Exhibit 1.3
[FORM OF]
MINIMUM OF 7 MEMBERSHIP INTERESTS
MAXIMUM OF 25 MEMBERSHIP INTERESTS
SARDY HOUSE, LLC
UNDERWRITING AGREEMENT
October ____, 2003
X. X. Xxxxxxx & Company
As Underwriter
0000 Xxxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Gentlemen:
Sardy House, LLC, a Colorado limited liability company (the "Company"),
has issued to North and South Aspen, L.L.C., a Colorado limited liability
company (the "Holder"), a total of 25 of the Company's assessable limited
liability company membership interests (the "Membership Interests"), which allow
for exclusive use of the Sardy House in Aspen, Colorado.
The Company and the Holder propose, upon the terms and conditions set
forth herein, to conduct a public offering through X. X. Xxxxxxx & Company, a
Colorado corporation (the "Underwriter"), of up to the total of 25 Membership
Interests held by the Holder, which offering shall be conducted on a "best
efforts, all or none" basis as to a minimum of 7 Membership Interests and on a
"best efforts" basis as to additional Membership Interests up to a maximum of 25
Membership Interests (the "Offering").
In connection with the Offering, the Company and the Holder hereby
agree with the Underwriter as follows (with this agreement being hereinafter
referred to as "this Agreement"):
1. Sales of Membership Interests.
(a) On the basis of the representations, warranties and
agreements set forth herein, and subject to the terms and conditions
set forth herein and in the Prospectus (as hereinafter defined):
(i) The Company and the Holder appoint the
Underwriter as the exclusive agent to effect sales of the
Membership Interests for the account of the Holder at the
offering price of $750,000 per Membership Interest. This price
may be changed by the Holder at any time after December 5,
2003. If the price is
decreased it will be decreased for all purchasers, and if the
price is increased it will be increased for all purchasers who
have not as of that date executed subscription agreements and
submitted subscription funds.
(ii) The Underwriter agrees to use its best
efforts as such agent to sell the Membership Interests during
the term hereof.
(b) As compensation for the Underwriter's services in
effecting sales of Membership Interests hereunder, upon the Closing (as
hereinafter defined) of a sale of a Membership Interest pursuant to the
Offering during the term hereof, the Holder shall pay the Underwriter
in certified funds a cash success fee equal to 3.25% of the Total
Transaction Value (as hereinafter defined). Any separate consulting or
advisory compensation to be paid to the Underwriter under that certain
Engagement Agreement among the parties hereto dated May 12, 2003, as
amended ___________ ____, 2003 (the "Engagement Agreement"), a copy of
which is attached hereto as Exhibit A, shall not reduce the cash
success fee due to the Underwriter upon a Closing of a sale of a
Membership Interest hereunder. Any fee payable to the Underwriter
pursuant to the above provisions shall be computed based upon the total
consideration for the sale of a Membership Interest, regardless of how
allocated or the form of consideration. Therefore, the "Total
Transaction Value" referred to above shall include (i) any and all
deferred installments of the transaction price for the sale of a
Membership Interest and (ii) any portion of the transaction price held
in escrow at Closing.
In the event this Agreement is terminated prior to the sale of all
Membership Interests being sold pursuant to the Offering as a result of
a determination by the Company or the Holder to cancel the Offering and
if the Company or the Holder subsequently sells Membership Interests in
the Company on substantially similar terms and conditions (excluding
price) as the Offering within a twenty-four month period following the
termination date of this Agreement, the Underwriter will be entitled to
the fees set forth above in this Section 1(b) except such fees will be
reduced by any fees required to be paid to any third party. For
purposes of this section, the sale of all or substantially all of the
Company to a single purchaser (which sale may include the sale of all
or substantially all Membership Interests in the Company) shall not be
considered a sale on "substantially similar terms and conditions"
hereunder; provided that, upon such a sale within a twenty-four month
period following termination of this Agreement, the Underwriter shall
be paid a fee equal to 1% of the Total Transaction Value.
(c) The Underwriter's appointment hereunder shall
continue for a period (such period, including any extension thereof as
hereinafter provided, being herein called the "Offering Period") until
________________________________ (and for a period of up to _________
additional days if extended by the mutual agreement of the parties
hereto), unless all of the Membership Interests have previously been
subscribed for. The Offering will terminate and all amounts paid by
subscribers to purchase Membership Interests will be promptly returned
to them with interest as provided in the Prospectus and the Escrow
Agreement (as hereinafter defined) (i) if subscriptions for at least 7
Membership Interests have not been received by April 30, 2004, subject
to extension by mutual agreement of the parties for up to an additional
30 days, (ii) at any time by mutual
2
agreement of the parties hereto or (iii) this Agreement shall be
terminated as provided herein.
