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Exhibit 1
2,000,000 Shares
SIGNATURE INNS, INC.
(an Indiana corporation)
Preferred Stock
(No Par Value)
UNDERWRITING AGREEMENT
January 20, 1997
XxXXXXXX & COMPANY SECURITIES, INC.
X.X. XXXXXXXX & CO.
THE OHIO COMPANY
as Representatives of the Several Underwriters
c/x XxXxxxxx & Company Securities, Inc.
XxXxxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
Signature Inns, Inc., an Indiana corporation (the "Company"),
confirms its agreement with XxXxxxxx & Company Securities, Inc. ("McDonald"),
X.X. Xxxxxxxx & Co. ("X.X. Xxxxxxxx"), The Ohio Company and each of the
other underwriters named in Schedule A hereto (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom XxXxxxxx, X.X. Xxxxxxxx
and The Ohio Company are acting as representatives (in such capacity, XxXxxxxx,
X.X. Xxxxxxxx and The Ohio Company shall hereinafter be referred to as
"Representatives"), with respect to the sale by the Company of 2,000,000 shares
of $1.70 Cumulative Convertible Preferred Stock, Series A, no par value (the
"Preferred Stock"), of the Company, and the purchase by the Underwriters,
acting severally and not jointly, of the respective numbers of shares of
Preferred Stock set forth in said Schedule A, aggregating 2,000,000 shares of
Preferred Stock, and with respect to the grant by the Company of the option
described in Section 2(b) hereof to purchase all or any part of 300,000 shares
of Preferred Stock, no par value, solely to cover over-allotments, in each case
except as may otherwise be provided in the Pricing Agreement, as hereinafter
defined. The aforesaid 2,000,000 shares of Preferred Stock (the "Initial
Securities") to be purchased by the Underwriters and all or any part of the
300,000 shares of Preferred Stock subject to the option described in Section
2(b) hereof (the "Option Securities") are collectively hereinafter called the
"Securities."
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Capitalized terms that are used but not defined in this Agreement have the
meanings assigned to them in the Prospectus.
Prior to the purchase and public offering of the Securities by
the Underwriters, the Representatives, acting on behalf of the several
Underwriters, shall enter into an agreement substantially in the form of
Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take the
form of an exchange of any standard form of written communication or
telecommunication between the Company and the Representatives and shall specify
such applicable information as is indicated in Exhibit A hereto. The offering
of the Securities will be governed by this Underwriting Agreement (this
"Agreement"), as supplemented by the Pricing Agreement. From and after the
date of the execution and delivery of the Pricing Agreement, this Agreement
shall be deemed to incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form SB-2 (No.
333-12735) and a related preliminary prospectus for the registration of the
Securities under the Securities Act of 1933, as amended (the "1933 Act"), and
has filed such amendments thereto, if any, and such amended preliminary
prospectuses as may have been required to the date hereof. Such registration
statement (as amended, if applicable) and the prospectus constituting a part
thereof (including the documents incorporated therein by reference and the
information, if any, deemed to be part thereof pursuant to Rule 430A(b) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations")), as from time to time amended or supplemented pursuant to the
1933 Act or otherwise, are hereinafter referred to as the "Registration
Statement" and the "Prospectus," respectively, except that if any revised
prospectus shall be provided to the Underwriters by the Company in connection
with the offering of the Securities which differs from the Prospectus on file
at the Commission at the time the Registration Statement becomes effective
(whether or not such revised prospectus is required to be filed by the Company
pursuant to Rule 424(b) of the 1933 Act Regulations), the term "Prospectus"
shall refer to such revised Prospectus from and after the time it is first
provided to the Underwriters for such use. Any reference herein to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated therein by reference.
The Company understands that the Underwriters propose to make
a public offering of the Securities as soon as the Representatives deem
advisable after the Registration Statement becomes effective and the Pricing
Agreement has been executed and delivered.
SECTION 1. Representations and Warranties. (a) The
Company represents and warrants to each Underwriter as of the
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date hereof and as of the date of the Pricing Agreement (such latter date being
hereinafter referred to as the "Representation Date") as follows:
(i) The Company is a small business issuer as defined in
Regulation S-B of the 1933 Act Regulations and otherwise satisfies all
applicable requirements for the use of Form SB-2 under the 1933 Act in
connection with the transactions contemplated hereby and by the Registration
Statement.
(ii) The Company has been subject to the requirements of
Section 12 or 15(d) of the Securities Exchange Act of 1934 (the "1934 Act") for
a period of at least 12 months prior to the initial filing of the Registration
Statement and has filed all the material required to be filed pursuant to
Section 13, 14 or 15 of the 1934 Act for a period of at least 12 calendar
months immediately preceding the initial filing of the Registration Statement
and through and including the Representation Date in a timely manner. The
documents incorporated by reference in the Prospectus, when they were filed
with the Commission, conformed in all material respects to the requirements of
the 1934 Act and the rules and regulations of the Commission thereunder (the
"1934 Act Regulations"), and none of such documents contained at the date of
such filing 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.
(iii) At the time the Registration Statement becomes
effective and at the Representation Date, the Registration Statement will
comply in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations, and the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Prospectus, at the Representation Date (unless the term "Prospectus" refers to
a prospectus which has been provided to the Underwriters by the Company for use
in connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective, in which case at the time it is first provided to the
Underwriters for such use) and at the Closing Time referred to in Section 2,
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; but the
representations and warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing by
any Underwriter through the Representatives expressly for use in the
Registration Statement or Prospectus.
