Exhibit 1.3
[FORM OF UNDERWRITING AGREEMENT]
MINIMUM OF 7 MEMBERSHIP INTERESTS
MAXIMUM OF 25 MEMBERSHIP INTERESTS
SARDY HOUSE, LLC
UNDERWRITING AGREEMENT
______________, 2003
X. X. Xxxxxxx & Company
As Underwriter
0000 Xxxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Gentlemen:
Sardy House, LLC, a Colorado limited liability company (the "Company"),
has issued to North and South Aspen, L.L.C., a Colorado limited liability
company (the "Holder"), a total of 25 of the Company's assessable limited
liability company membership interests (the "Membership Interests"), which allow
for exclusive use of the Sardy House in Aspen, Colorado.
The Company and the Holder propose, upon the terms and conditions set
forth herein, to conduct a public offering through X. X. Xxxxxxx & Company, a
Colorado corporation (the "Underwriter"), of up to the total of 25 Membership
Interests held by the Holder, which offering shall be conducted on a "best
efforts, all or none" basis as to a minimum of 7 Membership Interests and on a
"best efforts" basis as to additional Membership Interests up to a maximum of 25
Membership Interests (the "Offering").
In connection with the Offering, the Company and the Holder hereby
agree with the Underwriter as follows (with this agreement being hereinafter
referred to as "this Agreement"):
1. Sales of Membership Interests.
-----------------------------
(a) On the basis of the representations, warranties and
agreements set forth herein, and subject to the terms and conditions
set forth herein and in the Prospectus (as hereinafter defined):
(i) The Company and the Holder appoint the
Underwriter as the exclusive agent to effect sales of the
Membership Interests for the account of the Holder at the
offering price of $750,000 per Membership Interest. This price
may be changed by the Holder at any time after
_______________, 2003. If the price
is decreased it will be decreased for all purchasers, and if
the price is increased it will be increased for all purchasers
who have not as of that date executed subscription agreements
and submitted subscription funds.
(ii) The Underwriter agrees to use its best efforts
as such agent to sell the Membership Interests during the term
hereof.
(b) As compensation for the Underwriter's services in
effecting sales of Membership Interests hereunder, upon the Closing (as
hereinafter defined) of a sale of a Membership Interest pursuant to the
Offering during the term hereof, the Holder shall pay the Underwriter
in certified funds a cash success fee equal to 3.25% of the Total
Transaction Value (as hereinafter defined). Any separate consulting or
advisory compensation to be paid to the Underwriter under that certain
Engagement Agreement among the parties hereto dated May 12, 2003, as
amended on October 3, 2003 and October 15, 2003 (the "Engagement
Agreement"), a copy of which is attached hereto as Exhibit A, shall not
reduce the cash success fee due to the Underwriter upon a Closing of a
sale of a Membership Interest hereunder. Any fee payable to the
Underwriter pursuant to the above provisions shall be computed based
upon the total consideration for the sale of a Membership Interest,
regardless of how allocated or the form of consideration. Therefore,
the "Total Transaction Value" referred to above shall include (i) any
and all deferred installments of the transaction price for the sale of
a Membership Interest and (ii) any portion of the transaction price
held in escrow at Closing.
(c) The Underwriter's appointment hereunder shall continue for
a period (such period, including any extension thereof as hereinafter
provided, being herein called the "Offering Period") until
________________________________ (and for a period of up to _________
additional days if extended by the mutual agreement of the parties
hereto), unless all of the Membership Interests have previously been
subscribed for. The Offering will terminate and all amounts paid by
subscribers to purchase Membership Interests will be promptly returned
to them with interest as provided in the Prospectus and the Escrow
Agreement (as hereinafter defined) (i) if subscriptions for at least 7
Membership Interests have not been received by _________, 2004, subject
to extension by mutual agreement of the parties for up to an additional
30 days, (ii) at any time by mutual agreement of the parties hereto or
(iii) this Agreement shall be terminated as provided herein.