(d) The Underwriter hereby acknowledges that it is a
party to that certain Escrow Agreement dated as of October _____, 2003
(the "Escrow Agreement") among the Company, the Holder, the Underwriter
and Computershare Trust Company, Inc. (the "Escrow Agent"), a copy of
which is attached hereto as Exhibit B. The Underwriter shall promptly
deliver to the Escrow Agent, by no later than noon of the next business
day after receipt, all checks received by the Underwriter from
subscribers (the "Subscribers") to purchase Membership Interests. All
checks received by the Underwriter from Subscribers shall be made
payable to "Computershare Trust Company, Inc., as Escrow Agent for
Sardy House, LLC." Such checks shall be accompanied by one copy of a
subscription agreement pursuant to which subscriptions to purchase
Membership Interests are to be made, the form of which is attached to
the Escrow Agreement as Exhibit A (the "Subscription Agreement"),
properly completed and executed by the Subscriber. The Underwriter
shall promptly deliver to the Company one photocopy of each
Subscription Agreement delivered to the Escrow Agent. Promptly after
receipt of a Subscription Agreement and the funds therefor by the
Escrow Agent and receipt of a copy of the Subscription Agreement by the
Company, the Company shall mail an interim receipt, in the form
attached hereto as Exhibit C, to the Subscriber.
2. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, the Underwriter that:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a Registration
Statement on Form SB-2 (File No. 333-105521) and will prepare and file
one or more amendments thereto covering the registration of the
Offering under the Securities Act of 1933, as amended (the "Securities
Act"), including the related preliminary prospectuses, each and all
such preliminary prospectuses being herein referred to as the
"Preliminary Prospectus," and will prepare and proposes to file, prior
to the effective date of such Registration Statement, an additional
amendment to such registration statement, including a final prospectus,
copies of which will be delivered to the Underwriter before the filing
thereof. The Company will not, without the Underwriter's prior consent
(which shall not be unreasonably withheld), file any other amendment
thereto prior to the time such Registration Statement shall become
effective or make any change in such form of final prospectus prior to
the time it is first filed with the Commission pursuant to Rule 424(b)
of the rules and regulations of the Commission under the Securities Act
(the "Rules and Regulations"). Such Registration Statement and
prospectus, including all exhibits thereto, as finally amended and
revised at the time the registration statement becomes effective are
hereinafter referred to, respectively, as the "Registration Statement"
and the "Prospectus," except that, if the prospectus first filed by the
Company pursuant to Rule 424(b) of the Rules and Regulations shall
differ from the Prospectus, the term "Prospectus" shall mean the
prospectus first filed pursuant to Rule 424(b).
(b) When the Registration Statement shall become
effective and at all times subsequent thereto up to and including the
time of each Closing (as hereinafter defined),
3
and, when any post-effective amendment thereof shall become effective,
the Registration Statement (and any post-effective amendment thereof),
including the Prospectus (and the Prospectus as amended or
supplemented, if the Company shall have filed with the Commission any
amendment thereof or supplement thereto), will fully comply with the
applicable provisions of the Securities Act and the Rules and
Regulations thereunder, and the Registration Statement will not contain
any untrue statement of a material fact and will not omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading, except that the foregoing
does not apply to statements or omissions in the Registration Statement
or the Prospectus, or any amendment or supplement thereto, based upon
information furnished to the Company by the Underwriter specifically
for use therein.
(c) The Company has been duly organized and is validly
existing as a limited liability company in good standing under the laws
of the State of Colorado, and the Company has full power and authority
(limited liability company and other) to own its properties and conduct
its business as described in the Prospectus and as being conducted.
(d) The Membership Interests have been duly authorized,
and have been validly issued to the Holder and are fully paid, and
conform to the description thereof contained in the Prospectus. Each
Membership Interest is governed by the terms and conditions of the
Company's Operating Agreement dated as of March 21, 2003, as amended
(the "Operating Agreement"). The Membership Interests are assessable
pursuant to the provisions of the Operating Agreement whereby members
of the Company shall make required additional capital contributions to
the Company and contributions to the Company for assessments for
operating purposes as provided in the Operating Agreement. The
certificates to be used to evidence the Membership Interests will be in
due and proper form. No further approval or authorization by the Holder
or the sole manager of the Company will be required for the sale of the
Membership Interests as contemplated herein.
