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EXHIBIT 1
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2,500,000 SHARES
ILX RESORTS INCORPORATED
COMMON STOCK
UNDERWRITING AGREEMENT
DATED MARCH __, 1998
EVEREN SECURITIES, INC.
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TABLE OF CONTENTS
Section 1. Representations and Warranties of the Company 2
(a) Compliance with Registration Requirements 2
(b) Offering Materials Furnished to Underwriters 3
(c) Distribution of Offering Material By the Company 3
(d) The Underwriting Agreement 3
(e) Authorization of the Common Shares 3
(f) No Applicable Registration or Other Similar Rights 4
(g) No Material Adverse Change 4
(h) Independent Accountants 4
(i) Preparation of the Financial Statements 4
(j) Incorporation and Good Standing of the Company and its
Subsidiaries, Affiliated Companies and Related Partnerships 5
(k) Capitalization and Other Capital Stock Matters 5
(l) Preferred Stock, Warrants, etc 6
(m) Stock Exchange Listing 6
(n) No Current Material Defaults 6
(o) Authorization; Non-Contravention of Existing Instruments 7
(q) No Further Authorizations or Approvals Required 8
(r) No Material Actions or Proceedings 8
(s) Compliance with All Laws Regulating Timeshare Business 8
(t) Intellectual Property Rights 9
(u) All Necessary Permits, etc 9
(v) Title to Resorts and Other Properties 9
(w) Resort Mortgages 9
(x) Title Insurance 10
(y) Adequate Personal Property 10
(z) Tax Law Compliance 10
(aa) Company Not an "Investment Company" 10
(ab) Insurance 10
(ac) No Price Stabilization or Manipulation 11
(ad) No Broker or Finder Fees 11
(ae) Related Party Transactions 11
(af) Material Contracts 11
(ag) No Unlawful Contributions or Other Payments 11
(ah) Company's Accounting System 11
(ai) Compliance with Environmental Laws 11
(aj) No Material or Undisclosed Environmental Liability 12
(ak) Periodic Review of Costs of Environmental Compliance 13
(al) No ERISA "Plan Assets." 13
(am) ERISA Compliance 13
(an) Compliance with All (Other) Applicable Laws 14
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(ao) Financial Projections 14
(ap) Environmental Engineering Firm 14
(aq) No Labor Problems 14
(ar) Vacation Ownership Interests Not Securities 14
(as) No Options to Purchase Resorts 14
(at) ARDA's Consent Obtained 14
(au) Proxy Statement 15
(av) Subsidiaries, Affiliated Companies and Related Partnerships 15
Section 2. Purchase, Sale and Delivery of the Common Shares 15
(a) The Firm Common Shares 15
(b) The First Closing Date 15
(c) The Optional Common Shares; the Second Closing Date 15
(d) Public Offering of the Common Shares 16
(e) Payment for the Common Shares 16
(f) Delivery of the Common Shares 16
(h) Delivery of Prospectus to the Underwriters 17
Section 3. Additional Covenants 17
(a) Representative's Review of Proposed Amendments and
Supplements 17
(b) Securities Act Compliance 18
(c) Amendments and Supplements to the Prospectus and Other
Securities Act Matters 18
(d) Copies of any Amendments and Supplements to the Prospectus 18
(e) Press Releases 18
(f) Blue Sky Compliance 19
(g) Use of Proceeds 19
(h) Compliance with Undertakings 19
(i) Transfer Agent 19
(j) Continuing Inclusion in the Nasdaq National Market 19
(k) Earnings Statement 19
(l) Periodic Reporting Obligations 19
(m) Agreement Not To Offer or Sell Additional Securities 20
(n) Future Reports to the Representative 20
Section 4. Payment of Expenses 21
Section 5. Conditions of the Obligations of the Underwriters 21
(a) Accountants' Comfort Letter 22
(b) Compliance with Registration Requirements; No Stop Order; No
Material Misstatements or Omissions; No Objection from NASD 22
(c) No Material Adverse Change or Ratings Agency Change 23
(d) Opinion of Counsel for the Company 23
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(e) Opinion of Counsel for the Underwriters 23
(f) Officers' Certificate 23
(g) Bring-down Comfort Letter 23
(h) Lock-Up Agreements 24
(i) Resort-Related Documents 24
(j) Written Assurances under the Existing Instruments 24
(k) Nasdaq National Market Inclusion 24
(l) Opinion of Local Timeshare Counsel 25
(m) Employment Agreements 25
(n) Additional Documents 25
Section 6. Reimbursement of Underwriters' Expenses 25
Section 7. Effectiveness of this Agreement 25
Section 8. Indemnification 26
(a) Indemnification of the Underwriters 26
(b) Indemnification of the Company, its Directors and Officers 27
(c) Notifications and Other Indemnification Procedures 28
(d) Settlements 28
Section 9. Contribution 29
Section 10. Default of One or More of the Several Underwriters 30
Section 11. Termination of this Agreement 31
Section 12. Representations and Indemnities to Survive Delivery 31
Section 13. Notices 32
Section 14. Successors 32
Section 15. Partial Unenforceability 32
Section 16. 32
(a) Governing Law Provisions 32
(b) Consent to Jurisdiction 32
(c) Waiver of Immunity 33
Section 17. General Provisions 33
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UNDERWRITING AGREEMENT
March __, 1998
EVEREN SECURITIES, INC.
00 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Ladies and Gentlemen:
INTRODUCTORY. ILX Resorts, Incorporated, an Arizona corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 2,500,000 shares (the "Firm
Common Shares") of its Common Stock, no par value (the "Common Stock"). In
addition, the Company has granted to the Underwriters an option to purchase up
to an additional 375,000 shares of Common Stock (the "Optional Common Shares"),
as provided in Section 2. The Firm Common Shares and, if and to the extent such
option is exercised, the Optional Common Shares are collectively called the
"Common Shares." EVEREN Securities, Inc. has agreed to act as the representative
of the several Underwriters (in such capacity, the "Representative") in
connection with the offering and sale of the Common Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-[___]), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Securities Act"), including any information
deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A
or Rule 434 under the Securities Act, is called the "Registration Statement."
Any registration statement filed by the Company pursuant to Rule 462(b) under
the Securities Act is called the "Rule 462(b) Registration Statement," and from
and after the date and time of filing of the Rule 462(b) Registration Statement
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriters to
confirm sales of the Common Shares, is called the "Prospectus;" provided,
however, if the Company has, with the consent of EVEREN Securities, Inc.,
elected to rely upon Rule 434 under the Securities Act, the term "Prospectus"
shall mean the Company's prospectus subject to completion (each, a "preliminary
prospectus") dated February __, 1998 (such preliminary prospectus is called the
"Rule 434 preliminary prospectus"), together with the applicable term sheet (the
"Term Sheet") prepared and filed by
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the Company with the Commission under Rules 434 and 424(b) under the Securities
Act and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus, the Prospectus or the Term Sheet, or any amendments or supplements
to any of the foregoing, shall include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX").
The Representative has advised the Company that the Underwriters
propose to make a public offering of their respective portions of the Common
Shares on the effective date of the Registration Statement or as soon thereafter
as in judgment of the Representative is advisable.
For purposes of this Agreement, "Affiliated Company" means (i) any
corporation, partnership, association, limited liability company, joint venture
or other business entity which has title to or an ownership interest in any of
the Resorts (as defined below) or manages or provides services to any of the
Resorts, or (ii) any corporation, partnership, association, limited liability
company, joint venture or other business entity of which any director, officer
or manager of the Company has a beneficial ownership interest.
For purposes of this Agreement, "Subsidiary" means, with respect to the
Company, any corporation, partnership, association, limited liability company,
joint venture or other business entity of which more than 50% of the total
voting power of shares of stock or other ownership interest entitled (without
regard to the occurrence of any contingency) to vote in the election of the
person or persons (whether directors, managers, partners, trustees or other
person performing similar functions) having the power to direct or cause the
direction of the management and policies thereof is at the time owned or
controlled, directly or indirectly, by the Company or one or more of the other
Subsidiaries of the Company or a combination thereof, including, without
limitation, each of the entities named in Schedule B.
For purposes of this Agreement, "Related Partnership" means any
partnership or joint venture between on or more of the Affiliated Companies, the
Subsidiaries, and/or any third party.
The Company hereby confirms its agreements with the Underwriters as
follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ITS
SUBSIDIARIES, AFFILIATED COMPANIES AND RELATED PARTNERSHIPS. The Company and
each of its Subsidiaries, Affiliated Companies and Related Partnerships which
have a beneficial ownership in or an interest in any part of a Resort or a
Vacation Ownership Interest (as those terms are defined below) hereby represent,
warrant and covenant to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration
Statement
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and any Rule 462(b) Registration Statement have been declared effective by the
Commission under the Securities Act. The Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in effect
and no proceedings for such purpose have been instituted or are pending or, to
the best knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to XXXXX (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Common Shares.
Each of the Registration Statement, any Rule 462(b) Registration Statement and
any post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, as
amended or supplemented, as of its date and at all subsequent times, did not and
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements thereto,
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by the Representative expressly
for use therein. There are no contracts or other documents required to be
described in the Prospectus or to be filed as exhibits to the Registration
Statement which have not been described or filed as required.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representative one complete manually signed copy of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representative has
reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. Neither the
Company nor any Affiliated Company, Related Partnership or Subsidiary has
distributed or will distribute, prior to the later of the Second Closing Date
(as defined below) and the completion of the Underwriters' distribution of the
Common Shares, any offering material in connection with the offering and sale of
the Common Shares other than a preliminary prospectus, the Prospectus or the
Registration Statement.
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(d) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) Authorization of the Common Shares. The Common Shares to be
purchased by the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is given
in the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company, its Subsidiaries or any of the
Affiliated Companies or Related Partnerships (any such change is called a
"Material Adverse Change"); (ii) the Company, its Subsidiaries, and any of the
Affiliated Companies or Related Partnerships have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or agreement not in
the ordinary course of business; (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company, any of its Subsidiaries, Affiliated Companies or
Related Partnerships on any class of capital stock or repurchase or redemption
by the Company or any of its Subsidiaries, Affiliated Companies or Related
Partnerships of any class of capital stock; and (iv) neither the Company nor any
Subsidiary, Affiliated Company or Related Partnership has sustained any material
loss or interference with its respective businesses or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance.
(h) Independent Accountants. Deloitte & Touche LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, are independent public or certified public accountants as
required by the Securities Act and the Securities and Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder, the
"Exchange
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Act").
(i) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of any Form 10-Q or Form 10-K or the
Registration Statement and included in the Prospectus present fairly the
consolidated financial position of the Company and its Subsidiaries as of and at
the dates indicated and the results of their operations and cash flows for the
periods specified. The supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. Such
financial statements and supporting schedules have been prepared in conformity
with generally accepted accounting principles, as applied in the United States,
applied on a consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. No other financial statements or
supporting schedules are required to be included in the Registration Statement.