(d) The Underwriter hereby acknowledges that it is a party to
that certain Escrow Agreement dated as of _____________, 2003 (the
"Escrow Agreement") among the Company, the Holder, the Underwriter and
Computershare Trust Company, Inc. (the "Escrow Agent"), a copy of which
is attached hereto as Exhibit B. The Underwriter shall promptly deliver
to the Escrow Agent, by no later than noon of the next business day
after receipt, all checks received by the Underwriter from subscribers
(the "Subscribers") to purchase Membership Interests. All checks
received by the Underwriter from Subscribers shall be made payable to
"Computershare Trust Company, Inc., as Escrow Agent for Sardy House,
LLC." Such checks shall be accompanied by one copy of a subscription
agreement pursuant to which subscriptions to purchase Membership
Interests are to be made, the form of which is attached to the Escrow
Agreement as
2
Exhibit A (the "Subscription Agreement"), properly completed and
executed by the Subscriber. The Underwriter shall promptly deliver to
the Company one photocopy of each Subscription Agreement delivered to
the Escrow Agent. Promptly after receipt of a Subscription Agreement
and the funds therefor by the Escrow Agent and receipt of a copy of the
Subscription Agreement by the Company, the Company shall mail an
interim receipt, in the form attached hereto as Exhibit C, to the
Subscriber.
2. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, the Underwriter that:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form
SB-2 (File No. 333-105521) and will prepare and file one or more
amendments thereto covering the registration of the Offering under the
Securities Act of 1933, as amended (the "Securities Act"), including
the related preliminary prospectuses, each and all such preliminary
prospectuses being herein referred to as the "Preliminary Prospectus,"
and will prepare and proposes to file, prior to the effective date of
such Registration Statement, an additional amendment to such
registration statement, including a final prospectus, copies of which
will be delivered to the Underwriter before the filing thereof. The
Company will not, without the Underwriter's prior consent (which shall
not be unreasonably withheld), file any other amendment thereto prior
to the time such Registration Statement shall become effective or make
any change in such form of final prospectus prior to the time it is
first filed with the Commission pursuant to Rule 424(b) of the rules
and regulations of the Commission under the Securities Act (the "Rules
and Regulations"). Such Registration Statement and prospectus,
including all exhibits thereto, as finally amended and revised at the
time the registration statement becomes effective are hereinafter
referred to, respectively, as the "Registration Statement" and the
"Prospectus," except that, if the prospectus first filed by the Company
pursuant to Rule 424(b) of the Rules and Regulations shall differ from
the Prospectus, the term "Prospectus" shall mean the prospectus first
filed pursuant to Rule 424(b).
(b) When the Registration Statement shall become effective and
at all times subsequent thereto up to and including the time of each
Closing (as hereinafter defined), and, when any post-effective
amendment thereof shall become effective, the Registration Statement
(and any post-effective amendment thereof), including the Prospectus
(and the Prospectus as amended or supplemented, if the Company shall
have filed with the Commission any amendment thereof or supplement
thereto), will fully comply with the applicable provisions of the
Securities Act and the Rules and Regulations thereunder, and the
Registration Statement will not contain any untrue statement of a
material fact and will not omit to state any material fact required to
be stated therein or necessary in order to make the statements therein
not misleading, except that the foregoing does not apply to statements
or omissions in the Registration Statement or the Prospectus, or any
amendment or supplement thereto, based upon information furnished to
the Company by the Underwriter specifically for use therein.
(c) The Company has been duly organized and is validly
existing as a limited liability company in good standing under the laws
of the State of Colorado, and the
3
Company has full power and authority (limited liability company and
other) to own its properties and conduct its business as described in
the Prospectus and as being conducted.
(d) The Membership Interests have been duly authorized, and
have been validly issued to the Holder and are fully paid, and conform
to the description thereof contained in the Prospectus. Each Membership
Interest is governed by the terms and conditions of the Company's
Operating Agreement dated as of March 21, 2003, as amended (the
"Operating Agreement"). The Membership Interests are assessable
pursuant to the provisions of the Operating Agreement whereby members
of the Company shall make required additional capital contributions to
the Company and contributions to the Company for assessments for
operating purposes as provided in the Operating Agreement. The
certificates to be used to evidence the Membership Interests will be in
due and proper form. No further approval or authorization by the Holder
or the sole manager of the Company will be required for the sale of the
Membership Interests as contemplated herein.
(e) This Agreement and the Escrow Agreement have each been
duly authorized, executed and delivered by the Company, and each of
this Agreement and the Escrow Agreement constitutes a legal, valid and
binding obligation of the Company enforceable in accordance with its
terms, except as limited by applicable bankruptcy, insolvency or other
laws of general application affecting the enforcement of creditors'
rights.
