EXHIBIT 1.2
$100,000,000
SIGNATURE RESORTS, INC.
____ CONVERTIBLE SUBORDINATED NOTES DUE 2007
UNDERWRITING AGREEMENT
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___________, 1997
XXXXXXXXXX SECURITIES
XXXXXXX, SACHS & CO.
As Representatives of the several Underwriters
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. Introductory. Signature Resorts, Inc., a Maryland
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corporation (the "Company"), proposes to issue and sell an aggregate of
$100,000,000 principal amount of its ____% Convertible Subordinated Notes Due
2007 (the "Firm Notes") to be issued under an indenture, to be dated as of
__________, 199_ (the "Indenture"), between the Company and Norwest Bank
Minnesota, National Association as Trustee (the "Trustee"), to the several
underwriters named in Schedule A annexed hereto (the "Underwriters") for whom
you are acting as representatives (the "Representatives"). In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
aggregate of $15,000,000 principal amount of the Securities (the "Option Notes")
as provided in Section 5 hereof. The Firm Notes and, to the extent such option
is exercised, the Option Notes are hereinafter collectively referred to as the
"Notes."
Concurrently with the offering of the Notes, the Company proposed to
issue and sell 1,600,000 shares of its authorized but unissued common stock,
$.01 par value (the "Common Stock"), and several stockholders of the Company
(the "Selling Stockholders") propose to sell 1,400,000 shares of the Company's
issued and outstanding Common Stock. (the "Common Shares")
You have advised the Company that the Underwriters propose to make a
public offering of their respective portions of the Notes on the effective date
of the Registration Statement hereinafter referred to, or as soon thereafter as
in your judgment is advisable.
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The Company hereby confirms its respective agreements with respect to
the purchase of the Notes by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The
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Company hereby represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-_____) with
respect to the Notes has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder and has been filed
with the Commission. The Company has also taken such actions as are
necessary to qualify the Indenture under the Trust Indenture Act. There
have been delivered to you two signed copies of such registration statement
and any amendments thereto, together with two copies of each exhibit filed
therewith. Conformed copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested for
each of the Underwriters. The Company will next file with the Commission
one of the following: (i) prior to effectiveness of such registration
statement, a further amendment thereto, including the form of final
prospectus, or (ii) a final prospectus in accordance with Rules 430A and
424(b) of the Rules and Regulations. As filed, such amendment and form of
final prospectus, or such final prospectus, shall include all Rule 430A
Information (as hereinafter defined) and, except to the extent that you
shall agree in writing to a modification, shall be in all substantive
respects in the form furnished to you prior to the date and time that this
Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such
specific additional information and other changes (beyond that contained in
the latest Preliminary Prospectus) as the Representatives shall have
approved.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date, shall also mean such
registration statement as so amended; provided, however, that such term
shall also include all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations. The term
"Preliminary Prospectus" shall mean any preliminary
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prospectus referred to in the preceding paragraph and any preliminary
prospectus included in the Registration Statement at the time it becomes
effective that omits Rule 430A Information. The term "Prospectus" as used
in this Agreement shall mean the prospectus relating to the Notes in the
form in which it is first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations or, if no filing pursuant to Rule 424(b) of
the Rules and Regulations is required, shall mean the form of final
prospectus included in the Registration Statement at the time such
registration statement becomes effective. The term "Rule 430A Information"
means information with respect to the Notes and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act, the
Rules and Regulations and the Trust Indenture Act and, as of its date, has
not included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and at the time
the Registration Statement becomes effective, and at all times subsequent
thereto up to and including each Closing Date (as hereinafter defined), the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, will contain all material statements and information
required to be included therein by the Act, the Rules and Regulations and
the Trust Indenture Act and will in all material respects conform to the
requirements of the Act, the Rules and Regulations and the Trust Indenture
Act, and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, no representation or warranty contained in this Section
2(b) shall be applicable to information contained in or omitted from any
Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished pursuant to Section 3 of this Agreement to
the Company by or on behalf of any Underwriter, directly or through the
Representatives, specifically for use in the preparation thereof.
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(c) The Company has been duly formed and is validly existing as a
corporation, is in good standing under the laws of the State of Maryland,
with full power and authority (corporate and other) to conduct its business
as currently conducted or as described in the Prospectus.
(d) Each of the Significant Subsidiaries (as defined in the Indenture)
has been duly formed and is validly existing as a partnership, limited
liability company or corporation, as applicable, in good standing under the
laws of its jurisdiction of formation, with full power and authority
(partnership and other) to own and lease its properties and conduct its
respective businesses as currently conducted or described in the
Prospectus.
(e) The Company and each of the Significant Subsidiaries are in
possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of their respective businesses, all of which are valid and in full
force and effect; the Company and each of the Significant Subsidiaries are
duly qualified to do business and in good standing as a foreign
corporation, partnership or limited liability company, as applicable, in
each jurisdiction in which the conduct of their respective businesses
requires such qualification, except where the failure to be so qualified
and in good standing would not have a material adverse effect on the
condition (financial or otherwise), business, properties, results of
operations or prospects of the Company and the Significant Subsidiaries,
considered as an entity (a "Material Adverse Effect"); and to the Company's
knowledge no proceeding has been instituted or threatened in any such
jurisdiction revoking, limiting or curtailing, or seeking to
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revoke, limit or curtail, such power and authority or qualification.
(f) The Company has an authorized and outstanding capital stock as
set forth under the column captioned "Actual" under the heading
"Consolidated Capitalization" in the Prospectus; the issued and outstanding
shares of common stock, par value $.01 per share of the Company (the
"Common Stock"), have been duly authorized and validly issued, are fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, are duly listed on the Nasdaq National Market, were
not issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities and conform to the
description thereof contained in the Registration Statement and the
Prospectus. All of the shares of Common Stock issuable upon conversion of
the Notes have been duly authorized and duly reserved for issuance upon
such conversion and, when issued upon conversion of the Notes pursuant to
the terms of the Indenture, will be validly issued and outstanding, fully
paid and nonassessable with no personal liability attached to the ownership
thereof. None of the shares of Common Stock issuable upon conversion of the
Notes when delivered will be subject to any lien, claim, encumbrance,
restriction upon voting or transfer, preemptive right or any other claim of
any third party except such as are described in the Prospectus. Except as
disclosed in or contemplated by the Prospectus and the financial statements
of the Company and the related notes thereto, as of the First Closing Date
the Company does not have outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase such
securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of its capital stock, partnership interests or
limited liability company interests, as the case may be, or any such
options, rights, convertible securities or obligations. The description of
the Company's share option, share bonus and other share plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
(g) The Notes have been duly authorized and, when issued, delivered
and paid for in the manner set forth in this Agreement, will be duly
executed, authenticated and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the
Indenture under which they are to be issued, which will be in substantially
the form filed as an exhibit to the Registration Statement subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, moratorium,
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reorganization and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles; the Indenture
has been duly authorized and duly qualified under the Trust Indenture Act
and, when executed and delivered by the Company and the Trustee, the
Indenture will constitute a valid and legally binding instrument
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles, and the Notes and the Indenture
will conform to the descriptions thereof in the Prospectus.
(h) The Company has full legal right, power and authority to enter
into this Agreement, the Notes and the Indenture and perform the
transactions contemplated hereby and thereby. The Company has all necessary
corporate power and authority to issue the Common Stock issuable upon
conversion of the Notes. This Agreement, the Notes and the Indenture have
been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms.
The making and performance of this Agreement, the Notes and the Indenture
by the Company and the consummation of the transactions herein and therein
contemplated (including the issuance of Common Stock upon the conversion of
the Notes), will not violate any provisions of any partnership agreement,
certificate of partnership, charter, bylaws or other organizational
documents, as applicable, of the Company or any of the Significant
Subsidiaries and will not conflict with, result in the breach or violation
of, or constitute, either by itself or upon notice or the passage of time
or both, a default under (i) any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the
Company or any of the Significant Subsidiaries is a party or by which the
Company, any of the Significant Subsidiaries or any of the Existing Resorts
(as defined in the Prospectus) may be bound or affected or (ii) any statute
or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental
body applicable to the Company, any of the Significant Subsidiaries or any
of the Existing Resorts, in each case except as would not have a Material
Adverse Effect. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body is
required, including the satisfaction of any requirements pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, for the
execution and delivery of this Agreement, the Notes and the Indenture or
the consummation of the transactions contemplated by this Agreement and the
Indenture, except for
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compliance with the Act, the Exchange Act, the Trust Indenture Act, the
Blue Sky and Canadian securities laws applicable to the public offering of
the Notes by the several Underwriters, the clearance of such offering with
the National Association of Securities Dealers, Inc. (the "NASD") and
except for any such consent, approval, authorization or other order as has
been or will be obtained prior to the First Closing Date.
