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Exhibit 1.1
4,427,500 Shares
Candlewood Hotel Company, Inc.
Common Stock
UNDERWRITING AGREEMENT
November __, 1996
XXXXXXXXXX SECURITIES
XXXXXXXX WERTHEIM & CO. INCORPORATED
As Representatives of the several Underwriters
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. Introductory. Candlewood Hotel Company, Inc. a
Delaware corporation (the "Company"), proposes to issue and sell 3,850,000
shares of its authorized but unissued Common Stock (the "Common Stock") to the
several underwriters named in Schedule A annexed hereto (the "Underwriters"),
for whom you are acting as Representatives. Said aggregate of 3,850,000 shares
are herein called the "Firm Common Shares." In addition, the Company proposes to
grant to the Underwriters an option to purchase up to 577,500 additional shares
of Common Stock (the "Optional Common Shares"), as provided in Section 4 hereof.
The Firm Common Shares and, to the extent such option is exercised, the Optional
Common Shares are hereinafter collectively referred to as the "Common Shares."
You have 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 hereinafter referred to, or as soon
thereafter as in your judgment is advisable.
The Company hereby confirms its agreement with respect to the
purchase of the Common Shares by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The
Company and its Subsidiaries (as defined below) hereby jointly and severally
represent and warrant to the several Underwriters that:
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(a) A registration statement on Form S-1 (File No. 333-12021)
with respect to the Common Shares has been prepared by the Company in conformity
in all material respects with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder, and has
been filed with the Commission. The Company has prepared and has filed or
proposes to file prior to the effective date of such registration statement an
amendment or amendments to such registration statement, which amendment or
amendments have been or will be similarly prepared. There have been delivered to
you two signed copies of such registration statement and amendments, together
with two copies of each exhibit filed therewith. Conformed copies of such
registration statement and amendments (but without exhibits) and of the related
preliminary prospectus have been delivered to you in such reasonable quantities
as you have requested for each of the Underwriters. The Company will next file
with the Commission one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of final
prospectus, (ii) a final prospectus in accordance with Rules 430A and 424(b) of
the Rules and Regulations or (iii) a term sheet (the "Term Sheet") as described
in and in accordance with Rules 434 and 424(b) of the Rules and Regulations. As
filed, the final prospectus, if one is used, or the Term Sheet and the latest
Preliminary Prospectus sent or given to purchasers of the Common Shares by the
Underwriters prior to or at the same time as the confirmation of such sale, if a
final prospectus is not used, shall include all Rule 430A Information (as
defined) and, except to the extent that you shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to you
prior to the date and time that this Agreement was executed and delivered by the
parties hereto, or, to the extent not completed at such date and time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus (as defined)) as the Company
shall have previously advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement
shall mean such registration statement at the time such registration statement
becomes effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as defined), shall also mean such
registration statement as so amended; provided, however, that such term shall
also include all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes effective
as provided by Rule 430A of the Rules and Regulations. The term "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in the preceding
paragraph and any preliminary prospectus included in the Registration Statement
at the time it becomes effective that omits Rule 430A Information. The term
"Prospectus" as used in
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this Agreement shall mean: (i) the prospectus relating to the Common Shares in
the form in which it is first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations; (ii) if a Term Sheet is not used and no filing
pursuant to Rule 424(b) of the Rules and Regulations is required, the form of
final prospectus included in the Registration Statement at the time it becomes
effective; or (iii) if a Term Sheet is used, the Term Sheet in the form in which
it is first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, together with the latest Preliminary Prospectus sent or given to
purchasers of the Common Shares by the Underwriters prior to or at the same time
as the confirmation of such sale. The term "Rule 430A Information" means
information with respect to the Common Shares and the offering thereof permitted
to be omitted from the Registration Statement when it becomes effective pursuant
to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus, as of its date, has conformed in all material respects to the
requirements of the Act and the Rules and Regulations and, as of its date, has
not included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; at the time the
Registration Statement becomes effective, and at all times subsequent thereto up
to and including each Closing Date hereinafter mentioned, the Registration
Statement and the Prospectus, and any amendments or supplements thereto, will
contain all material statements and information required to be included therein
by the Act and the Rules and Regulations and will in all material respects
conform to the requirements of the Act and the Rules and Regulations, and the
Registration Statement will not include any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and neither the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, no representation or warranty
contained in this subsection 2(b) shall be applicable to information contained
in or omitted from any Preliminary Prospectus, the Registration Statement, the
Prospectus or any such amendment or supplement that is described in clauses (i)
and (ii) of Section 3 hereof.
(c) As of the First Closing Date, the Company will not own or
control, directly or indirectly, any corporation, association or other entity
that is material, individually or in the aggregate, to the Company's condition
(financial or otherwise), properties, business, results of operation or
prospects, other than the subsidiaries listed in Exhibit 21.1 to
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the Registration Statement (the "Subsidiaries"). The Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation, and each limited liability company
Subsidiary is a duly formed limited liability company and is validly existing as
a limited liability company under the laws of the state of its formation, each
with full power and authority (corporate and other) to own and lease its assets
and properties and conduct its business as now being conducted and as described
in the Registration Statement; as of the First Closing Date, the Company will
own, directly or indirectly, all of the membership interests of the Subsidiaries
free and clear of all claims, liens, charges and encumbrances, other than as
disclosed in the Registration Statement; the Company and each of the
Subsidiaries are in possession of and operating in material compliance with all
authorizations, licenses, permits, consents, certificates and orders material to
the conduct of their respective businesses, all of which are valid and in full
force and effect; the Company and the Subsidiaries are duly qualified to do
business and in good standing as foreign corporations or foreign limited
liability companies, as the case may be, in each jurisdiction in which the
ownership or leasing of properties or the conduct of their respective businesses
requires such qualification, except for jurisdictions in which the failure to so
qualify would not have a material adverse effect upon the Company or the
Subsidiaries, taken as a whole; and no proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
(d) Immediately prior to the First Closing Date, the Company
will have an authorized and outstanding capital stock as set forth under the
heading "Capitalization" in the Prospectus; the issued and outstanding shares of
Common Stock will have been duly authorized and validly issued, will be fully
paid and nonassessable, will have been issued in compliance with all applicable
federal and state securities laws, will not have been issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities, and will conform in all material respects to the description thereof
contained in the Prospectus. All membership interests of each Subsidiary have
been duly and validly authorized. Except as disclosed in or contemplated by the
Prospectus and the financial statements of the Company, and the related notes
thereto, included in the Prospectus, the Company, as of the First Closing Date,
will not have, and no Subsidiary has, outstanding any options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or membership interests, as
appropriate or any such options, rights, convertible securities or obligations.