The financial data set forth in the Prospectus under the captions "Prospectus
Summary--Summary Consolidated Historical and Pro Forma Financial Data,"
"Selected Consolidated Historical and Pro Forma Financial Data" and
"Capitalization" fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement. The pro forma consolidated financial statements of the
Company and its Subsidiaries and the related notes thereto included under the
caption "Prospectus Summary--Summary Consolidated Historical and Pro Forma
Financial Data", "Selected Consolidated Historical and Pro Forma Financial Data"
and elsewhere in the Prospectus and in the Registration Statement present fairly
the information contained therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly presented on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(j) Incorporation and Good Standing of the Company and its
Subsidiaries, Affiliated Companies and Related Partnerships. Each of the
Company, its Subsidiaries and Affiliated Companies has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and, in the case of the Company, to enter into and perform its
obligations under this Agreement; and no proceeding has been instituted or
threatened in any jurisdiction seeking to revoke, limit or curtail such power
and authority. Each of the Related Partnerships has been duly formed and is
validly existing as a partnership or joint venture 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 and no procedure has been instituted or threatened in any
jurisdiction seeking to revoke, limit or curtail such power and authority. Each
of the Company and each Subsidiary, Affiliated Company and Related Partnership
is duly qualified as a foreign corporation, partnership or limited liability
company, as applicable, to transact business and is in good standing in
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each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except for such
jurisdictions where the failure to so qualify or to be in good standing would
not, individually or in the aggregate, result in a Material Adverse Change; and
no proceeding has been instituted or threatened in any such jurisdiction seeking
to revoke, limit or curtail such qualification. All of the issued and
outstanding capital stock, partnership interests or membership interests of each
Subsidiary, Affiliated Company and Related Partnership have been duly authorized
and validly issued, is fully paid and nonassessable and is owned by the Company,
directly or through Subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim. The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the Subsidiaries listed in Exhibit 21 to the Registration Statement.
(k) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options or warrants described in the
Prospectus). The Common Stock (including the Common Shares) conforms in all
material respects to the description thereof contained in the Prospectus. All of
the issued and outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable and have been issued in
compliance with federal and state securities laws. No further approval or
authority of the holders of the Common Stock or the Board of Directors of the
Company is required for the issuance and sale of the Common Shares as
contemplated in this Agreement. Neither the issuance of the Common Shares nor
the issuance of the outstanding shares of Common Stock were issued in violation
of any preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its
Subsidiaries, Affiliated Companies and Related Partnerships other than those
accurately described in the Prospectus. The issued and outstanding capital stock
of each Subsidiary and Affiliated Company has been validly issued and are fully
paid and nonassessable and have been issued in compliance with all federal and
state securities laws. The issued and outstanding partnership interests in each
of the Related Partnerships has been validly issued and are fully paid and
nonassessable and have been issued in compliance with all federal and state
securities laws. Neither the Company nor any of the Subsidiaries, Affiliated
Companies or Related Partnerships has outstanding any options to purchase, or
any preemptive rights or any other rights to subscribe for or to purchase the
securities of any of the Company, Subsidiaries, Affiliated Companies or Related
Partnerships, or obligations convertible into, or any contracts or commitments
to issue or sell shares of their 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 stock
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options, stock bonuses and other stock plans or arrangements, and the options or
other rights granted thereunder, set forth in the Prospectus accurately and
fairly presents the information required to be shown with respect to such
options, bonuses, plans, arrangements and rights.
(l) Preferred Stock, Warrants, etc. _________________________,
__________________, and ____________________ are the only beneficial owners of
preferred stock of the Company. _________________________, __________________,
and ____________________ are the only beneficial owners of warrants of the
Company. There exist no securities or debt which is convertible into any capital
stock of the Company.
(m) Stock Exchange Listing. The Common Stock (including the Common
Shares) is registered pursuant to Section 12(g) of the Exchange Act and is
included on the Nasdaq National Market, and the Company has taken no action
designed to terminate, or likely to have the effect of terminating, the
registration of the Common Stock under the Exchange Act, or exclude, or likely
to have the effect of excluding, the Common Stock from the Nasdaq National
Market, including, without limitation, the five for one reverse stock split of
the Company's Common Stock, effective January __, 1998. In addition, the Company
has not received any notification that the Commission or the National
Association of Securities Dealers, Inc., or the Nasdaq Stock Market, Inc.
(collectively, together with NASD Regulation, Inc., the "NASD") is contemplating
terminating such registration or inclusion.
(n) No Current Material Defaults. Neither the Company nor any of its
Subsidiaries, Affiliated Companies or Related Partnerships is (i) in violation
of its charter, by-laws, partnership agreement, certificate of partnership
agreement or other organizational document or (ii) in default (or, with the
giving of notice or lapse of time, or both, would be in default) ("Default")
under any indenture, mortgage, loan or credit agreement, note, contract, tax
indemnity agreement, settlement agreement, franchise, lease, timeshare or
related agreement, or management agreement or other instrument to which the
Company or any of its Subsidiaries, Affiliated Companies or Related Partnerships
is a party or by which it or any of them may be bound or to which any of the
property or assets of the Company or any of its Subsidiaries, Affiliated
Companies or Related Partnerships is subject (each of the instruments or
agreements listed in clauses (i) and (ii) immediately above, an "Existing
Instrument"), including, without limitation, the Existing Instruments listed in
Schedule C attached hereto, except for such Defaults as would not, individually
or in the aggregate, result in a Material Adverse Change.
(o) Authorization; Non-Contravention of Existing Instruments. The
execution, delivery and performance by the Company and each Subsidiary,
Affiliated Company or Related Partnership, as applicable, of this Agreement and
consummation of the transactions contemplated by this Agreement and by the
Prospectus (i) have been duly authorized by all necessary corporate, partnership
or member action, as applicable, and will not result in any violation of the
provisions of the charter, by-laws, partnership agreement, partnership
certificate or other
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organizational document, as applicable, of the Company or any Subsidiary,
Affiliated Company or Related Partnership, (ii) will not conflict with or
constitute a breach of, or Default or a Debt Repayment Triggering Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
Subsidiary, Affiliated Company or Related Partnership pursuant to any Existing
Instrument, except for such conflicts, breaches, Defaults, liens, charges or
encumbrances as would not, individually or in the aggregate, result in a
Material Adverse Change, (iii) will not require the consent of any other party
to an Existing Instrument, except for such consents which have been obtained in
writing by the Company or a Subsidiary, Affiliated Company or Related
Partnership, as applicable, and copies of which have been delivered by the
Company to the Underwriters and its counsel (the "Written Consents"), and (iv)
will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any Subsidiary,
Affiliated Company or Related Partnership. No consent, approval, authorization
or other order of, or registration or filing with, any court or other
governmental or regulatory authority or agency, including the satisfaction of
any requirements pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, or the satisfaction of any requirements of any timeshare
regulatory authority, is required for the Company's execution, delivery and
performance of this Agreement and consummation of the transactions contemplated
hereby and by the Prospectus, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act, applicable
state securities or blue sky laws and from the National Association of
Securities Dealers, Inc. (the "NASD"). As used herein, a "Debt Repayment
Triggering Event" means any event or condition which gives, or with the giving
of notice or lapse of time, or both, would give, the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any Subsidiary,
Affiliated Company or Related Partnership.
(p) Material Agreements. Each of the agreements incorporated by
reference in this Agreement, in the Prospectus or as exhibits to the
Registration Statement in connection with the offering and the Company's
business, including without limitation, those listed in Schedule C, has been, or
prior to the consummation of the offering will be, duly authorized, executed and
delivered by the parties thereto and constitute a valid and binding agreement of
the parties thereto; and neither the Company, nor any of the Subsidiaries,
Affiliated Companies or Related Partnerships, nor any other party is, or upon
the consummation of the offering will be, in breach of or default under any
agreement. The Company, each Subsidiary, Affiliated Company and Related
Partnership and, each other party to each agreement, has full legal right, power
and authority to enter into each such agreement and to consummate the
transactions contemplated therein.
(q) No Further Authorizations or Approvals Required. No consent,
approval, authorization or other order of, or registration or filing with, any
court or other
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governmental or regulatory authority or agency, is required for the execution,
delivery and performance by the Company and each Subsidiary, Affiliated Company
or Related Partnership, as applicable, of this Agreement and for consummation of
the transactions contemplated by this Agreement and by the Prospectus, except
such as have been obtained or made and are in full force and effect under the
Securities Act, applicable state securities or blue sky laws and from the NASD.
(r) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or threatened (i) against or
affecting the Company or any of its Subsidiaries, Affiliated Companies or
Related Partnerships, (ii) which have as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its
Subsidiaries, Affiliated Companies or Related Partnerships or (iii) relating to
environmental or discrimination matters, where in any such case (A) there is a
reasonable possibility that such action, suit or proceeding might be determined
adversely to the Company or such Subsidiary, Affiliated Company or Related
Partnership and (B) any action, suit or proceeding, if so determined adversely,
would reasonably be expected to result in a Material Adverse Change or to
adversely affect the consummation of the transactions contemplated by this
Agreement. No material labor dispute with the employees of the Company or any of
its Subsidiaries, Affiliated Companies or Related Partnerships exists or is
threatened or imminent.
(s) Compliance with All Laws Regulating Timeshare Business. Each of the
Company and each of the Subsidiaries, Affiliated Companies and Related
Partnerships is and, upon consummation of the offering, will be, in compliance
with all federal, state, local and foreign laws and regulations regarding,
without limitation, the marketing of offers to sell, offers to sell, and sales
of, timeshare resorts and vacation ownership interests, and all federal, state,
local and foreign laws and regulations governing all licenses to sell and offers
to sell interests in timeshare resorts, including, without limitation, the
Federal Trade Commission Act, Truth in Lending Act and Regulation Z, Equity
Opportunity Credit Act and Regulation B, Interstate Land Sales Full Disclosure
Act, Real Estate Settlement Procedures Act, Consumer Credit Protection Act,
Telephone Consumer Protection Act, Telemarketing and Consumer Fraud and Abuse
Prevention Act, Fair Housing Act and Civil Rights Acts of 1964, 1968 and 1991,
and all licensure, anti-fraud, telemarketing, prize, gift, sweepstakes and labor
laws to which it is or may become subject (collectively "Timeshare Laws"). Each
of the Subsidiaries, Affiliated Companies and Related Partnerships has filed
and, upon consummation of the offering, will file, all required documents and
supporting information in compliance with all Timeshare Laws.
(t) Intellectual Property Rights. Except as otherwise disclosed in the
Prospectus, the Company and its Subsidiaries, Affiliated Companies and Related
Partnerships own or possess sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals, trade secrets and other similar rights,
including, without limitation, rights to the names appearing on Schedule D
(collectively,
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"Intellectual Property Rights") reasonably necessary to conduct their businesses
as now conducted; and the expected expiration of any of such Intellectual
Property Rights would not result in a Material Adverse Change. Neither the
Company nor any of its Subsidiaries, Affiliated Companies and Related
Partnerships has received any notice of infringement or conflict with asserted
Intellectual Property Rights of others, which infringement or conflict, if the
subject of an unfavorable decision, would result in a Material Adverse Change.
(u) All Necessary Permits, etc. The Company and each Subsidiary,
Affiliated Company and Related Partnership possess such valid and current
certificates, authorizations, licenses or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies as are necessary to
conduct their respective businesses, including, without limitation, all licenses
to sell and offers to sell interests in timeshare resorts and vacation ownership
interests, and neither the Company nor any Subsidiary, Affiliated Company or
Related Partnership has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such certificate,
authorization, license or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could result in a
Material Adverse Change.
(v) Title to Resorts and Other Properties. The Company and each of its
Subsidiaries, Affiliated Companies and Related Partnerships has good and
marketable title to all the properties and assets, including Vacation Ownership
Interests (as defined in the Prospectus), reflected as owned in the financial
statements referred to in Section 1(i) above (or elsewhere in the Prospectus),
including, without limitation, all of the ILX Resorts (as defined in the
Prospectus) and the Additional Resorts (as defined in the Prospectus, and
together with the ILX Resorts, the "Resorts") and the other Vacation Ownership
Interests described in the Prospectus as owned by the Company and each
Subsidiary, Affiliated Company or Related Partnership, in each case free and
clear of any security interests, mortgages, liens, encumbrances, equities,
claims and other defects, except such as do not materially and adversely affect
the value of such property and do not materially interfere with the use made or
proposed to be made of such property by the Company or such Subsidiary,
Affiliated Company or Related Partnership. The real property, improvements,
equipment and personal property held under lease by the Company or any
Subsidiary, Affiliated Company or Related Partnership are held under valid and
enforceable leases, with such exceptions as are not material and do not
materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by such entities. The
Company, and each Subsidiary, Affiliated Company and Related Partnership owns or
leases all such properties as are necessary to operate the Resorts and its other
business as now conducted.