(i) Ernst and Young LLP ("E & Y") and Xxxxxx Xxxxxxxx LLP ("Xxxxxx
Xxxxxxxx") who have expressed their opinion with respect to the financial
statements and schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants as required by the Act
and the Rules and Regulations.
(j) The consolidated financial statements of the Company, together
with the related notes thereto, set forth in the Registration Statement and
the Prospectus fairly present the financial condition of such entities as
of the dates indicated and the results of operations and changes in
financial position for the periods presented. The pro forma financial
statements, included in the Registration Statement and the Prospectus
comply in all material respects with the applicable requirements of Rule
11-02 of Regulation S-X of the Commission and the pro forma adjustments
have been properly applied to the historical amounts in the compilation of
such statements. Such statements, schedules and related notes have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis as certified by the independent accountants
named in Section 2(i). No other financial statements or schedules are
required to be included in the Registration Statement. The selected
financial data set forth in the Prospectus under the captions "Consolidated
Capitalization", "Selected Combined Historical Financial Information of the
Company" and "Summary Consolidated Historical and Pro Forma Financial
Information" fairly present the information set forth therein on the basis
stated in the Registration Statement.
(k) Except as disclosed in the Prospectus, the Company is not in
violation of any of its articles of organization or by-laws, and is not in
breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which it or any of its properties are bound, or to which any of the
property or assets of the Company is subject except for any such violation,
breach or default that could not have a Material Adverse Effect.
(l) There are no contracts or other documents required to be described
in the Registration Statement or to be filed
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as exhibits to the Registration Statement by the Act or by the Rules and
Regulations which have not been described or filed as required.
(m) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or threatened to which
the Company or any of the Significant Subsidiaries are a party or of which
any Resort owned or leased by Company or Signficant Subsidiaries is the
subject, or related to environmental or discrimination matters, which
actions, suits or proceedings could reasonably be anticipated to
individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or have a Material Adverse
Effect on the Company. The Company is not a party or subject to the
provisions of any material injunction, judgment, decree or order of any
court, regulatory body, administrative agency or other governmental body.
(n) Except as set forth in the Prospectus, the Company or the
Significant Subsidiaries have good and marketable title to all of the
Existing Resorts, subject to no lien, mortgage, pledge, charge or
encumbrance or any kind except those reflected in the financial statements
or elsewhere in the Prospectus. Except as disclosed in the Prospectus, the
Company and each of the Significant Subsidiaries owns or leases all such
properties as are necessary to operate the Existing Resorts as now
conducted or as proposed to be conducted, except with respect to the Poipu
Resort and the San Xxxx Bay intervals.
(o) From September 30, 1996 through the date hereof, and except as
described in or specifically contemplated by
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the Prospectus: (i) the Company has not incurred any material liabilities
or obligations, indirect, direct or contingent, or entered into any
material verbal or written agreement or other transaction which is not in
the ordinary course of business or which could result in a material
reduction in the future earnings of the Company; (ii) the Company has not
sustained any loss or interference with its respective businesses or
properties from fire, flood, windstorm, accident or other calamity, whether
or not covered by insurance, that would have a Material Adverse Effect;
(iii) the Company has not paid or declared any dividends or other
distributions with respect to its capital stock, shares or interests, as
applicable (other than such dividends or distributions paid to shareholders
to satisfy tax liabilities) and the Company is not in arrears or default in
the payment of principal or interest on any outstanding material debt
obligations; (iv) there has not been any change (excluding transfers) in
the capital stock (other than the sale of the Common Shares under this
Agreement) of the Company, or indebtedness material to the Company (other
than in the ordinary course of business); and (v) there has not been any
material adverse change in the condition (financial or otherwise),
business, properties, or results of operations of the Company and its
Subsidiaries, considered as one entity (a "Material Adverse Change");
provided that the representation and warranty contained in this section
2(o) shall not apply to either the offering and sale of the Common Shares
or the Company's performance and execution of the registration statement
([File No. 333-06027), dated as of _____, 1996, the prospectus attached
thereto, the underwriting agreement, dated as of August 14, 1996, by and
between the Company and the Representatives or the consummation (or the
effects thereof) of the transactions contemplated therein.
(p) Except as specifically disclosed in or specifically contemplated
by the Prospectus, the Company will have sufficient trademarks, trade
names, patent rights, copyrights, licenses or other similar rights and
proprietary knowledge (collectively, "Intangibles"), approvals and
governmental authorizations to conduct its businesses; the expiration of
any Intangibles, approvals or governmental authorizations will not have a
Material Adverse Effect; and the Company has no knowledge of any material
infringement by it or any of the Significant Subsidiaries of any
Intangibles, and there is no claim being made against the Company or any of
the Significant Subsidiaries regarding any Intangible or other infringement
which could have a Material Adverse Effect.
(q) Neither the Company nor any of the Significant Subsidiaries has
been advised, or has reason to believe, that the Company or any of the
Significant Subsidiaries is not conducting its businesses in
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compliance with all applicable laws, rules and regulations of the
jurisdictions in which any of them is, including, without limitation, all
applicable local, state and federal environmental laws and regulations, in
each case except as would not have a Material Adverse Effect.
(r) The Company and each of the Significant Subsidiaries has
filed all necessary federal, state and foreign income and franchise tax
returns and has paid all taxes shown as due thereon; and the Company has no
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company in each case except as would not have a
Material Adverse Effect.
(s) [Intentionally omitted.]
(t) Neither the Company nor any of the Significant Subsidiaries has at
any time during the last five years (i) made any unlawful contribution to
any candidate for foreign office or failed to disclose fully any
contribution in violation of law or (ii) made any payment to any federal or
state governmental officer or 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.
(u) Neither the Company nor any of the Significant Subsidiaries has
taken or will take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Notes.
(v) The Company and the Significant Subsidiaries have and will
maintain liability, property and casualty insurance (insured by insurers of
recognized financial responsibility) in favor of the Company, or the
Significant Subsidiaries with respect to each of the Existing Resorts
(except with respect to the Poipu Resort, such insurance therefor being
obtained and/or maintained by the Poipu Partnership), in an amount and on
such terms as is reasonable and customary for businesses of
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the type proposed to be conducted by the Company, including, among other
things, insurance against theft, damage, destruction and acts of vandalism.
The Company has not received from any insurance company notice of any
material defects or deficiencies affecting the insurability of any such
Resort.
(w) Title insurance in favor of the Company or the Significant
Subsidiaries, is in force with respect to each of the Existing Resorts in
an amount reasonably acceptable to the Representatives (except with respect
to the St. Maarten Resorts).
(x) The mortgages and deeds of trust encumbering the Existing Resorts
and the Merger Properties are not convertible nor does the Company hold a
participating interest therein and such mortgages and deeds of trust are
not cross-defaulted or cross-collateralized to any Existing Resort not to
be owned directly or indirectly by the Company.
(y) The Company and each of the Significant Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local
rules, laws and regulations relating to the protection of human health and
safety, the environment or any Hazardous Material (as hereinafter defined)
("Environmental Laws"), (ii) has received, or will have received, as of the
Closing Date, as the case may be, all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) is or will be, as of the Closing Date, as
the case may be, in compliance with all terms and conditions of any such
permit, license or approval, in each case except as would not have a
Material Adverse Effect. As used herein, "Hazardous Material" shall mean
(a) any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"),
(b) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended, (c) any petroleum or petroleum product, (d) any
polychlorinated biphenyl and (e) any pollutant or contaminant or hazardous,
dangerous, or toxic chemical, material, waste or substance regulated under
or within the meaning of any other Environmental Law.