(e) This Agreement and the Escrow Agreement have each
been duly authorized, executed and delivered by the Company, and each
of this Agreement and the Escrow Agreement constitutes a legal, valid
and binding obligation of the Company enforceable in accordance with
its terms, except as limited by applicable bankruptcy, insolvency or
other laws of general application affecting the enforcement of
creditors' rights.
(f) The execution and delivery of this Agreement and the
Escrow Agreement and the performance by the Company hereunder and
thereunder will not conflict with, result in a breach or violation of
or constitute a default under any agreement or instrument to which the
Company is a party or the articles of organization of the Company or
the Operating Agreement or any law, order, rule, regulation, decree or
injunction of any jurisdiction, court or governmental agency or body,
and no consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required for the
performance by the Company of this Agreement or the Escrow Agreement or
the consummation by the Company of the transactions contemplated
4
hereby or thereby, except as may be required under the Securities Act,
or state securities or blue sky laws.
(g) The Prospectus and the Preliminary Prospectus as
originally filed or as amended and supplemented, if the Company shall
have filed with the Commission any amendment thereof or supplement
thereto will fully comply with the applicable provisions of the
Securities Act and the Rules and Regulations and will not contain any
untrue statement of a material fact and will not omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
3. Representations, Warranties and Agreements of the Holder. The
Holder represents and warrants to, and agrees with, the Underwriter that:
(a) This Agreement and the Escrow Agreement have each
been duly authorized, executed and delivered by the Holder, and each of
this Agreement and the Escrow Agreement constitutes a legal, valid and
binding obligation of the Holder enforceable in accordance with its
terms, except as limited by applicable bankruptcy, insolvency or other
laws of general application affecting the enforcement of creditors'
rights.
(b) The Holder owns, beneficially and of record, free and
clear of any liens and encumbrances, all 25 of the Membership Interests
being offered under the Registration Statement. Upon delivery of the
payment for such Membership Interests as provided in the Escrow
Agreement, the Holder will convey good title thereto to the purchasers
of the Membership Interests, free and clear of any liens or
encumbrances.
(c) In connection with the completion of the minimum
amount of the Offering, the Holder acknowledges that it is solely
obligated and responsible for the application of the funds released
from escrow to complete repayment of the outstanding indebtedness of
the Company and the Holder to WestStar Bank under that certain
construction loan agreement for the Sardy House property (the
"Construction Loan Agreement"), as disclosed in the Prospectus included
in the Registration Statement.
4. Representations, Warranties and Agreements by the Underwriter.
The Underwriter represents and warrants to, and agrees with, the Company and the
Holder that:
(a) This Agreement and the Escrow Agreement have each
been duly authorized, executed and delivered by the Underwriter, and
each of this Agreement and the Escrow Agreement constitutes a legal,
valid and binding obligation of the Underwriter enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency or other laws of general application affecting the
enforcement of creditors' rights.
(b) The Underwriter is registered as a broker-dealer with
the Commission and is a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"). The Underwriter's
Membership Agreement with the NASD authorizes the Underwriter to
perform the business operations necessary for the Underwriter to
perform
5
this Agreement in accordance with its terms. The Underwriter is duly
licensed and authorized to act as a broker-dealer for the sale of
securities in all jurisdictions in which the Underwriter intends to or
will make offers and/or sales of the Membership Interests pursuant to
this Agreement.
(c) In connection with the offer and sale of the
Membership Interests pursuant to this Agreement, the Underwriter shall
comply with all provisions of the Securities Act, the Rules and
Regulations and other federal laws and regulations pertaining to the
sales of securities pursuant to the Offering, the securities or "blue
sky" laws and regulations and other applicable laws and regulations of
the states or other jurisdiction in which the Underwriter will sell the
Membership Interests and the Bylaws and the Rules of Conduct of the
NASD, including all published NASD interpretations thereof, whether
issued by the Board of Governors of the NASD, contained in any NASD
Notice to Members or otherwise (the "NASD Rules of Conduct").
(d) The Underwriter will not complete any sales of
Membership Interests until at least five business days after the date
on which the Subscriber receives a copy of the final Prospectus, and
shall otherwise comply with the requirements of Rule 15c2-8 of the
Commission.
