1
Exhibit 1.1
DRAFT
AS OF 3-20-98
CLEVELAND INDIANS BASEBALL COMPANY, INC.
4,000,000 Class A Common Shares*
UNDERWRITING AGREEMENT
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______________, 1998
McDonald & Company Securities, Inc.
As Representative of the Several Underwriters
c/o McDonald & Company Securities, Inc.
McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114
Dear Sirs:
1. INTRODUCTORY. Cleveland Indians Baseball Company, Inc., an Ohio
corporation (the "Company"), proposes to issue and sell 4,000,000 of its Class A
Common Shares, without par value (the "Common Shares"), which are authorized but
unissued, to the public through the underwriters named in Schedule A annexed
hereto (the "Underwriters") for whom you are acting as the Representative. The
4,000,000 Common Shares to be purchased from the Company are hereinafter
referred to as the "Firm Stock." The Company also proposes to sell to the
Underwriters, at their option, an aggregate of not more than 600,000 additional
Common Shares solely to cover over-allotments, which are hereinafter referred to
as the "Option Stock." The Firm Stock and the Option Stock are hereinafter
collectively referred to as the "Stock" and are more fully described in the
Registration Statement and the Prospectus (as hereinafter defined). The Company
hereby confirms its agreements, as set forth herein, with you, acting as the
Representative of the Underwriters.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters that:
(a) The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than those listed
in Exhibit 21 to the Registration Statement (as hereinafter defined). The
Company has been duly organized and is validly existing
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* Plus an option to purchase up to 600,000 additional shares to cover
over-allotments.
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as a corporation in good standing under the laws of Ohio with corporate power
and authority to own and lease its properties and conduct its business as
described in the Prospectus (as hereinafter defined). Each of the Company's
subsidiaries (as defined in Rule 1-02(x) of Regulation S-X) (the "Subsidiaries")
has been duly incorporated or, in the case of Cleveland Indians Baseball Company
Limited Partnership (the "Baseball Partnership"), formed and is validly existing
as a corporation or partnership, as the case may be, in good standing under the
laws of its respective jurisdiction of incorporation or formation, as the case
may be, with power and authority to own and lease its properties and conduct its
respective business. The Company and each of its Subsidiaries is duly qualified
to do business as a foreign corporation or partnership, as the case may be, and
is in good standing in all jurisdictions (i) in which the conduct of business,
as presently being conducted, requires such qualification and (ii) in which the
Company or such Subsidiary owns or leases real property (except for those
jurisdictions in which the failure to so qualify will not in the aggregate have
a material adverse effect on the Company and such Subsidiaries, taken as a
whole). Except as disclosed in the Registration Statement and except for the
shares of stock or partnership interest in the Baseball Partnership, as the case
may be, of each Subsidiary owned by the Company, neither the Company nor any
Subsidiary owns, directly or indirectly, any equity securities or securities
convertible into or exchangeable for equity securities of any other corporation,
partnership, joint venture, Massachusetts or other business trust or any other
business enterprise.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Company.
(c) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission"), in conformity with the requirements of
the Securities Act of 1933, as amended (the "Act"), and the Rules and
Regulations of the Commission thereunder (as hereinafter defined), a
registration statement on Form S-1 (Registration No. 333-________) including a
preliminary prospectus relating to the Company's Stock, and such amendments to
such registration statement as may have been required prior to the date hereof
have been similarly prepared and filed with the Commission. The registration
statement as amended at the time when it becomes effective, or, if applicable,
as amended at the time the most recent post-effective amendment to such
registration statement filed with the Commission prior to the execution and
delivery of this Agreement became effective (the "Effective Date"), and
including information (if any) contained in a prospectus subsequently filed with
the Commission pursuant to Rule 424(b) under the Act, and deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A
under the Act is hereinafter referred to as the "Registration Statement"; the
prospectus in the form first used to confirm sales of Stock, whether or not
filed with the Commission pursuant to Rule 424(b) under the Act is hereinafter
referred to as the "Prospectus." If an abbreviated registration statement is
prepared and filed with the Commission in accordance with Rule 462(b) under the
Act (an "Abbreviated Registration Statement"), the term "Registration Statement"
as used in this Agreement includes the Abbreviated Registration Statement.
(d) As of the Effective Date, and at all times subsequent
thereto up to and including the respective Closing Dates (as hereinafter
defined) of the offering, the
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Registration Statement and the Prospectus, and any amendments thereof or
supplements thereto, will contain all statements of material facts which are
required to be stated therein in accordance with the Act and the applicable
rules, regulations and interpretive releases of the Commission thereunder (the
"Rules and Regulations"), and will in all material respects conform to the
requirements of the Act and the Rules and Regulations; and neither the
Registration Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will include 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 not misleading; provided, however, that the Company makes
no representations, warranties or agreements as to information contained in the
Registration Statement or the Prospectus or any such amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company through you as the Representative specifically for use in the
preparation thereof.
(e) The Company's duly authorized, issued and outstanding
capital stock is as set forth under "Capitalization" in the Prospectus; all of
the outstanding shares of capital stock of the Company are duly authorized and
validly issued, fully paid and nonassessable, are free of any preemptive rights,
rights of first refusal or similar rights, were issued and sold in compliance
with the applicable Federal and state securities laws and conform in all
material respects to the description thereof in the Prospectus; except as
described in the Prospectus, there are no outstanding options, warrants or other
rights calling for the issuance of, and there are no commitments, plans or
arrangements to issue any shares of capital stock of the Company or any security
convertible or exchangeable or exercisable for capital stock of the Company.
There are no holders of securities of the Company who, by reason of the filing
of the Registration Statement have the right (and have not waived such right) to
request the Company to include in the Registration Statement securities owned by
them, other than such rights as have been satisfied by the inclusion of
securities in the Registration Statement.
(f) The Common Shares of the Company conform in substance to
all statements in relation thereto contained in the Registration Statement and
the Prospectus; the Stock to be sold by the Company hereunder has been duly
authorized and, when issued and delivered pursuant to this Agreement, will be
validly issued, fully paid and nonassessable and will conform to the description
thereof contained in the Prospectus. All corporate action required to be taken
for the issuance of the Stock by the Company has been validly taken. No
preemptive rights of security holders of the Company exist with respect to the
issuance and sale of the Stock by the Company pursuant hereto.