(z) To the Company's knowledge, there is no liability, alleged
liability or potential liability (including, without limitation, liability,
alleged liability or potential
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liability for investigatory costs, cleanup costs, governmental response
costs, natural resources damages, property damages, personal injuries or
penalties), of the Company arising out of, based on or resulting from (a)
the presence or release into the environment of any Hazardous Material at
any location, whether or not owned by the Company, or (b) any violation or
alleged violation of any Environmental Law, which liability, alleged
liability or potential liability is required to be disclosed in the
Registration Statement, other than as disclosed therein.
(aa) The Company is not, nor will it conduct its business in a manner
in which it would become an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(bb) The assets of neither the Company nor any of the Significant
Subsidiaries constitute, nor will such assets, as of the Closing Date,
constitute "plan assets" under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
(cc) The Company and each of the Significant Subsidiaries maintains
and will 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 authorization; (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 financial and
corporate books and records is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(dd) Neither the Company nor any of the Significant Subsidiaries has
incurred any liability for a fee, commission or other compensation on
account of the employment of a broker or finder in connection with the
transactions contemplated by this Agreement other than as disclosed in the
Registration Statement.
(ee) [Intentionally omitted.]
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(ff) To the Company's knowledge, no labor problem exists or is
imminent with respect to the employees of any of the Existing Resorts, the
Company or any of the Significant Subsidiaries which could have a Material
Adverse Effect.
(gg) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company, as the case may
be, as to the matters covered thereby.
(hh) The Company is in compliance with all federal, state, local and
foreign laws and regulations regarding the marketing, offers to sell and
sales of vacation intervals in each state in which the Company is doing
business, including but not limited to the Federal Trade Commission Act,
Regulation Z (the truth-in-lending act), Equity Opportunity Credit Act and
Regulation B, Interstate Land Sales Full Disclosure Act, Real Estate
Standards Practices Act, Telephone Consumer Protection Act, Telemarketing
and Consumer Fraud and Abuse Prevention Act, Fair Housing Act and Civil
Rights Acts of 1964 and 1968, in each case except as would not have a
Material Adverse Effect. The Company has filed all required documents and
supporting information in compliance with federal, state, local and foreign
laws and regulations, and the Company is in compliance with all licensure,
anti-fraud, telemarketing, price, gift and sweepstakes and labor laws to
which it is or may become subject, in each case except as would not have a
Material Adverse Effect. The Company, or entities all of the ownership
interests in which are directly or indirectly owned by the Company, has, or
upon the First Closing Date will have, all permits and licenses which are
required to sell vacation intervals in each state and foreign jurisdiction
where it conducts business, in each case except as would not have a
Material Adverse Effect.
(ii) Except as set forth in the Prospectus, no person has an option or
right of first refusal to purchase all or part of any of the Existing
Resorts (other than the Poipu Resort), or any interest therein. Each of the
Existing Resorts complies with all applicable codes, laws and regulations
(including, without limitation, building and zoning codes and laws relating
to handicapped access), except as would not have a Material Adverse Effect.
The Company has no knowledge of any pending or threatened condemnation
proceedings, zoning changes, or other proceedings or actions that will in
any manner affect the size of, number of vacation intervals planned for,
the use of any improvements on, or access to, the Existing Resorts.
(jj) To the Company's knowledge, no dispute exists or is imminent
between the Company and Promus Hotels, Inc. or
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between the Company and Westin Hotels & Resorts and no officer or director
of the Company has any agreement or understanding (verbally or in writing)
with Westin Hotels & Resorts except as set forth in the Prospectus.
(kk) The Common Stock into which the Notes are convertible have been
approved for listing on the NASDAQ National Market, subject to notice of
official issuance.
(ll) The Company has full legal right, power and authority to enter
into the Merger Agreement (as defined in the Prospectus) and perform the
transactions contemplated thereby. The Merger Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid
and binding obligation of the Company in accordance with its terms. The
making and performance of the Merger Agreement by the Company and the
consummation of the transactions therein contemplated, will not violate any
provisions of any partnership agreement, certificate of partnership,
charter, bylaws or other organizational documents, as applicable, of the
Company or any of the Significant Subsidiaries and will not conflict with,
result in the breach or violation of, or constitute, either by itself or
upon notice or the passage of time or both, a default under (i) any
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company or any of the Significant
Subsidiaries is a party or by which the Company, any of the Significant
Subsidiaries or any of the Existing Resorts may be bound or affected or
(ii) any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or
other governmental body applicable to the Company, any of the Significant
Subsidiaries or any of the Existing Resorts, in each case except as would
not have a Material Adverse Effect. No consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body is required, including the satisfaction of any
requirements pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, for the execution and delivery of the Merger Agreement
or the consummation of the transactions contemplated by the Merger
Agreement, except for compliance with the Act, the Exchange Act, the Blue
Sky and Canadian securities laws applicable to the public offering of the
Common Shares by the several Underwriters, the clearance of such offering
with the National Association of Securities Dealers, Inc. (the "NASD")
approval, authorization or other order as has been or will be obtained
prior to the First Closing Date.
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[(mm) The Company has received from its independent certified public
accountants a letter opining that the Merger Agreement and the consummation
of the transactions contemplated therein will qualify for pooling of
interest treatment in accordance with Opinion No. 16 of the Financial
Accounting Principles Board.]
SECTION 3. [Intentionally omitted.]
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SECTION 4. Representations and Warranties of the Underwriters. The
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Representatives, on behalf of the several Underwriters, represent and warrant to
the Company that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of offering and (ii) under "Underwriting" in the Prospectus was furnished
to the Company by and on behalf of the Underwriters for use in connection with
the preparation of the Registration Statement and the Prospectus and is correct
in all material respects. The Representatives represent and warrant that they
have been authorized by each of the other Underwriters as the Representatives to
enter into this Agreement on their behalf and to act for each Underwriter in the
manner herein provided.
SECTION 5. Purchase, Sale and Delivery of Notes. On the basis of the
------------------------------------
representations, warranties and agreements set forth herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
the Underwriters an aggregate of $100,000,000 principal amount of the Firm
Notes; each Underwriter agrees, severally and not jointly, to purchase
16
from the Company the respective principal amount of Firm Notes set forth
opposite the name of such Underwriter in Schedule A annexed hereto. The
purchase price for the Firm Notes to be paid by the several Underwriters to the
Company shall be _____% of the principal amount thereof.
Delivery of certificates for the Firm Notes to be purchased by the
Underwriters and payment therefor shall be made at such place as set forth below
at such time and date, not later than the third full business day following the
first date that any of the Notes are released by you for sale to the public, as
you shall designate by at least 48 hours prior notice to the Company (or at such
other time and date, not later than one week after such third full business day
as may be agreed upon by the Company and the Representatives) (the "First
Closing Date"); provided, however, that if the Prospectus is at any time prior
to the First Closing Date recirculated to the public, the First Closing Date
shall occur upon the later of the third full business day following the later of
the first date that any of the Notes are released by you for sale to the public
and the date that is 48 hours after the date that the Prospectus has been so
recirculated.
Delivery of certificates for the Firm Notes shall be made by or on
behalf of the Company to you, for the respective accounts of the Underwriters
against payment by you, for the accounts of the several Underwriters, by wire
transfer of immediately available funds to the order of the Company or other
agent designated by the Company. The Notes shall be registered in such names
and denominations as you shall have requested at least two full business days
prior to the First Closing Date, and shall be made available for checking and
packaging on the business day preceding the First Closing Date at a location in
New York, New York or such other location, as may be designated by you. Time
shall be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and
agreements set forth herein, and subject to the terms and conditions set forth
herein, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of $15,000,000 principal
amount of the Option Notes at the purchase prices to be paid for the Firm Notes,
for use solely in covering any over-allotments made by you for the account of
the Underwriters in the sale and distribution of the Firm Notes. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the first date that any of the Notes are released by you for sale
to the public, upon written notice by you to the Company setting forth the
aggregate number of Option Notes as to which the Underwriters are exercising the
option, the names and denominations in which the certificates for such shares
are to be registered and the time and place at which such certificates will
17
be delivered. Such Option Notes shall be purchased for the account of each
Underwriter in the same proportion as the principal amount of Firm Notes set
forth opposite such Underwriter's name on Schedule A hereto bears to the total
amount of Firm Notes (subject to adjustment by the Underwriters to round
purchases to the nearest $1,000 principal amount). Such time of delivery (which
may not be earlier than the First Closing Date), being herein referred to as the
"Second Closing Date," shall be determined by you, but if at any time other than
the First Closing Date shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. References herein to
"Closing Date" shall mean the First Closing Date and/or the Second Closing Date,
as the context requires. The Option Notes will be made available for checking
and packaging on the business day preceding the Second Closing Date at a
location in New York, New York or such other location, as may be designated by
you. Payment for the Option Notes shall be the same as for the Firm Notes
purchased from the Company as specified in the two preceding paragraphs. At any
time before lapse of the option, you may cancel such option by giving written
notice of such cancellation to the Company. If the option is cancelled or
expires unexercised in whole or in part, the Company will deregister under the
Act the number of Option Notes as to which the option has not been exercised.