(e) The Underwriter shall assist the Company in
qualifying or registering the Membership Interests for sale under the
laws of such states or jurisdictions as the Underwriter and the Company
shall mutually agree and shall make no sale of the Membership Interests
in any state or jurisdiction until the Underwriter has been advised by
the Company that the Membership Interests have been duly qualified or
registered for sale therein.
(f) Pursuant to the Underwriter's appointment as agent
for the Company and the Holder as set forth herein, insofar as it is
within the Underwriter's control, the Underwriter shall in good faith
use its best efforts to conduct the Offering in compliance with the
Securities Act and the Rules and Regulations, the NASD Rules of Conduct
and the permit(s) or authorizations issued with respect to the Offering
by any state or other securities regulatory authority, and in this
regard:
(i) The Underwriter shall, during the course of
the Offering, and to the extent that the Underwriter or any
person associated with the Underwriter makes any
representations in connection with the Offering other than
those set forth in the Prospectus, not make any untrue
statement of a material fact or omit to state a material fact
required to be stated or necessary to make any statement made
not misleading concerning the Offering or any matters set
forth in or contemplated by the Prospectus.
(ii) The Underwriter shall, prior to the sale of
Membership Interests to any Subscriber, make reasonable
efforts to determine that there are reasonable grounds for
believing that the purchase of the Membership Interests is
suitable for the Subscriber, and the Underwriter will prepare
and maintain for the Underwriter's benefit and for the benefit
of the Company and the Holder,
6
appropriate records to evidence such determination, which
records shall include but not be limited to information
regarding the Subscriber's investment objectives, investment
experience, income, net worth, financial situation, other
investments, and other relevant information to be set forth in
the Subscription Agreement. Such records shall be maintained
by the Underwriter for a period of at least five years
following the termination of the Offering.
(iii) The Underwriter shall, in the event that the
Underwriter uses any sales materials other than the Prospectus
(which, other than any such materials furnished to the
Underwriter by the Company or the Holder, shall be prepared
and provided solely at the Underwriter's own expense), refrain
from providing any such materials to any prospective investor
unless such materials have been reviewed and approved in
advance by the Commission and the securities regulatory
authority of the state or other jurisdiction in which the
materials are to be used, and such materials are accompanied
or preceded by the Prospectus.
(iv) Until the termination of this Agreement, if
any event affecting the Company or the Underwriter should
occur which the Company or its counsel believe should be set
forth in a supplement or amendment to the Prospectus, the
Underwriter agrees to distribute such supplement or amendment
to persons who have previously received a copy of the
Prospectus from the Underwriter and continue to express an
interest in purchasing a Membership Interest, and the
Underwriter further agrees to include such supplement or
amendment in all further deliveries of the Prospectus. The
Company shall, at its own expense, prepare and furnish to the
Underwriter a reasonable number of copies of that supplement
or amendment for such distribution.
(v) The Underwriter shall implement appropriate
procedures designed to ensure that each solicitation and sale
made by the Underwriter and the persons associated with the
Underwriter, and its and their efforts hereunder, will comply
with the terms of this Agreement and the NASD Rules of
Conduct.
(vi) The Underwriter shall not solicit or obtain
referrals for possible Subscribers from real estate brokers or
agents or other persons who are not registered with the
Commission as securities broker-dealers and arrange for the
payment of any compensation to such persons based on the
completion of the sale of Membership Interests to any
referrals therefrom.
(vii) The Underwriter shall at all times comply
with the requirements of Rule 15c2-4 of the Commission, and
all interpretations thereof issued by the Commission or the
NASD. In this regard, upon receipt of any checks from
prospective Subscribers for the purchase of Membership
Interests, the Underwriter shall promptly transmit the same,
together with a copy of the related Subscription Agreement, to
the Escrow Agent by noon of the next business day following
the Underwriter's receipt thereof.
(viii) The Underwriter shall send each Subscriber
who purchases a Membership Interest a confirmation of such
purchase.