(w) Resort Mortgages. The mortgages and deeds of trust encumbering the
Company and the Subsidiaries, Affiliated Companies and Related Partnerships'
interests in the Resorts are not convertible into equity securities of the
Company or any Subsidiary, Affiliated Company or Related Partnership nor, upon
the
15
consummation of the offering, will any lender hold a participating interest
in any such equity securities; such mortgages and deeds of trust are not
cross-defaulted or cross-collateralized to any mortgage or deed of trust
encumbering property that is not to be owned directly or indirectly by the
Company; and the offering shall not cause an acceleration of the underlying
indebtedness.
(x) Title Insurance. Title insurance in favor of the Company will be in
force with respect to each of the Resorts in an amount reasonably acceptable to
the Representatives (except with respect to the Additional Resorts where there
shall be issued a legal opinion in form and substance satisfactory to the
Representatives opining on the Company's interest in such Resorts).
(y) Adequate Personal Property. The personal property used and
maintained as part of the Resorts is adequate to enable the Company, and each of
its Subsidiaries, Affiliated Companies and Related Partnerships to continue to
conduct the operations of the Resorts in the manner in which such operations
have normally been conducted by the Company or each of its Subsidiaries,
Affiliated Companies and Related Partnerships, as applicable.
(z) Tax Law Compliance. The Company and its Subsidiaries, Affiliated
Companies and Related Partnerships have filed all necessary federal, state and
foreign income and franchise tax returns or have properly requested extensions
thereof and have paid all taxes required to be paid by any of them and, if due
and payable, any related or similar assessment, fine or penalty levied against
any of them except as may be being contested in good faith and by appropriate
proceedings and as described in the Prospectus. The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section 1(i) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company or
any of its Subsidiaries, Affiliated Companies and Related Partnerships has not
been finally determined.
(aa) Company Not an "Investment Company". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and after receipt of
payment for the Common Shares will not be, an "investment company" within the
meaning of the Investment Company Act and will conduct its business in a manner
so that it will not become subject to the Investment Company Act.
(ab) Insurance. Each of the Company and its Subsidiaries, Affiliate
Companies and Related Partnerships are insured by nationally recognized,
financially sound and reputable institutions with policies in such amounts and
with such deductibles and covering such risks as are generally deemed adequate
and customary for their businesses including, but not limited to, policies
covering the Company and its Subsidiaries, Affiliated Companies and Related
Partnerships against business interruptions and policies covering real and
personal property owned or leased by the Company and its Subsidiaries,
Affiliated Companies and Related Partnerships
16
against theft, damage, destruction, acts of vandalism and earthquakes. The
Company has no reason to believe that it or any Subsidiary, Affiliated Company
or Related Partnership will not be able (i) to renew its existing insurance
coverage as and when such policies expire or (ii) to obtain comparable coverage
from similar institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a Material
Adverse Change. Neither of the Company, any Subsidiary, Affiliated Company or
Related Partnership nor Xxxxxx X. Xxxxxxx or Xxxxx X. Xxxxx has been denied any
insurance coverage which it, or they, as applicable, has sought or for which it
has applied.
(ac) No Price Stabilization or Manipulation. The Company has not taken
and will not 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 Common
Shares.
(ad) No Broker or Finder Fees. Neither the Company nor any affiliate of
the Company has incurred any liability for a fee, commission or other
compensation on account of the employment or engagement of a broker or finder in
connection with the transactions contemplated by this Agreement.
(ae) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any Subsidiary, Affiliated
Company or Related Partnership or any other person required to be described in
the Prospectus which have not been described as required.
(af) Material Contracts. There are no contracts or other documents
required to be described in the Registration Statement or to be filed as
exhibits to the Registration Statement by the Securities Act which have not been
described or filed as required. Neither the Company nor any Subsidiary,
Affiliated Company or Related Partnership is subject to a collective bargaining
agreement.
(ag) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its Subsidiaries, Affiliated Companies or Related Partnerships, nor
any employee or agent of the Company or any Subsidiary, Affiliated Company or
Related Partnership, has made any contribution or other payment to any official
of, or candidate for, any federal, state or foreign office in violation of any
law or of the character required to be disclosed in the Prospectus.
(ah) Company's Accounting System. The Company and its Subsidiaries,
Affiliated Companies and Related Partnerships maintain and will continue to
maintain a system of 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 as applied in the United States and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with the management's general or specific authorization, and (iv) the
recorded accountability
17
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(ai) Compliance with Environmental Laws. (i) Neither the Company nor
any of its Subsidiaries, Affiliated Companies or Related Partnerships is in
violation of any federal, state, local or foreign law or regulation relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of Hazardous
Materials (as herein defined), chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum and petroleum products
(collectively, "Materials of Environmental Concern"), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environment Concern (collectively,
"Environmental Laws"), which violation includes, without limitation,
noncompliance with any permits or other governmental authorizations required for
the operation of the business of the Company or its Subsidiaries, Affiliated
Companies or Related Partnerships under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or any
of its Subsidiaries, Affiliated Companies or Related Partnerships received any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any of its Subsidiaries,
Affiliated Companies or Related Partnerships is in violation of any
Environmental Law; (ii) there is no claim, action or cause of action filed with
a court or governmental authority, no investigation with respect to which the
Company has received written notice, and no written notice by any person or
entity alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages,
personal injuries, attorneys' fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or operated by the Company
or any of its Subsidiaries, Affiliated Companies or Related Partnerships, now or
in the past (collectively, "Environmental Claims"), pending or, threatened
against the Company or any of its Subsidiaries, Affiliated Companies or Related
Partnerships or any person or entity whose liability for any Environmental Claim
the Company or any of its Subsidiaries, Affiliated Companies or Related
Partnerships has retained or assumed either contractually or by operation of
law; (iii) there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of Environmental
Concern, that reasonably could be expected to result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against
the Company or any of its Subsidiaries, Affiliated Companies or Related
Partnerships or against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries, Affiliated
Companies, Related Partnerships or related parties has retained or assumed
either contractually or by operation of law; and (iv) the Company and any
Subsidiary, Affiliated Company or Related Partnership has obtained a Phase I
Environmental Site Assessment with respect to
18
each property that the Company and any Subsidiary, Affiliated Company or Related
Partnership has title or an interest, and each of the foregoing entities has
obtained a Phase II Environmental Site Assessment where indicated or advised by
their environmental advisors. 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.
(aj) No Material or Undisclosed Environmental Liability. There is no
liability, alleged liability or potential liability (including, without
limitation, liability, alleged liability or potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties), of the
Company or any of its Subsidiaries, Affiliated Companies or Related Partnerships
arising out of, based on or resulting from (a) the presence or release into the
environment of any Material of Environmental Concern at any location, whether or
not owned by the Company or any of its Subsidiaries, Affiliated Companies or
Related Partnerships 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, or which liability, alleged liability or potential liability, singly or
in the aggregate, would cause a Material Adverse Change.
(ak)Periodic Review of Costs of Environmental Compliance. In the
ordinary course of its business, the Company conducts a periodic review of the
effect of Environmental Laws on the business, operations and properties of the
Company and its Subsidiaries, Affiliated Companies or Related Partnerships, in
the course of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties). On the basis of such review and the
amount of its established reserves, the Company has reasonably concluded that
such associated costs and liabilities would not, individually or in the
aggregate, result in a Material Adverse Change.
(al) No ERISA "Plan Assets." None of the assets of the Company, or any
of the Subsidiaries, Affiliated Companies or the Related Partnerships
constitutes, nor will such assets, as of either the First or Second Closing
Date, constitute "plan assets" under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
(am) ERISA Compliance. Except as otherwise disclosed in the Prospectus,
the Company and its Subsidiaries, Affiliated Companies or Related Partnerships
19
and any "employee benefit plan" (as defined under the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, "ERISA")) established or
maintained by the Company, its Subsidiaries, Affiliated Companies or Related
Partnerships or their "ERISA Affiliates" (as defined below) are in compliance in
with ERISA. "ERISA Affiliate" means, with respect to the Company or a
Subsidiary, Affiliated Company or Related Partnership, any member of any group
of organizations described in Sections 414(b),(c),(m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such Subsidiary,
Affiliated Company or Related Partnership is a member. No "reportable event" (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the Company,
its Subsidiaries, Affiliated Companies or Related Partnerships or any of their
ERISA Affiliates. No "employee benefit plan" established or maintained by the
Company, its Subsidiaries, Affiliated Companies or Related Partnerships or any
of their ERISA Affiliates, if such "employee benefit plan" were terminated,
would have any "amount of unfunded benefit liabilities" (as defined under
ERISA). Neither the Company, its Subsidiaries, Affiliated Companies or Related
Partnerships nor any of their ERISA Affiliates has incurred or reasonably
expects to incur any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "employee benefit plan" or (ii) Sections
412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan" established
or maintained by the Company, its Subsidiaries, Affiliated Companies or Related
Partnerships or any of their ERISA Affiliates that is intended to be qualified
under Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or failure to act, which would cause the loss of such
qualification.
(an) Compliance with All (Other) Applicable Laws. Each of the Company
and each Subsidiary, Affiliated Company or Related Partnership is conducting
business in compliance with all applicable state, federal and foreign laws,
rules and regulations, except where the failure to be in compliance, if the
subject of an unfavorable decision, ruling or finding, would not singly or in
the aggregate result in a Material Adverse Change. The description of the laws
and regulations affecting the Company and the Subsidiaries, Affiliated Companies
or Related Partnerships' operations in the Prospectus is a true and accurate
description thereof in all material respects.
(ao) Financial Projections. The statements, (including the assumptions
described therein) included in the Registration Statement and the Prospectus
under the headings "Prospectus Summary--Summary Consolidated Historical and Pro
Forma Financial Data," and "Selected Consolidated Historical and Pro Forma
Financial Data" (i) are within the coverage of Rule 175(b) under the Securities
Act to the extent such data constitute forward looking statements as defined in
Rule 175(c) and (ii) were made by the Company with a reasonable basis and
reflect the Company's good faith estimate of the matters described therein.
(ap) Environmental Engineering Firm. No environmental engineering firm
which
20
prepared Phase I, Phase II or Phase III environmental assessment reports (or
other similar reports) with respect to the Resorts as set forth in the
Registration Statement was employed for such purpose on a contingent basis or,
has any substantial interest in the Company or any of its Subsidiaries,
Affiliated Companies or Related Partnerships.
(aq) No Labor Problems. No general labor problem exists or is imminent
with respect to the employees of any of the Resorts, the Company, and each of
its Subsidiaries, Affiliated Companies or Related Partnerships.
(ar) Vacation Ownership Interests Not Securities. The Vacation
Ownership Interests do not constitute "securities" under the Securities Act.
Neither the offer, the sale nor the issuance of Vacation Ownership Interests by
the Company or any of the Subsidiaries, Affiliated Companies or Related
Partnerships required registration under the Securities Act or under the
securities laws of any state nor does the fact that such interests are
outstanding require registration under the Exchange Act.
(as) No Options to Purchase Resorts. No person or entity has an option
or right of first refusal to purchase all or part of any the Resorts or Vacation
Ownership Interests or any interest therein.
(at) ARDA's Consent Obtained. The timeshare industry information and
data set forth in the Registration Statement and the Prospectus was obtained
from American Resort Development Association ("ARDA") pursuant to ARDA's consent
and no further consent is necessary to prevent ARDA from filing a claim against
the Company or the Underwriters for wrongful or unpermitted use of the foregoing
information or data.
(au) Proxy Statement. The Proxy Statement of the Company for the
Special Meeting of Stockholders of the Company to be held Friday, January 9,
1998, and all notice of such meeting was undertaken and completed in compliance
with the Company's articles of incorporation, by-laws, the Securities Act and
the Exchange Act.
