Date, if any) an opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, counsel to the Company,
substantially to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware, with
full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), and
is duly registered or otherwise qualified to conduct its business as a
foreign corporation and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires
such registration or qualification, except where the failure to so register
or qualify does not have a Material Adverse Effect.
-21-
(ii) Each of the subsidiaries is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of its
organization, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto); and is duly registered and qualified to conduct its business and
is in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure to so register or qualify does not
have a Material Adverse Effect; and all of the outstanding shares of
capital stock of each of the subsidiaries have been duly authorized and
validly issued, and are fully paid and nonassessable, and are owned of
record, and to such counsel's knowledge, beneficially, by the Company
directly, or indirectly through one of the other subsidiaries, free and
clear of any perfected security interest, or any other security interest,
lien, adverse claim, equity or other encumbrance.
(iii) The capitalization of the Company conforms in all material
respects to the description thereof contained in the Prospectus under the
caption "Capitalization". Except as set forth in the Prospectus, the
Company is not a party to or bound by any outstanding options, warrants or
similar rights to subscribe for, or contractual obligations to issue, sell,
transfer or acquire, any of its capital stock or any securities convertible
into or exchangeable for any of such capital stock.
(iv) All shares of capital stock of the Company outstanding prior
to the issuance of the Shares to be issued and sold by the Company
hereunder, have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights that entitle
or will entitle any person to acquire any Shares upon the issuance thereof
by the Company, and no such rights will exist as of the Closing Date. To
such counsel's knowledge, all offers and sales of the Company's securities
have been made in compliance in all material respects with the registration
requirements of the Act and other applicable state securities laws or
regulations or applicable exemptions therefrom.
(v) To the knowledge of such counsel after reasonable inquiry,
the Company is not in default in the performance of any obligation,
agreement or condition contained in any bond, indenture, note or other
evidence of indebtedness or any other agreement or obligation of the
Company, where the default would have, individually or in the aggregate, a
Material Adverse Effect.
(vi) Neither the offer, sale or delivery of the Shares by the
Company, the execution, delivery or performance by the Company of this
Agreement, compliance by the Company with all provisions hereof nor
consummation by the Company of the transactions contemplated hereby (A)
conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under, any material agreement, indenture, lease or other
instrument to which the Company is a party or by which any of its
properties is bound, or (B) creates or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company.
-22-
(vii) The properties described in the Prospectus as held under
lease by the Company are held under duly executed leases.
(viii) Except as described in the Registration Statement or
Prospectus, there is no action, suit, inquiry, proceeding, or investigation
by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the knowledge of such
counsel, threatened, against or involving the Company or its subsidiaries,
or the properties of either the Company or any of its subsidiaries: (A)
which might individually or in the aggregate prevent or adversely affect
the transactions contemplated by this Agreement or result in a Material
Adverse Effect, nor, to the knowledge of such counsel, is there any basis
for any such action, suit, inquiry, proceeding, or investigation; or (B)
that are required to be described in the Registration Statement or
Prospectus (or any amendment or supplement thereto) that are not described
as required therein.
(ix) Such counsel has reviewed all agreements, contracts,
indentures, leases or other documents or instruments described or referred
to in the Registration Statement and the Prospectus, and such agreements,
contracts (and forms of contracts), indentures, leases or other documents
or instruments are fairly summarized or disclosed in all material respects
therein, and filed as exhibits thereto as required, and such counsel does
not know of any agreements, contracts, indentures, leases or other
documents or instruments required to be so summarized or disclosed or filed
which have not been so summarized or disclosed or filed.
(x) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official is required on the
part of the Company (except such as have been obtained under the Act or
such as may be required under state securities or Blue Sky laws governing
the purchase and distribution of the Shares) for the valid issuance and
sale of the Shares to the Underwriters under this Agreement.
(xi) The Company satisfies all of the requirements of the Act for
use of Form S-3 for the offering of Shares contemplated by this Agreement.