You have advised the Company that each Underwriter has authorized you
to accept delivery of its Notes, to make payment and to issue a receipt
therefor. You, individually and not as the Representatives of the Underwriters,
may (but shall not be obligated to) make payment for any Notes to be purchased
by any Underwriter whose funds shall not have been received by you by the First
Closing Date or the Second Closing Date, as the case may be, for the account of
such Underwriter, but any such payment shall not relieve such Underwriter from
any of its obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose
to make a public offering of their respective portions of the Notes as soon
after the effective date of the Registration Statement as in the judgment of the
Representatives is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the Prospectus.
SECTION 6. Covenants of the Company. The Company covenants and
------------------------
agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and
18
Regulations, or the filing of the Prospectus is otherwise required under
Rule 424(b) of the Rules and Regulations, the Company will file the
Prospectus, properly completed, pursuant to the applicable paragraph of
Rule 424(b) of the Rules and Regulations within the time period prescribed
and will provide evidence satisfactory to you of such timely filing. The
Company will promptly advise you in writing (i) of the receipt of any
comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or
after it becomes effective), any Preliminary Prospectus or the Prospectus
or for additional information, (iii) when the Registration Statement shall
have become effective and (iv) 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. If the Commission
shall enter any such stop order at any time, the Company will use its best
efforts to obtain the lifting of such order at the earliest possible
moment. The Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which you have not been
furnished with a copy a reasonable time prior to such filing or to which
you reasonably object or which is not in compliance with the Act and the
Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration
Statement or the Prospectus which in your judgment may be necessary or
advisable to enable the several Underwriters to continue the distribution
of the Notes and will use its best efforts to cause the same to become
effective as promptly as possible. The Company will fully and completely
comply with the provisions of Rule 430A of the Rules and Regulations with
respect to information omitted from the Registration Statement in reliance
upon such Rule.
(c) If at any time within the applicable period referred to in Section
10(a)(3) of the Act or Rule 174 of the Rules and Regulations during which a
prospectus relating to the Notes is required to be delivered under the Act
any event occurs, as a result of which the Prospectus, including any
amendments or supplements, would include an 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, or if it is
necessary at any time to amend the Prospectus, including any amendments or
supplements, to comply with the Act or the Rules and Regulations, the
Company will promptly advise you thereof and will promptly prepare and file
with the Commission, at its own expense, an amendment or supplement which
will
19
correct such statement or omission or an amendment or supplement which will
effect such compliance and will use its best efforts to cause the same to
become effective as soon as possible; and, in case any Underwriter is
required to deliver a prospectus after the applicable time period, the
Company upon request, but at the expense of such Underwriter, will promptly
prepare such amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act and Rule 174 of the Rules
and Regulations, as applicable.
(d) As soon as practicable, but not later than 45 days (or 90 days if
such quarter is the fiscal year end) after the end of the first quarter
ending after one year following the effective date of the Registration
Statement (as defined in Rule 158(c) of the Rules and Regulations), the
Company will make generally available to its security holders an earnings
statement (which need not be audited) covering a period of 12 consecutive
months beginning after the effective date of the Registration Statement
which will satisfy the provisions of the last paragraph of Section 11(a) of
the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the applicable period referred to in
Section 10(a)(3) of the Act or Rule 174 of the Rules and Regulations, will
furnish to you or mail to your order copies of the Registration Statement,
the Prospectus, the Preliminary Prospectus and all amendments and
supplements to any such documents in each case as soon as available and in
such quantities as you may reasonably request, for the purposes
contemplated by the Act and the Rules and Regulations.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Notes for sale under (or obtain exemptions from the
application of) the Blue Sky and Canadian securities laws of such
jurisdictions as you designate, will comply with such laws and will
continue such qualifications, registrations and exemptions in effect so
long as reasonably required for the distribution of the Notes, except that
the Company will not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not presently qualified or where it would be subject to taxation as a
corporation. The Company will advise you promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the
Notes for offering; sale or trading in any jurisdiction or any initiation
or threat of any proceeding for any such purpose, and in the event of the
issuance of
20
any order suspending such qualification, registration or exemption, the
Company, with your cooperation, will use its best efforts to obtain the
withdrawal thereof.
(g) During the period of five years after the date of this Agreement,
the Company will furnish to the Representatives and their counsel and, upon
request of the Representatives, to each of the other Underwriters: (i) as
soon as practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of the
close of such fiscal year and statements of income, shareholders' equity
and cash flows for the year then ended and the opinion thereon of the
Company's independent public accountants; (ii) as soon as practicable after
the filing thereof, copies of each proxy statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report
filed by the Company with the Commission, the NASD or any securities
exchange; and (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its Common
Stock.
(h) During the period of 90 days after the first date that any of the
Notes are released by you for sale to the public, without your prior
written consent (which consent may be withheld at your sole discretion),
the Company will not, other than as disclosed in the Prospectus, issue,
offer, sell, grant options to purchase or otherwise dispose of any of the
Company's equity securities or any other securities convertible into or
exchangeable with its Common Stock or other equity security of the Company,
except, in each case, to grant options or to sell shares of Common Stock
pursuant to the Company's 1996 Equity Participation Plan or the Company's
Employee Stock Option Plan, each as described in the Prospectus, to grant
options or sell Common Stock in connection with the offering and sale of
the Common Shares or to grant options or to sell or issue shares of Common
Stock in connection wiht the Merger Agreement.
(i) The Company will apply the net proceeds of the sale of the Notes
sold by it in accordance with the statements under the caption "Use of
Proceeds" in the Prospectus.
(j) The Company will use its best efforts to cause the Notes to be
sold by it to be listed as a national market system security on the Nasdaq
National Market.
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
21
SECTION 7. Payment of Expenses. Whether or not the transactions
-------------------
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limiting the
generality of the foregoing, (i) all expenses incident to the issuance and
delivery of the Notes (including all printing and engraving costs), (ii) all
fees and expenses of the Trustee and any agent of the Trustee, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Notes to the Underwriters, (iv) all fees and expenses of the
Company's counsel and the Company's independent accountants incurred in
connection the offering of the Notes, (v) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
the Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all amendments and
supplements provided for herein, this Agreement, the Agreement Among
Underwriters, the Selected Dealers Agreement, the Underwriters' Questionnaire,
the Underwriters' Power of Attorney and the preliminary and final Blue Sky
memoranda, (vi) all filing fees, attorneys' fees and expenses incurred by the
Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Notes for offer and sale under the Blue Sky laws or the provincial
securities laws of Canada, (vii) the filing fee of the NASD and the fees and
expenses related to the inclusion of the Notes on the Nasdaq National Market,
and (viii) all other fees, costs and expenses referred to in Item 13 of Part II
of the Registration Statement. Except as provided in this Section 7, Section 9
and Section 11 hereof, the Underwriters shall pay all of their own expenses,
including the fees and disbursements of their counsel (excluding those relating
to qualification, registration or exemption under the Blue Sky and Canadian
provincial securities laws and the preliminary and final Blue Sky memoranda,
which fees shall be paid on the First Closing Date or the Second Closing Date,
as applicable).
This Section 7 shall not affect any agreement to which the Company is
a party relating to the payment of expenses incurred in connection with the
separate issuance of 3,000,000 shares of the Company's Common Stock as described
in the Registration Statement (the "Stock Offering").