(av) Subsidiaries, Affiliated Companies and Related Partnerships. ILX
Resorts Incorporated, an Arizona corporation, Los Abrigados Partners Limited
Partnership, an Arizona limited partnership, VCA South Bend Incorporated, an
Arizona corporation, VCA Tucson Incorporated, an Arizona corporation, Southern
Vacations, Inc., a Florida corporation, and Genesis Investment Group, Inc., an
Arizona corporation are the only entities which have beneficial ownership of or
an interest in the Resorts or the Vacation Ownership Interests.
(aw) Compliance with All Lending Laws. Each of the Company and each of
the Subsidiaries, Affiliated Companies and Related Partnerships is and, upon
consummation of the offering, will be, in compliance with all federal, state,
local and foreign laws and regulations regarding, without limitation, the
underwriting of loans
21
or extending of credit, and all federal, state, local and foreign laws and
regulations governing all licenses to underwrite loans or extend credit,
including, without limitation, the Truth in Lending Act and Regulation Z, Equal
Opportunity Credit Act and Regulation B, Consumer Credit Protection Act,
Regulation T, and all usury laws to which it is or may become subject
(collectively "Lending Laws"). Each of the Subsidiaries, Affiliated Companies
and Related Partnerships has filed and, upon consummation of the offering, will
file, all required documents and supporting information in compliance with the
Lending Laws.
Any certificate signed by an officer of the Company and delivered to the
Representative or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company and each Subsidiary, Affiliated
Company and Related Partnership to each Underwriter as to the matters set forth
therein.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
(a) The Firm Common Shares. The Company agrees to issue and sell to the
several Underwriters the Firm Common Shares upon the terms herein set forth. On
the basis of the representations, warranties and agreements contained in this
Agreement, and upon the terms but subject to the conditions set forth in this
Agreement, the Underwriters agree, severally and not jointly, to purchase from
the Company the respective number of Firm Common Shares set forth opposite their
names on Schedule A. The purchase price per Firm Common Share to be paid by the
several Underwriters to the Company shall be $___ per share.
(b) The First Closing Date. Delivery of certificates for the Firm
Common Shares to be purchased by the Underwriters and payment therefor shall be
made at the offices of EVEREN Securities, Inc., 00 X. Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx (or such other place as may be agreed to by the Company and
the Representative) at 9:00 a.m. San Francisco time, as the Representative shall
designate by notice to the Company (the time and date of such closing is called
the "First Closing Date"). The Company hereby acknowledges that circumstances
under which the Representative may provide notice to postpone the First Closing
Date as originally scheduled include, without limitation, any determination by
the Company or the Representative to recirculate to the public copies of an
amended or supplemented Prospectus or a delay as contemplated by the provisions
of Section 10.
(c) The Optional Common Shares; the Second Closing Date. In addition,
on the basis of the representations, warranties and agreements contained in this
Agreement, and upon the terms but subject to the conditions set forth in this
Agreement, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 375,000 Optional
Common Shares from the Company at the purchase price per share to be paid by the
Underwriters for the Firm Common Shares. The option granted hereunder is for use
by the Underwriters solely in covering any over-allotments in connection with
the sale and
22
distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the Representative
to the Company, which notice may be given at any time within thirty (30) days
from the date of this Agreement. Such notice shall set forth (i) the aggregate
number of Optional Common Shares as to which the Underwriters are exercising the
option, (ii) the names and denominations in which the certificates for the
Optional Common Shares are to be registered and (iii) the time, date and place
at which such certificates will be delivered (which time and date may be
simultaneous with, but not earlier than, the First Closing Date; and in such
case the term "First Closing Date" shall refer to the time and date of delivery
of certificates for the Firm Common Shares and the Optional Common Shares). Such
time and date of delivery, if subsequent to the First Closing Date, is called
the "Second Closing Date" and shall be determined by the Representative and
shall not be earlier than three nor later than five full business days after
delivery of such notice of exercise. If any Optional Common Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Optional Common Shares (subject to such adjustments to eliminate
fractional shares as the Representative may determine) that bears the same
proportion to the total number of Optional Common Shares to be purchased as the
number of Firm Common Shares set forth on Schedule A opposite the name of such
Underwriter bears to the total number of Firm Common Shares. The Representative
may cancel the option at any time prior to its expiration by giving written
notice of such cancellation to the Company.
(d) Public Offering of the Common Shares. The Representative hereby
advises the Company that the Underwriters intend to offer for sale to the
public, as described in the Prospectus, their respective portions of the Common
Shares as soon after this Agreement has been executed and the Registration
Statement has been declared effective as the Representative, in its sole
judgment, has determined is advisable and practicable.
(e) Payment for the Common Shares. Payment for the Common Shares shall
be made at the First Closing Date (and, if applicable, at the Second Closing
Date) by wire transfer of immediately available funds to the order of the
Company.
It is understood that the Representative has been authorized, for its
own account and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Common
Shares and any Optional Common Shares the Underwriters have agreed to purchase.
EVEREN Securities, Inc., individually and not as the Representative of the
Underwriters, may (but shall not be obligated to) make payment for any Common
Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representative 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.
(f) Delivery of the Common Shares.
23
(i) The Company shall deliver, or cause to be delivered, to the
Representative for the accounts of the several Underwriters certificates
for the Firm Common Shares at the First Closing Date, against the
irrevocable release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. The Company shall also deliver,
or cause to be delivered, to the Representative for the accounts of the
several Underwriters, certificates for the Optional Common Shares the
Underwriters have agreed to purchase at the First Closing Date or the
Second Closing Date, as the case may be, against the irrevocable release of
a wire transfer of immediately available funds for the amount of the
purchase price therefor. The certificates for the Common Shares shall be in
definitive form and registered in such names and denominations as the
Representative shall have requested at least two (2) full business days
prior to the First Closing Date (or the Second Closing Date, as the case
may be) and shall be made available for inspection on the business day
preceding the First Closing Date (or the Second Closing Date, as the case
may be) at a location in New York City as the Representative may designate.
(ii) Notwithstanding the terms of the preceding Section 2(f)(i), or
elsewhere in this Agreement, that contemplate physical certificates for the
Common Shares, upon the Company's request, but only with the consent of the
Representative, the Common Shares may be issued without certificates and
constructive delivery of such uncertificated Common Shares to the
Underwriters may be accomplished through the FAST system of The Depository
Trust Company by the Company causing the transfer agent and registrar of
the Common Shares, on the applicable Closing Date, to issue one or more
Depository Trust Company Book Entry Positions, representing in the
aggregate the number of Common Shares to be delivered to the Representative
on such Closing Date, to such account or accounts as shall be specified by
the Representative in an instruction letter or other communication to the
Company or such transfer agent.
(g) Time of the Essence. Time shall be of the essence, and delivery at
the time and in the manner specified in this Agreement is a further condition to
the obligations of the Underwriters.
(h) Delivery of Prospectus to the Underwriters. Not later than 10:00
p.m. Chicago time on the second business day following the date the Common
Shares of released by the Underwriters for sale to the public, the Company shall
deliver or cause to be delivered copies of the Prospectus in such quantities and
at such places as the Representative shall request.
SECTION 3. ADDITIONAL COVENANTS. The Company and its
Subsidiaries, Affiliated Companies and Related Partnerships which have a
beneficial ownership in or an interest in any part of a Resort or a Vacation
Ownership Interest further covenant and agree with each Underwriter as follows:
(a) Representative's Review of Proposed Amendments and Supplements.
During such period beginning on the date of this Agreement and ending on
the later
24
of the First Closing Date or such date, as in the opinion of counsel for
the Underwriters, the Prospectus is no longer required by law to be
delivered in connection with sales by an Underwriter or dealer (the
"Prospectus Delivery Period"), prior to amending or supplementing the
Registration Statement (including any registration statement filed under
Rule 462(b) under the Securities Act) or the Prospectus (including any
amendment or supplement through incorporation by reference of any report
filed under the Exchange Act), the Company shall furnish to the
Representative for review a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed amendment or
supplement to which the Representative objects.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representative in writing (i) of the
receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing
of any post-effective amendment to the Registration Statement or any
amendment or supplement to any preliminary prospectus or the Prospectus,
(iii) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of any
order preventing or suspending the use of any preliminary prospectus or the
Prospectus, or of any proceedings to remove, suspend or terminate from
listing or quotation the Common Stock from any securities exchange upon
which the Common Stock is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any
of such purposes. 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. Additionally, the Company agrees
that it shall comply with the provisions of Rules 424(b), 430A and 434, as
applicable, under the Securities Act and will use its reasonable efforts to
confirm that any filings made by the Company under such Rule 424(b) were
received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If, during the Prospectus Delivery Period, any event shall
occur or condition exist as a result of which it is necessary, in the
opinion of the Representative or counsel to the Underwriters, to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if in the opinion of the Representative or counsel for
the Underwriters it is otherwise necessary to amend or supplement the
Prospectus to comply with law, the Company agrees promptly to prepare
(subject to Section 3(a) hereof), file with the Commission and furnish at
its own expense to the Underwriters and to dealers, amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
25
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representative, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Representative may request.
(e) Press Releases. If at any time during the ninety (90) day period
after the Registration Statement becomes effective, any rumor, publication
or event relating to or affecting the Company or its Subsidiaries,
Affiliated Companies or Related Partnerships shall occur as a result of
which, in the Representative's opinion, the market price of the Common
Stock has been or is likely materially to be affected (regardless of
whether such rumor, publication or event necessitates a supplement or
amendment to the Prospectus), the Company will, after written notice from
the Representative advising the Company to the effect set forth above,
promptly prepare, consult with the Representative concerning the content
of, and disseminate a press release or other public statement, satisfactory
to the Representative, responding to or commenting on such rumor,
publication or event.
(f) Blue Sky Compliance. The Company shall cooperate with the
Representative and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of)
the Blue Sky or state securities laws of those jurisdictions designated by
the Representative, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required
for the distribution of the Common Shares. The Company shall not be
required to qualify as a foreign corporation or to take any action that
would subject it to general service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise the
Representative promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Common Shares 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
any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(g) Use of Proceeds. The Company shall apply the net proceeds from the
sale of its Common Shares contemplated by this Agreement (a) to retire the
debt set forth on Schedule E attached hereto, and (b) for working capital
purposes. No use will be made of the proceeds other than those contemplated
by this section.
(h) Compliance with Undertakings. The Company will comply with all the
provisions of any undertakings contained, or incorporated by reference, in
the Registration Statement.
(i) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.
(j) Continuing Inclusion in the Nasdaq National Market. The Company
will
26
use its best efforts to continue the inclusion of the Common Stock in the
Nasdaq National Market System and will continue to comply in all material
respects with all of the rules and regulations thereof applicable to the
Company and the inclusion of the Common Stock.
(k) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representative an
earnings statement (which need not be audited) covering the twelve month
period ending on the final day of the Company's first quarter that ends at
least one year after "the effective date of the Registration Statement" (as
defined in Rule 158(c) under the Securities Act) that satisfies the
provisions of Section 11(a) of the Securities Act.
(l) Periodic Reporting Obligations. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and
the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act. Additionally, the Company shall file with the
Commission all reports on Form SR as may be required under Rule 463 under
the Securities Act.