(g) All the issued shares of capital stock of each corporate
Subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and nonassessable and are owned by the Company free and clear of all
liens, encumbrances, equities, security interests, or claims; and there are no
outstanding options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue, any shares of capital
stock of any Subsidiary or any security convertible or exchangeable or
exercisable for capital stock of any Subsidiary. All of the general partner
interests in the Baseball Partnership are owned by the Company and all of the
limited partner interests in the Baseball Partnership are owned by Cleveland
Baseball Corporation, a _________ corporation, in each case free and clear
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of all liens, encumbrances, equities, security interests or claims; and there
are no outstanding options, warrants or other rights calling for the issuance
of, and there are no commitments, plans or arrangements to issue, any interests
in the Baseball Partnership or any security convertible or exchangeable or
exercisable for interests in the Baseball Company.
(h) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus up to and including
the respective Closing Dates (as hereinafter defined), except as set forth or
contemplated in the Prospectus, (i) there has not been and will not have been
any change on a pro forma basis or otherwise in the capital stock (or
partnership interests in the case of the Baseball Partnership) or funded debt of
the Company and its Subsidiaries which is material or any material adverse
change in the business or the financial position or results of operations of the
Company and its Subsidiaries, taken as a whole, and (ii) no loss or damage
(whether or not insured) to the property of the Company and its Subsidiaries has
been sustained which materially and adversely affects the operations of the
Company and its Subsidiaries taken as a whole.
(i) The consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms and provisions of, or constitute a default under, the
Articles of Incorporation or the Code of Regulations of the Company, or the
organizational documents of any of its Subsidiaries, or, in the case of the
Baseball Partnership, its Certificate of Limited Partnership or Partnership
Agreement, or any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound, or any order, rule or
regulation applicable to the Company or any of its Subsidiaries of any court or
of any federal or state regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or any of its
Subsidiaries or any of their properties, or any rule, regulation, guideline,
bulletin, directive, policy or agreement pertaining to Major League Baseball,
including, without limitation, the American League Constitution, the Major
League Agreement, the Major League Rules, the MLB Collective Bargaining
Agreement and Ownership Guidelines (together, the "MLB Governing Documents").
(j) The financial statements of the Company included in the
Registration Statement and the Prospectus fairly present the financial position
and results of operations of the Company and its Subsidiaries at the respective
dates and for the respective periods to which they apply, and such financial
statements have been prepared in conformity with generally accepted accounting
principles consistently applied throughout the periods involved. The pro forma
financial statements of the Company included in the Prospectus fairly present
the pro forma financial position and results of operations of the Company and
its Subsidiaries at the dates and for the periods to which they apply, and have
been prepared to give effect to certain assumptions and proposed transactions
made on reasonable bases which are fully and accurately described in the
Prospectus, and the pro forma adjustments have been properly applied on the
bases described therein.
(k) Deloitte & Touche LLP, who have examined and expressed
their opinion on the financial statements of the Company referenced in their
opinion set forth in the
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Prospectus, are independent accountants within the meaning of the Act and the
Rules and Regulations.
(l) The Company and its Subsidiaries hold all necessary
material authorizations, approvals, orders, licenses, certificates and permits
of and from all governmental regulatory officials and bodies (collectively the
"licenses") required for the conduct of its business as described in the
Prospectus, and all such licenses are valid and in full force and effect, and
the Company and its Subsidiaries are operating in compliance in all material
respects with the terms and provisions of such licenses and with all material
laws, regulations, orders and decrees applicable to the Company and its
Subsidiaries, and their respective businesses and assets.
(m) Neither the Company nor any of its Subsidiaries is in
violation of any applicable Federal, state or local laws, statutes, rules,
regulations or ordinances relating to public health, safety or the environment,
including, without limitation, relating to releases, discharges, emissions or
disposal to air, water, land or groundwater, to the withdrawal or use of
groundwater, to the use, handling or disposal of polychlorinated biphenyls
(PCBs), asbestos or urea formaldehyde, to the treatment, storage, disposal or
management of hazardous substances (including, without limitation, petroleum,
crude oil or any fraction thereof, or other hydrocarbons), pollutants or
contaminants, to exposure to toxic, hazardous or other controlled, prohibited or
regulated substances, which violation would have a material adverse effect on
the business, condition (financial or other) or results of operations of the
Company and its Subsidiaries, taken as a whole, or which might materially and
adversely affect the consummation of the transactions contemplated by this
Agreement. In addition, and irrespective of such compliance, to the Company's
knowledge, neither the Company nor any of its Subsidiaries is subject to any
liabilities for environmental remediation or clean-up, including any liability
or class of liability of the lessee under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or the Resource
Conservation and Recovery Act of 1976, as amended, which liability would have a
material adverse effect on the business, condition (financial or other) or
results of operations of the Company and its Subsidiaries, taken as a whole, or
which might materially and adversely affect the consummation of the transactions
contemplated by this Agreement.
(n) There are no legal or governmental actions, suits or
proceedings pending or, to the knowledge of the Company, threatened to which the
Company or any of its Subsidiaries, or any of their executive officers or
directors is a party or of which the business or property (including, without
limitation, any of the licenses referred to in (l) above) of the Company or any
of its Subsidiaries or any of the Company's or any of its Subsidiaries'
employees is the subject which could have a material adverse effect on the
business, condition (financial or other) or results of operations of the Company
and its Subsidiaries, except as set forth in the Prospectus.
(o) Neither the Company nor any of its Subsidiaries is in
violation of its Articles of Incorporation or its Code of Regulations or other
organizational documents, or, in the case of the Baseball Partnership, its
Certificate of Limited Partnership or Partnership
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Agreement, and no material default exists by the Company or any of its
Subsidiaries in the due performance and observance of any term, covenant or
condition of any agreement material to the Company and its Subsidiaries to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries is bound.