7
5. Closings.
(a) Initial Closing. Subject to the prior termination of
the Offering as provided herein, there shall be a closing (with the
initial closing and each subsequent closing referred to as a
"Closing"), at the offices of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP,
0000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx, promptly following the
satisfaction of the minimum conditions of the Offering (or at such
other place or time as the Company and the Holder shall determine)
(with the date of such Closing hereinafter referred to as the "Initial
Closing Date"). Such Closing shall include the following: (i)
satisfaction of the minimum conditions of the Offering as set forth in
the Prospectus and the Escrow Agreement; (ii) satisfaction of the
conditions set forth in Section 8 hereof; (iii) payment for the
Membership Interests to the Holder by the release of funds from the
Escrow Account and delivery to the Company of properly completed and
executed Subscription Agreements with respect to each purchaser; (iv)
delivery by the Company of certificates representing the Membership
Interests purchased by each purchaser; (v) payment of interest earned
on amounts held in the Escrow Account to the respective purchasers as
set forth in the Escrow Agreement; (vi) payment by the Holder of all
outstanding indebtedness under the Construction Loan Agreement as
described in the Prospectus and the delivery by WestStar Bank of
appropriate releases of the security interests in the Company's
property held by WestStar Bank to secure such repayment, along with
releases of related personal guaranties of such repayment; (vii)
payment by the Holder to the Underwriter of the compensation set forth
in Section 1(b) hereof for each Membership Interest sold; and (viii)
payment by the Holder of any other referral or other fees due to any
other party in connection each Membership Interest sold.
(b) Subsequent Closings. Subject to the prior termination
of the Offering as provided herein, there shall be a subsequent
Closings at the discretion of the Company and the Holder with respect
to Subscription Agreements received and accepted after the initial
Closing. Such Closings shall include the following: (i) satisfaction of
the conditions set forth in Section 8 hereof; (ii) payment for the
Membership Interests to the Holder by the release of funds from the
Escrow Account and delivery to the Company of properly completed and
executed Subscription Agreements with respect to each purchaser; (iii)
delivery by the Company of certificates representing the Membership
Interests purchased by each purchaser; (iv) payment of interest earned
on amounts held in the Escrow Account to the respective purchasers as
set forth in the Escrow Agreement; (v) payment by the Holder to the
Underwriter of the compensation set forth in Section 1(b) hereof for
each Membership Interest sold; and (vi) payment by the Holder of any
other referral or other fees due to any other party in connection each
Membership Interest sold.
6. Covenants of the Company and the Holder. The Company and the
Holder covenant and agree with the Underwriter that:
(a) The Company shall use its best efforts to cause the
Registration Statement as filed and any subsequent amendments thereto
to become effective as promptly as possible and shall promptly notify
the Underwriter (i) when the Registration Statement
8
and any amendment thereto shall have become effective or any supplement
to the Prospectus or any amended Prospectus shall have been filed, (ii)
of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or of the institution of any proceedings for that purpose, or of the
institution or threatening by the Commission of any investigation or
other proceeding that might result in the suspension of the use of the
Prospectus, or of the suspension of the qualification of the Membership
Interests for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any such purpose or
for the purpose of preventing the use of or noticing a deficiency in
the Prospectus, any amended Prospectus or any supplement thereto. The
Company shall not file any post-effective amendment to the Registration
Statement or supplement or amendment to the Preliminary Prospectus or
the Prospectus or, prior to the completion of the Offering, make any
supplement to the Prospectus, unless the Underwriter shall have been
advised thereof and shall not have reasonably disapproved such
amendment or supplement.
(b) If prior to the Initial Closing Date or at any time
thereafter when a prospectus relating to the Membership Interests is
required to be delivered under the Securities Act any event occurs as a
result of which the Preliminary Prospectus or the Prospectus as then
amended or supplemented would, in the Underwriter's reasonable judgment
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Preliminary Prospectus or the
Prospectus to comply with the Securities Act, the Company shall
promptly prepare and file with the Commission an amendment or
supplement which shall correct such statement or omission or an
amendment which shall effect such compliance and, at the Company's
expense, shall prepare and furnish as many copies of any such amendment
or supplement as the Underwriter may reasonably request.
(c) The Company shall furnish to the Underwriter copies
of the Registration Statement, each related Preliminary Prospectus, the
Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the
Underwriter reasonably requests.
(d) The Company shall use its best efforts to arrange for
the qualification or registration of the Membership Interests under the
laws of such jurisdictions as the Underwriter designates and shall
continue such qualifications or registrations in effect so long as
required for the Offering, provided that the Company shall not be
obligated to file any general consent to service of process, or to
qualify as a foreign company or as a dealer in securities in any state
in which it is not now so qualified.