(m) Agreement Not To Offer or Sell Additional Securities. During the
period of one hundred eighty (180) days following the date of the
Prospectus, the Company will not, and will cause each of its directors,
officers, and five percent (5%) or greater shareholders to enter into
agreements (the "Lock-up Agreements"), substantially in the form of Exhibit
C, to the effect that each of them will not, without the prior written
consent of EVEREN Securities, Inc. (which consent may be withheld at the
sole discretion of EVEREN Securities, Inc.), directly or indirectly, sell,
offer, contract or grant any option to sell, pledge, transfer or establish
an open "put equivalent position" within the meaning of Rule 16a-1(h) under
the Exchange Act, or otherwise dispose of or transfer, or announce the
offering of, or file any registration statement under the Securities Act in
respect of, any shares of Common Stock, options or warrants to acquire
shares of the Common Stock or securities exchangeable or exercisable for or
convertible into shares of Common Stock (other than as specifically
contemplated by this Agreement with respect to the Common Shares);
provided, however, that the Company may issue shares of its Common Stock or
options to purchase its Common Stock, or Common Stock upon exercise of
options, pursuant to any stock option, stock bonus or other stock plan or
arrangement described in the Prospectus, but only if the holders of such
shares, options, or shares issued upon exercise of such options, agree in
writing not to directly or indirectly, sell, offer, contract or grant any
option to sell, pledge, transfer or establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, any such shares or options during such
one hundred eighty (180) day period without the prior written consent of
EVEREN Securities, Inc. (which consent may be withheld at the sole
discretion of the EVEREN Securities, Inc.).
(n) Future Reports to the Representative. During the period of five
years after the date of this Agreement the Company will furnish to the
Representative at 00 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, XX 00000,
Attention: Xx. Xxx X. Xxxxx, and to
00
X'Xxxxxxx & Xxxxx XXX, Xxxxxxxxx: Xxxxx X. Xxxxx, Esq. at the address set
forth in Section 13: (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, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public or
certified 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, Current 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 capital
stock.
(o) Employment Agreements. The Company has or will prior to the First
Closing enter into a separate employment agreements with each of Xxxxxx X.
Xxxxxxx, Chief Executive Officer, and Xxxxx X. Xxxxx, President, in a form
approved by the Underwriters which shall provide, among other things, that
Xx. Xxxxxxx and Xx. Xxxxx will devote substantially full time to the
business of the Company and not engage in any competitive businesses or
have beneficial ownership in any other company which competes or is in a
competitive business with the Company and its Subsidiaries, Affiliated
Companies and Related Partnerships, excepting any publicly traded company
wherein such persons are not officers, directors, employees or sponsors. In
particular, the individuals shall not manage, consult or participate in any
way in any timeshare business or acquire any property, in their respective
individual capacity or through an entity controlled by the respective
individual, with the intent to convert the property to a timeshare
operation.
EVEREN Securities, Inc., on behalf of the several Underwriters, may, in its
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.
SECTION 4. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated in this Agreement 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 under
this Agreement and in connection with the transactions contemplated by this
Agreement, including, without limitation (i) all expenses incident to the
issuance and delivery of the Common Shares (including, without limitation, all
printing and engraving costs), (ii) all fees and expenses of the registrar and
transfer agent of the Common Stock, (iii) all necessary issuance, transfer and
other stamp taxes in connection with the issuance and sale of the Common Shares
to the Underwriters, (iv) all fees and expenses of the Company's counsel,
independent public or certified pubic accountants and other advisors, (v) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including,
without limitation, financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with investigating the qualification
28
of, or qualifying or registering (or obtaining exemptions from the qualification
or registration of), all or any part of the Common Shares for offer and sale
under the state securities or Blue Sky laws and such foreign securities laws as
are designated by the Representative, and, if requested by the Representative,
preparing and printing a "Blue Sky Survey" or memorandum, and any supplements
thereto, advising the Underwriters of such qualifications, registrations and
exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD's review
and approval of the Underwriters' participation in the offering and distribution
of the Common Shares, (viii) the fees and expenses associated with including the
Common Shares in the Nasdaq National Market, and (ix) all other fees, costs and
expenses referred to in Item 14 of Part II of the Registration Statement. Except
as provided in this Section 4, Section 6, Section 8 and Section 9 hereof, the
Underwriters shall pay their own expenses, including the fees and disbursements
of their counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Common
Shares as provided in this Agreement on the First Closing Date and, with respect
to the Optional Common Shares, on the Second Closing Date, shall be subject to
the accuracy of the representations and warranties set forth in Section 1 of
this Agreement as of the date of this Agreement and as of the First Closing Date
as though then made and, with respect to the Optional Common Shares, as of the
Second Closing Date as though then made, to the timely performance by the
Company of its covenants and other obligations under this Agreement, and to each
of the following additional conditions:
(a) Accountants' Comfort Letter. On the date of this Agreement, the
Representative shall have received from Deloitte & Touche LLP, independent
public or certified public accountants for the Company, a letter dated the
date of this Agreement addressed to the Underwriters, in form and substance
satisfactory to the Representative, containing statements and information
of the type ordinarily included in accountant's "comfort letters" to
underwriters, delivered according to Statement of Auditing Standards No. 72
(or any successor bulletin), with respect to the audited and unaudited
financial statements and certain financial information contained in the
Registration Statement and the Prospectus (and the Representative shall
have received such number of additional conformed copies of such
accountants' letter as the Representative shall reasonably request).
(b) Compliance with Registration Requirements; No Stop Order; No
Material Misstatements or Omissions; No Objection from NASD. For the period
from and after effectiveness of this Agreement and prior to the First
Closing Date and, with respect to the Optional Common Shares, the Second
Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the
29
Registration Statement containing the information required by such
Rule 430A, and such post-effective amendment shall have become
effective; or, if the Company elected to rely upon Rule 434 under the
Securities Act and obtained the Representative's consent thereto, the
Company shall have filed a Term Sheet with the Commission in the
manner and within the time period required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in
effect and no proceedings for such purpose shall have been instituted
or threatened by the Commission;
(iii) the Representative shall not in good faith have advised the
Company that the Registration Statement, or any amendment thereto,
contains an untrue statement of fact that in the reasonable opinion of
the Representative or its counsel is material or omits to state a fact
that in the reasonable opinion of the Representative or its counsel is
material and is required to be stated therein or is necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, or that the Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact
that in the reasonable opinion of you or your counsel is material or
omits to state a fact that in the reasonable opinion of you or your
counsel is material and is required to be stated therein or is
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and which
statement or omission has not been or is not being corrected to your
satisfaction; and
(iv) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the
period from and after the date of this Agreement and prior to the First
Closing Date and, with respect to the Optional Common Shares, the Second
Closing Date:
(i) in the judgment of the Representative there shall not have
occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any securities of the
Company or any of its Subsidiaries by any "nationally recognized
statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act.
(d) Opinion of Counsel for the Company. On each of the First Closing
Date and the Second Closing Date the Representative shall have received the
favorable opinion of Squire, Xxxxxxx & Xxxxxxx LLP, counsel for the
Company, dated as of
30
such Closing Date, the form of which is attached as Exhibit A (and the
Representative shall have received such number of additional conformed
copies of such counsel's legal opinion as the Representative shall
reasonably request).
(e) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and the Second Closing Date the Representative shall have
received the favorable opinion of O'Melveny & Xxxxx LLP, counsel for the
Underwriters, dated as of such Closing Date, with respect to such matter as
the Representative and its counsel shall reasonably determine as necessary.
(f) Officers' Certificate. On each of the First Closing Date and the
Second Closing Date the Representative shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer
or President of the Company and the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of such Closing Date, to the
effect set forth in subsections (b)(ii) and (c)(ii) of this Section 5, and
further to the effect that:
(i) for the period from and after the date of this Agreement and
prior to such Closing Date, there has not occurred any Material Adverse
Change;
(ii) the representations, warranties and covenants set forth in
Section 1 of this Agreement are true and correct with the same force
and effect as though expressly made on and as of such Closing Date; and
(iii) the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior
to such Closing Date.
(g) Bring-down Comfort Letter. On each of the First Closing Date and
the Second Closing Date the Representative shall have received from
Deloitte & Touche LLP, independent public or certified public accountants
for the Company, a letter dated such date, in form and substance
satisfactory to the Representative, to the effect that they reaffirm the
statements made in the letter furnished by them pursuant to subsection (a)
of this Section 5, except that the specified date referred to therein for
the carrying out of procedures shall be no more than three business days
prior to the First Closing Date or Second Closing Date, as the case may be
(and the Representative shall have received such number of additional
conformed copies of such accountants' letter as the Representative shall
reasonably request).
(h) Lock-Up Agreements. On or before the First Closing Date, the
Representatives shall have received an executed copy of each of the Lock-Up
Agreements referred to in Section 3(m) and each such agreement shall be in
full force and effect on each of the First Closing Date and the Second
Closing Date.
(i) Resort-Related Documents. On or before the First Closing Date, the
Company or, the Subsidiaries, Affiliated Companies or Related Partnerships,
as applicable, shall have made available to the Representative or its
counsel with
31
respect to each Resort, each of which has been received and approved prior
to the date hereof:
(i) Evidence satisfactory to the Underwriters that such Resort is
owned by the Company or the applicable Subsidiary, Affiliated Company
or Related Partnership, subject to the prior sale of any Vacation
Ownership Interests at such Resort;
(ii) Policies or certificates of insurance relating to the Resort
evidencing coverages and in amounts customarily obtained by owners of
similar Resorts;
(iii) UCC, judgment and tax lien searches confirming that the
personal property comprising a part of the Resort is subject to no
liens;
(iv) An engineering (structural) report from an engineer or
engineers, together with Phase I environmental reports (or Phase II
environmental reports if recommended by the Company's environmental
engineers or counsel), each in a form satisfactory to the
Representative, respecting each Resort; and
(v) If such Resort is subject to an existing mortgage that will
be prepaid in whole or in part from the proceeds of the offering (an
"Existing Mortgage") as set forth on Schedule E, a letter dated not
earlier than ten days prior to the First Closing Date from the holder
of such Existing Mortgage indicating that the mortgagor or grantor
under such Existing Mortgage is not then in default and indicating the
principal amount required to satisfy all amounts then secured by such
Existing Mortgage and the additional amount required for each day after
the date of such letter necessary to satisfy all obligations secured
thereby, together with all documentation and consents necessary to
permit the repayment of all amounts owed and, if applicable, the
release of the Existing Mortgage.
(j) Written Assurances under the Existing Instruments. On or before
the First Closing Date, the Company shall have made available to the
Representative or its counsel the written consents referred to in Section
1(n), clause (iii) (regarding, among other matters, the absence of any
default under the Existing Instruments).
(k) Nasdaq National Market Inclusion. The Common Shares shall have
been approved for inclusion in the Nasdaq National Market System, subject
only to official notice of issuance.
(l) Opinion of Local Timeshare Counsel. On each of the First Closing
Date and the Second Closing Date the Representative shall have received the
favorable opinion of local counsel reasonably acceptable to the
Representative, each a special real estate and timeshare counsel for the
Company, dated as of such Closing Date, the form of which is attached as
Exhibit B (and the Representative shall have received such number of
additional conformed copies of such counsel's legal opinion as the
Representative shall reasonably request).
32
(m) Employment Agreements. On or before the First Closing Date, the
Representatives shall have received an executed copy of each of the
Employment Agreements referred to in Section 3(o) and each such agreement
shall be in full force and effect on each of the First Closing Date and the
Second Closing Date.
(n) Additional Documents. On or before each of the First Closing Date
and the Second Closing Date, the Representative and counsel for the
Underwriters shall have received such information, documents and opinions
as they may require in their sole discretion for the purposes of enabling
them to pass upon the issuance and sale of the Common Shares as
contemplated in this Agreement, or in order to evidence the accuracy of any
of the representations and warranties, or the satisfaction of any of the
conditions or agreements, contained in this Agreement.