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(iv) The accountants who certified the financial
statements and supporting schedules included or incorporated by reference in
the Registration Statement are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
(v) The financial statements included or incorporated by
reference in the Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated subsidiaries and
consolidated Affiliated Entities, and of the unconsolidated Affiliated
Entities, as at the dates indicated and the results of their operations for the
periods specified; and except as otherwise stated in the Registration
Statement, said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis.
(vi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one enterprise, or
of the Affiliated Entities, considered as one enterprise, whether or not
arising in the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries or with respect to
Affiliated Entities, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries, considered as
one enterprise, or of the Affiliated Entities, considered as one enterprise,
and (C) there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Indiana with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter into and
perform its obligations in connection with the Purchase Transactions; and the
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(viii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its
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properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material adverse effect
on the condition, financial or otherwise, or the earnings, business affairs or
business prospects of that subsidiary; all of the issued and outstanding
capital stock of each such subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company, directly
or through one or more direct of indirect subsidiaries, free and clear of any
security interest, pledge, lien, encumbrance or claim.
(ix) Each Affiliated Entity has been duly formed and is in
full force and existence as a limited partnership under the laws of Indiana
with the power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter into and
perform its obligations in connection with the Purchase Transactions; and each
Affiliated Entity is duly qualified as a foreign limited partnership to
transact business and is in full force and existence in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business except where the failure to so
qualify would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of such
Affiliated Entity.
(x) The Company has the authorized, issued and
outstanding capitalization set forth in the Prospectus; the shares of issued
and outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable; the shares of Preferred
Stock to be issued and sold by the Company have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company in the manner contemplated by this
Agreement, will be validly issued and fully paid and nonassessable; the
issuance of shares of Preferred Stock contemplated by this Agreement is not
subject to preemptive or other similar rights; the shares of the Company's
Common Stock, no par value (the "Common Stock") issuable on conversion of the
Preferred Stock have been duly authorized and reserved for issuance and, when
delivered on conversion of the Preferred Stock, will have been validly issued
and fully paid and will be nonassessable and free of preemptive or other
similar rights; the Preferred Stock and the Common Stock conform in all
material respects to all statements relating thereto contained in the
Prospectus; the certificates for the Securities are in due and proper form; and
the holders of the Securities will not be subject to personal liability by
reason of being such holders.
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The reverse stock split described in the Prospectus has been effected in
compliance with all applicable laws.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) Neither the Company nor any of its subsidiaries nor any
Affiliated Entity is in violation of its respective charter or limited
partnership agreement, as applicable, or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, loan agreement or note or in any material
contract, lease or other instrument to which it is a party or by which it may
be bound, or to which any of its property or assets is subject; the
consummation of the transactions contemplated herein and by the Pricing
Agreement has been duly authorized by the Company by all necessary corporate
action and the issuance, sale and delivery of the shares of Preferred Stock to
be issued and sold by the Company, the issuance of Common Stock on conversion
of the Preferred Stock, and the execution, delivery and performance of this
Agreement by the Company will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, any of its subsidiaries
or any Affiliated Entity pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company, any of its
subsidiaries or any Affiliated Entity is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company, any of
its subsidiaries or any Affiliated Entity is subject, nor will such action
result in any violation of the provisions of the charter or by-laws of the
Company or of any of its subsidiaries or the limited partnership agreement of
any Affiliated Entity, or any applicable law, administrative regulation or
administrative or court decree. The partnership agreement of each Affiliated
Entity is in full force and effect.
(xiii) No labor dispute with the employees of the Company or
of any of its subsidiaries or of any Affiliated Entity exists or, to the
knowledge of the Company, is imminent.
(xiv) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending or, to
the knowledge of the Company, threatened, against or affecting the Company or
any of its subsidiaries or any Affiliated Entity, which is required to be
disclosed in the Registration Statement (other than as disclosed therein), or
which, considered singly or in the aggregate, may result in any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries,
considered as one enterprise, or of the Affiliated Entities, considered as one
enterprise, or which may materially and adversely affect the properties or
assets of
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the Company and its subsidiaries, considered as one enterprise, or of the
Affiliated Entities, considered as one enterprise, or which may adversely
affect the consummation of this Agreement or the Pricing Agreement; all pending
legal or governmental proceedings to which the Company or any subsidiary or
Affiliated Entity is a party or of which any of their respective property or
assets is the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material; and there are no contracts or
documents of the Company or of any of its subsidiaries or of any Affiliated
Entity which are required to be filed as exhibits to the Registration Statement
by the 1933 Act or by the 1933 Act Regulations which have not been so filed.
(xv) The Company owns or possesses the licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "Intellectual
Property") employed by the Company, its subsidiaries or the Affiliated Entities
in connection with the businesses now operated by them, except for situations
in which the failure to own or possess any such intellectual property would not
have a material adverse effect on the condition, financial or otherwise, or on
the earnings, business affairs or business prospects of the Company and its
subsidiaries, considered as on enterprise, or of the Affiliated Entities,
considered as one enterprise, and neither the Company nor any of its
subsidiaries nor any Affiliated Entity has received any notice of infringement
of or conflict with asserted rights of others with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise, or of the Affiliated Entities, considered as one enterprise.