SECTION 8. Conditions of the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the several Underwriters to purchase and pay for the Firm Notes
on the First Closing Date and the Option Notes on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
the Company set forth herein as of the date hereof and as of the First Closing
Date or the Second Closing Date, as the case may
22
be, to the accuracy of the statements of the Company's officers made pursuant to
the provisions hereof, to the performance of the Company of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., Washington, D.C. Time, on the date of this Agreement, or at
such later time as shall have been consented to by you; if the filing of
the Prospectus, or any supplement thereto, is required pursuant to Rule
424(b) of the Rules and Regulations, the Prospectus shall have been filed
in the manner and within the time period required by Rule 424(b) of the
Rules and Regulations; and prior to such 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; and any request of the Commission for
inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to your satisfaction.
(b) There shall have been furnished to you, as Representatives of the
Underwriters, on each Closing Date, in form and substance satisfactory to
you, except as otherwise expressly provided below:
23
(i) An opinion of Xxxxxx & Xxxxxxx, counsel for the Company
(exclusive of environmental matters, matters relating to real property
ownership and condition, indebtedness of the Company, regulation of
the Company's business and property, the Company's relationship with
Promus Hotels Corporation and Westin Hotels & Resorts and matters
related to AVCOM International, Inc. and its subsidiaries and
affiliates) addressed to the Underwriters and dated the First Closing
Date, or the Second Closing Date, as the case may be, to the effect
that:
(1) [The Indenture and the Notes have been duly authorized
by the Company, the Indenture has been duly qualified under the
Trust Indenture Act and when duly executed and delivered will
constitute, and the Notes, when duly executed, authenticated,
issued and delivered as contemplated hereby and by the Indenture,
will constitute, valid and legally binding obligations of the
Company, enforceable in accordance with their terms and, in the
case of the Notes, entitled to the benefits of the Indenture,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles.]
(2) Except as disclosed in or specifically contemplated by
the Prospectus and except for the Common Shares, such counsel is
not aware of any outstanding options, warrants or other rights
calling for the issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock of the Company
or any security convertible into or exchangeable for capital
stock of the Company;
(3)(a)(i) The Registration Statement has become effective
under the Act; (ii) to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued; (iii) to
such counsel's knowledge, no proceedings for that purpose have
been instituted or are pending or contemplated by the Commission;
and (iv) any required filing of the Prospectus and any supplement
thereto pursuant to Rule 424(b) of the Rules and Regulations has
been made in the manner and within the time period required by
such Rule 424(b);
24
(b) The Registration Statement and the Prospectus comply as to form in all
material respects with the applicable requirements for
registration statements on Form S-1 under the Act, the Trust
Indenture Act and the Rules and Regulations, it being understood
that such counsel need not express any opinion with respect to
the financial statements, schedules and other financial and
statistical data included in the Registration Statement or the
Exhibits thereto;
(c) To such counsel's knowledge, there are no contracts,
agreements, documents, franchises, leases or licenses of a
character required to be disclosed in the Registration Statement
or Prospectus or required to be filed as exhibits to the
Registration Statement which are not disclosed or filed, as
required; and
(d) To such counsel's knowledge, there are no legal or
governmental actions, suits or proceedings pending or threatened
against the Company which are required to be described in the
Prospectus which are not described as required;
(4) The Company has the corporate power and authority to
enter into this Agreement, to sell and deliver the Notes to be
sold by it to the several Underwriters and to consummate the
other transactions contemplated herein; this Agreement has been
duly and validly authorized by all necessary action by the
Company, has been duly and validly executed and delivered by and
on behalf of the Company, and is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and
25
except as to those provisions relating to indemnity or
contribution for liabilities arising under the Act as to which no
opinion need be expressed;
(5) No approval, authorization, order, consent,
registration, filing, qualification, license or permit of or with
any court, regulatory, administrative or other governmental body
is required for the execution and delivery of this Agreement by
the Company or the consummation of the transactions contemplated
by this Agreement, except (i) such as have been obtained and are
in full force and effect under the Act and the Trust Indenture
Act, (ii) such as may be required under applicable Blue Sky or
Canadian securities laws in connection with the purchase and
distribution of the Notes by the Underwriters; (iii) clearance of
such offering with the NASD; and (iv) such as to which the
failure to so obtain would not have a Material Adverse Effect;
(6) The execution and performance of this Agreement, the
Notes and the Indenture and the consummation of the transactions
herein and therein contemplated will not conflict with, result in
the breach of, or constitute, either by itself or upon notice or
the passage of time or both, a default under, any agreement,
mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument known to such counsel to which the
Company is a party or by which the Company may be bound or
affected which is material to the Company; violate any of the
provisions of the partnership certificate, partnership agreement,
charter or bylaws, or other organizational documents, as
applicable, of the Company, in each case except as would not have
a Material Adverse Effect;
(7) Except for the Selling Stockholders and except as
otherwise set forth in the Prospectus, no holders of securities
of the Company have rights to register shares of Common Stock or
other securities because of the filing of the Registration
Statement or other transactions contemplated hereby;
(8) The Company will not be an "investment company" within
the meaning of the 1940 Act;
Such counsel shall also include a statement to the effect that
nothing has come to such counsel's attention that would lead such
counsel to believe that
26
either at the effective date of the Registration Statement or the
Prospectus, or any amendment or supplement thereto, contains any
untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, it being understood that in addition to the
matters excluded in paragraph (b)(i) above, such counsel express no
belief as to the financial statements, schedules and other financial
and statistical data included in the Registration Statement or
Prospectus or in the exhibits to the Registration Statement.
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of the officers of the Company and the
Significant Subsidiaries and of governmental officials, in which case
their opinion is to state that they are so doing and that the
Underwriters are justified in relying on such opinions or certificates
and copies of each of said opinions or certificates are to be attached
to the opinion.
(ii) An opinion of Ballard, Spahr, Xxxxxxx & Xxxxxxxxx, local
counsel for the Company, on matter of Maryland law, addressed to the
Underwriters and dated the First Closing Date, or the Second Closing
Date, as the case may be, to the effect that:
(1) The Company has been duly formed and is validly
existing as a corporation, is in good standing under the laws of
the State of Maryland, and is duly qualified to do business as a
foreign corporation and is in good standing in those
jurisdictions where the conduct of the Company's business
requires it to be qualified, and has the requisite corporate
power and authority to own its Resorts and conduct its business
as described in the Registration Statement;
[(2) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued and outstanding
shares of Common Stock of the Company have been duly authorized;
the Notes are convertible into Common Stock of the Company in
accordance with the terms of the Indenture; the shares of such
Common Stock initially issuable upon conversion of the Notes have
been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion in accordance
with the terms of the Indenture, will be validly issued and
outstanding, fully paid and nonassessable and will conform in all
material respects to the
27
description thereof contained in the Prospectus; other than as
described in the prospectus, the stockholders of the Company have
no preemptive or other rights to subscribe for or to purchase,
and no restrictions exist upon the voting or transfer of, any
shares of the Common Stock issuable upon conversion of the Notes,
pursuant to the laws of the State of Maryland, the Articles of
Incorporation or Bylaws of the Company or any agreement or
instrument filed with the Commission as an exhibit to the
Registration Statement or any document incorporated therein; and
neither the filing of the Registration Statement, the offering or
sale of the Notes nor the conversion of the Notes as contemplated
by this Agreement gives rise under any agreement or instrument
filed with the Commission as an exhibit to the Registration
Statement to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares
of Common Stock;]
(3) The information set forth in the Prospectus under the
headings "Description of Capital Stock", "Certain Provisions of
Maryland Law and of the Company's Charter and Bylaws" and "Shares
Eligible for Future Sale" to the extent such information
constitutes matters of Maryland law or legal conclusions
involving Maryland law, has been reviewed by such counsel and is
correct in all material respects.