(f) The execution and delivery of this Agreement and the
Escrow Agreement and the performance by the Company hereunder and
thereunder will not conflict with, result in a breach or violation of
or constitute a default under any agreement or instrument to which the
Company is a party or the articles of organization of the Company or
the Operating Agreement or any law, order, rule, regulation, decree or
injunction of any jurisdiction, court or governmental agency or body,
and no consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required for the
performance by the Company of this Agreement or the Escrow Agreement or
the consummation by the Company of the transactions contemplated hereby
or thereby, except as may be required under the Securities Act, or
state securities or blue sky laws.
(g) The Prospectus and the Preliminary Prospectus as
originally filed or as amended and supplemented, if the Company shall
have filed with the Commission any amendment thereof or supplement
thereto will fully comply with the applicable provisions of the
Securities Act and the Rules and Regulations and will not contain any
untrue statement of a material fact and will not omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
3. Representations, Warranties and Agreements of the Holder. The Holder
represents and warrants to, and agrees with, the Underwriter that:
4
(a) This Agreement and the Escrow Agreement have each been
duly authorized, executed and delivered by the Holder, and each of this
Agreement and the Escrow Agreement constitutes a legal, valid and
binding obligation of the Holder enforceable in accordance with its
terms, except as limited by applicable bankruptcy, insolvency or other
laws of general application affecting the enforcement of creditors'
rights.
(b) The Holder owns, beneficially and of record, free and
clear of any liens and encumbrances, all 25 of the Membership Interests
being offered under the Registration Statement. Upon delivery of the
payment for such Membership Interests as provided in the Escrow
Agreement, the Holder will convey good title thereto to the purchasers
of the Membership Interests, free and clear of any liens or
encumbrances.
(c) In connection with the completion of the minimum amount of
the Offering, the Holder acknowledges that it is solely obligated and
responsible for the application of the funds released from escrow to
complete repayment of the outstanding indebtedness of the Company and
the Holder to WestStar Bank under that certain construction loan
agreement for the Sardy House property (the "Construction Loan
Agreement"), as disclosed in the Prospectus included in the
Registration Statement.
4. Representations, Warranties and Agreements by the Underwriter. The
Underwriter represents and warrants to, and agrees with, the Company and the
Holder that:
(a) This Agreement and the Escrow Agreement have each been
duly authorized, executed and delivered by the Underwriter, and each of
this Agreement and the Escrow Agreement constitutes a legal, valid and
binding obligation of the Underwriter enforceable in accordance with
its terms, except as limited by applicable bankruptcy, insolvency or
other laws of general application affecting the enforcement of
creditors' rights.
(b) The Underwriter is registered as a broker-dealer with the
Commission and is a member in good standing of the National Association
of Securities Dealers, Inc. ("NASD"). The Underwriter's Membership
Agreement with the NASD authorizes the Underwriter to perform the
business operations necessary for the Underwriter to perform this
Agreement in accordance with its terms. The Underwriter is duly
licensed and authorized to act as a broker-dealer for the sale of
securities in all jurisdictions in which the Underwriter intends to or
will make offers and/or sales of the Membership Interests pursuant to
this Agreement.
(c) In connection with the offer and sale of the Membership
Interests pursuant to this Agreement, the Underwriter shall comply with
all provisions of the Securities Act, the Rules and Regulations and
other federal laws and regulations pertaining to the sales of
securities pursuant to the Offering, the securities or "blue sky" laws
and regulations and other applicable laws and regulations of the states
or other jurisdiction in which the Underwriter will sell the Membership
Interests and the Bylaws and the Rules of Conduct of the NASD,
including all published NASD interpretations thereof, whether issued by
5
the Board of Governors of the NASD, contained in any NASD Notice to
Members or otherwise (the "NASD Rules of Conduct").
(d) The Underwriter will not complete any sales of Membership
Interests until at least five business days after the date on which the
Subscriber receives a copy of the final Prospectus, and shall otherwise
comply with the requirements of Rule 15c2-8 of the Commission. (e) The
Underwriter shall assist the Company in qualifying or registering the
Membership Interests for sale under the laws of such states or
jurisdictions as the Underwriter and the Company shall mutually agree
and shall make no sale of the Membership Interests in any state or
jurisdiction until the Underwriter has been advised by the Company that
the Membership Interests have been duly qualified or registered for
sale therein.