The description of the Company's stock option, stock bonus and other stock plans
or arrangements, and the
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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.
(e) Immediately prior to the First Closing Date, the Common
Shares to be sold by the Company will have been duly authorized and, when
issued, delivered and paid for in the manner set forth in this Agreement, will
be validly issued, fully paid and nonassessable, and will conform to the
description thereof contained in the Prospectus. Immediately prior to the First
Closing Date, no preemptive rights or other rights to subscribe for or purchase
will exist with respect to the issuance and sale of the Common Shares by the
Company pursuant to this Agreement, except for such rights which have been
waived with respect to the issuance and sale of the Common Shares. Immediately
prior to the Closing Date, no stockholder of the Company will have any right
which will not have been waived to require the Company to register the sale of
any shares owned by such stockholder under the Act in the public offering
contemplated by this Agreement. No further approval or authorization of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Common Shares to be sold by the Company as contemplated
herein.
(f) The Company has full right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby (including,
without limitation, the Reorganization as described in the Prospectus). This
Agreement has been duly authorized, executed and delivered by the Company, and
it constitutes a valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, except (A) as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, (B) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought and
(C) to the extent that rights to indemnity or contribution under this Agreement
may be limited by federal, state or provincial securities laws or the public
policy underlying such laws. The execution and delivery of this Agreement by the
Company and the consummation of the transactions herein contemplated by the
Company will not violate any provisions of the certificate of incorporation or
bylaws of the Company or the operating agreement of any Subsidiary, and will not
conflict with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under any
franchise agreement to which the Company or any of the Subsidiaries is a party
or any other agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument that has been filed as an Exhibit to the
Registration Statement and to which the Company or any of the Subsidiaries is a
party or by which the Company or any
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of the Subsidiaries or any of their respective properties may be bound or
affected, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of the Subsidiaries or any of
their respective properties. No consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other governmental body
is required for the execution and delivery of this Agreement or the consummation
of the transactions contemplated by this Agreement, except for compliance with
the Act, the Blue Sky laws applicable to the public offering of the Common
Shares by the several Underwriters and the clearance of such offering with the
National Association of Securities Dealers, Inc. (the "NASD") or the
authorization for quotation on the NASDAQ National Market which has been
obtained prior to the date hereof or such other consents or approvals under
state franchise laws which if not received or issued would not be material to
the Company or the Subsidiaries taken as a whole.
(g) KPMG Peat Marwick, who have expressed their opinion with
respect to the financial statements and schedules filed with the Commission as a
part of the Registration Statement and included in the Prospectus, are
independent accountants as required by the Act and the Rules and Regulations.
(h) As of the First Closing Date, the consolidated financial
statements and schedule of the Company and its Subsidiaries, and the related
notes thereto, included in the Registration Statement and the Prospectus will
present fairly the consolidated financial position of the Company and its
Subsidiaries as of the respective dates of such financial statements and
schedule, and the consolidated results of operations, cash flows and the
stockholders' equity and the other information purported to be shown therein of
the Company and its Subsidiaries for the respective periods covered thereby.
Such statements, schedule and related notes have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis as
certified by the independent accountants named in subsection 2(g). The
Registration Statement includes all of the financial statements and schedules
required under the Act to be included in the Registration Statement. Immediately
prior to the First Closing Date, the selected financial data set forth in the
Prospectus under the captions "Summary Consolidated Financial Information,"
"Capitalization" and "Selected Consolidated Financial Information" will present
fairly the information set forth therein on the basis stated in the Registration
Statement.
(i) Except as disclosed in the Prospectus, and except as to
violations, breaches or defaults which individually or in the aggregate would
not be material to the Company and the Subsidiaries taken as a whole, neither
the Company nor any of the
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Subsidiaries is in violation or default of any provision of its certificate of
incorporation or bylaws or operating agreement,as the case may be, or is in
breach of or default with respect to any provision of any agreement, judgment,
decree, order, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which it is a party or by which it or any of its
properties is bound; and there does not exist any state of facts which
constitutes an event of default (as defined in those documents) on the part of
the Company or any such Subsidiary or which, with notice or lapse of time or
both, would constitute such an event of default.
(j) 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 Act or by the Rules and Regulations which have not
been described or filed as required. The contracts so described in the
Prospectus are in full force and effect on the date hereof; and neither the
Company nor any of the Subsidiaries, nor to the best of the Company's knowledge
any other party, is in breach of or default under any of such contracts, which
breach or default would have a material adverse effect on the Company and its
Subsidiaries, taken as a whole.
(k) There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened to
which the Company or any of the Subsidiaries is a party or of which property
owned or leased by the Company or any of the Subsidiaries is the subject,
including actions related to environmental or discrimination matters, which
actions, suits or proceedings might reasonably be expected to, individually or
in the aggregate, prevent or materially and adversely affect the transactions
contemplated by this Agreement or result in a material adverse change in the
condition (financial or otherwise), properties, business, results of operations
or prospects of the Company and the Subsidiaries, taken as a whole; and no labor
disturbance by the employees of the Company or any of the Subsidiaries exists or
is imminent which might reasonably be expected to affect materially and
adversely such condition, properties, business, results of operations or
prospects of the Company and the Subsidiaries, taken as a whole. Neither the
Company nor any of the Subsidiaries is a party or subject to the provisions of
any injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body which might reasonably be
expected to, individually or in the aggregate, prevent or materially and
adversely affect the transactions contemplated by this Agreement or result in a
material adverse change in the condition (financial or otherwise), properties,
business, results of operations or prospects of the Company and the
Subsidiaries, taken as a whole.
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(l) The Company and each Subsidiary has good and valid title
to all the properties and assets reflected as owned in the financial statements
hereinabove described or as described elsewhere in the Prospectus, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements or as described elsewhere in the
Prospectus, and (ii) those which are not material in amount and do not
materially and adversely affect the use made and proposed to be made of such
property and assets by the Company and the Subsidiaries, taken as a whole. The
Company and each Subsidiary holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation to
the business of the Company. Immediately prior to the First Closing Date, except
as disclosed in the Prospectus, the Company and the Subsidiaries will own or
lease all such properties as are necessary to their respective operations as now
conducted.