(p) The Company and its Subsidiaries have good title to, or
valid and enforceable leasehold estates in, all properties and assets used for
their businesses (including the property described in the Prospectus as being
owned or leased by the Company), in each case free and clear of all liens,
encumbrances and defects other than those set forth or referred to in the
Registration Statement or Prospectus or those which do not materially affect the
value of such property or leasehold and do not materially interfere with the use
made or proposed to be made of such property or leasehold by the Company and its
Subsidiaries; and all of the leases and subleases under which the Company and
its Subsidiaries hold such properties are in full force and effect.
(q) Other than as set forth in the Prospectus, the Company and
its Subsidiaries own or possess, or can acquire on reasonable terms, the
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets, applications and other unpatented or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks, and
trade names (collectively, "Proprietary Rights") used in or necessary for the
conduct of their businesses as now conducted and as proposed to be conducted as
described in the Prospectus; the Company and its Subsidiaries have the right to
use all Proprietary Rights used in or necessary for the conduct of their
businesses without infringing the rights of any person or violating the terms of
any licensing or other agreement to which the Company or any of its Subsidiaries
is a party, and to the knowledge of the Company no person is infringing upon any
Proprietary Right which the Company or any of its Subsidiaries has the sole and
exclusive right to use; no charges, claims or litigation have been asserted and
remain pending or to the knowledge of the Company have been threatened against
the Company or any of its Subsidiaries and not withdrawn that contest the right
of the Company or any of its Subsidiaries to use, or the validity of, any
Proprietary Right or challenging or questioning the validity or effectiveness of
any license or agreement pertaining thereto or asserting the misuse thereof,
and, to the Company's knowledge, no valid basis exists for the assertion of any
such charge, claim or litigation; all licenses and other agreements to which the
Company or any of its Subsidiaries is a party relating to Proprietary Rights are
in full force and effect and constitute valid, binding and enforceable
obligations of the Company or such Subsidiary, and, to the Company's knowledge,
the other respective parties thereto, and, to the Company's knowledge, there
have not been and there currently are not any defaults thereunder which would
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole, and no event has occurred which (whether by notice or lapse of time or
both) would constitute such a default under any license or other agreement
affecting Proprietary Rights used in or necessary for the conduct of the
businesses of the Company and its Subsidiaries by any party; and except as set
forth in the Prospectus, the validity, continuation and effectiveness of all
such licenses and other agreements and the current terms thereof will not be
affected by the transactions contemplated by this Agreement.
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(r) No approval, authorization, consent or other order of any
public board or body (other than in connection with or in compliance with the
provisions of the Act and the securities or Blue Sky laws of various
jurisdictions) is legally required for the sale of the Stock by the Company.
(s) The Common Shares have been registered under Section 12(g)
of the Securities Exchange Act of 1934, as amended, and have been authorized for
trading over-the-counter on the National Association of Securities Dealers
Automated Quotation National Market ("NASDAQ/NM") subject to notice of issuance
or sale, as the case may be.
(t) The outstanding debt, the properties and the business of
the Company and its Subsidiaries conform in all material respects to the
description thereof contained in the Registration Statement and the Prospectus.
(u) The Company and its Subsidiaries have filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all taxes
shown as due thereon; and no tax deficiency has been asserted against the
Company or any of its Subsidiaries that has not been satisfied, nor does the
Company know of any tax deficiency which is likely to be asserted against the
Company or any of its Subsidiaries which if determined adversely to the Company
or such Subsidiary could materially adversely affect the business, prospects,
properties, assets, results of operations or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole. All tax liabilities are
adequately provided for on the books of the Company.
(v) The Company and each of its Subsidiaries maintain
insurance of the types and in the amounts generally deemed adequate for their
businesses, including, but not limited to, insurance covering (i) personal
injury claims and (ii) real and personal property owned or leased by the Company
and its Subsidiaries against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is in full
force and effect.
(w) To the best of the Company's knowledge, no labor problem
exists with its employees or is threatened or imminent that could materially
adversely affect the Company and its Subsidiaries, taken as a whole, and the
Company is not aware of any existing, threatened or imminent labor disturbance
by the employees of any of its principal suppliers, contractors or customers
that could be expected to materially adversely affect the business, prospects,
properties, assets, results of operation or condition (financial or other) of
the Company and its Subsidiaries, taken as a whole.
(x) The Company has obtained the agreement of each of its
executive officers, directors and shareholders that, for a period of 270 days
from the date of the final prospectus, such persons will not, without the prior
written consent of McDonald & Company Securities, Inc., directly or indirectly
sell, offer to sell, grant any option for the sale of, or otherwise dispose of
Common Shares (including, without limitation, Common Shares which may
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be deemed to be beneficially owned by such persons in accordance with the 1934
Act Regulations) or any securities convertible into Common Shares.
(y) Neither the Company nor any of its officers, directors or
affiliates (as defined in the Act and the Rules and Regulations), has taken or
will take, directly or indirectly, any action designed to stabilize or
manipulate, or which has constituted, or might in the future reasonably be
expected to cause or result in, stabilization or manipulation of, the price of
the Stock of the Company in order to facilitate the sale or resale of the Stock
or otherwise.
(z) The Company's system of internal accounting controls is
sufficient to meet the broad objectives of internal accounting control insofar
as those objectives pertain to the prevention or detection of errors or
irregularities in amounts that would be material in relation to the Company's
financial statements; and, to the best of the Company's knowledge, neither the
Company nor any employee or agent of the Company or any of its Subsidiaries has
made any payment of funds of the Company or any of its Subsidiaries or received
or retained any funds and no funds of the Company or any of its Subsidiaries
have been set aside to be used for any payment in violation of any law, rule or
regulation.
(aa) Neither the Company nor any of its Subsidiaries is or
intends to conduct its business in a manner in which it would become, an
"investment company" as defined in Section 3(a) of the Investment Company Act of
1940, as amended.
(bb) All contracts and documents which are required to be
filed as exhibits to the Registration Statement have been so filed.
3. SALE, PURCHASE AND DELIVERY OF STOCK. (a) On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company hereby agrees to sell to each
Underwriter, and each Underwriter, severally and not jointly, agrees to purchase
from the Company the respective number of shares of the Firm Stock set forth
opposite the Underwriter's name in Schedule A hereto, at a price of $______ per
share.