(f) Pursuant to the Underwriter's appointment as agent for the
Company and the Holder as set forth herein, insofar as it is within the
Underwriter's control, the Underwriter shall in good faith use its best
efforts to conduct the Offering in compliance with the Securities Act
and the Rules and Regulations, the NASD Rules of Conduct and the
permit(s) or authorizations issued with respect to the Offering by any
state or other securities regulatory authority, and in this regard:
(i) The Underwriter shall, during the course of the
Offering, and to the extent that the Underwriter or any person
associated with the Underwriter makes any representations in
connection with the Offering other than those set forth in the
Prospectus, not make any untrue statement of a material fact
or omit to state a material fact required to be stated or
necessary to make any statement made not misleading concerning
the Offering or any matters set forth in or contemplated by
the Prospectus.
(ii) The Underwriter shall, prior to the sale of
Membership Interests to any Subscriber, make reasonable
efforts to determine that there are reasonable grounds for
believing that the purchase of the Membership Interests is
suitable for the Subscriber, and the Underwriter will prepare
and maintain for the Underwriter's benefit and for the benefit
of the Company and the Holder, appropriate records to evidence
such determination, which records shall include but not be
limited to information regarding the Subscriber's investment
objectives, investment experience, income, net worth,
financial situation, other investments, and other relevant
information to be set forth in the Subscription Agreement.
Such records shall be maintained by the Underwriter for a
period of at least five years following the termination of the
Offering.
(iii) The Underwriter shall, in the event that the
Underwriter uses any sales materials other than the Prospectus
(which, other than any such materials furnished to the
Underwriter by the Company or the Holder, shall be prepared
and provided solely at the Underwriter's own expense), refrain
from providing any such materials to any prospective investor
unless such materials have been
6
reviewed and approved in advance by the Commission and the
securities regulatory authority of the state or other
jurisdiction in which the materials are to be used, and such
materials are accompanied or preceded by the Prospectus.
(iv) Until the termination of this Agreement, if any
event affecting the Company or the Underwriter should occur
which the Company or its counsel believe should be set forth
in a supplement or amendment to the Prospectus, the
Underwriter agrees to distribute such supplement or amendment
to persons who have previously received a copy of the
Prospectus from the Underwriter and continue to express an
interest in purchasing a Membership Interest, and the
Underwriter further agrees to include such supplement or
amendment in all further deliveries of the Prospectus. The
Company shall, at its own expense, prepare and furnish to the
Underwriter a reasonable number of copies of that supplement
or amendment for such distribution.
(v) The Underwriter shall implement appropriate
procedures designed to ensure that each solicitation and sale
made by the Underwriter and the persons associated with the
Underwriter, and its and their efforts hereunder, will comply
with the terms of this Agreement and the NASD Rules of
Conduct.
(vi) The Underwriter shall not solicit or obtain
referrals for possible Subscribers from real estate brokers or
agents or other persons who are not registered with the
Commission as securities broker-dealers and arrange for the
payment of any compensation to such persons based on the
completion of the sale of Membership Interests to any
referrals therefrom.
(vii) The Underwriter shall at all times comply with
the requirements of Rule 15c2-4 of the Commission, and all
interpretations thereof issued by the Commission or the NASD.
In this regard, upon receipt of any checks from prospective
Subscribers for the purchase of Membership Interests, the
Underwriter shall promptly transmit the same, together with a
copy of the related Subscription Agreement, to the Escrow
Agent by noon of the next business day following the
Underwriter's receipt thereof.
(viii) The Underwriter shall send each Subscriber who
purchases a Membership Interest a confirmation of such
purchase.