In rendering such opinion, counsel may rely, to the extent he deems
such reliance proper, as to matters of fact upon certificates of officers
of the Company and of government officials, provided that counsel shall
state their belief that they and you are justified in relying thereon.
Copies of all such certificates shall be furnished to you and your counsel
on the Closing Date.
In addition to the opinion set forth above, such counsel shall state
that during the course of his participation in the preparation of the
Registration Statement and the Prospectus and the amendments thereto,
nothing has come to the attention of such counsel which has caused him to
believe or given him reason to believe that the Registration Statement or
the Prospectus or any amendment thereto (except for the financial
statements and other financial, accounting and statistical information, or
industry data attributed to an identified source,
-23-
contained therein or omitted therefrom as to which no opinion need be
expressed), at the date thereof, contained an 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 Registration Statement or the Prospectus as of the date of the opinion
(except as aforesaid), contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(d) You shall have received on the Closing Date (and the Additional
Closing Date, if any) an opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, counsel to the Selling
Stockholders, substantially to the effect that:
(i) The Selling Stockholders have all requisite power and
authority to enter into this Agreement and to issue, sell and deliver
the Shares to be sold by them to the Underwriters as provided herein,
and this Agreement has been duly authorized, executed and delivered by
the Selling Stockholders and is a valid, legal and binding agreement
of the Selling Stockholders enforceable against the Selling
Stockholders in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally or by general
equitable principles, and except to the extent enforceability of the
provisions relating to indemnity and contribution for liabilities
under the Act may be limited by or under the Act, or by public policy.
(ii) The Shares to be issued and sold to the Underwriters by the
Selling Stockholders hereunder have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, (A) such Shares will be validly
issued, fully paid and nonassessable and free of any preemptive or
similar that entitle or will entitle any person to acquire any Shares
upon the sale thereof by the Selling Stockholders, and (B) good and
valid title to such Shares, free and clear of any claim, encumbrance
or defect in title of any nature (other than any arising by or through
the Underwriters), will pass to each Underwriter that has purchased
any portion of such Shares in good faith and without knowledge of any
such claim, encumbrance or defect.
(iii) Neither the offer, sale or delivery of the Shares by the
Selling Stockholders, the execution, delivery or performance by the Selling
Stockholders of this Agreement, compliance by the Selling Stockholders with
all provisions hereof nor consummation by the Selling Stockholders of the
transactions contemplated hereby (A) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, any
material agreement, indenture, lease or other instrument to which such
Selling Stockholder is a party or by which any of their properties is
bound, or (B) creates or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of such Selling
Stockholder.
(iv) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body,
-24-
agency or official is required on the part of the Selling Stockholders
(except such as have been obtained under the Act or such as may be required
under state securities or Blue Sky laws governing the purchase and
distribution of the Shares) for the valid sale of the Shares to the
Underwriters by the Selling Stockholders under this Agreement.
(e) You shall have received on the Closing Date (and the Additional Closing
Date, if any) an opinion of ▇▇▇▇▇▇▇▇▇ Traurig, LLP., special counsel to the
Company, substantially to the effect that:
(i) The Shares to be issued and sold to the Underwriters by the
Company hereunder have been duly authorized and, when issued and delivered
to the Underwriters against payment therefor in accordance with the terms
hereof, such Shares will be validly issued, fully paid and nonassessable
and free of any preemptive or similar rights under the Company's
Certificate of Incorporation, as amended, or Bylaws, as amended and
restated, that entitle or will entitle any person to acquire any Shares
upon the issuance thereof by the Company.
(ii) The form of certificates for the Shares conforms in all
material respects to the requirements of the applicable corporate laws of
the State of Delaware.
(iii) The Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose are pending before or contemplated by the
Commission.