(b) The Company will deliver the Firm Stock to you for the
respective accounts of the several Underwriters at the office of McDonald &
Company Securities, Inc., McDonald Investment Center, 800 Superior Avenue,
Cleveland, Ohio 44114, at 10:00 A.M., Cleveland time, or to your designee at a
specified place at the same time, against payment of the purchase price at the
place of such Closing, by certified or official bank checks in next day funds
drawn to the order of the Company on the third full business day after the
effective date of the Registration Statement (or, if the Firm Stock is priced
after 4:30 p.m., Cleveland time on the effective date of the Registration
Statement, the fourth full business day after the effective date of the
Registration Statement), or at such other time not later than seven full
business days after such initial public offering as you shall determine, such
time and place being herein referred to as the "Closing Date." The certificates
for the Firm Stock so to be delivered will be in such denominations and
registered in such names as you may specify to the Company at or before 3:00
P.M., Cleveland time, on the second full business day prior to the Closing Date.
Such
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certificates will be made available for checking and packaging at least 24 hours
prior to the Closing Date.
(c) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to 600,000 additional shares in the aggregate of the Option
Stock at the purchase price set forth in Section 3(a) hereof, for use solely in
covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Stock. The option granted hereunder may be exercised at
any time (but not more than once) within 30 days after the date the Registration
Statement becomes effective, upon written or telegraphic notice by the
Representative to the Company setting forth the aggregate number of shares of
the Option Stock as to which the Underwriters are exercising the option and the
time and place at which certificates will be delivered, such time (which, unless
otherwise determined by you and the Company, shall not be earlier than three nor
later than seven full business days after the exercise of said option) being
herein called the "Second Closing Date." The number of shares of the Option
Stock to be sold by the Company to each Underwriter and purchased by such
Underwriter from the Company shall be the same percentage of the total number of
shares of the Option Stock to be purchased by the several Underwriters on the
Second Closing Date as such Underwriter purchased of the total number of shares
of the Firm Stock, as adjusted by the Representative to avoid fractions and to
reflect any adjustment required by Section 13 hereof. The Company will deliver
certificates for the shares of the Option Stock being purchased by the several
Underwriters to you on the Second Closing Date at the place and time of such
Closing, or to your designee at a specified place at the same time, against
payment of the purchase price at the place of such Closing, by certified or
official bank checks in next day funds drawn to the order of the Company. The
certificates for the Option Stock so to be delivered will be in such
denominations and registered in such names as you may specify to the Company at
or before 3:00 P.M., Cleveland time, on the second full business day prior to
the Second Closing Date. Such certificates will be made available for checking
and packaging at least 24 hours prior to the Second Closing Date. The option
granted hereby may be cancelled by you as the Representative of the several
Underwriters, as to the shares of the Option Stock for which the option is
unexercised, at any time prior to the expiration of the 30-day period, upon
notice to the Company.
4. OFFERING BY UNDERWRITERS. Subject to the terms and conditions
hereof, the several Underwriters agree that (i) they will offer the Stock to the
public as set forth in the Prospectus as soon after the Registration Statement
becomes effective as may be practicable, but in no event later than 5:00 p.m.,
Cleveland time, on the 15th business day subsequent to the date that the
Registration Statement becomes effective, and (ii) they will offer and sell the
Stock to the public only in those jurisdictions, and in such amounts, where due
qualification and/or registration has been effected or an exemption from such
qualification and/or registration is available under the applicable securities
or Blue Sky laws of such jurisdiction; it being understood, however, that such
agreement only covers the initial sale of the Stock by the Underwriters and not
any subsequent sale of such Stock in any trading market which may develop after
the public offering.
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5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Underwriters that:
(a) The Company will make every reasonable effort to cause the
Registration Statement to become effective and will advise you when it is
effective under the Act. The Company will not file any amendment to the
Registration Statement, or supplement to the Prospectus, of which you have not
been previously advised and furnished with a copy, or to which you have
reasonably objected in writing.
(b) The Company will advise you promptly of any request of the
Commission for amendment of the Registration Statement or Prospectus or for
additional information and of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose of which it has knowledge, and the Company
will make every reasonable effort to prevent the issuance of any such stop order
and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will comply, to the best of its ability, with
the Act so as to permit the continuance of sales of and dealings in the Stock
under the Act for such period as may be required by the Act; whenever it is
necessary to amend or supplement the Prospectus to make the statements therein
not misleading, furnish, without charge to you as the Representatives, either
amendments to the Prospectus or supplemental information, so that the statements
in the Prospectus as so amended or supplemented will not be misleading; and file
a post-effective amendment to the Registration Statement whenever such an
amendment may be required and furnish, without charge to you, a reasonable
number of copies of any such amendment and related Prospectus.
(d) Not later than the 45th day following the end of the
fiscal quarter first occurring after the first anniversary of the Effective
Date, the Company will make generally available to its security holders and
deliver to you an earnings statement (which need not be audited) covering a
period of at least 12 months beginning not earlier than the Effective Date which
shall satisfy the provisions of Section 11(a) of the Act and/or Rule 158
promulgated under the Act.
(e) The Company will furnish to you copies of the Registration
Statement (two of which will be signed and will include all exhibits thereto),
each preliminary prospectus, the Prospectus, all amendments of and supplements
to such documents, and all correspondence between the Commission and the Company
or its counsel or accountants relating thereto, in each case as soon as
available and in such quantities as you may reasonably request.
(f) For a period of three years from the date of the
Prospectus, the Company will deliver to you (i) within 90 days after the end of
each fiscal year, consolidated balance sheets, statements of income, statements
of cash flow and statements of changes in stockholders' equity of the Company
and its consolidated Subsidiaries, if any, as at the end of and for such year
and the last preceding year, all in reasonable detail and certified by
independent
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accountants, (ii) within 45 days after the end of each of the
first three quarterly periods in each fiscal year, unaudited consolidated
balance sheets and statements of income, statements of cash flow and statements
of changes in stockholders' equity of the Company and its consolidated
Subsidiaries, if any, as at the end of and for such period, all in reasonable
detail, (iii) as soon as available, all such proxy statements, financial
statements and reports as the Company shall send or make available to its
stockholders or the stockholders or partners, as the case may be, of any
Subsidiary any of whose stock or partnership interests are owned by any person
other than the Company or any Subsidiary, and (iv) copies of all annual or
periodic reports as the Company or any Subsidiary shall file with the Commission
as required by the Act, the Exchange Act and any rules or regulations
thereunder, which are available for public inspection at the Commission, or any
material reports filed in connection with the Company's listing on any stock
exchange.