5. Closings.
(a) Initial Closing. Subject to the prior termination of the
Offering as provided herein, there shall be a closing (with the initial
closing and each subsequent closing referred to as a "Closing"), at the
offices of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP, 0000 00xx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxx, promptly following the satisfaction of
the minimum conditions of the Offering (or at such other place or time
as the Company and the Holder shall determine) (with the date of such
Closing hereinafter referred to as the "Initial Closing Date"). Such
Closing shall include the following: (i) satisfaction of the minimum
conditions of the Offering as set forth in the Prospectus and the
Escrow Agreement; (ii) satisfaction of the conditions set forth in
Section 8 hereof;
7
(iii) payment for the Membership Interests to the Holder by the release
of funds from the Escrow Account and delivery to the Company of
properly completed and executed Subscription Agreements with respect to
each purchaser; (iv) delivery by the Company of certificates
representing the Membership Interests purchased by each purchaser; (v)
payment of interest earned on amounts held in the Escrow Account to the
respective purchasers as set forth in the Escrow Agreement; (vi)
payment by the Holder of all outstanding indebtedness under the
Construction Loan Agreement as described in the Prospectus and the
delivery by WestStar Bank of appropriate releases of the security
interests in the Company's property held by WestStar Bank to secure
such repayment, along with releases of related personal guaranties of
such repayment; (vii) payment by the Holder to the Underwriter of the
compensation set forth in Section 1(b) hereof for each Membership
Interest sold; and (viii) payment by the Holder of any other referral
or other fees due to any other party in connection each Membership
Interest sold.
(b) Subsequent Closings. Subject to the prior termination of
the Offering as provided herein, there shall be a subsequent Closings
at the discretion of the Company and the Holder with respect to
Subscription Agreements received and accepted after the initial
Closing. Such Closings shall include the following: (i) satisfaction of
the conditions set forth in Section 8 hereof; (ii) payment for the
Membership Interests to the Holder by the release of funds from the
Escrow Account and delivery to the Company of properly completed and
executed Subscription Agreements with respect to each purchaser; (iii)
delivery by the Company of certificates representing the Membership
Interests purchased by each purchaser; (iv) payment of interest earned
on amounts held in the Escrow Account to the respective purchasers as
set forth in the Escrow Agreement; (v) payment by the Holder to the
Underwriter of the compensation set forth in Section 1(b) hereof for
each Membership Interest sold; and (vi) payment by the Holder of any
other referral or other fees due to any other party in connection each
Membership Interest sold.
6. Covenants of the Company and the Holder. The Company and the Holder
covenant and agree with the Underwriter that:
(a) The Company shall use its best efforts to cause the
Registration Statement as filed and any subsequent amendments thereto
to become effective as promptly as possible and shall promptly notify
the Underwriter (i) when the Registration Statement and any amendment
thereto shall have become effective or any supplement to the Prospectus
or any amended Prospectus shall have been filed, (ii) of any request by
the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose, or of the institution
or threatening by the Commission of any investigation or other
proceeding that might result in the suspension of the use of the
Prospectus, or of the suspension of the qualification of the Membership
Interests for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any such purpose or
for the purpose of preventing the use of or noticing a deficiency in
the Prospectus, any amended Prospectus or any supplement thereto. The
Company shall not file any post-effective amendment to the
8
Registration Statement or supplement or amendment to the Preliminary
Prospectus or the Prospectus or, prior to the completion of the
Offering, make any supplement to the Prospectus, unless the Underwriter
shall have been advised thereof and shall not have reasonably
disapproved such amendment or supplement.
(b) If prior to the Initial Closing Date or at any time
thereafter when a prospectus relating to the Membership Interests is
required to be delivered under the Securities Act any event occurs as a
result of which the Preliminary Prospectus or the Prospectus as then
amended or supplemented would, in the Underwriter's reasonable judgment
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Preliminary Prospectus or the
Prospectus to comply with the Securities Act, the Company shall
promptly prepare and file with the Commission an amendment or
supplement which shall correct such statement or omission or an
amendment which shall effect such compliance and, at the Company's
expense, shall prepare and furnish as many copies of any such amendment
or supplement as the Underwriter may reasonably request.
(c) The Company shall furnish to the Underwriter copies of the
Registration Statement, each related Preliminary Prospectus, the
Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the
Underwriter reasonably requests.
(d) The Company shall use its best efforts to arrange for the
qualification or registration of the Membership Interests under the
laws of such jurisdictions as the Underwriter designates and shall
continue such qualifications or registrations in effect so long as
required for the Offering, provided that the Company shall not be
obligated to file any general consent to service of process, or to
qualify as a foreign company or as a dealer in securities in any state
in which it is not now so qualified.
(e) The Holder shall apply the net proceeds from the sale of
the Membership Interests hereunder for the purposes set forth in the
Prospectus.