(iv) The Company has all requisite corporate power and authority
to enter into this Agreement and to issue, sell and deliver the Shares to
be sold by it to the Underwriters as provided herein, and this Agreement
has been duly authorized, executed and delivered by the Company and is a
valid, legal and binding agreement of the Company enforceable against the
Company in accordance with its terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general equitable
principles, and except to the extent enforceability of the provisions
relating to indemnity and contribution for liabilities under the Act may be
limited by or under the Act, or by public policy.
(v) Neither the offer, sale or delivery of the Shares by the
Company, the execution, delivery or performance of this Agreement by the
Company, compliance by the Company with all provisions hereof nor
consummation by the Company of the transactions contemplated hereby (A)
conflicts with or constitutes a breach of, or a default under, the
certificate of incorporation or bylaws, or (B) violates any existing law,
statute, regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or decree of New
York law, Florida law, the laws of the United States or the provisions of
the Delaware General Corporation law which is applicable to the Company or
any of its properties and of which such counsel is aware.
-25-
(vi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official is required on the
part of the Company (except such as have been obtained under the Act, such
as may be required under state securities or Blue Sky laws governing the
purchase and distribution of the Shares or such as may be required under
state or federal gaming laws) for the valid issuance and sale of the Shares
to the Underwriters under this Agreement.
(vii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and
the notes thereto and the schedules and other financial and statistical
data included therein, as to which such counsel need not express any
opinion) comply as to form in all material respects with the requirements
of the Act. Without limiting the generality of the foregoing, any Rule 434
Prospectus conforms in all material respects with the requirements of Rule
434 under the Act.
(viii) The authorized and the outstanding 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."
(ix) The descriptions in the Prospectus of statutes, regulations
or legal or governmental proceedings, insofar as they purport to summarize
certain of the provisions thereof, are accurate and fairly present the
information required to be presented by the Act and the rules and
regulations thereunder.
(x) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company", as such terms are defined in the Investment Company Act of 1940,
as amended.
In rendering such opinion, such counsel shall not be required to
express any opinion with respect to any Incorporated Documents and may
rely, to the extent he deems such reliance proper, as to matters of fact
upon certificates of officers of the Company and of government officials,
provided that counsel shall state their belief that they and you are
justified in relying thereon. Copies of all such certificates shall be
furnished to you and your counsel on the Closing Date.
In rendering such opinion, in each case where such opinion is
qualified by "the knowledge of such counsel" or "known to such counsel",
such counsel may rely as to matters of fact upon certificates of executive
and other officers and employees of the Company as you and such counsel
shall deem are appropriate and such other procedures as you and such
counsel shall mutually agree; provided, however, in each such case, such
counsel shall state that it has no knowledge contrary to the information
contained in such certificates or developed by such procedures and knows of
no reason why you should not reasonably rely upon the information contained
in such certificates or developed by such procedures. Such counsel may
state in such opinion that its knowledge is limited to the knowledge of its
-26-
attorneys and other representatives and employees that have given attention
to the Company's matters in connection with the transactions contemplated
by this Agreement.
In addition to the opinion set forth above, such counsel shall state
that during the course of their participation in the preparation of the
Registration Statement and the Prospectus and the amendments thereto,
nothing has come to the attention of such counsel which has caused them to
believe or given them reason to believe that the Registration Statement or
the Prospectus or any amendment thereto (except for the financial
statements and other financial, accounting and statistical information, or
industry data attributed to an identified source, contained therein or
omitted therefrom as to which no opinion need be expressed), at the date
thereof, contained an 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 Registration Statement or
the Prospectus as of the date of the opinion (except as aforesaid),
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) You shall have received on the Closing Date an opinion of Akerman,
Senterfitt & ▇▇▇▇▇▇, P.A., as counsel for the Underwriters, dated the Closing
Date with respect to the issuance and sale of the Shares, the Registration
Statement and other related matters as you may reasonably request, and the
Company and its counsel shall have furnished to your counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon such
matters.
(g) You shall have received letters addressed to you and dated the
date hereof and the Closing Date (and the Additional Closing Date, if any) from
(i) the firm of KPMG LLP, independent certified public accountants, and (ii) the
Chief Financial Officer of the Company, substantially in the forms heretofore
approved by you.