(g) The Company will apply the net proceeds from the sale of
the Stock sold by it in the manner set forth in the Prospectus.
(h) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A promulgated under the Act, then promptly following the execution of
this Agreement, the Company will prepare, and file or transmit for filing with
the Commission in accordance with Rule 430A and Rule 424(b) promulgated under
the Act, copies of an amended Prospectus or, if required by such Rule 430A, a
post-effective amendment (including an amended Prospectus), containing all
information so omitted.
(i) The Company will file with the NASD all documents and
notices required of companies that have issued securities that are traded in the
over-the-counter market and quotations for which are reported by the NASDAQ/NM.
(j) The Company will cooperate with you and your counsel to
qualify the Stock for sale under the securities or Blue Sky laws of such
jurisdictions within the United States as you designate, including furnishing
such information and executing such instruments as may be required, and will
continue such qualifications in effect for a period of at least three months
from the date hereof; provided, however, the Company shall not be required to
register or qualify as a foreign corporation or as a dealer in securities nor,
except as to matters and transactions relating to the offer and sale of the
Stock, consent to a service of process in any jurisdiction.
(k) For a period of 270 days from the time of the initial
public offering of the Stock by the Underwriters, the Company will not publicly
sell, except with your prior written consent, any Common Shares or securities
convertible into Common Shares for cash, except pursuant to the exercise of any
outstanding stock options of the Company that are described in the Prospectus.
(l) After the Closing Dates, the Company and the Subsidiaries
will be in compliance with the financial record-keeping requirements and
internal accounting control requirements of Section 13(b)(2) of the Exchange
Act.
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6. PAYMENT OF EXPENSES. The Company will pay or cause to be paid all
costs and expenses incident to the performance of the obligations of the Company
hereunder, including, but not limited to, the reasonable fees and disbursements
of its counsel; the reasonable fees, costs and expenses of preparing, printing
and delivering the certificates for the Stock; the reasonable fees, costs and
expenses of the transfer agent and registrar for the Common Shares; the
reasonable fees and disbursements of its accountants; the filing fees and
reasonable expenses incurred in connection with the qualification, registration
or exemption of the Stock under state securities or Blue Sky laws and the fees
and disbursements of counsel for the Underwriters in connection with such
qualification, registration or exemption and the preparation and printing of the
preliminary and final Blue Sky Surveys; the filing fees and reasonable expenses
paid and incurred by the Underwriters, including fees and disbursements of
counsel for Underwriters, in connection with the review of the terms of the
underwriting arrangements by the NASD; the costs and expenses in connection with
the preparation, printing and filing of the Registration Statement (including
exhibits thereto) and the Prospectus and the furnishing to the Underwriters of
such copies of each preliminary and final Prospectus as the Underwriters may
reasonably require; and the costs and expenses in connection with the printing
of this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement and other documents distributed to the Underwriters.
7. CONDITIONS OF THE OBLIGATION OF THE UNDERWRITERS. The obligations of
the several Underwriters to purchase and pay for the Firm Stock on the Closing
Date and the Option Stock on the Second Closing Date shall be subject to the
condition that the representations and warranties made by the Company herein are
true and correct as of the date hereof and as of the respective Closing Dates,
to the condition that the written statements of Company officers made pursuant
to the provisions hereof are true and correct, and to the performance by the
Company of their obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M., Cleveland time, on the date of this Agreement, or at such
later time as shall have been consented to by you, and prior to each Closing
Date no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending, or to the knowledge of the Company or you, shall
be contemplated by the Commission.
(b) You shall not have advised the Company that the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto contains an untrue statement of fact which, in the reasonable opinion of
Calfee, Halter & Griswold LLP, counsel for the Underwriters, is material, or
omits to state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading.
(c) You shall have received as of each Closing Date (or prior
thereto as indicated) the following:
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(i) An opinion of Baker & Hostetler LLP, dated the respective
Closing Dates, to the effect that:
(aa) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of Ohio with
corporate power and authority to own its properties and conduct its business as
described in the Prospectus. Each of the Company's Subsidiaries has been duly
incorporated or, in the case of the Baseball Partnership, formed and is validly
existing as a corporation or partnership, as the case may be, in good standing
under the laws of its respective jurisdiction of incorporation or formation, as
the case may be, with power and authority to own and lease its properties and
conduct its respective business. The Company and each of its Subsidiaries are
duly qualified to do business as a foreign corporation and are in good standing
in all jurisdictions (i) in which the conduct of business, as presently being
conducted, requires such qualification (except for those jurisdictions in which
the failure to so qualify will not in the aggregate have a material adverse
effect on the Company and its Subsidiaries) and (ii) in which the Company or
such Subsidiary owns or leases real property.
(bb) The authorized capital stock of the Company is
as set forth under "Capitalization" in the Prospectus; all issued and
outstanding Common Shares of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, and are free of preemptive rights
of stockholders, rights of first refusal or similar rights. Except as described
in the Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of and there are no commitments, plans or arrangements
to issue any shares of capital stock of the Company or any security convertible
or exchangeable or exercisable for capital stock of the Company, and there are
no holders of securities of the Company who, by reason of the filing of the
Registration Statement, have the right (and have not waived such right) to
request the Company to include in the Registration Statement securities owned by
them, other than such rights as have been satisfied by the inclusion of
securities in the Registration Statement.
(cc) The Common Shares of the Company to be issued
and sold by the Company hereunder have been duly authorized, and, when issued,
delivered and paid for pursuant to this Agreement, will be validly issued, fully
paid and nonassessable. No preemptive rights of security holders of the Company
exist with respect to the issuance and sale of the Stock by the Company pursuant
to this Agreement. The Common Shares of the Company conform to the description
thereof contained in the Prospectus and the certificates for the Common Shares
of the Company (including the Stock) are in due and legal form under Ohio law.