(xvi) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the sale of
the Securities hereunder, except such as may be required under the 1933 Act or
the 1933 Act Regulations, which qualification has been obtained, or state and
foreign securities laws.
(xvii) The Company and its subsidiaries and the Affiliated
Entities possess such certificates, authorizations or permits as are necessary
to conduct the business now operated by them, and neither the Company nor any
of its subsidiaries nor any Affiliated Entity has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or
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otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise, or of any
Affiliated Entity.
(xviii) All United States federal income tax returns of the
Company and of each of its subsidiaries and of each Affiliated Entity required
by law to be filed have been filed and all taxes shown by those returns or
otherwise assessed which are due and payable have been paid, except assessments
against which appeals have been or will be promptly taken. The United States
federal income tax returns of the Company and its subsidiaries on a
consolidated basis and of each Affiliated Entity through its latest completed
fiscal year have been filed and no assessment in connection therewith has been
made against the Company or any subsidiary or Affiliated Entity. The Company
and its subsidiaries and the Affiliated Entities have filed all other tax
returns which are required to have been filed by them pursuant to applicable
state, local or other law and have paid all taxes due pursuant to said returns
or pursuant to any assessment received by the Company or its subsidiaries or
any Affiliated Entity, except for such taxes, if any, as are being contested in
good faith and as to which adequate reserves have been provided. The charges,
accruals and reserves on the consolidated books of the Company in respect of
any income and corporation tax liability and on the books of each Affiliated
Entity for any years not finally determined are adequate to meet any
assessments or re-assessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy which would not have
a material adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise or on any Affiliated Entity. Each of
the Affiliated Entities has, since its formation, been properly treated for
purposes of the Code and applicable state law as a partnership and not as an
association taxable as a corporation or a "publicly traded partnership" within
the meaning of Section 7704(b) of the Code.
(xix) The Company and its subsidiaries maintain, and each
Affiliated Entity maintains, a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed
in accordance with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (C) access to assets is permitted only in
accordance with management's general or specific authorization, and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(xx) There are no holders of securities (debt or equity) of
the Company or of any of its subsidiaries or of any Affiliated Entity, or
holders of rights, options or warrants to obtain securities of the Company or
of any of its subsidiaries or of any Affiliated Entity, who, by reason of the
filing of the Registration Statement under the 1933 Act, have the right to
request the Company or any of its subsidiaries or any Affiliated Entity to
register any security under the 1933 Act. The Company and its subsidiaries and
the Affiliated Entities have complied in all material respects with all of the
terms of any of their outstanding agreements relating to the rights of any
holder of securities to have securities registered under the Registration
Statement. Except as described in the Prospectus, there are no outstanding
options, warrants or other rights that may require the issuance of, and there
are no commitments, plans or arrangements to issue, any shares of Preferred
Stock or Common Stock or any security convertible into or exchangeable or
exercisable for any shares of Preferred Stock or Common Stock.
(xxi) The Company, its subsidiaries and the Affiliated
Entities have good title to all properties owned by them, in each case free and
clear of all liens, encumbrances and defects except for (A) those items that do
not materially interfere with the use made and proposed to be made of such
properties, and (B) the mortgage liens and other items described in the
Registration Statement.
(xxii) Except as disclosed in the Registration Statement, the
Company, its subsidiaries and the Affiliated Entities are in compliance with
all applicable federal, state and local laws and regulations relating to
protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material (as hereinafter defined)
("Environmental Laws"), except, in each case, where any noncompliance, singly
or in the aggregate, would not have a material and adverse effect on the
condition, financial or otherwise, or the earnings or business affairs of the
Company, any subsidiary or any Affiliated Entity. The term "Hazardous
Material" means (A) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (B)
any "hazardous waste" as defined by the Resource Conservation and Recovery Act,
as amended, (C) any petroleum or petroleum product, (D) any polychlorinated
biphenyl, and (E) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, waste or substance regulated under or within the meaning of
any other Environmental Law.
(xxiii) There is no alleged liability, or to the best
knowledge and information of the Company, potential liability (including,
without limitation, alleged or potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) of the Company, any subsidiary or any
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Affiliated Entity arising out of, based on or resulting from (A) the presence
or release into the environment of any Hazardous Material at any location at
which the Company, any of its subsidiaries or any Affiliated Entity has
previously conducted or is currently conducting any business (whether or not
owned by the Company, any subsidiary or any Affiliated Entity) or has
previously owned or currently owns any property, or, (B) any violation or
alleged violation of any Environmental Law, (x) which alleged or potential
liability is required to be disclosed in the Registration Statement, other than
as disclosed therein, or (y) which alleged or potential liability, singly or in
the aggregate, would have a material and adverse effect on the condition,
financial or otherwise, or the earnings or business affairs of the Company, any
of its subsidiaries or any Affiliated Entity.
(xxiv) Each of the Initial Hotels complies in all material
respects with all applicable codes and zoning laws and resolutions, and there
is no pending or, to the knowledge of the Company or any Affiliated Entity,
threatened condemnation, zoning change, or other proceeding or action that will
in any manner affect the size of, use of, improvements on, construction on, or
access to any Initial Hotel. The improvements comprising any portion of any
Initial Hotel's property (the "Improvements") are free of any and all material
physical, mechanical, structural, design and construction defects which would,
singly or in the aggregate, have a material adverse effect on that hotel's
property and the mechanical, electrical and utility systems servicing the
Improvements (including, without limitation, all water, electric, sewer,
plumbing, heating, ventilation, gas and air conditioning) are in good condition
and proper working order and are free of defects (for which provision to repair
has not been made) which would, singly or in the aggregate, have a material
adverse effect on that hotel's property.