7. Expenses. The Company and the Holder agree to reimburse the
Underwriter for expenses incurred by the Underwriter in connection with the
Offering and other services performed by the Underwriter for the Company and the
Holder pursuant to the provisions set forth in Section 8 of the Engagement
Agreement.
8. Conditions of the Underwriter's Obligations. The Underwriter's
obligations to use the Underwriter's best efforts to sell the Membership
Interests as provided herein shall be subject to the accuracy of the
representations and warranties of the Company and the Holder as of the date
hereof and at the time of each Closing, to the performance by the Company and
the Holder of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective
prior to the receipt of any funds from Subscribers, and no stop order
suspending the effectiveness of the Registration Statement shall
9
have been issued and no proceedings for that purpose shall have been
instituted, or, to the knowledge of the Company, shall be contemplated,
by the Commission.
(b) The Underwriter shall not have advised the Company that
the Registration Statement or Prospectus, or any amendment or
supplement thereto, contains an untrue statement of fact or omits to
state a fact which the Underwriter has reasonably concluded, after
conferring with the Underwriter's counsel, is in either case material
and in the case of an omission is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) Since the respective dates as of which information is
given in the Prospectus, there shall not have been any change, or any
development involving a prospective change, in the condition (financial
or otherwise) of the Company or in any pending action, suit, proceeding
or investigation involving the Company, whether or not arising from
transactions in the ordinary course of business, that in the
Underwriter's reasonable judgment is material and renders it
impractical or inadvisable to proceed with the completion of the sale
of and payment for the Membership Interests at a Closing.
(d) No notice of disapproval shall have been issued or
proceedings for that purpose shall have been instituted by the
Commission, the NASD, or any state securities or blue sky authority
with respect to the distribution arrangements relating to the Offering.
9. Indemnification and Contribution.
(a) The Company and the Holder, jointly and severally, shall
indemnify and hold harmless the Underwriter, and shall indemnify and
hold harmless to the fullest extent permitted by law each of the
Underwriter's officers, directors, employees, representatives, agents
and each person, if any, who controls the Underwriter within the
meaning of the Securities Act, against any and all losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements (including without limitation reasonable
fees and disbursements of counsel) to which the Underwriter or such
person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, obligations, penalties,
judgments, awards, liabilities, costs, expenses and disbursements are
related to or arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any
Preliminary Prospectus, or are related to or arise out of the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and shall reimburse the Underwriter and each such person
for all reasonable expenses as may be incurred by the Underwriter or
such person in connection with investigating, preparing or defending
any such action or claim, whether or not in connection with pending or
threatened litigation or administrative proceedings; provided, that
neither the Company nor the Holder shall be liable in any such case to
the extent that any such loss, claim, damage, obligation, penalty,
judgment, award, liability, cost, expense or disbursement is related to
or arises out of an untrue statement or alleged untrue statement or
omission or alleged omission made in any of such documents in
10
reliance upon and in conformity with information furnished to the
Company or the Holder by the Underwriter for use therein; and provided
further, that the indemnity agreement contained in this Section 9(a)
with respect to any Preliminary Prospectus shall not inure to the
benefit of the Underwriter or of any such person on account of any such
loss, claim, damage, obligation, penalty, judgment, award, liability,
cost, expense or disbursement related to or arising out of the sale of
any of the Membership Interests to any person if the Underwriter shall
have failed to send or give to such person with or prior to the
delivery to the Underwriter by such person of a Subscription Agreement,
a copy of the Prospectus or the Prospectus as amended or supplemented,
if any amendments or supplements thereto shall have been furnished by
the Company to the Underwriter at or prior to the time of receipt by
the Underwriter of such person's Subscription Agreement, to the extent
that any such loss, claim, damage, obligation, penalty, judgment,
award, liability, cost, expense or disbursement results from an untrue
statement or an omission which was corrected in the Prospectus or the
Prospectus as amended or supplemented. This indemnity agreement shall
be in addition to any liability which the Company or the Holder may
otherwise have.