(e) The Holder shall apply the net proceeds from the sale
of the Membership Interests hereunder for the purposes set forth in the
Prospectus.
9
7. Expenses. The Company and the Holder agree to reimburse the
Underwriter for expenses incurred by the Underwriter in connection with the
Offering and other services performed by the Underwriter for the Company and the
Holder pursuant to the provisions set forth in Section 8 of the Engagement
Agreement.
8. Conditions of the Underwriter's Obligations. The Underwriter's
obligations to use the Underwriter's best efforts to sell the Membership
Interests as provided herein shall be subject to the accuracy of the
representations and warranties of the Company and the Holder as of the date
hereof and at the time of each Closing, to the performance by the Company and
the Holder of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become
effective prior to the receipt of any funds from Subscribers, and no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been instituted, or, to the knowledge of the Company, shall be
contemplated, by the Commission.
(b) The Underwriter shall not have advised the Company
that the Registration Statement or Prospectus, or any amendment or
supplement thereto, contains an untrue statement of fact or omits to
state a fact which the Underwriter has reasonably concluded, after
conferring with the Underwriter's counsel, is in either case material
and in the case of an omission is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) Since the respective dates as of which information is
given in the Prospectus, there shall not have been any change, or any
development involving a prospective change, in the condition (financial
or otherwise) of the Company or in any pending action, suit, proceeding
or investigation involving the Company, whether or not arising from
transactions in the ordinary course of business, that in the
Underwriter's reasonable judgment is material and renders it
impractical or inadvisable to proceed with the completion of the sale
of and payment for the Membership Interests at a Closing.
(d) No notice of disapproval shall have been issued or
proceedings for that purpose shall have been instituted by the
Commission, the NASD, or any state securities or blue sky authority
with respect to the distribution arrangements relating to the Offering.
9. Indemnification and Contribution.
(a) The Company and the Holder, jointly and severally,
shall indemnify and hold harmless the Underwriter, and shall indemnify
and hold harmless to the fullest extent permitted by law each of the
Underwriter's officers, directors, employees, representatives, agents
and each person, if any, who controls the Underwriter within the
meaning of the Securities Act, against any and all losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements (including without limitation reasonable
fees and disbursements of counsel) to which the Underwriter or such
person may become subject, under the Securities Act or otherwise,
10
insofar as such losses, claims, damages, obligations, penalties,
judgments, awards, liabilities, costs, expenses and disbursements are
related to or arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any
Preliminary Prospectus, or are related to or arise out of the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and shall reimburse the Underwriter and each such person
for all reasonable expenses as may be incurred by the Underwriter or
such person in connection with investigating, preparing or defending
any such action or claim, whether or not in connection with pending or
threatened litigation or administrative proceedings; provided, that
neither the Company nor the Holder shall be liable in any such case to
the extent that any such loss, claim, damage, obligation, penalty,
judgment, award, liability, cost, expense or disbursement is related to
or arises out of an untrue statement or alleged untrue statement or
omission or alleged omission made in any of such documents in reliance
upon and in conformity with information furnished to the Company or the
Holder by the Underwriter for use therein; and provided further, that
the indemnity agreement contained in this Section 9(a) with respect to
any Preliminary Prospectus shall not inure to the benefit of the
Underwriter or of any such person on account of any such loss, claim,
damage, obligation, penalty, judgment, award, liability, cost, expense
or disbursement related to or arising out of the sale of any of the
Membership Interests to any person if the Underwriter shall have failed
to send or give to such person with or prior to the delivery to the
Underwriter by such person of a Subscription Agreement, a copy of the
Prospectus or the Prospectus as amended or supplemented, if any
amendments or supplements thereto shall have been furnished by the
Company to the Underwriter at or prior to the time of receipt by the
Underwriter of such person's Subscription Agreement, to the extent that
any such loss, claim, damage, obligation, penalty, judgment, award,
liability, cost, expense or disbursement results from an untrue
statement or an omission which was corrected in the Prospectus or the
Prospectus as amended or supplemented. This indemnity agreement shall
be in addition to any liability which the Company or the Holder may
otherwise have.