(xxv) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(xxvi) The Company, each of its subsidiaries and each
Affiliated Entity maintains reasonably adequate insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or
similar businesses and similarly situated, of such types and in such amounts as
are customarily carried under similar circumstances by such other corporations.
(xxvii) The shares of Common Stock outstanding prior to the
Representation Date have not been listed on any securities exchange. The
shares of freely tradeable Common Stock outstanding prior to the Representation
Date will be listed on the National Association of Securities Dealers Automated
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Quotation National Market System ("NASDAQ NMS") no later than the next trading
day after the Representation Date. The shares of Preferred Stock to be issued
and sold by the Company pursuant to this Agreement and 4,166,667 shares of
Common Stock issuable on conversion of the Preferred Stock will at the Closing
Time be duly authorized for listing on the NASDAQ NMS, subject only to official
notice of issuance.
(xxviii) The Company has furnished the Representatives
letters from each of the executive officers and directors of the Company
pursuant to which such persons have agreed during a period of 180 days from the
date hereof that, without the prior written consent of McDonald, such persons
will not sell, offer to sell, contract to sell, or otherwise dispose of,
directly or indirectly, any shares of Preferred Stock, any other equity
security of the Company, or any security convertible into or exchangeable or
exercisable for shares of Preferred Stock or Common Stock, beneficially owned
by such person or with respect to which such person has the power of
disposition, other than as bona fide gifts.
(xxix) The purchase agreements (the "Purchase Agreements")
pursuant to which the Company will acquire the interests in the Initial Hotels
to be acquired in the Purchase Transactions (those hotels, the "Acquired
Hotels") have been duly authorized, executed and delivered by the Company and
the other parties thereto. The Purchase Agreements and all deeds, assignments
of partnership interests, assignments of leases and other documents delivered
or to be delivered in connection therewith are legally sufficient to effect the
transfer to the Company of all right, title and interest in and to the Acquired
Hotels upon payment of the consideration therefor. Within two business days
after the sale of the Initial Securities at the Closing Time, the Company will
have good and marketable title in fee simple absolute to all real property and
good and marketable title to each of the items of personal property which are
included in the Acquired Hotels or are referred to in the Registration
Statement and the Prospectus or are reflected in the financial statements
referred to herein as being owned by any of them, and will have valid
and enforceable leasehold interests in each of the items of real and
personal property which are included in the Acquired Hotels or are referred to
in the Registration Statement and the Prospectus as being leased by any of
them, in each case free and clear of all liens, claims, security interests, and
other encumbrances except such as are immaterial.
(xxx) Other than this Agreement and as set forth in the
Prospectus under the heading "Underwriting," there are no contracts, agreement
or understandings between the Company and any person that would give rise to a
valid claim against the Company or any Underwriter for a brokerage commission,
finder's
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fee or other like payment with respect to the consummation of the transactions
contemplated by this Agreement.
(xxxi) Except as described in the Prospectus or the
Registration Statement, the Company has not sold or issued any equity security
during the six-month period preceding the date of the Prospectus, including any
sales pursuant to Rule 144A or Regulation D or S, under the 0000 Xxx.
(xxxii) No relationship, direct or indirect, exists between
or among the Company on the one hand, and the directors, officers or
stockholders of the Company on the other hand, which is required to be
described in the Prospectus which is not so described.
(xxxiii) The Company and its subsidiaries and each
Affiliated Entity are in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with
respect to any "pension plan" (as defined in ERISA) for which the Company or
any such subsidiary or Affiliated Entity would have any liability; neither the
Company, any such subsidiary or any Affiliated Entity has incurred nor does it
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 412 or
4971 of the Code, as amended, including the regulations and published
interpretations thereunder, and each "pension plan" for which the Company or
any such subsidiary or Affiliated Entity would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in
all material respect and nothing has occurred, whether by action or by failure
to act, which would cause the loss of such qualification.
(xxxiv) All information supplied, delivered or made available
to any Underwriter or to counsel to the Underwriters by the Company or its
agents, during the course of the Underwriters' review of the Company, the
Affiliated Entities and the Initial Hotels, including without limitation all
information supplied, delivered or made available to any Underwriter or to
counsel to the Underwriters prior to the Closing Time is (or was at the time
such information was supplied, delivered or made available) true, correct and
complete.
(b) Any certificate signed by an officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
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(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each Underwriter, and each Underwriter, severally
and not jointly, agrees to purchase from the Company, at the price agreed upon
by the Representatives and the Company as set forth in the Pricing Agreement,
the number of shares of Preferred Stock set forth in Schedule A opposite the
name of such Underwriter (except as otherwise provided in the Pricing
Agreement).
(i) If the Company has elected not to rely upon Rule 430A
under the 1933 Act Regulations, the initial public offering price of the
Securities and the purchase price of the Securities to be paid by the several
Underwriters shall be agreed upon and set forth in the Pricing Agreement, dated
the date hereof, and an amendment to the Registration Statement and the
Prospectus will be filed before the Registration Statement becomes effective.