(dd) The Company has the corporate power and
authority to enter into and perform this Agreement, and to issue and deliver the
Stock as provided herein. The execution, delivery and performance of this
Agreement by the Company has been duly authorized by all necessary action of the
Company. This Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms, except as rights to
indemnity may be limited by public policy and applicable federal or state
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securities laws and except as enforcement thereof may be limited by bankruptcy,
insolvency or other laws of general application affecting the enforcement of
creditors' rights or limitations upon the availability of certain remedies that
may be precluded by general principles of equity.
(ee) All the issued shares of capital stock of each
corporate Subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned by the Company free and
clear of all liens, encumbrances, equities, security interests, or claim; and
there are no outstanding options, warrants or other rights calling for the
issuance of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of any Subsidiary or any security convertible or
exchangeable or exercisable for capital stock of any Subsidiary; except as
disclosed in the Registration Statement and except for the shares of stock or
partnership interest in the Baseball Partnership, as the case maybe, of each
Subsidiary owned by the Company, neither the Company nor any Subsidiary owns,
directly or indirectly, any shares of capital stock of any corporation or has
any equity interest in any firm, partnership, joint venture, association or
other entity.
(ff) All of the general partner interests in the
Baseball Partnership are owned by the Company and all of the limited partner
interests in the Baseball Partnership are owned by Cleveland Baseball
Corporation, a __________ corporation, in each case free and clear of all liens,
encumbrances, equities, security interests or claims; and there are no
outstanding options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue, any interests in the
Baseball Partnership or any security convertible or exchangeable or exercisable
for interests in the Baseball Partnership.
(gg) The Registration Statement has become effective
under the Act and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Act. The Registration Statement and the Prospectus, and
each amendment thereof or supplement thereto (except for the financial
statements and schedules included therein as to which such counsel need express
no opinion) comply as to form in all material respects with the requirements of
the Act and the Rules and Regulations (except for the financial statements and
schedules included therein as to which such counsel need express no opinion);
the descriptions in the Registration Statement and the Prospectus of the Common
Shares, statutes, regulations, leases, employee benefit plans, contracts and
other documents are materially accurate and fairly present the information
required to be shown; and such counsel does not know of any legal or
governmental proceedings, pending or threatened, which are required by the Act
and the Rules and Regulations to be described in the Prospectus and which are
not described as so required, or of any leases, contracts or other documents of
a character which are required by the Act and the Rules and Regulations to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement and which are not described and/or filed
as so required.
(hh) The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not result in a breach
of any of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or
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other agreement or instrument to which the Company or any of its Subsidiaries is
a party and of which such counsel has knowledge after reasonable investigation,
or the Articles of Incorporation or Code of Regulations of the Company, or the
organizational documents of any of its Subsidiaries, or, in the case of the
Baseball Partnership, its Certificate of Limited Partnership or partnership
agreement, or any of the MLB Governing Documents, or, to the knowledge of such
counsel, any order, rule or regulation applicable to the Company or any of its
Subsidiaries of any court or of any federal or state regulatory body or
administrative agency or other governmental body having jurisdiction over the
Company or any of its Subsidiaries or the properties of any of them, except for
such breaches or defaults as will not have a material adverse effect on the
consummation of the transactions herein contemplated and the fulfillment of the
terms hereof by the Company.
(ii) All approvals, consents and orders of all
governmental bodies required in connection with the valid authorization,
issuance and sale of the Stock as contemplated by this Agreement have been
obtained, except such as may be required under the securities or Blue Sky laws
of any jurisdiction as to which such counsel need express no opinion.
(jj) To such counsel's knowledge, neither the Company
nor any of its Subsidiaries is in violation of its Articles of Incorporation or
its Code of Regulations or other organizational documents, or, in the case of
the Baseball Partnership, its Certificate of Limited Partnership or partnership
agreement, and, to the best of the knowledge of such counsel, no default exists
by the Company or any of its Subsidiaries in the due performance and observance
of any term, covenant or condition of any indenture, mortgage, deed of trust,
loan agreement or other agreement filed as an exhibit to the Registration
Statement and by which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound.
(kk) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(ll) To the best of such counsel's knowledge, the
Company and its Subsidiaries are not in violation of any Federal or Ohio laws
and regulations that are of general application to corporations or partnerships
in the conduct of their business, except where the failure so to comply or
conform would not have a material adverse effect on the business, condition
(financial or other) or results of operations of the Company and its
Subsidiaries, taken as a whole.
(mm) No facts have come to the attention of such
counsel which would lead such counsel to believe that either the Registration
Statement at the time it became effective and at the Closing Date or the Second
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
as of the date thereof and as of the Closing Date or the Second Closing Date, as
the
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case may be, contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and schedules included
therein).
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent
specified in such opinion, if at all, upon an opinion or opinions of other
counsel, familiar with the applicable laws; and (B) as to matters of fact on
certificates of officers of the Company and certificates or other written
statements of officers of departments of various jurisdictions having custody of
documents respecting the corporate existence or good standing of the Company and
its Subsidiaries. The opinion of such counsel for the Company shall state that
the opinion of any such other counsel is in form satisfactory to such counsel
and, in their opinion, you and they are justified in relying thereon.
(ii) Such opinion or opinions of Calfee, Halter &
Griswold LLP, counsel for the Underwriters, dated the respective Closing Dates,
with respect to the sufficiency of all corporate proceedings and other legal
matters relating to this Agreement, the validity of the Stock, the Registration
Statement, the Prospectus, and other related matters as you may reasonably
request, and the Company shall have furnished to such counsel such documents as
they may request for the purpose of enabling them to pass upon such matters. In
connection with such opinions, such counsel may rely on representations or
certificates of officers of the Company.
(iii) A certificate of the Company executed by the
principal executive officer and the principal financial and accounting officer
of the Company, dated each respective Closing Date, to the effect that:
(aa) The representations and warranties of the
Company in Section 2 of this Agreement are true and correct as of each
respective Closing Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to each respective Closing Date.
(bb) No stop order suspending the effectiveness of
the Registration Statement has been issued and, to the knowledge of the
respective signers of the certificate, no proceedings for that purpose have been
instituted or are pending or are contemplated under the Act.