(b) The Underwriter shall indemnify and hold harmless
each of the Company and the Holder, and shall indemnify and hold
harmless to the fullest extent permitted by law each of their
respective officers, directors, managers, employees, representatives,
agents and each person, if any, who controls the Company or the Holder
within the meaning of the Securities Act, against any and all losses,
claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements (including without
limitation reasonable fees and disbursements of counsel) to which the
Company or the Holder or any such person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses
and disbursements are related to or arise out of any untrue statement
by the Underwriter or any person associated with the Underwriter of a
material fact not contained in the Prospectus or the omission or
alleged omission to state a material fact necessary to make any such
statement of a material fact not contained in the Prospectus made by
the Underwriter or any person associated with the Underwriter not
misleading, or are related to or arise out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, or
11
any amendment or supplement thereto, or any Preliminary Prospectus or
are related to or arise out of the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in such case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission therein was
made in reliance upon and in conformity with information furnished to
the Company or the Holder by the Underwriter for use therein; and shall
reimburse each of the Company and the Holder and each such person for
all reasonable expenses as may be incurred by the Company or the Holder
or such person in connection with investigating, preparing or defending
any such action or claim, whether or not in connection with pending or
threatened litigation or administrative proceedings. This indemnity
agreement will be in addition to any liability which the Underwriter
may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under this Section 9, notify the
indemnifying party or parties of the commencement thereof; but any
delay or failure to so notify an indemnifying party shall relieve it
from any liability which it may have to any indemnified party under
this Section 9 only to the extent, if at all, that the indemnifying
party is prejudiced by reason of such failure or delay. In case any
such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that
it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation. An
indemnifying party against whom indemnity may be sought shall not be
liable to indemnify an indemnified party under this Section 9 if any
settlement of any such action is effected without such indemnifying
party's consent.
(d) If the indemnification provided for in subsection
(a), (b) or (c) of this Section 9 is for any reason, other than as
specified in such subsections, unavailable and the Company, the Holder
or the Underwriter have been required to pay damages as a result of a
determination by a court that the Registration Statement, any
Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or the
Underwriter or any person associated with the Underwriter made any
untrue statement of a material fact not contained in the Prospectus or
the omission or alleged omission to state a material fact necessary to
make any such statement of a material fact not contained in the
Prospectus made by the Underwriter or any person associated with the
Underwriter not misleading, then the Company and the Holder, jointly
and severally, shall contribute to the damages paid by the Underwriter
or persons related to the Underwriter that are subject to the
indemnification provisions above, and the Underwriter shall contribute
to the damages paid by the Company and the Holder or the persons
related to the Company
12
or the Holder that are subject to the indemnification provisions above,
but in each case only to the extent that such damages relate to or
arise out of such untrue statement or omission in such proportion as is
appropriate to reflect the relative fault of the Company and the Holder
on the one hand and the Underwriter on the other hand in connection
with the statements or omissions which resulted in such damages, as
well as any other relevant equitable considerations. The relative fault
of the Company and the Holder on the one hand and the Underwriter on
the other hand shall be determined by reference to, among other things,
whether the untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Company or
the Holder on the one hand or by the Underwriter on the other hand, and
the parties' relevant intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Company, the Holder and the Underwriter agree that it would not be
just and equitable if their respective obligations to contribute
pursuant to this Section 9(d) were to be determined by pro rata
allocation of the aggregate damages or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding sentence. For purposes of this
Section 9(d), the term "damages" shall include any legal or other
expenses reasonably incurred by the Company, the Holder or the
Underwriter in connection with investigating or defending against any
action or claim which is the subject of the contribution provisions of
this Section 9(d). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The provisions of this Section 9 shall survive the
expiration or termination of this Agreement, including a termination
resulting from the completion of the Offering.
10. Termination. This Agreement may, subject to the other
provisions hereof, be terminated as follows:
(a) The Company and the Holder shall have the right to
terminate this Agreement and the Offering at any time in their sole
discretion, by giving written notice to the Underwriter of such
termination.
(b) Except as otherwise provided herein, this Agreement
shall terminate upon the expiration or termination of the Offering,
whether by expiration of the Offering Period, completion of the
Offering or otherwise.
11. Survival of Indemnities, Representations and Warranties. The
respective indemnities, agreements, representations and warranties of the
Company, the Holder and the Underwriter set forth in or made pursuant to this
Agreement shall remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriter, the Holder or the Company, or any of their respective officers,
directors, managers or controlling persons, and will survive payment to the
Holder for the sale of the Membership Interests hereunder. If this Agreement is
terminated pursuant to Section 10 hereof or if for any reason the sale of the
Membership Interests is not completed, the Company and the Holder shall remain
responsible for the expenses to be paid or reimbursed by them to the Underwriter
pursuant to Section 7 hereof and the indemnification provisions pursuant to
Section 9 hereof shall remain in effect.