(ii) If the Company has elected to rely upon Rule 430A
under the 1933 Act Regulations, the initial public offering price of the
Securities and the purchase price of the Securities to be paid by the several
Underwriters shall be determined by agreement among the Representatives and the
Company and set forth in the Pricing Agreement. In the event that such prices
have not been agreed upon and the Pricing Agreement has not been executed and
delivered by all parties thereto by the close of business on the fourth
business day following the date of this Agreement, this Agreement shall
terminate forthwith, without liability of any party to any other party, unless
otherwise agreed to by the Company and the Representatives.
(b) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to 300,000 shares of Preferred Stock at the price
per share set forth in the Pricing Agreement. The option hereby granted will
expire 30 days after (i) the date the Registration Statement becomes effective,
if the Company has elected not to rely on Rule 430A under the 1933 Act
Regulations or (ii) the date of the Pricing Agreement, if the Company has
elected to rely on Rule 430A under the 1933 Act Regulations, and may be
exercised in whole or in part from time to time (but not more than twice) only
for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Securities upon notice by the
Representatives to the Company setting forth the number of Option Securities as
to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Securities. Any such time and
date of payment (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full Business Days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined,
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unless otherwise agreed by the Representatives and the Company. If the option
is exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion
of the total number of Option Securities then being purchased which the number
of Initial Securities set forth in Schedule A opposite the name of such
Underwriters bears to the total number of Initial Securities (except as
otherwise provided in the Pricing Agreement), subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
XxXxxxxx &: Company Securities, Inc., XxXxxxxx Investment Center, Cleveland,
Ohio or at such other place as shall be agreed upon by the Representatives and
the Company, at 10:00 A.M. on the third business day (unless postponed in
accordance with the provisions of Section 10) following the date the
Registration Statement becomes effective (or, if the Company has elected to
rely upon Rule 430A, the third business day after execution of the Pricing
Agreement), or such other time not later than ten business days after such date
as shall be agreed upon by the Representatives and the Company (such time and
date of payment and delivery being herein called the "Closing Time"); provided,
however, that if the Registration Statement becomes effective later than 4:30
p.m., Eastern Time, on any date, then, subject to the foregoing, the Closing
Time shall be the fourth business day thereafter (or, if the Company has
elected to rely upon Rule 430A, and the Pricing Agreement is not executed until
after 4:30 p.m., Eastern Time, on any date, the fourth business day after
execution of the Pricing Agreement). In addition, in the event that any or all
of the Option Securities are to be purchased by the Underwriters, payment of
the purchase price for, and delivery of certificates for, such Option
Securities shall be made at the above-mentioned offices of XxXxxxxx & Company
Securities, Inc., or at such other place as shall be agreed upon by the
Representatives and the Company on each Date of Delivery as specified in the
notice from the Representatives to the Company. Payment shall be made to the
Company by wire transfer of immediately available funds to the account
designated by the Company, against delivery of the Securities to the
Underwriters. The certificates representing Securities shall be in such
denominations and registered in such names as the Representatives may request
in writing at least two business days before the Closing Time. It is
understood that each Underwriter has authorized the Representatives, for their
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Securities which it has agreed to purchase. The Representatives
may (but shall not be obligated to) make payment of the purchase price for the
Securities to be purchased by any Underwriter whose check has not been received
by the Closing Time, but such payment shall not relieve such Underwriter from
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its obligations hereunder. The Securities will be made available for
examination and packaging by the Underwriters not later than 10:00 A.M. on the
last business day prior to the Closing Time at such place as the Underwriters
may designate in New York, New York.
SECTION 3. Covenants of the Company. The Company
covenants with each Underwriter as follows:
(a) The Company will notify the Underwriters immediately, and
confirm the notice in writing, (i) of the effectiveness of the Registration
Statement and any amendment thereto (including any post-effective amendment),
(ii) of the receipt of any comments from the Commission, (iii) 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, and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose or the suspension of the qualification of the
Securities for offering or sale, in any jurisdiction, or the threatening or
initiation of any proceeding for that purpose. The Company will make every
reasonable effort to prevent the issuance of any stop order or any order
preventing or suspending the use of any preliminary prospectus or suspending
such qualification and, if any stop order or any order preventing or suspending
the use of any preliminary prospectus or suspending such qualification is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Company will give the Underwriters notice of its intention
to file or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities which differs
from the prospectus on file with the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), will furnish
the Underwriters with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file any such amendment or supplement or use any such prospectus
without the prior written consent of the Underwriters.
(c) The Company will deliver to the Underwriters two signed copies
of the Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) and
will also deliver to the Underwriters conformed copies of the Registration
Statement as originally filed and of each amendment thereto (without exhibits).
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(d) The Company will furnish to each Underwriter, from time to
time during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act
or the 1934 Act Regulations.
(e) If any event shall occur as a result of which counsel for the
Company and counsel for the Underwriters mutually agree that it is necessary to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in light of the circumstances existing at the time it is delivered
to a purchaser or if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the 1933 Act, the 1933 Act
Regulations, the 1934 Act or the 1934 Act Regulations, the Company will
forthwith amend or supplement the Prospectus (in form and substance mutually
satisfactory to counsel for the Underwriters and counsel for the Company and in
compliance with the 1933 Act and the 1933 Act Regulations) so that, as so
amended or supplemented, the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time it is
delivered to a purchaser, not misleading and will comply with the 1933 Act, the
1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, and the
Company will furnish to the Underwriters a reasonable number of copies of such
amendment or supplement.