(iii) Opinions of Paul, Hastings, Xxxxxxxx & Xxxxxx and/or
Xxxxxxxxx, Xxxxxxx & Xxxxx, each a special real estate and timeshare
counsel for the Company, addressed to the Underwriters and dated as of
the First Closing Date, or the Second Closing Date, which opinions
shall state to the effect that (it being understood that such counsel
shall only have to opine as to the laws of the jurisdiction in which
it is duly licensed to practice law in):
(1) The Company has obtained the material approvals and
permits from the timeshare authority of the state in which the
subject Resort is located ("Home State") necessary to offer for
sale and sell timeshare interests and offer purchase money
financing in connection with such sales ("Home State Approvals")
in accordance with the applicable laws and regulations of the
state in which the Resort is located specifically governing the
marketing and sale of timeshare interests in real property ("Home
State Timeshare Laws");
(2) All of the permits and/or approvals issued by timeshare
authorities of states other
28
than the state where each applicable Resort is located ("Foreign
State") for the offering for sale and sale of timeshare interests
in such Resort (collectively, the "Foreign State Approvals"),
constitute the material approvals and permits necessary to be
issued by such Foreign State to permit the offering for sale and
sale of timeshare interests in such Resort in accordance with the
laws and regulations of the Foreign State specifically governing
the offering for sale and sale of timeshare interests in real
property located outside of the Foreign State ("Foreign State
Timeshare Laws");
(3) To such counsel's knowledge and based upon its review of
certificates and letters from state timeshare authorities, the
Company and other pertinent parties (collectively, "Reliance
Certificates and Letters"), the Company has not received any
written notice from any regulatory authority that it is in
violation of any applicable federal or state law or regulation
regarding the offering for sale and sale of timeshare interests
in the Existing Resorts, the violation of which would have a
Material Adverse Effect on the ownership or operation of the
Existing Resorts;
(4) To such counsel's knowledge, there are no material
franchises, licenses, leases, contracts, agreements or other
documents (collectively, the "Material Agreements") entered into
by the Company outside the ordinary course of business, which
involve matters relating to the ownership, purchase money
financing and/or use of real property and/or the offering for
sale or sale of timeshare interests in the Existing Resorts,
which are of a character required to be disclosed in the
Registration Statement or to be filed as exhibits to the
Registration Statement which are not disclosed or filed;
(5) To such counsel's knowledge and based upon such
counsel's review of Reliance Certificates and Letters, there are
no real estate or timeshare related governmental actions,
governmental suits or governmental proceedings pending or
threatened against the Company with respect to the business and
property relating to the Existing Resorts except (a) those which
have been disclosed in the Registration Statement, and (b) those
which would not have a Material Adverse Effect;
29
(6) The consummation by the Company of the transactions
contemplated by the Underwriting Agreement do not require the
consent, approval, authorization, registration or qualification
of (i) any governmental agency or authority of the timeshare
authority of the states where each of the Existing Resorts are
located, (ii) any lender which has a recorded security interest
in the Existing Resorts, (iii) Westin Hotels & Resorts or any
related entities under that certain agreement by and between W &
S Hotel L.L.C. and Argosy/Koar Group, Inc., dated May 3, 1996
("Westin Agreement"), (iv) Promus Hotels, Inc. (or any subsidiary
or affiliate of Promus Hotels, Inc.) under any Licensee
Agreements and Management Agreements with Promus Hotels, Inc. (or
any of its subsidiaries or affiliates) (collectively, the
"Embassy License Agreements and Management Agreements"), except
those which have been obtained and are in full force and effect
and those as to which the failure to so obtain would not have a
Material Adverse Effect;
(7) The consummation by the Company of the transactions
contemplated by the Underwriting Agreement as they relate to the
Existing Resorts do not conflict with or result in a material
breach or violation by the Company of: (i) any of the terms and
provisions of any loans which encumber the Existing Resorts, (ii)
any terms or provisions of the Home State Approvals where each of
the Existing Resorts are located; (iii) any terms or provisions
of the Foreign State Approvals; (iv) the Westin Agreement; (v)
the Embassy License Agreements and Management Agreements, or if
such transactions would have constituted such a breach, violation
or default had the necessary consents or approvals not been
obtained, consents or approvals have been obtained and are in
full force and effect;
(8) The owner of each of the Existing Resorts, if required
by law, has obtained a brokerage or sales license from the state
timeshare authority in order to offer purchase money financing in
connection with the sale of timeshare interests in the applicable
Resorts. The owner of each of the Existing Resorts, if required
by law, has obtained a brokerage or sales license from the state
timeshare authority in order to offer for sale and sell timeshare
interests in the State of California or has contracted with a
licensed broker to provide any of the aforementioned services;
and
30
(9) A statement to the effect that although such counsel is
not passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in
the Registration Statement or the Prospectus and has not made any
independent check or verification thereof, during the course of
such participation (relying as to the factual matters upon the
Reliance Certificates and Letters), no facts came to the
counsel's attention that have caused it to believe that the
Registration Statement at the time it became effective and as of
the date hereof or the Prospectus 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
in light of the circumstances under which they were made, not
misleading; provided, however, that this statement is limited
solely to the statements or omissions relating to (i)
indebtedness secured by the Existing Resorts (it being understood
that the counsel's review of the Registration Statement has been
limited to legal and other non-financial matters with respect
thereto), (ii) ownership of the Existing Resorts (it being
understood that our review thereof has been limited to the review
of certain title reports), (iii) regulation by each Home State
and each Foreign State with respect to the issuance of the Home
State Approvals and the Foreign State Approvals, (iv) the
Property Partnerships' and the Company's contractual
relationships with Promus or Westin, and (v) the statements in
the Prospectus under the caption "Business - Governmental
Regulation," to the extent that such information constitutes
matters of law or legal conclusions as it pertains to the
ownership, operation, sale and offering of sale of timeshare
interests in the Existing Resorts.
In rendering such opinions, each such counsel may rely as to
matters of local law, on opinions
31
of local counsel, and as to matters of fact, on certificates of
officers of the Company as applicable, and of governmental
officials, in which case their opinion is to state that they are
doing so and certificates and copies of each of said opinions or
certificates are attached to the opinion.
(iv) An opinion of Xxxxxxxxx, Xxxxxxx & Xxxxx, in addition to
the opinion set forth above in section 8(c)(iii), as counsel for the
Company in connection with the Merger Agreement, addressed to the
Underwriter and dated as of the First Closing Date, or the Second
Closing Date, which opinions shall state to the effect that:
(1) The Company had the corporate power and authority to
enter into the Merger Agreement and to consummate the
transactions contemplated therein; the Merger Agreement has been
duly and validly authorized by all necessary action by the
Company, has been duly and validly executed and delivered by and
on behalf of the Company, and is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and except as to those
provisions relating to indemnity or contribution for liabilities
arising under the Act as to which no opinion need be expressed;
(2) The registration statement and the prospectus filed with
the Commission on November 18, 1996, and the Merger Agreement
were duly and validly authorized by all necessary action by the
Company and conformed in all material respects with the
applicable requirements for registration statements on Form S-4
under the Act and the Rules and Regulations.
32
(v) Such opinion or opinions of O'Melveny & Xxxxx LLP, counsel
for the Underwriters, dated the First Closing Date or the Second
Closing Date, as the case may be, with respect to the formation of the
Company and other legal matters relating to this Agreement, the
validity of the Notes, the Registration Statement and the Prospectus
and other related matters as you may reasonably require, and the
Company shall have furnished to such counsel such documents and shall
have exhibited to them such papers and records as they may reasonably
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 and
governmental officials, as applicable.
(vi) A certificate of the Company, executed by the Chairman of
the Board or President and the chief financial or accounting officer
of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that:
(1) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of
the date of
33
this Agreement and as of the First Closing Date or the Second
Closing Date, as the case may be, and the Company has complied
with each of the agreements and satisfied all of the conditions
on its part to be performed or satisfied on or prior to such
Closing Date;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and to the knowledge
of the Company no proceedings for that purpose have been
instituted or are pending or contemplated under the Act;
(3) Each of the respective signers of each certificate has
carefully examined the Registration Statement and the Prospectus;
in his opinion and to the knowledge of the Company, the
Registration Statement and the Prospectus and any amendments or
supplements thereto contain all statements required to be stated
therein; and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided, however, that
such certificate does not require any representation concerning
statements in, or omissions from, the Registration Statement or
Prospectus, which are based upon and conform to information
furnished by the Underwriters pursuant to Section 3 hereof;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction
or event has occurred which should have been set forth in an
amendment to the Registration Statement or in a supplement to or
amendment of any prospectus which has not been disclosed in such
a supplement or amendment;
(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and except
for the Stock Offering, and except as specifically disclosed in
or contemplated by the Prospectus, there has not been any
Material Adverse Change or a development involving a Material
Adverse Change; and no legal
34
or governmental action, suit or proceeding is pending or
threatened against the Company, or, to the knowledge of the
Company, any of the Existing Resorts which would have a Material
Adverse Effect; since such dates and except as so disclosed, the
Company has not entered into any verbal or written agreement or
other transaction which is not in the ordinary course of
business, incurred any liability or obligation, direct,
contingent or indirect, made any change in its capital stock,
made any change in its short-term debt or funded debt or
repurchased or otherwise acquired any of the Company's capital
stock which could be reasonably expected to have a Material
Adverse Effect; and the Company has not declared or paid any
dividend, or made any other distribution (other than dividends or
distributions paid to shareholders to satisfy tax liabilities),
upon its capital stock payable to shareholders of record on a
date prior to the First Closing Date or the Second Closing Date,
as the case may be; and
(6) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and except
as disclosed in or contemplated by the Prospectus, none of the
Existing Resorts has sustained a material loss or damage by
strike, fire, flood, windstorm, hurricane, typhoon, accident or
other calamity (whether or not insured).
