PLACEMENT AGREEMENT
between
ROYAL ALOHA DEVELOPMENT COMPANY
and
FIRST FINANCIAL EQUITY CORPORATION
Dated as of
March 20, 1998
ROYAL ALOHA DEVELOPMENT COMPANY
$9,200,000
Subordinated Notes
PLACEMENT AGREEMENT
March 20, 1998
First Financial Equity Corporation
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxx
Dear Xx. Xxxxxx:
Pursuant to this Placement Agreement ("Agreement"), Royal
Aloha Development Company (the "Company") confirms its agreement with you
("Placement Agent") to act as the Company's agent to offer for sale for the
Company's account (the "Offering") up to $9,200,000 of Subordinated Notes of-the
Company (the "Notes") in Arizona and Texas as follows:
1. The Prospectus. On or before the Commencement Date (as
defined below), the Company will deliver to you a final Prospectus for use in
the sale of the Notes (the "Prospectus") prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Securities
Act'% the Securities Exchange Act of 1934 (the "Exchange Act"), the securities
laws of each state in which the Notes will be offered and sold, and the rules
and regulations promulgated thereunder (collectively, the "Securities Laws").
2. Purchase, Delivery and Sales of the Notes.
2.1 Subject to the terms and conditions of this
Agreement, and on the basis of the representations, warranties and agreements
herein contained, the Company employs Placement Agent to sell the Notes in
Arizona and Texas for the Company's account during the period commencing on the
date (the "Commencement Date") upon which the Company's registration statement
on Form SB-2 is declared effective by the Securities and Exchange Commission
("SEC") and ending at the close of business on the 90th day after the
Commencement Date, (except that this period may be extended for up to two
additional successive 90-day periods by the Company) (the "Offering Period")
upon the terms to be determined and set forth in the Prospectus. The Company
will also file the Form SB-2, together with this Agreement, with the NASD (as
defined in Section 3.1). Placement Agent agrees to use its best efforts as agent
of the Company to sell the Notes promptly after the commencement of the
Offering, but Placement Agent shall not have any obligation or commitment to
engage in any particular selling activities except to use best efforts to
identify prospective purchasers of the Notes. This is a "best efforts" and not a
"firm commitment" placement and Placement Agent has no obligation or commitment
to purchase or sell any of the offered Notes.
2.2 The Company agrees to pay Placement Agent a
sales commission of 4.2% of the gross proceeds from the sale of Notes to Royal
Aloha Vacation Club members and a commission of 6.0% of the gross proceeds from
the sale of Notes to all other investors.
2.3 All funds collected by Placement Agent from
prospective purchasers of the Notes must be deposited in an escrow account
maintained by First Trust of California, N. A., as escrow agent. The commission
payable by the Company to Placement Agent will be paid out of the escrow account
immediately after Closing. If Closing does not occur by the end of the Offering
Period, amounts deposited in the escrow account will be returned to investors,
and the Company will pay to Placement Agent a fixed fee of $2,500 from its own
funds. Payment of the commission and delivery of and payment for the Notes shall
take place at the office of Xxxxx and Xxxx, Phoenix, Arizona, (or at any other
place designated by agreement between Placement Agent and the Company) at such
time and date as Placement Agent and the Company may agree upon in writing. Such
time and date of payment and delivery (the "Closing Date") shall be not later
than 270 days after the Commencement Date.
2.4 The Company will make any certificates
representing the Notes to be purchased hereunder available to Placement Agent
for checking at least two full business days prior to the Closing Date. Any such
certificates shall be in such names and denominations as Placement Agent
requests at least four full business days prior to the Closing Date.
3. Offering of Notes and Use of Prospectus.
3.1 Placement Agent shall offer the Notes only to
residents of Arizona and Texas, in a manner so as to comply with the Securities
Laws upon the terms set forth in this Agreement. Such solicitation activities
shall be conducted in accordance with this Agreement, the Securities Laws and
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. ("NASD").
3.2 The Company authorizes Placement Agent to use
the Prospectus, as amended or supplemented from time to time, in connection with
the sale of the Notes and in accordance with the provisions of the Securities
Laws.
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3.3 Placement Agent will provide the Company with
adequate assurances that all subscribers of the Notes will satisfy the
suitability requirements set forth in the Prospectus and imposed as a condition
of registration of the Notes under the securities laws of the State of Arizona
and the State of Texas (the "Suitability Requirements") set forth under the
headings, "Arizona Investor Qualifications" and "Texas Investor Qualifications"
in the Prospectus.
4. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, Placement Agent as follows:
4.1 (a) At all times during the Offering Period the
Prospectus and any amendments or supplements thereto will contain all statements
which are required to be stated therein by the Securities Laws and will in all
material respects comply with the requirements of the Securities Laws; and (b)
neither the Prospectus nor any amendments or supplements thereto, will include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that no representations, warranties or agreements
made hereunder will be applicable to information contained in or omitted from
the Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of Placement Agent specifically for use
in the preparation thereof.
4.2 The Company has been duly formed under the laws
of the State of Nevada, with power and authority to conduct such business as
permitted by applicable Nevada law.
4.3 This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement, enforceable against the Company in accordance with its terms
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally or by general equitable principles and except as
the enforcement of indemnification provisions may be limited by Securities Laws.
4.4 The Company is not in violation of its articles
of incorporation or other similar governing instruments, or in default in the
performance or observance of any obligation, agreement, or condition contained
in any bond, debenture, note or other evidence of indebtedness or in any
material contract, indenture, mortgage, loan agreement, lease, joint venture,
partnership or other agreement or instrument to which it is a party or by which
it or any material portion of its properties may be bound or in violation of any
law, ordinance, government rule or regulation, or court decree to which it is
subject except to the extent any such defaults or violations, alone or in the
aggregate, would not materially affect the Company or its business.
4.5 The execution and delivery of this Agreement and
the consummation of the transactions contemplated herein and in the Prospectus
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and compliance with the terms of this Agreement will not conflict with, or
result in a breach of any of the terms, conditions or provisions of, or
constitute a default under, or result in the imposition of any lien, charge or
encumbrance upon any of the property or assets of the Company pursuant to any
agreement, indenture or other instrument to which the Company is a party or by
which the Company or any material portion of its properties or assets may be
bound, nor will such action result in the material violation by the Company of
any of the provisions of its articles of incorporation or other similar
governing instruments, or any violation of any law, rule, administrative
regulation, or decree of any governmental instrumentality or court having
Jurisdiction over the Company.
4.6 No consent, approval, authorization or order of
any court or governmental agency or body is required for the consummation by the
Company of the transactions on its part herein contemplated.
4.7 Upon acceptance of subscriptions therefor
effective at Closing, the Notes will be validly issued and outstanding.
4.8 There is not now pending or, to the knowledge of
the Company, threatened, any action, suit or proceeding to which the Company is
a party before or by any court or governmental agency or body, which might
result in any material adverse change in the condition (financial or otherwise),
business or prospects of the Company or might materially and adversely affect
the properties or assets of the Company.
4.9 The Company has obtained all licenses, permits
and other governmental authorizations to its knowledge currently required for
the conduct of its business as now being conducted or as proposed to be
conducted and the Company has in all material respects complied therewith.
5. Covenants of the Company. The Company covenants and agrees
with Placement Agent that:
5.1 The Company will not at any time amend the
Prospectus without advising Placement Agent and furnishing Placement Agent with
a copy of its proposed amended Prospectus or in a manner which is not in
compliance with the Securities Laws.
5.2 As soon as the Company is advised thereof, the
Company will advise Placement Agent of the receipt of any request made by any
governmental authority for additional information with respect to the Prospectus
or the issuance of any order or of the entry of any judgment, order, injunction,
or decree enjoining, restraining, barring or limiting the distribution or the
use of the Prospectus, or of the institution of any proceedings for any of the
foregoing purposes, and will use reasonable efforts to prevent the issuance of
any such order and, if issued, to obtain as soon as possible the lifting or
dismissal thereof.
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5.3 The Company authorizes Placement Agent to use
the Prospectus in connection with the offering and sale of the Notes for such
period as in the reasonable opinion of Placement Agent's counsel is required to
comply with the applicable provisions of the Securities Laws. The Company will
prepare promptly upon Placement Agent's request, any such amendments or
supplements to the Prospectus and take any other action as, in the opinion of
Placement Agent's counsel, may be necessary or advisable in connection with the
offering and sale of the Notes.
5.4 In case of the happening of any event of which
the Company has knowledge and which materially affects the Company or its
securities, or which should be set forth in an amendment of or a supplement to
the Prospectus in order to make the statements therein not misleading in light
of the circumstances then existing, or in case it shall be necessary to amend or
supplement the Prospectus to comply with the Securities Laws or any other law,
the Company will forthwith prepare and furnish to Placement Agent copies of an
amended Prospectus or of a supplement to be attached to the Prospectus, in such
quantities as Placement Agent may reasonably request, in order that the
Prospectus, as so amended or supplemented, will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements in the Prospectus, in the light of circumstances under which they
are made, not misleading. The preparation and furnishing of any such amendment
or supplement to the Prospectus shall be without expense to Placement Agent.