(h) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or, to the knowledge of the Company, shall be
threatened or contemplated by the Commission at or prior to the Closing Date;
(ii) no order suspending the effectiveness of the Registration Statement or the
qualification or registration of the Shares under the securities or Blue Sky
laws of any jurisdiction shall be in effect and no proceeding for such purpose
shall be pending or, to the knowledge of the Company, threatened or contemplated
by the Commission or the authorities of any jurisdiction; (iii) any request for
additional information on the part of the staff of the Commission or any such
authorities shall have been complied with to the satisfaction of the staff of
the Commission or such authorities; (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have been filed
unless a copy thereof was first submitted to you and you did not object thereto
in good faith; and (v) all of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
(except for such representations and warranties qualified by materiality, which
representations and warranties shall be true and correct in all respects) on and
as of the date hereof and on and as of the Closing Date as if made on and as of
the Closing Date, and you shall have received a certificate, dated the Closing
-27-
Date and signed by the chief executive officer and the chief financial officer
of the Company (or such other officers as are acceptable to you) to the effect
set forth in this Section 9(h) and in Sections 9(b) and 9(i) hereof.
(i) The Company shall not have failed in any material respect at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(j) The Company shall have furnished or caused to have been furnished
to you such further certificates and documents as you shall have reasonably
requested.
(k) At or prior to the Closing Date, you shall have received Lock-Up
Agreements from each of the Company's senior executive officers and directors,
and the Selling Stockholders.
(l) At or prior to the effective date of the Registration Statement,
you shall have received a letter from the Corporate Financing Department of the
NASD confirming that such Department has determined to raise no objections with
respect to the fairness or reasonableness of the underwriting terms and
arrangements of the offering contemplated hereby.
(m) You shall be satisfied that, and you shall have received a
certificate dated the Closing Date, from each Selling Stockholder to the effect
that, as of the Closing Date: (i) the representations and warranties made by
such Selling Stockholders herein are true and correct in all material respect on
the Closing Date; and (ii) such Selling Stockholder has complied with all
obligations and satisfied all conditions which are required to be performed or
satisfied on his or its part at or prior to the Closing Date.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and your counsel.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the satisfaction on and as of the Additional Closing
Date of the conditions set forth in this Section 9, except that, if the
Additional Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in this Section 9 shall be dated as of the
Additional Closing Date and the opinions called for by paragraphs (c) and (e)
shall be revised to reflect the sale of Additional Shares.
If any of the conditions hereinabove provided for in this Section 9 shall
not have been satisfied when and as required by this Agreement, this Agreement
may be terminated by you by notifying the Company of such termination in writing
or by telegram at or prior to such Closing Date, but you shall be entitled to
waive any of such conditions.
10. Effective Date of Agreement. This Agreement shall become effective
---------------------------
upon the later of (a) the execution and delivery hereof by the parties hereto,
and (b) release of notification of the
-28-
effectiveness of the Registration Statement by the Commission; provided,
however, that the provisions of Sections 7, and 8 shall at all times be
effective.
If any one or more of the Underwriters shall fail or refuse to purchase
Firm Shares which it or they have agreed to purchase hereunder, and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Firm Shares, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I hereto bears to the aggregate number
of Firm Shares set forth opposite the names of all non-defaulting Underwriters
or in such other proportion as you may specify in the Agreement Among
Underwriters, to purchase the Firm Shares which such defaulting Underwriter or
Underwriters agreed, but failed to refuse to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares and arrangements satisfactory
to you and the Company for the purchase of such Firm Shares are not made within
48 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
which does not result in termination of this Agreement, either you or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven (7) days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or 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 such default of any such
Underwriter under this Agreement.
11. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or the Additional Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, in your sole judgment,
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the NYSE, (ii) trading in securities generally on the New York
Stock Exchange, American Stock Exchange or NASDAQ/NMS shall have been suspended
or materially limited, or minimum or maximum prices shall have been generally
established on such exchange, or additional material governmental restrictions,
not in force on the date of this Agreement, shall have been imposed upon trading
in securities generally by any such exchange or by order of the Commission or
any court or other governmental authority, (iii) a general moratorium on
commercial banking activities 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 other international or domestic calamity, crisis or
change in political, financial or economic conditions or other material event
the effect of which on the financial markets of the United States is such as to
make it, in your judgment, impracticable or inadvisable to market the Shares or
to enforce contracts for the sale of the Shares. Notice of such cancellation
shall be promptly given to the Company and its counsel by telegraph, telecopy or
telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriters. The Company acknowledges
-----------------------------------------
that (i) the paragraph immediately following footnote (2) on the cover page of
the Prospectus, and (ii) the FOURTH, FIFTH and EIGHTH paragraphs under the
caption "Underwriting" in any Prepricing Prospectus,
-29-
constitute the only information furnished by or on behalf of the Underwriters
through you or on your behalf as such information is referred to in Sections
6.1(a), 6.1(b) and 8 hereof.
13. Miscellaneous. Except as otherwise provided in Section 5 and 11
-------------
hereof, notice given pursuant to any of the provisions of this Agreement shall
be in writing and shall be delivered (i) to the Company to the office of the
Company at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Att: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, Esq. (With a copy to ▇▇▇▇▇▇▇▇▇ Traurig LLP, The Met Life Building,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Att: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., or
(iii) if to you, as Representative of the Underwriters, to ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. Ascari, Managing Director (with copy to Akerman, Senterfitt
& ▇▇▇▇▇▇, P.A., ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Att:
▇▇▇▇ ▇▇▇▇▇▇, Esq.).
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company and its respective directors and officers and the
Selling Stockholders.
14. Applicable Law; Counterparts. This Agreement shall be governed by and
----------------------------
construed in accordance with the laws of the State of Florida without reference
to choice of law principles thereunder.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
This Agreement shall be effective when, but only when, at least one
counterpart hereof shall have been executed on behalf of each party hereto.
The Company, the Selling Stockholders and the Underwriters each hereby
irrevocably waive any right they may have to a trial by jury in respect to any
claim based upon or arising out of this Agreement or the transactions
contemplated hereby.
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Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
Dover Downs Entertainment, Inc.
By:_______________________________________________
President and Chief Executive Officer
Solely with respect to Sections 6.2 and 8 of this
Agreement, the Selling Stockholders Named in
Schedule II Hereto, Acting Severally
By:_______________________________________________
Attorney-in-Fact
CONFIRMED as of the date first above mentioned,
on behalf of the Representatives and the other
several Underwriters named in Schedule I hereto.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
By:___________________________________
Authorized Representative
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SCHEDULE I
Number of
Name Firm Shares
--------------------------------------------------- ---------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates.........................
▇.▇. ▇▇▇▇▇▇▇▇ & Co. ...............................
TOTAL ............................................. 2,650,000
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SCHEDULE II
Schedule of Selling Stockholders
Number of
Firm Shares
Stockholder to be Sold
----------- -----------
Total
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EXHIBIT A
February __, 2000
DOVER DOWNS ENTERTAINMENT, INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
▇.▇. ▇▇▇▇▇▇▇▇ & CO.
As Representatives of the Several Underwriters
c/o Raymond ▇▇▇▇▇ & Associates, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: DOVER DOWNS ENTERTAINMENT, INC. (THE "COMPANY") - RESTRICTION ON STOCK
----------------------------------------------------------------------
SALES
-----
Dear Sirs:
This letter is delivered to you pursuant to the Underwriting Agreement (the
"Underwriting Agreement") to be entered into by the Company, as issuer, and
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. and ▇.▇. ▇▇▇▇▇▇▇▇ & Co., the representatives
(the "Representatives") of certain underwriters (the "Underwriters") to be named
therein. Upon the terms and subject to the conditions of the Underwriting
Agreement, the Underwriters intend to effect a public offering of Common Stock,
par value $.10 per share, of the Company (the "Common Stock"), as described in
and contemplated by the registration statement of the Company on Form S-3, File
No. 333-30060 (the "Registration Statement"), as filed with the Securities and
Exchange Commission on February 10, 2000.