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Representative
by notice to the Company at any time on or prior to the First Closing Date and,
with respect to the Optional Common Shares, at any time prior to the Second
Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 4, Section 6, Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this Agreement is
terminated by the Representative pursuant to Section 5, Section 7, Section 10 or
Section 11, or if the sale to the Underwriters of the Common Shares on the First
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company to perform any agreement in this Agreement or to comply
with any provision of this Agreement, the Company agrees to reimburse the
Representative and the other Underwriters (or such Underwriters as have
terminated this Agreement with respect to themselves), severally, upon demand
for all out-of-pocket expenses that shall have been reasonably incurred by the
Representative and the Underwriters in connection with the proposed purchase and
the offering and sale of the Common Shares, including, without limitation, to
fees and disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall not become effective until the later of (i) the
execution of this Agreement by the parties hereto and (ii) notification by the
Commission to the Company and the Representative of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any
party by notice to each of the other parties hereto, and any such termination
shall be without liability on the part (a) of the Company to any Underwriter,
except that the Company shall be obligated to reimburse the expenses of the
Representative and the
33
Underwriters pursuant to Sections 4 and 6 hereof, (b) of any Underwriter to the
Company, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Underwriters. The Company and its
Subsidiaries, Affiliated Companies and Related Partnerships agree to
indemnify and hold harmless each Underwriter, its officers and employees,
and each person, if any, who controls any Underwriter within the meaning of
the Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Underwriter or such
controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, 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 loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based (i) upon any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule 434
under the Securities Act, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) upon any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; or (iii) in whole or in part
upon any inaccuracy in the representations and warranties contained in this
Agreement; or (iv) in whole or in part upon any failure of the Company to
perform its obligations under this Agreement or under law; or (v) any act
or failure to act or any alleged act or failure to act by any Underwriter
in connection with, or relating in any manner to, the Common Stock or the
offering contemplated by this Agreement, and which is included as part of
or referred to in any loss, claim, damage, liability or action arising out
of or based upon any matter covered by clause (i) or (ii) above, provided,
however, that the Company shall not be liable under this clause (v) to the
extent that a court of competent jurisdiction shall have determined by a
final (non-appealable) judgment that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken
or omitted to be taken by such Underwriter through its gross negligence or
willful misconduct; and to reimburse each Underwriter and each such
controlling person for any and all expenses (including, without limitation,
the fees and disbursements of counsel chosen by EVEREN Securities, Inc.) 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 foregoing indemnity agreement shall
34
not apply to any loss, claim, damage, liability or expense to the extent,
but only to the extent, arising out of or based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Representative expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto); and provided, further, that with respect to any
preliminary prospectus, the foregoing indemnity agreement shall not inure
to the benefit of any Underwriter from whom the person asserting any loss,
claim, damage, liability or expense purchased Common Shares, or any person
controlling such Underwriter, if copies of the Prospectus were timely
delivered to the Underwriter pursuant to Section 2 and a copy of the
Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of
the Common Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense. The indemnity agreement set forth in this
Section 8(a) shall be in addition to any liabilities that the Company may
otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to 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 Securities Act or the Exchange Act,
against any loss, claim, damage, liability or expense, as incurred, to
which the Company, or any such director, officer or controlling person may
become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, 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 loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is 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
written information furnished to the Company by the Representative
expressly for use therein; and to reimburse the Company, or any such
director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. The Company hereby acknowledges that the only information that the
Underwriters have furnished to the Company expressly for use in the
Registration Statement, any
35
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) are the statements set forth (A) as the last paragraph on the
inside front cover page of the Prospectus concerning stabilization and
passive market making by the Underwriters and (B) in the table in the first
paragraph and as the second paragraph [second and [___] paragraphs] under
the caption "Underwriting" in the Prospectus; and the Underwriters confirm
that such statements are correct. The indemnity agreement set forth in this
Section 8(b) shall be in addition to any liabilities that each Underwriter
may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 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 8, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
for contribution or otherwise than under the indemnity agreement contained
in this Section 8 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 shall elect, jointly
with all other indemnifying parties similarly notified, by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided,
however, 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 a conflict may arise 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 such indemnifying party's 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 8 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 separate counsel 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 (together with local
counsel), approved by the indemnifying party (EVEREN Securities, Inc. in
the case of Section 8(b) and Section 9), representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party
shall not have employed counsel 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.
36
(d) Settlements. The indemnifying party under this Section 8 shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 8(c) hereof, the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement, compromise or consent to
the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been
a party and indemnity was or could have been sought hereunder by such
indemnified party, unless such settlement, compromise or consent includes
an unconditional release of such indemnified party from all liability on
claims that are the subject matter of such action, suit or proceeding.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any reason held
to be unavailable to or otherwise insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount paid or payable by such indemnified party, as incurred, as a
result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other hand, from the offering of the Common Shares pursuant to this Agreement 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, on the one hand, and the Underwriters, on the other hand, 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 relative benefits received by the Company, on the one hand,
and the Underwriters, on the other hand, in connection with the offering of the
Common Shares pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Common
Shares pursuant to this Agreement (before deducting expenses) received by the
Company, and the total underwriting discount received by the Underwriters, in
each case as set forth on the front cover page of the Prospectus (or, if Rule
434 under the Securities Act is used, the corresponding location on the Term
Sheet) bear to the aggregate initial public offering
37
price of the Common Shares as set forth on such cover. The relative fault of the
Company, on the one hand, and the Underwriters, on the other hand, shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company and
any of its Subsidiaries, Affiliated Companies or Related Partnerships, on the
one hand, or the Underwriters, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The 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 8(c), 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 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall
be required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several, and not joint, in proportion to their
respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the several Underwriters shall fail or refuse to purchase Common Shares
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of
38
the Common Shares to be purchased on such date, the other Underwriters shall be
obligated, severally, in the proportions that the number of Firm Common Shares
set forth opposite their respective names on Schedule A bears to the aggregate
number of Firm Common Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as may be specified by
the Representative with the consent of the non-defaulting Underwriters, to
purchase the Common Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase on such date. If, on the First Closing
Date or the Second Closing Date, as the case may be, any one or more of the
Underwriters shall fail or refuse to purchase Common Shares and the aggregate
number of Common Shares with respect to which such default occurs exceeds 10% of
the aggregate number of Common Shares to be purchased on such date, and
arrangements satisfactory to the Representative and the Company for the purchase
of such Common Shares are not made within 48 hours after such default, this
Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 4, Section 6, Section 8 and Section 9
shall at all times be effective and shall survive such termination. In any such
case either the Representative or the Company shall have the right to postpone
the First Closing Date or the Second Closing Date, as the case may be, but in no
event for longer than seven days in order that the required changes, if any, to
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First Closing
Date this Agreement maybe terminated by the Representative by notice given to
the Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD, (ii) a general
banking moratorium shall have been declared by any of federal, New York or
Chicago authorities, (iii) there shall have occurred any outbreak or escalation
of national or international hostilities or any crisis or calamity, or any
change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change in
United States' or international political, financial or economic conditions, as
in the judgment of the Representative is material and adverse and makes it
impracticable to market the Common Shares in the manner and on the terms
described in the Prospectus or to enforce contracts for the sale of securities,
(iv) in the judgment of the Representative there shall have occurred any
Material Adverse Change, (v) the Company or any of its Subsidiaries, Affiliated
Companies or Related Partnerships shall have sustained a loss
39
by strike, fire, flood, earthquake, accident or other calamity of such character
as in the judgment of the Representative may interfere materially with the
conduct of the business and operations of the Company regardless of whether or
not such loss shall have been insured, or (vi) there shall have been any action
initiated against the Company or any of its Subsidiaries, Affiliated Companies
or Related Partnerships respecting any license to offer the sale of or the sale
of interests in timeshare resorts. Any termination pursuant to this Section 11
shall be without liability on the part of (a) the Company to any Underwriter,
except that the Company shall be obligated to reimburse the expenses of the
Representative and the Underwriters pursuant to Sections 4 and 6 hereof, (b) any
Underwriter to the Company, or (c) of any party hereto to any other party except
that the provisions of Section 8 and Section 9 shall at all times be effective
and shall survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company and its Subsidiaries, Affiliated Companies and Related
Partnerships, and of their respective 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 Common Shares sold under this Agreement and any termination of this
Agreement.
SECTION 13. NOTICES. All communications under this Agreement shall
be in writing and, if sent to the Representative shall be mailed, hand delivered
or telecopied and confirmed to EVEREN Securities, Inc., at 00 X. Xxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, XX 00000, Facsimile: (000) 000-0000, Attention: Xx. Xxx X.
Xxxxx with a copy to O'Melveny & Xxxxx LLP at Embarcadero Center West, 000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000, Facsimile:
(000) 000-0000, Attention: Xxxxx X. Xxxxx, Esq.; and if sent to the Company
shall be mailed, delivered or telecopied and confirmed to ILX Resorts,
Incorporated, at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000,
Facsimile: (000) 000-0000, Attention: Xx. Xxxxxx X. Xxxxxxx with a copy to
Squire, Xxxxxxx & Xxxxxxx L.L.P. at Two Renaissance Square, 00 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Facsimile: (000) 000-0000,
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties to this Agreement, including any substitute
Underwriters pursuant to Section 10 of this Agreement, and to the benefit of the
employees, officers and directors and controlling persons referred to in Section
8 and Section 9, and in each case their respective successors, and personal
representatives, and no other
40
person will have any right or obligation under this Agreement. The term
"successors" shall not include any purchaser of the Common Shares as such from
any of the Underwriters merely by reason of such purchase.
SECTION 15. 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 of this Agreement. 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 16.
(a) GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the City and County of San Francisco or the
courts of the State of California in each case located in the City and County of
San Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
(c) Waiver of Immunity. With respect to any Related Proceeding, each
party irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without
41
limitation, any immunity pursuant to the United States Foreign Sovereign
Immunities Act of 1976, as amended.
SECTION 17. GENERAL PROVISIONS. 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 subject matter of this Agreement. This Agreement may be
executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and to this Agreement were
upon the same instrument. This Agreement may not be amended or modified unless
in writing by all of the parties to this Agreement, and no condition in this
Agreement (express or implied) may be waived unless waived in writing by each
party whom the condition is meant to benefit. The Table of Contents and the
Section headings in this Agreement are for the convenience of the parties only
and shall not affect the construction or interpretation of this Agreement. In
this Agreement, unless the context otherwise requires, (i) singular words shall
connote the plural number as well as the singular and vice versa, and the
masculine shall include the feminine and the neuter, and (ii) all references to
particular articles, Sections, subsections, clauses or exhibits are references
to articles, Sections, subsections, clauses or exhibits of this Agreement.
Each of the parties to this Agreement acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions of this Agreement, including, without
limitation, the indemnification provisions of Section 8 and the contribution
provisions of Section 9, and is fully informed regarding said provisions. Each
of the parties to this Agreement further acknowledges that the provisions of
Sections 8 and 9 to this Agreement fairly allocate the risks in light of the
ability of the parties to investigate the Company, its affairs and its business
in order to assure that adequate disclosure has been made in the Registration
Statement, any preliminary prospectus and the Prospectus (and any amendments and
supplements thereto), as required by the Securities Act and the Exchange Act.
[signature page follows]
42
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies of this
Agreement, whereupon this instrument, along with all counterparts hereof, shall
become a binding agreement in accordance with its terms.
Very truly yours,
ILX RESORTS, INCORPORATED,
an Arizona corporation
By:
Xxxxxx X. Xxxxxxx
Chief Executive Officer
LOS ABRIGADOS PARTNERS LIMITED
PARTNERSHIP, an Arizona limited partnership
By:
VCA SOUTH BEND INCORPORATED,
an Arizona corporation
By:
VCA TUCSON INCORPORATED,
an Arizona corporation
By:
SOUTHERN VACATIONS, INC.,
a Florida corporation
S-39
43
By:
GENESIS INVESTMENT GROUP, INC.,
an Arizona corporation
By:
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representative in Chicago, Illinois as of the date first above written.
EVEREN SECURITIES, INC.
Acting as Representative of the
several Underwriters named in
the attached Schedule A.