(m) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as described
in or specifically contemplated by the Prospectus: (i) the Company and the
Subsidiaries have not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of business
(it being understood that the purchase of real estate and the construction of
hotels are considered to be in the ordinary course of business) or which could
reasonably be expected to result in a material reduction in the future earnings
of the Company and the Subsidiaries, taken as a whole; (ii) the Company and the
Subsidiaries have not sustained any material loss or interference with their
respective businesses or properties from fire, flood, windstorm, accident or
other calamity, whether or not covered by insurance; (iii) the Company has not
paid or declared any dividends or other distributions with respect to its
capital stock and the Company and the Subsidiaries are not in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock (other than upon the sale of the
Common Shares hereunder) or indebtedness material to the Company and the
Subsidiaries, taken as a whole (other than in the ordinary course of business);
and (v) there has not been any material adverse change in the condition
(financial or otherwise), business, properties, results of operations or
prospects of the Company and the Subsidiaries, taken as a whole.
(n) Other than as described in the Registration Statement and
Prospectus, the Company and the Subsidiaries have sufficient trademarks, trade
names, service marks, patent rights, mask works, copyrights, licenses, know-how
and other similar rights and proprietary knowledge (collectively, "Intangibles")
to conduct their respective businesses as now conducted; and the
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Company has no knowledge of any material infringement by it or the Subsidiaries
of any Intangible of others, and there is no claim being made against the
Company or the Subsidiaries regarding any Intangible which could have a material
adverse effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company and the Subsidiaries, taken as a whole.
(o) The Company has not been advised, and has no reason to
believe, that either it or any Subsidiary is not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, all
applicable local, state and federal environmental laws and regulations; except
where failure to be so in compliance would not materially and adversely affect
the condition (financial or otherwise), business, results of operations or
prospects of the Company and the Subsidiaries, taken as a whole.
(p) The Company and the Subsidiaries have filed all necessary
federal, state and foreign tax returns and have paid all taxes shown as due
thereon; and the Company has no knowledge of any tax deficiency which has been
or might be asserted or threatened against the Company or the Subsidiaries which
could materially and adversely affect the business, operations or properties of
the Company and the Subsidiaries, taken as a whole.
(q) The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute
prior to the First Closing Date any offering material in connection with the
offering and sale of the Common Shares other than any Preliminary Prospectus,
the Prospectus, the Registration Statement and the other materials permitted by
the Act.
(s) The Company, as of the First Closing Date will maintain,
and each of the Subsidiaries maintains, insurance of the types and in the
amounts generally deemed adequate in the extended-stay lodging industry for its
business, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and the Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect, or in the case of
the Company, will be in full force and effect as of the First Closing Date.
(t) Neither the Company nor any of the Subsidiaries has at any
time during the last five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or
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official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
(u) The Shares have been duly authorized for quotation on the
NASDAQ National Market.
(v) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate located in
Cuba in violation of Section 517.075 of the Florida Statutes.
(w) To the best knowledge of the Company, the Company and each
Subsidiary have obtained all permits, licenses and other authorizations that are
required under all environmental laws applicable to them, including but not
limited to the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), Resource Conservation & Recovery Act (42 U.S.C. Section 6901 et seq.),
Safe Drinking Water Act (21 U.S.C. Section 349, 42 U.S.C. Sections 201,
300f), Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), Clean Air
Act (42 U.S.C. Section 7401 et seq.), Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), other
applicable state and other laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes, or any other applicable regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder (collectively, the "Environmental
Laws"), except to the extent failure to have any such permit, license or
authorization, individually or in the aggregate, would not have a material
adverse effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company and the Subsidiaries, taken as a whole.
Except as described in the Prospectus, the Company and the Subsidiaries are in
compliance with all terms and conditions of any required permits, licenses,
authorizations, limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws, except to the extent failure to comply would not have a
material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company and the Subsidiaries, taken as
a whole.
(x) To the best knowledge of the Company, there are no past or
present events, conditions, circumstances, activities, practices, incidents,
actions or plans relating to the business as presently being conducted by the
Company or any Subsidiary that interfere with or prevent compliance or continued
compliance with the Environmental Laws, or which would be reasonably likely to
give rise to any legal liability (whether statutory or common law) or otherwise
would be reasonably likely to form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of
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violation, study, investigation, remediation or cleanup based on or related to
the generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release into the
workplace, the community or the environment of any pollutant, contaminant,
chemical or industrial, toxic, or hazardous substance or waste, except for any
liabilities or any claims, demands or other actions specified above that will
not individually or in the aggregate have a material adverse effect on the
Company and the Subsidiaries, taken as a whole.
SECTION 3. Representations and Warranties of the Underwriters.
The Representatives, on behalf of the several Underwriters, represent and
warrant to the Company that the information set forth (i) on the cover page of
the Prospectus with respect to price, underwriting discounts and commissions and
terms of offering and (ii) under "Underwriting" in the Prospectus was furnished
to the Company by and on behalf of the Underwriters for use in connection with
the preparation of the Registration Statement and the Prospectus and such
information is correct in all material respects. The Representatives represent
and warrant that they have been authorized by each of the other Underwriters as
the Representatives to enter into this Agreement on its behalf and to act for it
in the manner herein provided.
SECTION 4. Purchase, Sale and Delivery of Common Shares. On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Underwriters the Firm Common Shares. The Underwriters
agree, severally and not jointly, to purchase from the Company the number of
Firm Common Shares described below. The purchase price per share to be paid by
the several Underwriters to the Company shall be $____ per share.
Delivery of certificates for the Firm Common Shares to be
purchased by the Underwriters and payment therefor shall be made at the offices
of Xxxxxxxxxx Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or
such other place as may be agreed upon by the Company and the Representatives)
at such time and date, not later than the fourth full business day following the
first date that any of the Common Shares are released by you for sale to the
public, as you shall designate by at least 48 hours' prior notice to the Company
(or at such other time and date, not later than one week after such fourth full
business day as may be agreed upon by the Company and the Representatives) (the
"First Closing Date"); provided, however, that if the Prospectus is at any time
prior to the First Closing Date recirculated to the public, the First Closing
Date shall occur upon the later of the third full business day following the
first date that any of the Common Shares are released by you for sale to the
public or the date that is 48 hours after the date that the Prospectus has been
so recirculated.