The undersigned recognizes that it is in the best financial interests of
the undersigned, as an officer or director, and owner of stock, options,
warrants or other securities of the Company (the "Company Securities"), that the
Company complete the proposed Offering.
The undersigned further recognizes that the Company Securities held by the
undersigned are, or may be, subject to certain restrictions on transferability,
including those imposed by United States federal securities laws.
Notwithstanding these restrictions, the undersigned has agreed to enter into
this letter agreement to further assure the Underwriters that the Company
Securities of the undersigned, now held or hereafter acquired, will not enter
the public market at a time that might impair the underwriting effort.
Therefore, as an inducement to the Underwriters to execute the Underwriting
Agreement, the undersigned hereby acknowledges and agrees that the undersigned
will not (i) offer, sell, contract to sell, pledge, grant any option to purchase
or otherwise dispose of (collectively, a "Disposition") any shares of the
Company's capital stock, or any securities convertible into or exercisable or
exchangeable for, or any rights to purchase or otherwise acquire, any shares of
the Company's capital stock held by the undersigned or acquired by the
undersigned after the date hereof, or which
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may be deemed to be beneficially owned by the undersigned (collectively, the
"Lock-Up Shares"), pursuant to the Rules and Regulations promulgated under the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended, for a period commencing on the date hereof and ending 90 days after the
date of the Company's Prospectus first filed pursuant to Rule 424(b) under the
Act, inclusive (the "Lock-Up Period"), without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc., or (ii) exercise or seek to exercise or
effectuate in any manner any rights of any nature that the undersigned has or
may have hereafter to require the Company to register under the Act the
undersigned's sale, transfer or other disposition of any of the Lock-Up Shares
or other securities of the Company held by the undersigned, or to otherwise
participate as a selling securityholder in any manner in any registration
effected by the Company under the Act, including under the Registration
Statement, during the Lock-Up Period. The foregoing restrictions are expressly
agreed to preclude the undersigned from engaging in any hedging, collar (whether
or not for any consideration) or other transaction which is designed to or
reasonably expected to lead or result in a Disposition of Lock-Up Shares during
the Lock-Up Period, even if such Lock-Up Shares would be disposed of by someone
other than such holder. Such prohibited hedging or other transactions would
include, without limitation, any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including, without limitation, any put
or call option or reversal or cancellation thereof) with respect to any Lock-Up
Shares or with respect to any security (other than a broad-based market basket
or index) that includes, relates to or derives any significant part of its value
from Lock-Up Shares.
Notwithstanding the agreement not to make any Disposition during the Lock-
Up Period, you have agreed that the foregoing restrictions shall not apply to:
(1) the Company Securities being offering in the prospectus included in the
Registration Statement;
(2) any grant or exercise of options pursuant to the Company's 1991 Stock
Option Plan or 1996 Stock Option Plan; or
(3) Dispositions of Company Securities to charitable organizations and
sales of Company Securities, in each case constituting not more than 2%
of the Company Securities owned by the me.
It is understood that, if the Underwriting Agreement (other than the
provisions thereof which survive termination) shall terminate or be terminated
prior to payment for and delivery of the Shares, you will release the
undersigned from the obligations under this letter agreement.
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer of Lock-Up
Shares if such transfer would constitute a violation or breach of this letter.
This letter shall be binding on the undersigned and the respective successors,
heirs, personal representatives and assigns of the undersigned. Capitalized
terms used but not defined herein have the respective meanings assigned to such
terms in the Underwriting Agreement.
Very truly yours,
Signature of Securityholder
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