(f) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions of the United
States as the Representatives may designate; provided, however, that the
Company shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. In each jurisdiction in which
the Securities have been so qualified, the Company will file such statements
and reports as may be required by the laws of such jurisdiction to continue
such qualification in effect, for a period of not less than one year from the
effective date of the Registration Statement.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close of
the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a twelve month
period beginning on the first day of the Company's fiscal quarter next
following the fiscal quarter in which the "effective date" (as defined in said
Rule 158) of the Registration Statement occurs.
(h) If, at the time that the Registration Statement becomes effective,
any information shall have been omitted therefrom in
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reliance upon Rule 430A of the 1933 Act Regulations, then immediately following
the execution of the Pricing Agreement, the Company will prepare, and file or
transmit for filing with the Commission in accordance with such Rule 430A and
Rule 424(b) of the 1933 Act Regulations, copies of an amended Prospectus, or,
if required by such Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all information so
omitted.
(i) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act Regulations.
(j) The Company will effect the listing of the Preferred Stock issued
and sold pursuant to this Agreement on the NASDAQ NMS.
(k) During a period of 180 days from the date hereof, the Company
will not, without the prior written consent of McDonald, sell, offer to sell,
contract to sell, or otherwise dispose of, directly or indirectly, any shares
of Preferred Stock or Common Stock, any other equity security of the Company or
any security convertible into or exchangeable or exercisable for Preferred
Stock or Common Stock (except for shares of Preferred Stock issued pursuant to
this Agreement and the Pricing Agreement, the grant of options or the issuance
of shares of Common Stock upon the exercise of outstanding options under the
Company's existing stock option plans, in each case as described in the
Prospectus).
(1) The Company will use all commercially reasonable efforts to do
and perform all things required or necessary to be done and performed by it
under this Agreement prior to the Closing Time and will satisfy all conditions
precedent to the delivery of the Securities.
SECTION 4. Payment of Expenses. The Company will pay
all expenses incident to the performance of its obligations under this
Agreement, including those associated with (i) the printing and filing and
delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, during the period specified in
Section 3(d) hereof (excluding any fees, costs or expenses of counsel to the
Underwriters), (ii) the printing of this Agreement and the Pricing Agreement,
(iii) the preparation, issuance and delivery of the certificates for the
Securities to the Underwriters, (iv) the fees and disbursements of the
Company's counsel and accountants, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation of
the Blue Sky Survey, (vi) the
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printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and each amendment thereto, of the preliminary
prospectuses, and of the Prospectus and any amendments or supplements thereto,
(vii) the printing and delivery to the Underwriters of the Blue Sky Survey,
(viii) the fees and expenses of the Company's transfer agent, (ix) the fee of
the National Association of Securities Dealers, Inc. and (x) the fees and
expenses incurred in connection with the listing of the Securities on the
NASDAQ NMS.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses relating to
the transactions contemplated hereby, including the reasonable fees and
disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the Underwriters hereunder are subject to the accuracy of
the representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder, and to the following
further conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 P.M. on the date hereof, or with the consent of the
Representatives, at a later time and date, not later, however, than 5:30 P.M.
on the first business day following the date hereof, or at such later time and
date as may be approved by the Underwriters and at the Closing Time no stop
order suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or threatened
by the Commission. If the Company has elected to rely upon Rule 430A of the
1933 Act Regulations, the price of the Securities and any price related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the 1933 Act Regulations within the
prescribed time period, and prior to Closing Time, the Company shall have
provided evidence satisfactory to McDonald that such timely filing, or a
post-effective amendment containing price related information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the 1993 Act Regulations.
(b) At the Closing Time the Underwriters shall have received:
(i) An opinion, dated the Closing Time, of counsel for
the Company and its subsidiaries and the Affiliated Entities, substantially
in the form set forth on Annex I attached hereto, and
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(ii) An opinion, dated the Closing Time, of Xxxxx &
Xxxxxxxxx LLP, counsel for the Underwriters, in form and substantially
satisfactory to the Underwriters.
In giving their opinions required by subsections (i) and (ii),
respectively, of this section 5, counsel for the Company and Xxxxx & Xxxxxxxxx
LLP shall each additionally state that although such counsel has not
undertaken to determine independently the accuracy, completeness and
fairness of the information contained in the Registration Statement or in
the Prospectus and takes no responsibility therefor, such counsel has
participated in discussions and meetings with officers and other
representatives of the Company and discussions with the auditors for the
Company in connection with the preparation of the Registration Statement and
the Prospectus, and that nothing has come to such counsel's attention that has
caused such counsel 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 required in order to
make the statements therein not misleading, or that the Prospectus, at the
Closing Time, contained any untrue statement of a material fact or omitted to
state a material fact required in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that in each case such counsel need not express any opinion or belief with
respect to the financial or statistical statements or other financial data
contained in the Registration Statement or the Prospectus.