(cc) The signers of the certificate have carefully
examined the Registration Statement and the Prospectus; no facts have come to
their attention which would lead them to believe that either the Registration
Statement at the time it became effective (or any amendment thereof or
supplement thereto made prior to the Closing Date or the Second Closing Date, as
the case may be, as of the date of such amendment or supplement) contained an
untrue statement of a material fact or omitted to state any material fact
required to
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be stated therein or necessary to make the statements therein not misleading or
that the Prospectus as of the date thereof (or any amendment thereof or
supplement thereto made prior to the Closing Date or the Second Closing Date, as
the case may be, as of the date of such amendment or supplement) contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; since the
latest respective dates as of which information is given in the Registration
Statement, there has been no material adverse change in the financial position,
business or results of operations of the Company and its Subsidiaries, except as
set forth in or contemplated by the Prospectus; and since the Effective Date of
the Registration Statement there has occurred no event required to be set forth
in an amended or supplemented Prospectus which has not been set forth.
(iv) Letters from Deloitte & Touche LLP dated
respectively the date of this Agreement and each respective Closing Date,
addressed to you and in form and substance previously approved by you, with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and the Prospectus.
(d) Prior to the Closing Date the Company shall have furnished
to you such further certificates and documents as you may reasonable request.
(e) Prior to each Closing Date no stop orders suspending the
qualification of the Stock under the securities or Blue Sky laws of the states
in which the Stock is to be offered and sold shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending, or
to the knowledge of the Company or you, shall be contemplated by the applicable
state securities administrators.
If any condition of the Underwriters' obligations hereunder to be
satisfied prior to any Closing Date is not so satisfied, this Agreement may be
terminated by you prior to such Closing Date, by notice in writing or by
telegram confirmed in writing to the Company.
All such opinions, certificates, letters and documents furnished to you
pursuant to this Section 7 will be in compliance with the provisions hereof only
if they are in all material respects satisfactory to you and to Calfee, Halter &
Griswold LLP, counsel for the Underwriters, as to which both you and such
counsel shall act reasonably. The Company will furnish you with such executed
and conformed copies of such opinions, certificates, letters and documents as
you may request.
You, on behalf of the Underwriters, may waive in writing the compliance
by the Company of any one or more of the foregoing conditions or extend the time
for their performance.
8. REPRESENTATIONS OF THE UNDERWRITERS. Each of the Underwriters
severally represents and warrants to the Company that the information furnished
to the Company in writing by such Underwriters or by you expressly for use in
the preparation of the Registration Statement or the Prospectus does not, and
any amendments thereof or supplements thereto thus
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furnished will not, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. Through you each Underwriter has
only furnished to the Company expressly for such use, the statements made in the
last paragraph of the cover page of the Prospectus and the statements relating
to the terms of the offering by the several Underwriters set forth under the
caption "Underwriting" in the Prospectus.
9. TERMINATION OF AGREEMENT. This Agreement shall become effective: (i)
upon the execution and delivery hereof by the parties hereto; or (ii) if, at the
time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Stock may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission. At any time before the happening of such
occurrence, the Company may, by notice to you, terminate this Agreement; and at
any time prior to such time, you, as the Representative of the several
Underwriters, may, by notice to the Company, terminate this Agreement.
This Agreement may also be terminated by you, as the Representative of
the several Underwriters, by notice to the Company on or after the Effective
Date of the Registration Statement and prior to each respective Closing Date, if
at any time during such period any of the following has occurred: (i) except as
disclosed in or contemplated by the Registration Statement, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole or the earnings,
business affairs, management or business prospects of the Company and its
Subsidiaries taken as a whole, whether or not arising in the ordinary course of
business; (ii) any outbreak of hostilities or escalation in existing hostilities
anywhere in the world or other national or international calamity or crisis or
change in economic or political conditions, if the effect of such outbreak,
escalation, calamity, crisis or change on the financial markets in the United
States would, in your reasonable judgment, make it impracticable to offer for
sale or to enforce contracts made by the Underwriters for the resale of the
Stock agreed to be purchased hereunder; (iii) any general suspension of trading
in securities on the New York Stock Exchange or the American Stock Exchange or
the NASDAQ/NM or any general limitation on prices for such trading or any
general restrictions on the distribution of securities, all to such a degree as
would in your reasonable judgment materially adversely affect the market for the
Stock; or (iv) a banking moratorium shall have been declared by either Federal,
Ohio or New York State authorities.
This Agreement may also be terminated as provided in Sections 7 and 11
hereof.
If this Agreement shall be terminated by you because of any failure on
the part of the Company to comply with any of the terms or to fulfill any of the
conditions of this Agreement, the Company shall pay, in addition to the costs
and expenses referred to in Section 6, all reasonable out-of-pocket expenses
incurred by the Underwriters in contemplation of the performance by them of
their obligations hereunder, including but not limited to the reasonable
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fees and disbursements of counsel for the Underwriters, the Underwriters'
reasonable printing and traveling expenses and postage, telegraph and telephone
charges relating directly to the offering contemplated by the Prospectus, and
also including reasonable advertising expenses of the Representative incurred
after the Effective Date of the Registration Statement and so relating, it being
understood that such out-of-pocket expenses shall not include any compensation,
salaries or wages of the officers, partners or employees of any of the
Underwriters. Only such out-of-pocket expenses as shall be accounted for by the
Underwriters shall be paid to the Underwriters by the Company.
The Company shall not in any event be liable to the several
Underwriters for damages on account of loss of anticipated profits arising out
of the transactions contemplated by this Agreement.