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Delivery of certificates for the Firm Common Shares shall be
made by or on behalf of the Company to you, for the respective accounts of the
Underwriters against payment by you, for the accounts of the several
Underwriters, of the purchase price therefor by wire transfer payable in same
day funds to the order of the Company. The certificates for the Firm Common
Shares shall be registered in such names and denominations as you shall have
requested at least two full business days prior to the First Closing Date, and
shall be made available for checking and packaging on the business day preceding
the First Closing Date at such location in New York, New York, as may be
designated by you. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of
the Underwriters.
In addition, on the basis of the representations, warranties
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 577,500 Optional
Common Shares at the purchase price per share to be paid by the Underwriters for
the Firm Common Shares, for use solely in covering any over-allotments made by
you for the account of the Underwriters in the sale and distribution of the Firm
Common Shares. The option granted hereunder may be exercised at any time (but
not more than once) within 30 days after the first date that any of the Common
Shares are released by you for sale to the public, upon notice by you to the
Company setting forth the aggregate number of Optional Common Shares as to which
the Underwriters are exercising the option, the names and denominations in which
the certificates for such shares are to be registered and the time and place at
which such certificates are to be delivered. Such time of delivery (which may
not be earlier than the First Closing Date and being herein referred to as the
"Second Closing Date") shall be determined by you, but if at any time other than
the First Closing Date shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. The number of Optional
Common Shares to be purchased by each Underwriter shall be determined by
multiplying the number of Optional Common Shares to be sold by the Company
pursuant to such notice of exercise by a fraction, the numerator of which is the
number of Firm Common Shares to be purchased by such Underwriter as set forth
opposite its name in Schedule A and the denominator of which is 3,850,000
(subject to such adjustments to eliminate any fractional share purchases as you
in your discretion may make). Certificates for the Optional Common Shares being
purchased will be made available for checking and packaging on the business day
preceding the Second Closing Date at such location in New York, New York, as may
be designated by you. The manner of payment for and delivery of such Optional
Common Shares shall be the same as for the Firm Common Shares purchased from the
Company as specified in the two preceding paragraphs. At any time before lapse
of the option, you may
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cancel such option by giving written notice of such cancellation to the Company.
If the option is cancelled or expires unexercised in whole or in part, the
Company will deregister under the Act the number of Optional Common Shares as to
which the option has not been exercised.
You have advised the Company that each Underwriter has
authorized you to accept delivery of its Common Shares, to make payment and to
issue a receipt therefor. You, individually and not as the Representatives of
the Underwriters, may (but shall not be obligated to) make payment for any
Common Shares to be purchased by any Underwriter whose funds shall not have been
received by you by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall not
relieve such Underwriter from any of its obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters
propose to make a public offering of their respective portions of the Common
Shares as soon after the effective date of the Registration Statement as in the
judgment of the Representatives is advisable and at the public offering price
set forth on the cover page of and on the terms set forth in the final
prospectus, if one is used, or on the first page of the Term Sheet, if one is
used.
SECTION 5. Covenants of the Company. The Company covenants and
agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations,
the Company will file the Prospectus, properly completed, pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of such timely
filing. The Company will promptly advise you in writing (i) of the receipt of
any comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or after
it becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have become
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose. If the Commission shall enter any such stop
order at any time, the Company will use its best efforts to obtain the lifting
of such order at the earliest possible moment. The Company will not file any
amendment or supplement to the
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Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus if you have not been furnished with a
copy a reasonable time prior to such filing, if you reasonably object to the
Company filing such document or if the document to be filed is not in compliance
with the Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the Registration
Statement or the Prospectus which in your judgment may be necessary or advisable
to enable the several Underwriters to continue the distribution of the Common
Shares and will use its best efforts to cause the same to become effective as
promptly as possible. The Company will fully and completely comply with the
provisions of Rule 430A of the Rules and Regulations with respect to information
omitted from the Registration Statement in reliance upon such Rule.
(c) If at any time within the 25-day period referred to in
Rule 174 of the Rules and Regulations, during which a prospectus relating to the
Common Shares is required to be delivered under the Act any event occurs, as a
result of which the Prospectus, including any amendments or supplements, would
include an untrue statement of a material fact, or omit to state any material
fact required to be stated therein or necessary, in light of the circumstances
under which they were made, to make the statements therein not misleading, or if
it is necessary at any such time to amend the Prospectus, including any
amendments or supplements, to comply with the Act or the Rules and Regulations,
the Company will promptly advise you thereof and will promptly prepare and file
with the Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment or supplement which will
effect such compliance and will use its best efforts to cause the same to become
effective as soon as possible; and, in case any Underwriter is required to
deliver a prospectus after such 25-day period, the Company upon request, but at
the expense of such Underwriter, will promptly prepare such amendment or
amendments to the Registration Statement and such Prospectus or Prospectuses as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act.
(d) As soon as practicable, but not later than 45 days after
the end of the first quarter ending after the first anniversary of the effective
date of the Registration Statement (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of Section
11(a) of the Act.
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(e) As soon as practicable, but no later than the close of
business one business day after the pricing of the Common Shares, the Company
will have delivered to you or to such locations as you may request the
Prospectus, in such reasonable quantities as you may request.
(f) During such period as a prospectus is required by law to
be delivered in connection with sales by an Underwriter or dealer, the Company,
at its expense, but only for the 25-day period referred to in Rule 174 of the
Rules and Regulations, will furnish to you or mail to your order copies of the
Registration Statement, the Prospectus, the Preliminary Prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may request, for the purposes
contemplated by the Act.
(g) The Company shall cooperate with you and your counsel in
order to qualify or register the Common Shares for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such jurisdictions as
you designate, will comply with such laws and will continue such qualifications,
registrations and exemptions in effect so long as reasonably required for the
distribution of the Common Shares. The Company shall not be required to qualify
as a foreign corporation or to file a general consent to service of process in
any such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise you
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, with your cooperation, will use its best
efforts to obtain the withdrawal thereof.
(h) During the period of five years hereafter, the Company
will furnish to the Representatives and, upon request of the Representatives, to
each of the other Underwriters: (i) as soon as practicable after the end of each
fiscal year, copies of the Annual Report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and statements of
income, stockholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement and annual
and other report filed by the Company with the Commission, the NASD or any
securities exchange; and (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its Common Stock.
(i) During the period of 180 days after the first date that
any of the Common Shares are released by you for sale to the
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public, without the prior written consent of the Representatives (which consent
may be withheld at the sole discretion of the Representatives, as the case may
be), the Company will not other than (i) in accordance with the employee benefit
plans described in the Prospectus or (ii) issuances in connection with the
acquisition of another business (provided the persons to whom the stock is
issued agree not to sell any such shares for the remainder of the 180 day
period), issue, offer, sell, grant options to purchase or otherwise dispose of
any of the Company's equity securities or any other securities convertible into
or exchangeable with its Common Stock or other equity security.