(c) At the Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as one
enterprise, or in the Affiliated Entities, considered as one enterprise,
whether or not arising in the ordinary course of business, and the Underwriters
shall have received a certificate of the Chairman and Chief Executive Officer
of the Company and the chief financial or chief accounting officer of the
Company, dated as of the Closing Time, to the effect that (A) there has been no
such material adverse change, (B) the representations and warranties in Section
1 are true and correct with the same force and effect as though expressly made
at and as of the Closing Time, (C) the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied at or
prior to the Closing Time, and (D) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been initiated or threatened by the Commission.
(d) On the date of the execution of this Agreement, the
Underwriters shall have received from KPMG Peat Markwick, LLP,
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independent certified public accountants, a letter dated such date, in form and
substance previously approved by the Representatives, with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(e) At the Closing Time, the Underwriters shall have received from
KPMG Peat Markwick, LLP,, independent certified public accountants, a letter,
dated as of Closing Time, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (d) of this Section, except that
the review cutoff date referred to in the Closing Time letter shall be a date
not more than five days prior to the Closing Time.
(f) At the Closing Time, the Representatives shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling counsel for the Underwriters to pass upon the issuance
and sale of the Securities as herein contemplated and related proceedings, or
in order to evidence the accuracy of any of the representations or warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and sale of
the Securities as herein contemplated and in connection with the Purchase
Transactions shall be reasonably satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(g) At the time of the execution of this Agreement, the
Representatives shall have received from each of the executive officers and
directors of the Company a letter in which each such person agrees during a
period of 180 days from the date hereof, that such person will not, without the
prior written consent of McDonald, sell, offer to sell, contract to sell, or
otherwise dispose of, directly or indirectly, any shares of Common Stock, any
other equity security of the Company or any security convertible into or
exchangeable or exercisable for shares of Common Stock, beneficially owned by
such person or with respect to which such person has the power of disposition,
other than as bona fide gifts.
(h) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Company contained herein
and the statements in any certificates furnished by the Company hereunder shall
be true and correct as of each Date of Delivery and, at the relevant Date of
Delivery, the Representatives shall have received:
(i) A certificate, dated such Date of Delivery, of the
Chairman and Chief Executive officer of the Company and of the chief financial
or chief accounting officer of the Company confirming that the certificate
delivered at the Closing Time
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pursuant to Section 5 (c) hereof remains true and correct as of such Date of
Delivery.
(ii) An opinion, dated such Date of Delivery, of counsel
for the Company and its Subsidiaries, substantially in the form set forth on
Annex I attached hereto.
(iii) An opinion, dated such Date of Delivery, of Xxxxx &
Xxxxxxxxx LLP, counsel for the Underwriters, in form and substance reasonably
satisfactory to the Underwriters.
(iv) A letter from KPMG Peat Markwick, LLP, in form and
substance satisfactory to the Representatives and dated such Date of Delivery,
substantially the same in form and substance as the letter furnished to the
Underwriters pursuant to Section 5(e) hereof, except that the review cutoff
date in the letter furnished pursuant to this Section 5(h)(vi) shall be a date
not more than five days prior to such Date of Delivery.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 4. Notwithstanding any
such termination, the provisions of Sections 6 and 7 shall remain in effect.
SECTION 6. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act, and
each officer and director of each Underwriter and any such controlling person
to the extent and in the manner set forth as follows:
(i) against any and all loss, liability, claim, damage,
and expense whatsoever, as incurred, arising out of anyuntrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto) including the information deemed to be
part of the Registration Statement pursuant to Rule 430A(b) of the 1933 Act
regulations, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
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(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or arising from any investigation or proceeding
by any governmental agency or body, commenced or threatened, or arising from
any claim whatsoever based upon such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with the
written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by the Underwriters), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by a governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense not
paid under (i) or (ii) above; but this indemnity agreement shall not apply (A)
to any loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives expressly for use in the
Registration Statement or Prospectus and (B) with respect to the Prospectus or
any preliminary prospectus to the extent that any loss, liability, claim,
damage or expense results from the fact that such Underwriter sold Securities
to a person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (and any amendment or
supplement thereto) in any case where such delivery is required by the 1933 Act
if the Company timely furnished copies thereof to such Underwriter and the
loss, liability, claim, damage or expense results from an untrue statement or
omission of a material fact contained in the Prospectus or any preliminary
prospectus which was corrected in the Prospectus (or any amendment or
supplement thereto).
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or such
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preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Each indemnified party shall give notice as promptly
as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action. In no event shall the indemnifying parties
be liable for fees and expenses (which fees and expenses shall be reasonable)
of more than one counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances; but if an indemnified party
shall have been advised in writing by counsel selected to represent the
indemnified parties that an actual or potential conflict of interest exists
between the position of that indemnified party and other indemnified parties,
that indemnified party shall have the right to select separate counsel to
participate in the defense of such action on behalf of that indemnified party,
and the indemnifying parties shall be responsible for the reasonable fees and
expenses of such separate counsel.
SECTION 7. Contribution. If the indemnification
provided for in Section 6 is unavailable or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as incurred, in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the Preferred
Stock. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party, as
incurred, in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the
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Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and the opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to above. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Preferred Stock underwritten by it and distributed to the public was offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute are
several in proportion to their respective underwriting obligations and not
joint.
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement and the Pricing Agreement, or contained in certificates of
officers of the Company submitted pursuant hereto, shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or controlling person, or by or on behalf of the Company,
and shall survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of the Agreement.