13
12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been validly served, given or
delivered five days after deposit in the United States mail, by certified mail
with return receipt requested and postage prepaid, when delivered personally,
one day after delivery to any overnight courier, or when transmitted by
facsimile transmission facilities, and addressed to the party to be notified as
follows:
If to the Underwriter: X. X. Xxxxxxx & Company
0000 Xxxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Rothgerber Xxxxxxx & Xxxxx LLP
One Xxxxx Center, Suite 3000
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
If to the Company or Holder: North and South Aspen, L.L.C.
c/o Hotel Lenado
000 X. Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxx, Esq.
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
13. Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective successors and
permitted assigns, and the other indemnified persons referred to in Section 9
hereof and their respective successors, representatives and permitted assigns.
No other person shall have any right or obligation hereunder.
14. Entire Agreement. This Agreement, along with the provisions of
the Engagement Agreement which are not inconsistent herewith, constitutes the
entire agreement among the parties with respect to the subject matter hereof.
15. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Colorado without regard
to the principles of the conflicts of laws.
14
16. Severability. The invalidity, legality or enforceability of
any provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision. If any provision is held to be
unenforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.
17. Amendments or Waiver. This Agreement may be amended or
modified only by a writing signed by all of the parties hereto. No delay or
omission by any party in exercising any right with respect thereto shall operate
as a waiver. A waiver on any one occasion shall not be construed as a bar to, or
waiver of, any right or remedy on any future occasion.
18. Assignment. No party hereto or indemnified person referred to
in Section 9 may assign its or such person's rights or obligations hereunder
without the prior written consent of the other parties hereto, which consent
shall not be unreasonably withheld.
19. Further Assurances. The parties agree and covenant that they
will execute such other and further instruments and documents as are or may
become necessary or advisable to effectuate the terms of this Agreement.
20. Execution and Counterparts. Each individual signatory hereto
acknowledges that he or she is legally authorized to sign this Agreement on
behalf of any entity associated with his or her signature hereto. This Agreement
may be executed in counterparts, all of which, taken together, shall constitute
a single agreement. Counterpart signature pages may be delivered by fax
transmission.
[Remainder of page intentionally left blank]
15
If the foregoing is in accordance with the Underwriter's understanding
of this Agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it shall become a binding agreement among the Company, the Holder and
the Underwriter in accordance with its terms.
Very truly yours,
COMPANY:
SARDY HOUSE, LLC,
a Colorado limited liability company
By: BLOCK 66, LLC,
a Colorado limited liability company
By: ________________________________
Xxxxxx X. Xxxxxx, Manager
HOLDER:
NORTH AND SOUTH ASPEN, L.L.C.,
a Colorado limited liability company
By: ________________________________
Xxxxxx X. Xxxxxx, Manager
The foregoing Underwriting Agreement is herein confirmed and accepted as of the
date first above written.
UNDERWRITER:
X. X. XXXXXXX & COMPANY,
a Colorado corporation
By: ________________________________
Xxxxx X. Xxxxxxx, President
16
EXHIBIT A
ENGAGEMENT AGREEMENT
[Engagement Agreement]
A-1
EXHIBIT B
ESCROW AGREEMENT
[Escrow Agreement]
B-1
EXHIBIT C
INTERIM RECEIPT
SARDY HOUSE, LLC
This Interim Receipt evidences the receipt from the Subscriber to
purchase named below of $__________________ in payment with respect to a
Subscription Agreement for the purchase of assessable limited liability company
membership interests (the "Membership Interests") of Sardy House, LLC, a
Colorado limited liability company. Such amount shall be promptly deposited with
the Escrow Agent pursuant to the Escrow Agreement referred to in the prospectus
for the offering of such Membership Interests. Such Subscription Agreement and
payment for Membership Interests as described above are governed by such Escrow
Agreement. This receipt does not constitute an acceptance of such Subscription
Agreement by Sardy House, LLC.
Dated: _________________, 200__
SARDY HOUSE, LLC,
a Colorado limited liability company
By: BLOCK 66, LLC,
a Colorado limited liability
company, its Manager
By: ____________________________
Xxxxxx X. Xxxxxx, Manager
________________________________________
Name of Subscriber
________________________________________
________________________________________
Address of Subscriber
C-1