(j) The Company will apply the net proceeds of the sale of the
Common Shares sold by it substantially in accordance with its statements under
the caption "Use of Proceeds" in the Prospectus.
(k) The Company will use its best efforts to qualify or
register its Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Canadian provincial securities laws,
will comply with such securities laws and will continue such qualifications,
registrations and exemptions in effect for a period of five years after the date
hereof.
(l) On or before the completion of this offering, the Company
will use its best efforts to designate the Common Stock for quotation as a
national market system security on the Nasdaq National Market.
You, on behalf of the Underwriters, may, in your sole
discretion, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.
SECTION 6. Payment of Expenses. Whether or not the
transactions contemplated hereunder are consummated or this Agreement becomes
effective or is terminated, the Company agrees to pay all costs, fees and
expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby (except as
set forth herein), including without limiting the generality of the foregoing,
(i) all expenses incident to the issuance and delivery of the Common Shares
(including all printing and engraving costs), (ii) all fees and expenses of the
registrar and transfer agent of the Common Stock, (iii) all necessary issue,
transfer and other 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
and the Company's independent accountants, (v) all costs and expenses incurred
in connection with the preparation, printing, filing, shipping and distribution
of the Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and
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all amendments and supplements provided for herein, this Agreement, the Master
Agreement Among Underwriters, the Selected Dealers Agreement, the Master
Underwriters' Questionnaire, the Preliminary and the Final Blue Sky Memoranda,
(vi) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the Canadian provincial securities laws
and U.S. state Blue Sky laws, (vii) the filing fee of the NASD and any fees and
expenses relating to inclusion of the Common Shares on the Nasdaq National
Market, and (viii) all other fees, costs and expenses referred to in Item 13 of
the Registration Statement. Except as provided in this Section 6, Section 8 and
Section 10 hereof, the Underwriters shall pay all of their own expenses,
including the fees and disbursements of their counsel (excluding those relating
to qualification, registration or exemption under the securities and Blue Sky
laws and the Blue Sky Memoranda referred to above).
SECTION 7. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for the Firm
Common Shares on the First Closing Date and the Optional Common Shares on the
Second Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company herein set forth as of the date hereof and
as of the First Closing Date or the Second Closing Date, as the case may be, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M., Washington, D.C. Time, on the date of this Agreement, or
at such later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and Regulations;
and prior to such Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company or you, shall be contemplated by the Commission; and any request of
the Commission for inclusion of additional information in the Registration
Statement, or otherwise, shall have been complied with to your satisfaction.
(b) Except as described in or specifically contemplated by the
Prospectus, you shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) there
shall not have been any change in the capital stock other than as provided
herein and in accordance with the employee benefit plans
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described in the Prospectus of the Company or any material change in the
indebtedness (other than in the ordinary course of business) of the Company and
any of the Subsidiaries, taken as a whole, (ii) except as set forth in or
contemplated by the Registration Statement or the Prospectus, no material verbal
or written agreement or other transaction shall have been entered into by the
Company or any of the Subsidiaries, which is not in the ordinary course of
business (it being understood that the purchase of real estate and the
construction of hotels are considered to be in the ordinary course of business)
or which could reasonably be expected to result in a material reduction in the
future earnings of the Company and the Subsidiaries,taken as a whole, (iii) no
loss or damage (whether or not insured) to the property of the Company or any of
the Subsidiaries shall have been sustained which materially and adversely
affects the condition (financial or otherwise), business, properties, results of
operations or prospects of the Company and the Subsidiaries, taken as a whole,
(iv) no legal or governmental action, suit or proceeding affecting the Company
or any of the Subsidiaries which is material to the Company and the
Subsidiaries, taken as a whole, or which affects or may affect the transactions
contemplated by this Agreement shall have been instituted or threatened and (v)
there shall not have been any material adverse change in the condition
(financial or otherwise), business, properties, results of operations or
prospects of the Company and the Subsidiaries, taken as a whole, which makes it
impractical or inadvisable in the judgment of the Representatives to proceed
with the public offering or purchase the Common Shares as contemplated hereby.
(c) There shall have been delivered to you the Firm Common
Shares and, if any Optional Common Shares are then being purchased, such
Optional Common Shares.
(d) The NASD, upon review of the terms of the public offering
of the Common Shares, shall not have objected to the fairness and reasonableness
of the underwriting terms and arrangements as proposed in this Agreement, the
Master Agreement Among Underwriters and the Selected Dealers Agreement.
(e) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered pursuant to
Section 7(f)(iii) shall be true and correct when made and on and as of the First
Closing Date or the Second Closing Date, as the case may be, as if made on such
date and the Company shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by it at or before such Closing Date.
(f) There shall have been furnished to you, as Representatives
of the Underwriters, on each Closing Date, in form and substance reasonably
satisfactory to you, except as otherwise expressly provided below:
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(i) An opinion of Xxxxxx & Xxxxxxx, counsel for the
Company (or as to paragraphs 1, 2 and 4 with respect to entities
organized under the laws of states other than California and Delaware,
counsel to Company for said states), addressed to the Underwriters and
dated the First Closing Date or the Second Closing Date, as the case
may be, to the effect that:
(1) The Company has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. Each of
the Subsidiaries has been duly formed as a limited liability
company and is validly existing as a limited liability company
under the laws of its jurisdiction of formation.
(2) The Company and each of the Subsidiaries
has full corporate or limited liability company power and
authority to own and lease its assets and properties and
conduct its business as now being conducted and as described
in the Registration Statement.
(3) The authorized, issued and outstanding
capital stock of the Company is as set forth under the caption
"Capitalization" 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, have
been issued in transactions that were registered or exempt
from registration under the Act, and were not issued in
violation of or subject to any preemptive rights contained in
any applicable statute or the Company's Certificate of
Incorporation; and the description thereof contained under the
caption entitled "Description of Capital Stock" in the
Prospectus accurately sets forth in all material respects the
information required therein by Form S-1.
(4) All of the membership interests of the
Subsidiaries have been duly and validly authorized and are
owned of record and, directly or indirectly and to the best of
such counsel's knowledge beneficially by the Company.