By EVEREN SECURITIES, INC.
By:
Xxx X. Xxxxx
Managing Director
S-40
44
SCHEDULE A
UNDERWRITERS
Number of
Firm Shares to
be Purchased
----------------------------
EVEREN Securities, Inc 000,000
000,000
000,000
000,000
000,000
000,000
000,000
000,000
000,000
000,000
000,000
000,000
000,000
000,000
000,000
---------
Total 2,500,000
=========
45
SCHEDULE B
CERTAIN SUBSIDIARIES
[TO BE UPDATED BY COMPANY COUNSEL]
CORPORATE ENTITIES:
AVC Development Incorporated, an Arizona corporation
Genesis Investment Group, Inc., an Arizona corporation
Capital Reserve Fund, Inc., an Arizona corporation
Harbor Southwest Development, Inc., an Arizona corporation
High Income Fund, Inc., an Arizona corporation
Laveen Properties, Inc., an Arizona corporation
Lomacasi Resort Incorporated, an Arizona corporation
Pilot Service Corp., an Arizona corporation
Short Term Fund, Inc., an Arizona corporation
Syracuse Project Incorporated, an Arizona corporation
Golden Eagle Realty, Inc., a Colorado corporation
Golden Eagle Resort, Inc., an Arizona corporation
ILE Florida, Inc., an Arizona corporation
Southern Vacations, Inc., a Florida corporation
ILE Sedona , an Arizona corporation
Xxxx'x Ranch Water Company, an Arizona corporation
Sedona Worldwide Incorporated (previously Red Rock Collection Incorporated), an
Arizona corporation
SW Resorts Incorporated (previously Sedona Worldwide Incorporated), an Arizona
46
corporation
SHI Health Institute Incorporated, an Arizona corporation
Varsity Clubs of America Incorporated, an Arizona corporation
VCA Iowa Incorporated, an Arizona corporation
VCA Management Incorporated, an Arizona corporation
VCA South Bend Incorporated, an Arizona corporation
VCA Tucson Incorporated, an Arizona corporation
PARTNERSHIPS/JOINT VENTURES:
Los Abrigados Partners Limited Partnership, an Arizona limited partnership (in
which ILE Sedona Incorporated is General Partner (71%); and ILX Incorporated is
Class A Limited Partner (7.5%))
Orangemen Club Limited Partnership, a New York limited partnership (in which
Syracuse Project Incorporated is General Partner (80%))
The Sedona Real Estate Limited Partnership #1, an Arizona limited partnership
(in which Lomacasi Resort Incorporated is General Partner (75%))
VCASB Partners General Partnership, an Arizona general partnership (in which the
general partners are VCA South Bend Incorporated (50%) and ILX Incorporated
(50%))
NON-PROFIT ENTITIES:
Arizona Vacation Club, an Arizona non-profit corporation
Golden Eagle Resort Condominium Association, Inc., a Colorado non-profit
corporation
Xxxx'x Ranch Owners Association, an Arizona non-profit corporation
Sedona Vacation Club Incorporated, an Arizona non-profit corporation
Varsity Clubs of America--Iowa Chapter, an Arizona non-profit corporation
Varsity Clubs of America--Norman, Oklahoma, an Arizona non-profit corporation
Varsity Clubs of America--South Bend Chapter, an Arizona non-profit corporation
47
Varsity Clubs of America--Tucson Chapter, an Arizona non-profit corporation
48
SCHEDULE C
CERTAIN EXISTING INSTRUMENTS
[TO BE COMPILED BY COMPANY COUNSEL]
49
SCHEDULE D
CERTAIN INTELLECTUAL PROPERTY RIGHTS
[TO BE COMPILED BY COMPANY COUNSEL]
50
SCHEDULE E
DEBT TO BE RETIRED
[TO BE COMPILED BY COMPANY COUNSEL]
51
EXHIBIT A
FORM OF COMPANY COUNSEL OPINION
The final opinion in draft form should be attached as Exhibit A at the time this
Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to Section
5(d) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements
thereto at the Closing Date.
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Arizona.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Underwriting Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except for such
jurisdictions (other than the State of Arizona) where the failure to so
qualify or to be in good standing would not, individually or in the
aggregate, result in a Material Adverse Change.
(iv) Each Subsidiary and Affiliated Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and, to the best knowledge of such counsel, is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except for such jurisdictions where the failure to so qualify or
to be in good standing would not, individually or in the aggregate, result
in a Material Adverse Change. Each Related Partnership has been duly formed
and is validly existing as a partnership in good standing under the laws of
the jurisdiction of its formation, with full power and authority
(partnership and other) to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified
as a foreign partnership to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in
good standing would not, individually or in the aggregate, result in a
Material Adverse Change.
A-48
52
(v) All of the issued and outstanding capital stock of each such
Subsidiary and Affiliated Company has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company,
directly or through Subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or, to the best knowledge of such
counsel, any pending or threatened claim.
(vi) The authorized, issued and outstanding capital stock of the
Company (including the Common Stock) conform to the descriptions thereof
set forth in the Prospectus. All of the outstanding shares of Common Stock
have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with the registration and
qualification requirements of federal and state securities laws. The form
of certificate used to evidence the Common Stock is in due and proper form
and complies with all applicable requirements of the charter and by-laws of
the Company and the General Corporation Law of the State of Arizona. The
description of the Company's stock option, stock bonus and other stock
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.
(vii) No stockholder of the Company or its Subsidiaries or Affiliated
Companies or any other person has any preemptive right, right of first
refusal or other similar right to subscribe for or purchase securities of
the Company or its Subsidiaries or Affiliated Companies.
(viii) The Common Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to the
Underwriting Agreement and, when issued and delivered by the Company
pursuant to the Underwriting Agreement against payment of the consideration
set forth therein, will be validly issued, fully paid and nonassessable.
(ix) The Registration Statement and the Rule 462(b) Registration
Statement, if any, has been declared effective by the Commission under the
Securities Act. To the best knowledge of such counsel, no stop order
suspending the effectiveness of either of the Registration Statement or the
Rule 462(b) Registration Statement, if any, has been issued under the
Securities Act and no proceedings for such purpose have been instituted or
are pending or are contemplated or threatened by the Commission. Any
required filing of the Prospectus and any supplement thereto pursuant to
Rule 424(b) under the Securities Act has been made in the manner and within
the time period required by such Rule 424(b).
(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Prospectus including any document incorporated by reference
therein, and each amendment or supplement to the Registration Statement and
the Prospectus including any document incorporated by reference therein, as
of their respective effective or issue dates (other than the financial
statements and supporting schedules included or incorporated by reference
therein or in exhibits to
A-49
53
or excluded from the Registration Statement, as to which no opinion need be
rendered) comply as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
(xi) The Common Shares have been approved for inclusion on the Nasdaq
National Market.
(xii) The statements (i) in the Prospectus under the captions "Risk
Factors," "Description of Capital Stock," "Management's Discussion and
Analysis and Results of Operations--Liquidity," "Business--Litigation,"
"Business--Intellectual Property," "Certain Relationships and Related
Transactions," "Shares Eligible for Future Sale," "Certain United States
Income Tax Considerations" and "Underwriting" and (ii) in Item 14 and Item
15 of the Registration Statement, insofar as such statements constitute
matters of law, summaries of legal matters, the Company's charter or by-law
provisions, documents or legal proceedings, or legal conclusions, has been
reviewed by such counsel and fairly present and summarize, in all material
respects, the matters referred to therein.
(xiii) There are no legal or governmental actions, suits or proceedings
pending or threatened which are required to be disclosed in the
Registration Statement, other than those disclosed therein.
(xiv) The sale of Vacation Ownership Interests by the Company and each
of Subsidiary, Affiliated Company and Related Partnership do not constitute
"securities" under the Securities Act. Neither the offer, the sale nor the
issuance of Vacation Ownership Interests by the Company or any of the
Subsidiaries, Affiliated Companies or Related Partnerships requires
registration under the Securities Act or under the securities laws of any
state nor does the fact that such interests are outstanding require
registration under the Exchange Act.
(xv) There are no Existing Instruments required to be described or
referred to in the Registration Statement or to be filed as exhibits
thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto; and the descriptions thereof
and references thereto are correct in all material respects.
(xvi) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company and its Subsidiaries, Affiliated
Companies or Related Partnerships' execution, delivery and performance of
the Underwriting Agreement and consummation of the transactions
contemplated thereby and by the Prospectus, except as required under the
Securities Act, applicable state securities or blue sky laws and from the
NASD.
(xvii) The execution and delivery of the Underwriting Agreement by the
Company and its Subsidiaries, Affiliated Companies and Related
Partnerships, and the performance by the Company and its Subsidiaries,
Affiliated Companies and
A-50
54
Related Partnerships of their respective obligations thereunder (other
than performance by the Company of its obligations under the
indemnification section of the Underwriting Agreement, as to which no
opinion need be rendered) (i) have been duly authorized by all necessary
corporate or partnership action on the part of the Company and its
Subsidiaries, Affiliated Companies and Related Partnerships; (ii) will not
result in any violation of the provisions of the articles of incorporation,
by-laws, partnership agreement, certificate of partnership or other
organizational document, as applicable, of the Company or its Subsidiary,
Affiliated Companies or Related Partnerships; (iii) will not conflict with
or constitute a breach of, or Default or a Debt Repayment Triggering Event
(as defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
any of its Subsidiaries, Affiliated Companies or Related Partnerships
pursuant to, or require the consent of any other party to, any Existing
Instrument, except for such conflicts, breaches, Defaults, liens, charges
or encumbrances as would not, individually or in the aggregate, result in a
Material Adverse Change; (iv) will not require the consent of any other
party to an Existing Instrument except for such consents which have been
obtained in writing by the Company or a Subsidiary, Affiliated Company or
Related Partnership, as applicable (the "Written Consents"), and (iv) will
not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any Subsidiary,
Affiliated Company or Related Partnership. As used herein, a "Debt
Repayment Triggering Event" means any event or condition which gives, or
with the giving of notice or lapse of time, or both, would give, the holder
of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any of its Subsidiaries, Affiliated Companies or Related
Partnerships.
(xviii) Every Resort is directly owned by the Company or one of its
Subsidiaries, Affiliated Companies or Related Partnerships.
(xix) The Company is not, and after receipt of payment for the Common
Shares will not be, an "investment company" within the meaning of
Investment Company Act.
(xx) Except as disclosed in the Prospectus under the caption "Shares
Eligible for Future Sale", to the best knowledge of such counsel, there are
no persons with registration or other similar rights to have any equity or
debt securities registered for sale under the Registration Statement or
included in the offering contemplated by the Underwriting Agreement, except
for such rights as have been duly waived.
(xxi) Neither the Company nor any of its Subsidiaries, Affiliated
Companies or Related Partnerships is in violation of its charter or by-laws
or any law, administrative regulation or administrative or court decree
applicable to the Company or any of its Subsidiaries, Affiliated Companies
or Related Partnerships or is in Default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
material Existing Instrument, except in each
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such case for such violations or Defaults as would not, individually or in
the aggregate, result in a Material Adverse Change.
(xxii) Each of the Company and each of the Subsidiaries, Affiliated
Companies and Related Partnerships is and, upon consummation of the
offering, will be, in compliance with all federal, state, local and foreign
laws and regulations regarding, without limitation, the underwriting of
loans or extending of credit, and all federal, state, local and foreign
laws and regulations governing all licenses to underwrite loans or extend
credit, including, without limitation, the Truth in Lending Act and
Regulation Z, Equal Opportunity Credit Act and Regulation B, Consumer
Credit Protection Act, Regulation T, and all usury laws to which it is or
may become subject (collectively "Lending Laws"). Each of the Subsidiaries,
Affiliated Companies and Related Partnerships has filed and, upon
consummation of the offering, will file, all required documents and
supporting information in compliance with the Lending Laws.