(vii) On the date that this Agreement is executed and also on
the First Closing Date and the Second Closing Date a letter addressed
to you, as Representatives of the Underwriters, from E & Y and Xxxxxx
Xxxxxxxx, as applicable, independent accountants, the first one to be
dated the day of this Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a Second Closing) to
be dated the Second Closing Date, in form and substance satisfactory
to the Representatives, to the effect that:
(1) E & Y and Xxxxxx Xxxxxxxx are independent certified
public accountants with respect to the Company within the meaning
of the Act and the Rules and Regulations;
(2) It is their opinion that the financial statements,
historical summaries and any supplementary financial information
and supporting schedule included in the Registration
35
Statement and the Prospectus examined by them comply as to form
in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations;
(3) The financial statements of each of the Existing
Resorts for the three years ended December 31, 1995 and the nine
months ended September 30, 1996 and the nine months ended
September 30, 1995, to the extent applicable, were reviewed by
them in accordance with the standards established by the American
Institute of Certified Public Accountants and based upon their
review they are not aware of any material modifications that
should be made to such financial statements or historical
summaries for them to be in conformity with generally accepted
accounting principles currently in effect in the United States
and such financial statements comply as to form in all material
respects with the applicable requirements of the Act and the
Rules and Regulations;
(4) Based upon procedures set forth in detail in such
letter, including a reading of the latest available interim
financial statements of the Company and inquiries of officials of
the Company responsible for financial and accounting matters,
nothing has come to their attention which causes them to believe
that:
(a) the unaudited financial information with respect to the
results of operations for and at the end of each of the three
years (or such lesser period, if applicable) in the period ended
December 31, 1995 and any subsequent quarters included in the
Registration Statement under the captions "Summary" and "Selected
Combined Historical Financial Information of the Company" do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations
or are not presented in conformity with generally accepted
accounting principles currently in effect in the United States
applied on a basis substantially consistent with that of the
audited financial statements included in the Registration
Statement, or do not agree with the corresponding amounts in the
audited financial statements for each of the years then ended, or
that with respect to the unaudited pro forma financial
statements, such financial statements do not comply as to form in
all material respects with the applicable
36
accounting requirements of the Act and the Rules and Regulations
and the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of such statements, or
(b) at a specified date not more than five days prior to
the date of this Agreement, other than the offering and sale of
the Common Shares or the Merger Agreement, (i) there has been any
change in the assets or shareholders' equity of the Company as
compared with the amounts shown in the September 30, 1996 balance
sheet of the Company included in the Registration Statement, (ii)
there has been any increase in indebtedness or other liabilities
related to the Existing Resorts as compared with the amounts
shown in the September 30, 1995 historical or pro forma balance
sheets related to the Existing Resorts or during the period
September 30, 1996 to a specified date not more than five days
prior to the date of this Agreement, or (iii) there were any
decreases, as compared with the corresponding period in the
preceding year, in combined revenues or net income of the
Existing Resorts, except in all instances for changes, increases
or decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur; and
(5) In addition to the examination referred to in their
opinions and the procedures referred to above, they have carried
out certain specified procedures, not constituting an audit, with
respect to certain amounts, percentages and financial information
which are included in the Registration Statement and Prospectus
and which were specified by you, and have found such amounts,
percentages and financial information to be in agreement with, or
derived from, the relevant accounting, financial and other
records of the Company and each of the Property Partnerships.
(c) The Firm Notes and the Option Notes shall have been approved for
listing on the Nasdaq National Market, subject to official notice of
issuance, and the NASD, upon review of the terms of the public offering,
shall not have objected to such offering, such terms or the Underwriters'
participation in the same.
(d) The Company shall have furnished to you such further certificates
and documents as you shall have reasonably requested.
37
(e) There shall have been delivered to you the Firm Notes, and if any
Option Notes are purchased, the Option Notes in the manner required
pursuant to Section 6, hereof.
All such opinions, certificates, letters and documents
shall be in compliance with the provisions hereof only if they are satisfactory
to you and to O'Melveny & Xxxxx LLP, counsel for the Underwriters. The Company
shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to the Representatives or to
counsel for the Underwriters shall be deemed to be a representation and warranty
by the Company to the Underwriters as to each of the statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representatives to the Company without liability on the part of any Underwriter
or the Company, except for the expenses to be paid or reimbursed by the Company
pursuant to Sections 7 and 9 hereof and except to the extent provided in Section
11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. Notwithstanding
---------------------------------------
any other provisions hereof, if this Agreement shall be terminated by you
pursuant to Section 8, or if the sale to the Underwriters of the Notes at the
First Closing is not consummated because of any willful refusal, inability or
failure on the part of the Company to perform any agreement herein or to comply
with any provision hereof without reasonable justification therefor, the Company
agrees to reimburse you and the other Underwriters upon demand for all out-of-
pocket expenses that shall have been reasonably incurred by you and them in
connection with the proposed purchase and the sale of the Notes, including but
not limited to fees and disbursements of counsel relating directly to the
offering contemplated by the Prospectus. Any such termination shall be without
liability of any party to any other party except that the provisions of this
Section 9, Section 7 and Section 11 shall at all times be effective and shall
apply.
SECTION 10. Effectiveness of Registration Statement. You and the
---------------------------------------
Company will use your and its best efforts to cause the Registration Statement
to become effective, to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
SECTION 11. Indemnification. (a) The Company agrees to indemnify
---------------
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act against any losses, claims, damages,
liabilities or expenses,
38
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act, the Exchange Act, the Trust Indenture Act, or
other federal, state or Canadian statutory laws or regulations, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company) insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) 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 or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in any of them not misleading, or 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 or his obligations hereunder or under law, and will reimburse each
Underwriter and each such controlling person for any legal and other expenses as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or as a result of or any amendment or supplement thereto in reliance
upon and in conformity with the information furnished to the Company pursuant to
Section 4 hereof; and provided the indemnity agreement contained in this Section
11(a) shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages, liabilities or expenses purchased
the Notes, as the case may be, concerned to the extent that any such loss,
claim, damage liability or expense of such Underwriter results from the fact
that a copy of the Prospectus was not sent or given to such person at or prior
to the written confirmation of sale of such Common Shares or Notes to such
person as required by the Act. In addition to their other obligations under
this Section 11(a) the Company agrees that it will reimburse expenses as
provided in this Section 11(a) as incurred, but no less frequently than
quarterly, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company's obligations 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 Company, together
with interest, compounded daily, determined on the basis of the prime rate (or
other commercial lending rate for borrowers of the highest credit
39
standing) announced from time to time by Bank of America NT&SA, San Francisco,
California (the "Prime Rate"). Any such interim reimbursement payments which
are not made to an Underwriter within 30 days of a request for reimbursement
shall bear interest at the Prime Rate from the date of such request. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Act, against any losses, claims, damages, liabilities or expenses to
which the Company, any such director, officer or controlling person may become
subject under the Act, the Exchange Act, the Trust Indenture Act, or other
federal or state statutory laws or regulations, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
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 or supplement thereto, in reliance upon and in
conformity with the information furnished to the Company pursuant to Section 4
hereof; and will reimburse the Company, or any such director, officer or any
controlling person of the Company for any legal and other expense reasonably
incurred by the Company, or any such director, officer or controlling person of
the Company in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or action. In
addition to its other obligations under this Section 11(b), each Underwriter
severally agrees that it will reimburse expenses as provided in this Section
11(b) as incurred, but no less frequently than quarterly, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the Underwriters, obligation to reimburse the Company (and, to the extent
applicable, each officer, director or controlling person of the Company) 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, the Company
(and, to the extent applicable, each officer, director or controlling person of
the Company) shall promptly return it to the Underwriters together with
interest, compounded
40
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which
such Underwriter 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 the indemnifying party in writing of the commencement thereof;
but the omission to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise under the indemnity agreement contained in this Section or to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel representing all indemnified parties who are parties to such
action or set of related actions) or (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of counsel shall be at
the expense of the indemnifying party.