(b) The Underwriter shall indemnify and hold harmless each of
the Company and the Holder, and shall indemnify and hold harmless to
the fullest extent permitted by law each of their respective officers,
directors, managers, employees, representatives, agents and each
person, if any, who controls the Company or the Holder within the
meaning of the Securities Act, against any and all losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements (including without limitation reasonable
fees and disbursements of counsel) to which the Company or the Holder
or any such person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses and
disbursements are related to or arise out of any untrue statement by
the Underwriter or any person associated with the Underwriter of a
material fact not contained in the Prospectus or the omission or
alleged omission to state a material fact necessary to make any such
statement of a material fact not contained in the Prospectus made by
the Underwriter or any person associated with the Underwriter not
misleading, or are related to or arise out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any Preliminary Prospectus or are related to or arise out
of 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 such case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission therein was made in reliance upon and in
conformity with information furnished to the Company or the Holder by
the Underwriter for use therein; and shall reimburse each of the
Company and the Holder and each such person for all reasonable expenses
as may be incurred by the Company or the Holder or such person in
connection with investigating, preparing or defending any such action
or claim, whether or not in connection with pending or threatened
litigation or administrative proceedings. This indemnity agreement will
be in addition to any liability which the Underwriter may otherwise
have.
11
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an
indemnifying party under this Section 9, notify the indemnifying party
or parties of the commencement thereof; but any delay or failure to so
notify an indemnifying party shall relieve it from any liability which
it may have to any indemnified party under this Section 9 only to the
extent, if at all, that the indemnifying party is prejudiced by reason
of such failure or delay. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section
9 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than
reasonable costs of investigation. An indemnifying party against whom
indemnity may be sought shall not be liable to indemnify an indemnified
party under this Section 9 if any settlement of any such action is
effected without such indemnifying party's consent.
(d) If the indemnification provided for in subsection (a), (b)
or (c) of this Section 9 is for any reason, other than as specified in
such subsections, unavailable and the Company, the Holder or the
Underwriter have been required to pay damages as a result of a
determination by a court that the Registration Statement, any
Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or the
Underwriter or any person associated with the Underwriter made any
untrue statement of a material fact not contained in the Prospectus or
the omission or alleged omission to state a material fact necessary to
make any such statement of a material fact not contained in the
Prospectus made by the Underwriter or any person associated with the
Underwriter not misleading, then the Company and the Holder, jointly
and severally, shall contribute to the damages paid by the Underwriter
or persons related to the Underwriter that are subject to the
indemnification provisions above, and the Underwriter shall contribute
to the damages paid by the Company and the Holder or the persons
related to the Company or the Holder that are subject to the
indemnification provisions above, but in each case only to the extent
that such damages relate to or arise out of such untrue statement or
omission in such proportion as is appropriate to reflect the relative
fault of the Company and the Holder on the one hand and the Underwriter
on the other hand in connection with the statements or omissions which
resulted in such damages, as well as any other relevant equitable
considerations. The relative fault of the Company and the Holder on the
one hand and the Underwriter on the other hand shall be determined by
reference to, among other things, whether the untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the Company or the Holder on the one hand or by
the Underwriter on the other hand, and the parties' relevant intent,
knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Holder and the
Underwriter agree that it would not be just and equitable if their
respective obligations to contribute pursuant to this Section 9(d)
12
were to be determined by pro rata allocation of the aggregate damages
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
sentence. For purposes of this Section 9(d), the term "damages" shall
include any legal or other expenses reasonably incurred by the Company,
the Holder or the Underwriter in connection with investigating or
defending against any action or claim which is the subject of the
contribution provisions of this Section 9(d). 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.
(e) The provisions of this Section 9 shall survive the
expiration or termination of this Agreement, including a termination
resulting from the completion of the Offering.
10. Termination. This Agreement may, subject to the other provisions
hereof, be terminated as follows:
(a) The Company and the Holder shall have the right to
terminate this Agreement and the Offering at any time in their sole
discretion, by giving written notice to the Underwriter of such
termination.
(b) Except as otherwise provided herein, this Agreement shall
terminate upon the expiration or termination of the Offering, whether
by expiration of the Offering Period, completion of the Offering or
otherwise.
11. Survival of Indemnities, Representations and Warranties. The
respective indemnities, agreements, representations and warranties of the
Company, the Holder and the Underwriter set forth in or made pursuant to this
Agreement shall remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriter, the Holder or the Company, or any of their respective officers,
directors, managers or controlling persons, and will survive payment to the
Holder for the sale of the Membership Interests hereunder. If this Agreement is
terminated pursuant to Section 10 hereof or if for any reason the sale of the
Membership Interests is not completed, the Company and the Holder shall remain
responsible for the expenses to be paid or reimbursed by them to the Underwriter
pursuant to Section 7 hereof and the indemnification provisions pursuant to
Section 9 hereof shall remain in effect.
12. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
days after deposit in the United States mail, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one day after
delivery to any overnight courier, or when transmitted by facsimile transmission
facilities, and addressed to the party to be notified as follows:
If to the Underwriter: X. X. Xxxxxxx & Company
0000 Xxxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
13
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Rothgerber Xxxxxxx & Xxxxx LLP
One Xxxxx Center, Suite 0000
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
If to the Company or Holder: North and South Aspen, L.L.C.
c/o Hotel Lenado
000 X. Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxx, Esq.
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
13. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, their respective successors and permitted
assigns, and the other indemnified persons referred to in Section 9 hereof and
their respective successors, representatives and permitted assigns. No other
person shall have any right or obligation hereunder.
14. Entire Agreement. This Agreement, along with the provisions of the
Engagement Agreement which are not inconsistent herewith, constitutes the entire
agreement among the parties with respect to the subject matter hereof.
15. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Colorado without regard to the
principles of the conflicts of laws.
16. Severability. The invalidity, legality or enforceability of any
provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision. If any provision is held to be
unenforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.
17. Amendments or Waiver. This Agreement may be amended or modified
only by a writing signed by all of the parties hereto. No delay or omission by
any party in exercising any right with respect thereto shall operate as a
waiver. A waiver on any one occasion shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion.
14
18. Assignment. No party hereto or indemnified person referred to in
Section 9 may assign its or such person's rights or obligations hereunder
without the prior written consent of the other parties hereto, which consent
shall not be unreasonably withheld.
19. Further Assurances. The parties agree and covenant that they will
execute such other and further instruments and documents as are or may become
necessary or advisable to effectuate the terms of this Agreement.
20. Execution and Counterparts. Each individual signatory hereto
acknowledges that he or she is legally authorized to sign this Agreement on
behalf of any entity associated with his or her signature hereto. This Agreement
may be executed in counterparts, all of which, taken together, shall constitute
a single agreement. Counterpart signature pages may be delivered by fax
transmission.
[Remainder of page intentionally left blank]
15
If the foregoing is in accordance with the Underwriter's understanding
of this Agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it shall become a binding agreement among the Company, the Holder and
the Underwriter in accordance with its terms.
Very truly yours,
COMPANY:
SARDY HOUSE, LLC,
a Colorado limited liability company
By: BLOCK 66, LLC,
a Colorado limited liability company
By:
---------------------------------
Xxxxxx X. Xxxxxx, Manager
HOLDER:
NORTH AND SOUTH ASPEN, L.L.C.,
a Colorado limited liability company
By:
-------------------------------------
Xxxxxx X. Xxxxxx, Manager
The foregoing Underwriting Agreement is herein confirmed and accepted as of the
date first above written.
UNDERWRITER:
X. X. XXXXXXX & COMPANY,
a Colorado corporation
By:
-------------------------------------------------
Xxxxx X. Xxxxxxx, President
16
EXHIBIT A
---------
ENGAGEMENT AGREEMENT
[Engagement Agreement]
A-1
EXHIBIT B
---------
ESCROW AGREEMENT
[Escrow Agreement]
B-1
EXHIBIT C
---------
INTERIM RECEIPT
SARDY HOUSE, LLC
This Interim Receipt evidences the receipt from the Subscriber to
purchase named below of $__________________ in payment with respect to a
Subscription Agreement for the purchase of assessable limited liability company
membership interests (the "Membership Interests") of Sardy House, LLC, a
Colorado limited liability company. Such amount shall be promptly deposited with
the Escrow Agent pursuant to the Escrow Agreement referred to in the prospectus
for the offering of such Membership Interests. Such Subscription Agreement and
payment for Membership Interests as described above are governed by such Escrow
Agreement. This receipt does not constitute an acceptance of such Subscription
Agreement by Sardy House, LLC.
Dated: _________________, 200__
SARDY HOUSE, LLC,
a Colorado limited liability company
By: BLOCK 66, LLC,
a Colorado limited liability company,
its Manager
By:
---------------------------------
Xxxxxx X. Xxxxxx, Manager
-------------------------------------
Name of Subscriber
-------------------------------------
-------------------------------------
Address of Subscriber
C-1