(5) The certificates evidencing the Common
Shares to be delivered hereunder are in proper form under
Delaware law, have been duly authorized and, when duly
countersigned by the Company's transfer agent and registrar
and delivered to you or upon your order against payment of the
agreed consideration therefor in accordance with the
provisions of this Agreement, the Common Shares represented
thereby will be validly issued, fully paid and nonassessable
and will not have
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been issued in violation of or subject to any preemptive
rights contained in any applicable statute or the Company's
Certificate of Incorporation.
(6) Except as disclosed in or specifically
contemplated by the Prospectus, to the best of such counsel's
knowledge, there are no outstanding options, warrants or other
rights issued by the Company calling for the issuance of, and
no commitments, plans or arrangements of the Company to issue,
any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the
Company.
(7) (A) The Registration Statement has
become effective under the Act, and, to the best of
such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued
and no proceedings for that purpose have been
instituted or are pending or contemplated by the
Commission; and any required filing of the Prospectus
and any supplement thereto pursuant to Rule 424(b) of
the Rules and Regulations has been made in the manner
and within the time period required by such Rule
424(b).
(B) The Registration Statement, the
Prospectus and each amendment or supplement thereto
(except for the financial statements, schedule and
other financial, accounting and statistical
information included therein as to which such counsel
need express no opinion) comply as to form in all
material respects with the requirements of the Act
and the Rules and Regulations; it being understood,
however, that such counsel expresses no opinion with
respect to the financial statements, schedule and
other financial and statistical data included in the
Registration Statement, the Prospectus and each
amendment or supplement thereto.
(C) To the best of such counsel's
knowledge, there are no franchises, leases,
contracts, agreements or documents of a character
required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to
the Registration Statement which are not described or
filed, as required.
(D) To the best of such counsel's
knowledge, there are no legal or governmental
actions, suits or proceedings pending or
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threatened against the Company which are required
to be described in the Prospectus which are not
described as required.
(8) The Company has the corporate power and
authority to enter into this Agreement and to sell and deliver
the Common Shares to be sold by it to the several
Underwriters; this Agreement has been duly authorized,
executed and delivered by the Company.
(9) No approval, authorization, order,
consent, registration, filing, qualification, license or
permit of or with any federal or California court, regulatory,
administrative or other governmental body that, in such firm's
experience, are normally applicable to transactions of the
type contemplated by this Agreement, is required to be
obtained by the Company for the execution and delivery of this
Agreement by the Company or the sale of the Common Shares to
the several Underwriters, except (i) such as have been
obtained and are in full force and effect under the Act and
(ii) such as may be required under applicable Blue Sky laws in
connection with the purchase and distribution of the Common
Shares by the Underwriters, as to which no opinion is
rendered.
(10) The execution and delivery of this
Agreement by the Company and the sale of the Common Shares to
the several Underwriters will not violate any of the
provisions of the certificate of incorporation or bylaws of
the Company or the operating agreement of any of the
Subsidiaries or cause the Company or any Subsidiary to violate
any federal or California statute, judgment, decree, order,
rule or regulation of any court or governmental body that, in
the firm's experience, are normally applicable to the
execution and delivery of similar agreements, except that no
opinion shall be rendered as to federal securities laws or
applicable Blue Sky laws.
(11) To the best of such counsel's
knowledge, no holders of securities of the Company have
rights, which have not been waived, to the registration of
shares of Common Stock or other securities, because of the
filing of the Registration Statement by the Company or the
offering contemplated hereby.
(12) The Company is not an "investment
company" within the meaning of the Investment Company Act of
1940.
In rendering such opinion, such counsel may
rely on certificates of officers of the Company and of
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governmental officials, in which case their opinion is to state that they are so
doing and that the Underwriters are justified in relying on such certificates
and copies of said certificates are to be provided to counsel for the
Underwriters. Such counsel shall also include a statement that they have
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the Company
and your representatives, at which the contents of the Registration Statement
were discussed and, although they are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus and have not made any
independent check or verification thereof, during the course of such
participation (relying as to materiality to a large extent on the statements of
officers and other representatives of the Company) no facts came to their
attention that caused them to believe that the Registration Statement, at the
time it 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, contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being understood
that such counsel expresses no belief with respect to the financial statements,
schedules and other financial and statistical data included in the Registration
Statement or the Prospectus.
(ii) Such opinion or opinions of O'Melveny & Xxxxx LLP,
counsel for the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the
incorporation of the Company, the sufficiency of all corporate
proceedings and other legal matters relating to this Agreement, the
validity of the Common Shares, the Registration Statement and the
Prospectus and other related matters as you may reasonably require, and
the Company shall have furnished to such counsel such documents and
shall have exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such
matters. In connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and
governmental officials.
(iii) A certificate of the Company executed by the
Chairman of the Board and the President and the chief financial officer
of the Company, in their capacities as officers of the Company, dated
the First Closing Date or the Second Closing Date, as the case may be,
to the effect that:
(1) The representations and warranties of
the Company set forth in Section 2 of this Agreement
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were true and correct as of the date of this Agreement and are
true and correct in all material respects as of such Closing
Date, as the case may be, and the Company has complied in all
material respects with all the agreements and satisfied in all
material respects all the conditions on its part to be
performed or satisfied on or prior to such Closing Date.
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus or any
Preliminary Prospectus filed as a part of the Registration
Statement or any amendment or supplement thereto; no stop
order suspending the effectiveness of the Registration
Statement has been issued; and to the best of the knowledge of
the respective signers, no proceedings for that purpose have
been instituted or are pending or contemplated under the Act.
(iv) On the date before this Agreement is executed and
also on each Closing Date, a letter addressed to you, as
Representatives of the Underwriters, from KPMG Peat Marwick,
independent accountants, the first one to be dated the day before the
date of this Agreement, the second one to be dated the First Closing
Date and the third one (in the event of a second closing hereunder) to
be dated the Second Closing Date, in form and substance reasonably
satisfactory to you.
(v) On or before the First Closing Date, letters from
each holder of the Company's Common Stock and each director and
executive officer of the Company, in form and substance reasonably
satisfactory to you, (i) confirming that for a period of 180 days after
the first date that any of the Common Shares are released by you for
sale to the public, such person will not, directly or indirectly, sell
or offer to sell or otherwise dispose of any shares of Common Stock or
any right to acquire such shares without the prior written consent of
Xxxxxxxxxx Securities, which consent may be withheld at the sole
discretion of the Representatives; provided that any such holder,
director or officer may transfer Common Shares to one or more
affiliates (including partners of any partnership) or one or more
members of such person's immediate family, or a trust, the sole
beneficiaries of which are members of such individual's immediate
family, if the transferee agrees in writing to be bound by this
provision and (ii) waiving any registration rights and rights to
purchase with respect to the public offering contemplated hereunder.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory to you and to O'Melveny & Xxxxx LLP, counsel for the Underwriters.