41
(d) If the indemnification provided for in this Section is required by
its terms, but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under Sections 11(a), 11(b)
or 11(c) hereof in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any losses, claims, damages, liabilities or expenses referred to herein (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Underwriters from the offering of the Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriters in connection with the statements or omissions or inaccuracies
in the representations and warranties herein which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company and the Underwriters shall be deemed to be in the same proportion, in
the case of the Company as the total price paid to the Company for the Notes
sold by them to the Underwriters (net of underwriting commissions, but before
deducting expenses), and in the case of the Underwriters as the underwriting
commissions received by them bears to the total of such amounts paid to the
Company and received by the Underwriters as underwriting commissions. The
relative fault of the Company and the Underwriters 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
or the inaccurate or the alleged inaccurate representation and/or warranty
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 amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section (c) of this Section, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in Section (c) of this Section
with respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section (d); provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section (c) of this Section for purposes of
indemnification. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section were determined
solely 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 in the immediately
preceding
42
paragraph. Notwithstanding the provisions of this Section, no Underwriter shall
be required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Notes underwritten by it and distributed to the public. 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 are several in proportion to their respective
underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 11(a) or 11(b)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Constitution and Rules of the Board of Governors of
the New York Stock Exchange, Inc. or 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
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 Sections 11(a) and 11(b)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 11(a) or 11(b) hereof.
SECTION 12. Default of Underwriters. It shall be a condition to this
-----------------------
Agreement and the obligation of the Company to sell and deliver the and Notes
hereunder, and of each Underwriter to purchase the Notes in the manner as
described herein, that, except as hereinafter in this Section provided, each of
the Underwriters shall purchase and pay for all the Notes agreed to be purchased
by such Underwriter hereunder upon tender to the Representatives of all such
shares in accordance with the terms hereof. If any Underwriter or Underwriters
so default in their obligation to purchase Notes hereunder on either the First
or Second Closing Date, and arrangements satisfactory to the Representatives and
the Company for the purchase of such Notes by other persons 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 except for the
expenses to be paid by the Company pursuant to Section 7 hereof and except to
the extent provided in Section 11 hereof.
In the event that the Notes to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company
43
shall have the right to postpone the First Closing Date or the Second Closing
Date, as the case may be, for not more than five business days in order that the
necessary changes in the Registration Statement, Prospectus and any other
documents, as well as any other arrangements, may be effected. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. Effective Date. This Agreement shall become effective
--------------
immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 P.M., California time, on the first full business
day following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Notes for sale to the public. For the purposes of
this Section 13, the Notes shall be deemed to have been so released upon the
release for publication of any newspaper advertisement relating to the Notes or
upon the release by you of telegrams (i) advising Underwriters that the Notes
are released for public offering or (ii) offering the Notes for sale to
securities dealers, whichever may occur first.
SECTION 14. Termination. Without limiting the right to terminate
-----------
this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
or by you by notice to the Company at any time prior to the time this
Agreement shall become effective as to all its provisions, and any such
termination shall be without liability on the part of the Company to any
Underwriter (except for the expenses to be paid or reimbursed by the
Company pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof) or of any Underwriter to the Company (except
to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities
44
generally shall have been suspended on either such Exchange or in the over
the counter market by the NASD, or a general banking moratorium shall have
been established by federal, New York or California authorities; (ii) if an
outbreak of major hostilities or other national or international calamity
or any substantial change in political, financial or economic conditions
shall have occurred or shall have accelerated or escalated to such an
extent, as, in the judgment of the Representatives, to affect adversely the
marketability of the Notes; (iii) if any adverse event shall have occurred
or shall exist which makes untrue or incorrect in any material respect any
statement or information contained in the Registration Statement or
Prospectus or which is not reflected in the Registration Statement or
Prospectus but should be reflected therein in order to make the statements
or information contained therein not misleading in any material respect; or
(iv) if there shall be any action, suit or proceeding pending or
threatened, or there shall have been any development involving particularly
the business or properties or securities of the Company or the transactions
contemplated by this Agreement, which, in the reasonable judgment of the
Representatives, may materially and adversely affect the Company's business
or earnings and makes it impracticable or inadvisable to offer or sell the
Notes. Any termination pursuant to this Section 14(b) shall be without
liability on the part of any Underwriter to the Company or on the part of
the Company to any Underwriter (except for expenses to be paid or
reimbursed by the Company pursuant to Sections 7 and 9 hereof and except to
the extent provided in Section 11 hereof).
SECTION 15. Representations and Indemnities to Survive Delivery. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements of the Company, the Company's officers and of 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 or the Company or any of its or their partners, officers or
directors or any controlling person, as the case may be, and will survive
delivery of and payment for the Notes sold hereunder and any termination of this
Agreement.
SECTION 16. Notices. All communications hereunder shall be in
-------
writing and, if sent to the Representatives shall be mailed, delivered,
telecopied or telegraphed and confirmed to Xxxxxxxxxx Securities at 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Telecopier: (415) 249-
5513, Attention: Xxxx X. Xxxxxxxx, and Xxxxxxx, Xxxxx & Co. at 00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Telecopier: (000) 000-0000, Attention: Xxxx X.
Xxxxxxx with a copy to O'Melveny & Xxxxx LLP, Embarcadero Center West 000
Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Telecopier: (000) 000-0000,
Attention: Xxxxx X. Xxxxx, Esq.; and
45
if sent to the Company shall be mailed, delivered or telegraphed and confirmed
to the Company, as applicable at 0000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 Telecopier: (000) 000-0000 Attention: Xxxxxx X.
Xxxxxx with a copy to Xxxxxx & Xxxxxxx, 000 X. Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 Telecopier: (000) 000-0000, Attention: Xxxxxx
Xxxxxxxxxxxx, Xx., Esq. The Company or you may change the address for receipt
of communications hereunder by giving notice to the other.
SECTION 17. Successors. This Agreement will inure to the benefit of
----------
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal representatives and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations hereunder. The term "successors" shall not include
any purchaser of the Notes as such from any of the Underwriters merely by reason
of such purchase.
SECTION 18. Underwriters' Representatives. You will act as
-----------------------------
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you, as
Representatives, will be binding upon all of the Underwriters.
SECTION 19. Partial Unenforceability. The invalidity or
------------------------
unenforceability of any section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other section, paragraph or
provision hereof. If any section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 20. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 21. Knowledge. As used in this Agreement, the term knowledge
---------
or best knowledge on the part of an entity shall include the knowledge of such
entity's officers and any other employees with managerial responsibilities and
such entity shall only make such statement after conducting a diligent
investigation on the subject matter thereof.
SECTION 22. General. This Agreement constitutes the entire agreement
-------
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the
46
subject matter hereof. This Agreement may be executed in several counterparts,
each one of which shall be an original, and all of which shall constitute one
and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholder and you.
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 among the Company and the several Underwriters,
including you, all in accordance with its terms.
[Signature Page to Follow]
47
Very truly yours,
SIGNATURE RESORTS, INC.
By:
Its______________________
The foregoing Underwriting Agreement is hereby confirmed and accepted by us in
San Francisco, California as of the date first above written.
XXXXXXXXXX SECURITIES
XXXXXXX, SACHS & CO.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By: XXXXXXXXXX SECURITIES
By:
Managing Director
48
SCHEDULE A
Underwriter Principal
------------------------------- Amount of
Notes to be
Purchased
Xxxxxxxxxx Securities
Xxxxxxx, Xxxxx & Co.
-------------------------------
Xxxxx Xxxxxx Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
49