(a) The Representatives may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries
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considered as one enterprise, or in the Affiliated Entities, considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States, or any new outbreak of hostilities or material escalation
thereof or other calamity or crisis, the effect of which is to make it, in the
judgment of the Representatives, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in the
Preferred Stock or the Common Stock has been suspended by the Commission, or if
trading generally on either the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market System has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by any of said exchanges or system or by order
of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either federal, New York or Ohio authorities.
(b) If this Agreement is terminated pursuant to this Section 9,
such termination shall be without liability of any party to any other party
except as provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 6 and 7 shall remain in effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time to purchase the
Initial Securities which it or they are obligated to purchase under this
Agreement and the Pricing Agreement (the "Defaulted Securities"), the
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the nondefaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements with such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Initial Securities, the nondefaulting Underwriters shall be
obligated to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all nondefaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Initial Securities, this Agreement shall terminate without liability
on the part of any nondefaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
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In the event of any such default which does not result in the
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
The Underwriters shall have the right to amend Schedule A hereto by
making such substitutions or corrections as are indicated in the Pricing
Agreement.
SECTION 11. Notices. All notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunications.
Notices to the Underwriters shall be directed in care of the Representatives at
XxXxxxxx Investment Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000,
attention: Xxxxxx Xxxxxx, Senior Managing Director, and notices to the Company
shall be directed to it at One Parkwood Crossing, 000 Xxxx 00xx Xxxxxx, Xxxxx
000, Xxxxxxxxxxxx, Xxxxxxx 00000, attention: Xxxx X. Xxxxxxxxx, telecopy
number (000) 000-0000.
SECTION 12. Parties. This Agreement and the Pricing
Agreement shall each inure to the benefit of and be binding upon the
Underwriters and the Company and their respective successors. Nothing
expressed or mentioned in this Agreement or the Pricing Agreement is intended
or shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or the Pricing Agreement or any
provision herein and therein contained. This Agreement and the Pricing
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the Underwriters and the Company and
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No Purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason of such purchase.
SECTION 13. Governing Laws and Time. This Agreement and
the Pricing Agreement shall be governed by and construed in accordance with the
internal laws of the State of Ohio without giving effect to principles of
conflict of laws. Specified times of day refer to the time in Cleveland, Ohio.
As used herein, the term "business day" means any day on which the NASDAQ
National Market System is open for business.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
SIGNATURE INNS, INC.
By:_______________________
Name:
Title:
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CONFIRMED AND ACCEPTED
as of the date first above written:
XxXXXXXX & COMPANY SECURITIES, INC.
X.X. XXXXXXXX & CO.
THE OHIO COMPANY
BY: XxXXXXXX & COMPANY SECURITIES, INC.
By: ____________________________
Name:
Title:
For themselves and as Representatives of the
other Underwriters in Schedule A hereto.
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SCHEDULE A
Number
Of Shares
Underwriters To Be Purchased
------------ ---------------
XxXxxxxx & Company Securities, Inc. 434,000
X.X. Xxxxxxxx & Co. 433,000
The Ohio Company 433,000
City Securities Corp. 70,000
Xxxxxxx, Xxxxxx & Co. 70,000
Friedman, Billings, Xxxxxx & Co., Inc. 70,000
Xxxxxx Xxxxxx & Co., Inc. 70,000
NatCity Investments, Inc. 70,000
Xxxxxxx Xxxxx & Associates, Inc. 70,000
Xxxxx & Co., LLC 70,000
Sutro & Co. 70,000
Xxxxx & Co. Inc. 70,000
Xxxxxx Xxxxxxx Inc. 70,000
TOTAL 2,000,000
30
EXHIBIT A
2,000,000 Shares
SIGNATURE INNS, INC.
(an Indiana corporation)
Preferred Stock
(No Par Value)
PRICING AGREEMENT
January 20, 1997
XxXXXXXX & COMPANY SECURITIES, INC.
X.X. XXXXXXXX & CO.
THE OHIO COMPANY
as Representatives of the Several Underwriters
c/x XxXxxxxx & Company Securities, Inc.
XxXxxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated
January 20, 1997 (the "Underwriting Agreement"), relating to the purchase by
the several Underwriters named in Schedule A thereto, for whom XxXxxxxx &
Company Securities, Inc., X.X. Xxxxxxxx & Co. and The Ohio Company are acting
as representatives, of the above shares of the Preferred Stock, no par value,
of Signature Inns, Inc. (the "Company").
Pursuant to Section 2 of the Underwriting Agreement, the
Company agrees with the Underwriters as follows:
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, is $20.
2. The purchase price per share for the Securities to be
paid by the several Underwriters is $18.60, being an amount equal to the
initial public offering price set forth above less $1.40 per share.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the
31
Company a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement between the Underwriters and the
Company in accordance with its terms.
Very truly yours,
SIGNATURE INNS, INC.
By: _______________________
Name:
Title:
CONFIRMED AND ACCEPTED
as of the date first above written:
XxXXXXXX & COMPANY SECURITIES, INC.
X.X. XXXXXXXX & CO.
THE OHIO COMPANY
BY: XxXXXXXX & COMPANY SECURITIES, INC.
By: ____________________________
Name:
Title:
For themselves and as Representatives of the
other Underwriters in Schedule A to the
Underwriting Agreement.
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Annex I
Form of opinion of
Issuer's Counsel