10. INDEMNIFICATION. (a) The Company will indemnify and hold harmless
each Underwriter, and each person, if any, who controls each Underwriter within
the meaning of the Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
in whole or in part on any inaccuracy in the representations and warranties of
the Company contained herein or any failure of the Company to perform its
obligations hereunder, or arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any related preliminary prospectus (if used prior to the Effective
Date), the Prospectus or any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, subject to the provisions of Section 10(c), will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 10(a) with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter or to the benefit of any person
controlling such Underwriter in respect of any loss, claim, damage, liability or
action asserted by a person who purchases shares of the Stock from such
Underwriter, if such Underwriter failed to send or give a copy of the Prospectus
(as the same may then be amended or supplemented) to such person with or prior
to written confirmation of the sale to such person; and provided, further, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission or alleged omission made in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendment thereof or
supplement thereto in reliance upon or in conformity with written information
furnished to the Company by an Underwriter specifically for use in the
preparation thereof, as referred to in the last sentence of Section 8 hereof.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the Act, each of
its directors, and each of its officers who have signed the Registration
Statement, against any losses, claims,
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damages or liabilities to which the Company, or any such director or officer may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, any preliminary prospectus, the Prospectus
or any amendment thereof or supplement thereto in reliance upon or in conformity
with written information furnished to the Company by such Underwriter through
you, as the Representative of the Underwriters, specifically for use in the
preparation thereof, as referred to in the last sentence of Section 8 of this
Agreement; and will reimburse the Company and each such director or officer for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which the
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify each party against whom indemnification is to be sought in
writing of the commencement thereof; but the omission so to notify an
indemnifying party will not relieve it from any liability which they may have to
any indemnified party otherwise than under this Section. In case any such action
is brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate in, and to the extent that it may wish, to assume the defense
thereof, with counsel approved by such indemnified party (which approval shall
not be unreasonably withheld), and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof except as provided
below and except for the reasonable costs of investigation subsequently incurred
by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the named
parties to any such action include both the indemnifying party and the
indemnified party, and the indemnified party shall have reasonably concluded
that there is an actual or potential conflict of interest between the
indemnifying parties and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying parties shall not have employed counsel to assume the defense
of such action within a reasonable time after notice of the commencement
thereof, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying parties. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel for all
indemnified parties in connection with any one or separate but similar or
related actions in the same jurisdiction arising out of the same
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allegations or circumstances. Anything in this Section to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section is for any reason held to be
unavailable from the Company or the Underwriters or is insufficient to hold
harmless a party indemnified hereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provisions (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of the Act, officers of the Company who signed the Registration Statement and
directors of the Company) to which the Company and one or more of the
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company and the Underwriters from the
offering of the Stock or, if such allocation is not permitted by applicable law
or indemnification is not available as a result of the indemnifying party not
having received notice as provided in this Section, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omissions or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 10(d) were
determined by pro rata allocation even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above. Notwithstanding
the provisions of this Section 10(d), (i) in no case shall any Underwriter
(except as may be provided in the Agreement Among Underwriters) be liable or
responsible for any amount in excess of the underwriting discounts and
commissions applicable to the Stock purchased by such Underwriter hereunder and
(ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person, if
any, who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 10(d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act shall have the same rights to contribution as
such Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, each officer of the Company
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who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to clauses (i) and (ii) of this Section 10(d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section
10(d), notify such party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 10(d) or otherwise. No party shall be liable for
contribution for any settlement of any action or claim effected without its
written consent.
11. DEFAULT OF THE UNDERWRITERS. If any Underwriter or Underwriters
default in their obligations to purchase the Stock hereunder and arrangements
satisfactory to you and the Company, evidenced by a writing or writings signed
by you and the Company, for the purchase of such Stock by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter and the Company (except
that the Company shall be liable for the expenses to be paid by it pursuant to
the provisions of Section 6), provided, however, that if the number of shares of
the Stock which all such defaulting Underwriters have agreed but failed to
purchase shall not exceed 10% of the number of shares of the Firm Stock or the
Option Stock, as the case may be, agreed to be purchased pursuant to this
Agreement (other than the shares agreed to be taken up hereunder which the
defaulting Underwriters failed to purchase) by all non-defaulting Underwriters,
the non-defaulting Underwriters shall be obligated proportionately to take up
and pay for the shares of the Firm Stock or the Option Stock which such
defaulting Underwriters failed to purchase.
If any such default occurs, either you or the Company shall have the
right to postpone the Closing Date for not more than seven business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangement, may be effected. As used
in this Agreement, the term "Underwriters" includes any person substituted for
an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from its liability to the other several Underwriters and the Company
for its default hereunder.
12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations and warranties of the Company and the
several Underwriters, set forth in or made pursuant to this Agreement, will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Company or any of its officers or directors or
any controlling person, and will survive delivery of and payment for the Stock
and, in the case of the agreements contained in Sections 6, 9 and 10 hereof,
will survive any termination of this Agreement.
13. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to you at McDonald & Company Securities, Inc., McDonald Investment Center, 800
Superior Avenue, Cleveland, Ohio 44114, Attention: Ralph M. Della Ratta, Jr.,
with a copy to Calfee, Halter & Griswold LLP, 1400 McDonald Investment Center,
800 Superior Avenue, Cleveland, Ohio 44114, Attention:
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Thomas F. McKee, Esq., or if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to the Company at 2401 Ontario Street, Cleveland, Ohio
44115, Attention: Dennis Lehman, Executive Vice President, with a copy to Baker
& Hostetler LLP, 3200 National City Center, 1900 East Ninth Street, Cleveland,
Ohio 44114, Attention: Edward G. Ptaszek, Esq.
14. SUCCESSORS, GOVERNING LAW. This Agreement will inure solely to the
benefit of and be binding upon the parties hereto and the officers and directors
and controlling persons referred to in Section 10 hereof and their respective
successors, assigns, heirs, executors and administrators, and no other persons
will have any right or obligation hereunder. This Agreement will be governed by
and construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflicts of laws thereof.
15. EXECUTION IN COUNTERPARTS. This Agreement may be executed by any
one or more of the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
16. AUTHORITY OF THE REPRESENTATIVE. You represent and warrant that you
have been authorized by the several Underwriters to enter into this Agreement on
their behalf and to act for them in the manner hereinbefore provided.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement by and between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
CLEVELAND INDIANS BASEBALL
COMPANY, INC.
By:________________________________
Its:____________________________
The foregoing Agreement is hereby confirmed and accepted by us in Cleveland,
Ohio, acting on our own behalf and as the Representative of the several
Underwriters named on Schedule A annexed hereto, as of
the date first above written.
McDONALD & COMPANY SECURITIES, INC.
As Representative of the Several Underwriters
By:___________________________________
Managing Director
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SCHEDULE A
UNDERWRITERS
Number of Shares to
Underwriter be Purchased
----------- ------------
McDonald & Company Securities, Inc.....................................
Total ...............................................
A-1