(xxiii) Title insurance in favor of the Company, Subsidiary, Affiliated
Company or Related Partnership, as applicable, will be in force with
respect to each of the Resorts in an amount reasonably acceptable to the
Representatives.
(xxiv) No person or entity has an option or right of first refusal to
purchase all or any part of any Resorts or Vacation Ownership Interests or
any interest therein.
(xxv) The timeshare industry information and data set forth in the
Registration Statement and the Prospectus was obtained from American Resort
Development Association ("ARDA") pursuant to ARDA's consent and, to the
best knowledge of such counsel, such consent is in full force and effect.
(xxvi) The Proxy Statement of the Company for the Special Meeting of
Stockholders of the Company to be held Friday, January 9, 1998, and all
action taken as a result thereof was in compliance with the Company's
articles of incorporation, by-laws, the Securities Act, the Exchange Act,
and the Nasdaq National Market rules.
(xxvii) ILX Resorts Incorporated, an Arizona corporation, Los Abrigados
Partners Limited Partnership, an Arizona limited partnership, VCA South
Bend Incorporated, an Arizona corporation, VCA Tucson Incorporated, an
Arizona corporation, Southern Vacations, Inc., a Florida corporation, and
Genesis Investment Group, Inc., an Arizona corporation are the only
entities which have beneficial ownership of or an interest in the Resorts
or the Vacation Ownership Interests.
(xxviii) Each Employment Agreement executed pursuant to Section 3(o)
has been duly authorized, executed and delivered by, and is a valid and
binding agreement of, the respective counterparty, enforceable in
accordance with its terms.
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(xxix) Each Lock-Up Agreement executed pursuant to Section 3(m) is in
full force and effect on each of the First Closing Date and the Second
Closing Date and has been duly authorized, executed and delivered by, and
is a valid and binding agreement of, the respective counterparty,
enforceable in accordance with its terms.
(xxx) The Common Shares have been duly designated for quotation by the
Nasdaq National Market as a national market system security upon official
notice of issuance.
(xxxi) The information set forth in the Prospectus to the extent that
it constitutes matters of law or legal conclusions, has been reviewed by
such counsel and is correct in all material respects.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representative of the independent public or certified public accountants
for the Company and with representatives of the Underwriters at which the
contents of the Registration Statement and the Prospectus, and any
supplements or amendments thereto, and related matters were discussed and,
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (other than as
specified above), and any supplements or amendments thereto, on the basis
of the foregoing, nothing has come to their attention which would lead them
to believe that either the Registration Statement or any amendments
thereto, at the time the Registration Statement or such amendments became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date or at the First Closing Date or the Second Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(it being understood that such counsel need express no belief as to the
financial statements or schedules or other financial or statistical data
derived therefrom, included or incorporated by reference in the
Registration Statement or the Prospectus or any amendments or supplements
thereto).
In addition, the opinion, which shall be dated the First Closing Date
or the Second Closing Date, as the case may be, shall be satisfactory in
form and substance to the Underwriters, shall expressly state that the
Underwriters and their counsel may rely on such opinion as if it were
addressed to them and shall be furnished to the Representative.
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EXHIBIT B
FORM OF LOCAL TIMESHARE COUNSEL OPINION
The final opinion in draft form should be attached as Exhibit B at the time this
Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to Section
5(l) of the Underwriting Agreement.
References to the Prospectus in this Exhibit B include any supplements
thereto at the Closing Date.
(i) Each of the Company, its Subsidiaries, Affiliated Companies and
Related Partnerships which owns a Resort or Vacation Ownership Interest has
obtained all necessary approvals and permits from the timeshare authority
of the state in which the subject Resort or Vacation Ownership Interest is
located ("Home State") necessary to offer for sale and sell timeshare
interests and Vacation Ownership 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 ("Home State Timeshare Laws");
(ii) Each of the Company and its Subsidiaries, Affiliated Companies and
Related Partnerships has obtained all necessary approvals and permits from
all authorities of states other than the state where each applicable Resort
or Vacation Ownership Interest is located ("Foreign State") for the
offering for sale and sale of timeshare interests or Vacation Ownership
Interests in such Resort and the offer of purchase money financing
(collectively, the "Foreign State Approvals"), in accordance with the laws
and regulations of the Foreign State located outside of the Foreign State
("Foreign State Timeshare Laws");
(iii) Neither the Company nor its Subsidiaries, Affiliated Companies or
Related Partnerships, have received any written notice from any regulatory
authority that they are in violation of any applicable federal or state law
or regulation regarding the offering for sale and sale of timeshare
interests or Vacation Ownership Interests in the Resorts;
(iv) There are no franchises, licenses, leases, contracts, management
agreement, agreements or other documents (collectively, the "Material
Agreements") entered into by the Company or its Subsidiaries, Affiliated
Companies or Related Partnerships, involving 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 or Vacation Ownership
Interests in the 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;
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(v) To the best of such counsel's knowledge, there are no real estate
or timeshare related governmental actions, governmental suits or
governmental proceedings pending or threatened against any of the Company
or any of its Subsidiaries, Affiliated Companies or Related Partnerships
with respect to the business and property relating to the Resorts;
(vi) 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
governing the sale of the timeshares, (ii) any lender which has a security
interest in the Resorts;
(vii) The consummation by the Company of the transactions contemplated
by the Underwriting Agreement as they relate to the Resorts or Vacation
Ownership Interests do not conflict with or result in a material breach or
violation by the Company or any of its Subsidiaries, Affiliated Companies
or Related Partnerships of: (i) any of the terms and provisions of any
loans which encumber the Resorts or Vacation Ownership Interests, (ii) any
terms or provisions of the Home State Approvals where each of the Resorts
or Vacation Ownership Interests are located; (iii) any terms or provisions
of the Foreign State Approvals;
(viii) The owner of each of the 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 or Vacation Ownership Interests in the applicable
Resorts. The owner of each of the 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 or Vacation Ownership Interests
in the State of Arizona or has contracted with a licensed broker to provide
any of the aforementioned services;
(ix) 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 Resorts
or the Vacation Ownership Interests has been reviewed by such counsel and
fairly present and summarize, in all material respects, the matters
referred to therein.
(x) The Company and each entity which owns a Resort has obtained all
necessary approvals and permits from the timeshare authority of the state
in which the subject Resort is located necessary to offer for sale and sell
timeshare interests or Vacation Ownership Interests and offer purchase
money financing in connection with such sales in accordance with the
applicable laws and regulations of the state in which the Resort is located
governing the marketing and sale of timeshare interests in real property
and all other states where timeshare interests or Vacation Ownership
Interests are offered.
(xi) Each of the Company and each of the Subsidiaries, Affiliated
Companies
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and Related Partnerships is and, upon consummation of the offering, will
be, in compliance with all federal, state, local and foreign laws and
regulations regarding, without limitation, the marketing of offers to sell,
offers to sell, and sales of, timeshare resorts, and all federal, state,
local and foreign laws and regulations governing all licenses to sell and
offer to sell interests in timeshare resorts, including, without
limitation, the Federal Trade Commission Act, Truth-in-Lending Act and
Regulation Z, Equity Opportunity Credit Act and Regulation B, Interstate
Land Sales Full Disclosure Act, Real Estate Settlement Procedures Act,
Consumer Credit Protection Act, Telephone Consumer Protection Act,
Telemarketing and Consumer Fraud and Abuse Prevention Act, Fair Housing Act
and Civil Rights Acts of 1964, 1968 and 1991, and all licensure,
anti-fraud, telemarketing, prize, gift, sweepstakes and labor laws to which
it is or may become subject (collectively "Timeshare Laws").
(xii) The Company and each of its Subsidiaries, Affiliated Companies
and Related Partnerships has good and marketable title to all the
properties and assets, including Vacation Ownership Interests, reflected as
owned in the financial statements referred to in Section 1(i) of the
Underwriting Agreement (or elsewhere in the Prospectus), including, without
limitation, all of the ILX Resorts and the Additional Resorts and the other
vacation ownership interests described in the Prospectus as owned by the
Company and each Subsidiary, Affiliated Company or Related Partnership, in
each case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such
property by the Company or such Subsidiary, Affiliated Company or Related
Partnership. The real property, improvements, equipment and personal
property held under lease by the Company or any Subsidiary, Affiliated
Company or Related Partnership are held under valid and enforceable leases,
with such exceptions as would not have a Material Adverse Change. Each
Company, Subsidiary, Affiliated Company and Related Partnership owns or
leases all such properties as are necessary to operate the Resorts and its
other business as now conducted.
(xiii) Each of the Company and each of the Subsidiaries, Affiliated
Companies and Related Partnerships is and, upon consummation of the
offering, will be, in compliance with all federal, state, local and foreign
laws and regulations regarding, without limitation, the underwriting of
loans or extending of credit, and all federal, state, local and foreign
laws and regulations governing all licenses to underwrite loans or extend
credit, including, without limitation, the Truth in Lending Act and
Regulation Z, Equal Opportunity Credit Act and Regulation B, Consumer
Credit Protection Act, Regulation T, and all usury laws to which it is or
may become subject (collectively "Lending Laws"). Each of the Subsidiaries,
Affiliated Companies and Related Partnerships has filed and, upon
consummation of the offering, will file, all required documents and
supporting information in compliance with the Lending Laws.
In addition, such counsel shall state that they have participated in
conferences
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with officers and other representatives of the Company, representative of
the independent public or certified public accountants for the Company and
with representatives of the Underwriters at which the contents of the
Registration Statement and the Prospectus, and any supplements or
amendments thereto, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as specified above),
and any supplements or amendments thereto, on the basis of the foregoing,
nothing has come to their attention which would lead them to believe that
either the Registration Statement or any amendments thereto, at the time
the Registration Statement or such amendments became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, as of its date or at the First
Closing Date or the Second Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no belief as to the financial
statements or schedules or other financial or statistical data derived
therefrom, included or incorporated by reference in the Registration
Statement or the Prospectus or any amendments or supplements thereto).
In rendering such opinions, each such counsel may rely as to matters of
local law, on opinions of local counsel, and as to matters of fact, on
certificates of officers of the Company or the Company and its
Subsidiaries, Affiliated Companies and Related Partnerships 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.
In addition, the opinion, which shall be dated the First Closing Date
or the Second Closing Date, as the case may be, shall be satisfactory in
form and substance to the Underwriters, shall expressly state that the
Underwriters and their counsel may rely on such opinion as if it were
addressed to them and shall be furnished to the Representative.
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EXHIBIT C
FORM OF INDIVIDUALS' LOCK-UP AGREEMENT
[Pricing Date]
EVEREN Securities, Inc.
As Representative of the Several Underwriters
00 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Re: ILX Resorts, Incorporated (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
Representative of the underwriters. The undersigned recognizes that the Offering
will be of benefit to the undersigned and will benefit the Company by, among
other things, raising additional capital for its operations. The undersigned
acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of EVEREN Securities,
Inc. (which consent may be withheld in its sole discretion), directly or
indirectly, sell, offer, contract or grant any option to sell (including without
limitation any short sale), pledge, transfer, establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act
of 1934, or otherwise dispose of any shares of Common Stock, options or warrants
to acquire shares of Common Stock, or securities exchangeable or exercisable for
or convertible into shares of Common Stock currently or hereafter owned either
of record or beneficially (as defined in Rule 13d-3 under Securities Exchange
Act of 1934, as amended) by the undersigned, or publicly announce the
undersigned's intention to do any of the foregoing, for a period commencing on
the date hereof and continuing through the close of trading on the date 180 days
after the date of the Prospectus. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock held by the
undersigned except in
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compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any rights
to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal Representative, and assigns of the
undersigned.
(printed name of Holder)
(signature)
(printed name of person signing)
(indicate capacity of person signing if signing as
custodian, trustee, or on behalf of an entity)
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