The Company shall furnish you with
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such manually signed or conformed copies of such opinions, certificates, letters
and documents as you request. Any certificate signed by any officer of the
Company and delivered to the Representatives or to counsel for the Underwriters
shall be deemed to be a representation and warranty by the Company to the
Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to
be satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representatives to the Company without liability on the part of any Underwriter
or the Company except for the expenses to be paid or reimbursed by the Company
pursuant to Sections 6 and 8 hereof and except to the extent provided in Section
10 hereof.
SECTION 8. Reimbursement of Underwriters' Expenses.
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 7 or Section 13, or if the sale to the
Underwriters of the Common Shares at the First Closing Date is not consummated
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or to comply with any provision hereof, the Company
agrees to reimburse you and the other Underwriters upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by you and them
in connection with the proposed purchase and the sale of the Common Shares,
including but not limited to reasonable fees and disbursements of counsel,
printing expenses, travel expenses, postage and telephone charges relating
directly to the offering contemplated by the Prospectus. Any such termination
shall be without liability of any party to any other party except that the
provisions of this Section , Section 6 and Section 10 shall at all times be
effective and shall apply.
SECTION 9. Effectiveness of Registration Statement. You and
the Company will use your and its best efforts to cause the Registration
Statement to become effective, to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement and, if such stop
order be issued, to obtain as soon as possible the lifting thereof.
SECTION 10. Indemnification and Contribution.
(a) The Company and each of the Subsidiaries, jointly and
severally, agree to (i) indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act
against any losses, claims, damages, liabilities or expenses, joint or several,
to which such Underwriter or such controlling person may become subject, under
the Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or other federal or state statutory law or regulation, or at common law or
otherwise (including in
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settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary (with respect to the Prospectus or
any Preliminary Prospectus, in light of the circumstances under which they were
made) to make the statements in any of them not misleading, or arise out of or
are based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained in Section 2 herein or any failure of the
Company to perform its obligations hereunder or under law; and (ii) reimburse
each Underwriter and each such controlling person for any legal and other
expenses as such expenses are reasonably incurred by such Underwriter or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, liability or expense arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with the information furnished to the Company pursuant to
Section 3 hereof; and provided further that the indemnification provisions
contained in this paragraph (a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of any Common Shares by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus. In addition to its other obligations
under this Section 10(a), the Company agrees that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any untrue statement or omission, or any alleged
untrue statement or omission, or any inaccuracy in the representations and
warranties of the Company herein or any failure to perform its obligations, all
as described in this Section 10(a), it will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligation to
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reimburse each Underwriter for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, each Underwriter shall promptly return it to the
Company, together with interest, compounded daily, determined on the basis of
the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Bank of America NT&SA, San
Francisco, California (the "Prime Rate"). Any such interim reimbursement
payments which are not made to an Underwriter within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter agrees to severally indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Act, against any losses, claims, damages, liabilities or
expenses to which the Company, or any such director, officer or controlling
person may become subject, under the 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 losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary (with respect to the
Prospectus or any Preliminary Prospectus, in light of the circumstances under
which they were made) to make the statements in any of them not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 3 hereof or arise out
of or are based in whole or in part on any inaccuracy in the representations and
warranties of the Underwriters contained herein or any failure of the
Underwriters to perform their respective obligations hereunder or under law; and
will 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. In addition to its other obligations under this
Section 10(b), each Underwriter severally agrees that, as an
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interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in this Section 10(b) which relates
to information furnished to the Company pursuant to Section 3 hereof, it will
reimburse the Company (and, to the extent applicable, each officer, director or
controlling person) on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director or controlling person) for such expenses and
the possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company (and, to the
extent applicable, each officer, director or controlling person) shall promptly
return it to the Underwriters, together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim reimbursement
payments which are not made to the Company within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which
such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under the indemnity agreement contained in this Section or to the extent it is
not prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the
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defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel, approved
by the Representatives in the case of paragraph (a), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice
of commencement of the action, in each of which cases the reasonable fees and
expenses of counsel shall be at the expense of the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent, which will not be
unreasonably withheld.
(d) If the indemnification provided for in this Section 10 is
required by its terms but is for any reason held to be unavailable to hold
harmless an indemnified party under paragraphs (a) or (b) in respect of any
losses, claims, damages, liabilities or expenses referred to herein, then each
applicable indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Common Shares or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company and the Underwriters shall be deemed to be in the same proportion, in
the case of the Company as the total price paid to the Company for the Common
Shares sold by it to the Underwriters (net of underwriting commissions but
before deducting expenses), and in the case of the Underwriters as the
underwriting commissions received by them, bears to the total of such amounts
paid to the Company and received by the Underwriters as underwriting
commissions. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a
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material fact relates to information supplied by the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The 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 paragraph (c) of this Section 10, 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 paragraph (c) of this Section 10
with respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this paragraph (d); provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under such paragraph (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 10 were determined solely by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 10, no Underwriter shall be
required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 10 are several in proportion to their respective underwriting
commitments and not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections 10(a)
and 10(b) hereof, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or written notice of intention to
arbitrate, therein selecting the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 10(a) and 10(b)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is
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created by the provisions of such Sections 10(a) and 10(b) hereof.
SECTION 11. Default of Underwriters. It shall be a condition
to this Agreement and the obligation of the Company to sell and deliver the
Common Shares hereunder, and of each Underwriter to purchase the Common Shares
in the manner as described herein, that, except as hereinafter in this paragraph
provided, each of the Underwriters shall purchase and pay for all the Common
Shares agreed to be purchased by such Underwriter hereunder upon tender to the
Representatives of all such shares in accordance with the terms hereof. If any
Underwriter or Underwriters default in their obligations to purchase Common
Shares hereunder on either the First or Second Closing Date and the aggregate
number of Common Shares which such defaulting Underwriter or Underwriters agreed
but failed to purchase on such Closing Date does not exceed 10% of the total
number of Common Shares which the Underwriters are obligated to purchase on such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Common
Shares which such defaulting Underwriters agreed but failed to purchase on such
Closing Date. If any Underwriter or Underwriters so default and the aggregate
number of Common Shares with respect to which such default occurs is more than
the above percentage and arrangements satisfactory to the Representatives and
the Company for the purchase of such Common Shares by other persons are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company except
for the expenses to be paid by the Company pursuant to Section 6 hereof and
except to the extent provided in Section 10 hereof.
If Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus, this
Agreement and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
SECTION 12. Effective Date. This Agreement shall become
effective immediately as to Sections 6, 8, 10, 13 and 14 and, as to all other
provisions, (i) if at the time of execution of this Agreement the Registration
Statement has not become effective, at 2:00 P.M., California time, on the first
full business day following the effectiveness of the Registration Statement, or
(ii) if at the time of execution of this Agreement the Registration Statement
has been declared effective, at 2:00 P.M., California time, on the first full
business day following
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the date of execution of this Agreement; but this Agreement shall nevertheless
become effective at such earlier time after the Registration Statement becomes
effective as you may determine on and by notice to the Company or by release of
any of the Common Shares for sale to the public. For the purposes of this
Section 12, the Common Shares shall be deemed to have been so released upon the
release for publication of any newspaper advertisement relating to the Common
Shares or upon the release by you of notices (i) advising your sales personnel
that the Common Shares are released for public offering, or (ii) offering the
Common Shares for sale to securities dealers, whichever may occur first.
SECTION 13. Termination. Without limiting the right to
terminate this Agreement pursuant to any other provision
hereof:
(a) This Agreement may be terminated by the Company by notice
to you or by you by notice to the Company at any time prior to the time this
Agreement shall become effective as to all its provisions, and any such
termination shall be without liability on the part of the Company to any
Underwriter (except for the expenses to be paid or reimbursed by the Company
pursuant to Sections 6 and 8 hereof and except to the extent provided in Section
10 hereof) or of any Underwriter to the Company (except to the extent provided
in Section 10 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date by notice to the Company (i) if material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
Exchange or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities or other national or
international calamity or any substantial change in political, financial or
economic conditions shall have occurred or shall have accelerated or escalated
to such an extent, as, in the reasonable judgment of the Representatives, to
affect materially and adversely the marketability of the Common Shares, (iii) if
any adverse event shall have occurred or shall exist which makes untrue or
incorrect in any material respect any statement or information contained in the
Registration Statement or the Prospectus or which is not reflected in the
Registration Statement or the Prospectus but should be reflected therein in
order to make the statements or information contained therein not misleading in
any material respect or (iv) if there shall be any action, suit or proceeding
pending or threatened, or there shall have been any development or prospective
development involving
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particularly the business or properties or securities of the Company or any of
the Subsidiaries or the transactions contemplated by this Agreement, which, in
the reasonable judgment of the Representatives, may materially and adversely
affect the Company's business or earnings and makes it impracticable or
inadvisable to offer or sell the Common Shares. Any termination pursuant to this
paragraph (b) shall be without liability on the part of any Underwriter to the
Company or on the part of the Company to any Underwriter (except for expenses to
be paid or reimbursed by the Company pursuant to Sections 6 and 8 hereof and
except to the extent provided in Section 10 hereof.
(c) This Agreement shall also terminate at 5:00 P.M.,
California Time, on the tenth full business day after the Registration Statement
shall have become effective if the initial public offering price of the Common
Shares shall not then as yet have been determined as provided in Section 4
hereof. Any termination pursuant to this subsection (c) shall be without
liability on the part of any Underwriter to the Company or on the part of the
Company to any Underwriter (except for expenses to be paid or reimbursed by the
Company pursuant to Sections 6 and 8 hereof and except to the extent provided in
Section 10 hereof.
SECTION 14. Representations and Indemnities to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company, of its 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 hereunder and any termination
of this Agreement.
SECTION 15. Notices. All communications hereunder shall be in
writing and, if sent to the Representatives shall be mailed, delivered or
telecopied and confirmed to you at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xx. Xxxx Xxxxxxxx, FAX: (000) 000-0000, with a copy
to O'Melveny & Xxxxx LLP, 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx, Esq., FAX: (000) 000-0000; and
if sent to the Company shall be mailed, delivered or telecopied and confirmed to
the Company at Xxxxxxxxx Xxxxxx Xxxx, 0000 Xxxx Xxxxxxx, Xxxxxxx, Xxxxxx
00000-0000 Attention: Xxxx XxXxxx, FAX: (000) 000-0000, with a copy to Xxxxxx &
Xxxxxxx, 000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxx Xxxx, Esq., FAX: (714) 000- 0000. The Company or you may
change the address for receipt of communications hereunder by giving notice to
the others.
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SECTION 16. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 11 hereof, and to the benefit of the officers
and directors and controlling persons referred to in Section 10, and in each
case their respective successors, personal representatives and assigns, and no
other person will have any right or obligation hereunder. No such assignment
shall relieve any party of its obligations hereunder. The term "successors"
shall not include any purchaser of the Common Shares as such from any of the
Underwriters merely by reason of such purchase.
SECTION 17. Representatives of Underwriters. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you
jointly or by Xxxxxxxxxx Securities, as Representatives, will be binding upon
all the Underwriters.
SECTION 18. Partial Unenforceability. The invalidity or
unenforceability of any Section , paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section , paragraph or
provision hereof. If any Section , paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 19. Applicable Law. This Agreement shall be governed
by and construed in accordance with the internal laws (and not the laws
pertaining to conflicts of laws) of the State of California.
SECTION 20. General. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in
several counterparts, each one of which shall be an original, and all of which
shall constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The Section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company and you.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement between the Company and the several
Underwriters including you, all in accordance with its terms.
Very truly yours,
Candlewood Hotel Company, Inc.
By: _______________________________
By: _______________________________
Subsidiary A
By: _______________________________
Subsidiary B
By: _______________________________
Subsidiary C
The foregoing Underwriting Agreement is
hereby confirmed and accepted by us in
San Francisco, California as of the date
first above written.
XXXXXXXXXX SECURITIES
XXXXXXXX XXXXXXXX & CO. INCORPORATED
Acting as Representatives of the several
Underwriters named in the attached
Schedule A.
By XXXXXXXXXX SECURITIES
By: _________________________________
Managing Director
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SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
XXXXXXXXXX SECURITIES ________
XXXXXXXX WERTHEIM & CO. INCORPORATED ________
TOTAL UNDERWRITERS (__) 3,850,000
A-1