5.5 The Company will to the best of its ability
comply with the Securities Laws so as to permit the continuance of sales of the
Notes.
5.6 Subject to the limitation contained in Section
11, the Company will deliver to Placement Agent as many copies of the
Prospectus, in final form, and as thereafter amended or supplemented, as
Placement Agent may from time to time reasonably request.
6. Representations, Warranties and Covenants of
Placement Agent.
6.1 Best Efforts. Placement Agent shall use its best
efforts to find purchasers for the Notes who satisfy the Suitability
Requirements.
6.2 Manner of the Offering. Placement Agent shall
offer the Notes and, as to any Notes which may be sold, shall sell such Notes,
on behalf of the Company in accordance with the Securities Laws.
6.3 Authorization. This Agreement has been duly
authorized, executed and delivered by Placement Agent and constitutes the valid,
legal and binding agreement of Placement Agent, enforceable in accordance with
its terms except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
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affecting the rights of creditors generally or by general equitable principles
and except as the enforcement of indemnification provisions may be limited by
Securities Laws.
6.4 Breach of Other Agreements Affecting Placement
Agreement. The execution and delivery of this Agreement, and fulfillment of the
terms set forth herein, and the consummation of the transactions contemplated
hereby, will not violate or result in a breach of, or constitute a default
under, or conflict with or cause any acceleration of any obligation with respect
to (a) any note, indenture. agreement or other instrument by which Placement
Agent is bound, (b) the governing instruments of Placement Agent or (c) any law,
rule, regulation or order of any court or other governmental agency or body
having jurisdiction over Placement Agent.
6.5 Registration as Broker-Dealer. Placement Agent
is a member in good standing of NASD, is registered as a broker-dealer under the
Securities Exchange Act of 1934, is registered under the securities or blue sky
laws of Arizona, has filed all documents necessary to become registered under
the securities or blue sky laws of Texas and will be so registered prior to
offering the Notes for sale in Texas. There are no pending or threatened actions
or proceedings against Placement Agent and no pending disciplinary actions
brought against Placement Agent by the SEC, NASD or any agency of any state.
6.6 Materials. Placement Agent will use no written
material in connection with Placement Agent's activities hereunder other than
the Prospectus and such other material as the Company may approve in writing,
and Placement Agent will make no representations in offering the Notes for sale
other than those contained in the Prospectus and such other material as the
Company may approve in writing.
6.7 Reasonable Beliefs. Immediately prior to
submitting any subscription for Notes for acceptance, Placement Agent will
reasonably believe, based upon its review of the purchaser questionnaire with
each prospective investor, that the subscriber meets the Suitability
Requirements.
6.8 General Solicitation. Placement Agent will not
make any offer of Notes by any, form of solicitation or advertising in violation
of the Securities Laws.
6.9 Actions. Placement Agent will take such action
or refrain from taking such action as the Company may reasonably request in
order to comply with all applicable Securities Laws, including Placement Agent's
using its best efforts to cause offerees and subscribers to execute and deliver
such additional documents and instruments as the Company may reasonably require.
6.10 Access to Information. Placement Agent will:
(a) maintain all Subscription Documents and other materials used by Placement
Agent to ascertain the satisfaction of the criteria enumerated herein for
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offerees and subscribers, for a period of at least five years from the close of
escrow; and (b) make such material available to the Company upon request.
6.11 Amendments and Supplements. Placement Agent
shall promptly deliver each amendment or supplement to the Prospectus furnished
to Placement Agent (a) to all offerees who are then being or are thereafter
solicited by Placement Agent and (b) to each person who has subscribed for Notes
(through the efforts of Placement Agent) prior to his or her receipt of such
amendment or supplement, obtaining from such person, if deemed necessary by
Placement Agent's counsel or counsel to the Company, a confirmation of his or
her subscription as a condition to acceptance thereof by the Company.
7. Conditions of the Placement Agent's Obligations. The
obligations of Placement Agent are subject to the accuracy (as of the date
hereof, and as of the Closing Date) of and compliance with the representations
and warranties of the Company, the performance by the Company of its agreements
and obligations hereunder and the following additional conditions:
7.1 The Prospectus shall have been delivered to
Placement Agent by the Company for use in offering the Notes and no order
enjoining, restraining, barring, or limiting the distribution or use of the
Prospectus shall have been issued by any governmental authority having
jurisdiction and no proceeding for that or any similar purpose shall have been
instituted or shall be pending.
7.2 On the Closing Date Placement Agent shall have
received a certificate, signed by the Principal of the Company and dated as of
the Closing Date, to the effect, to the best knowledge of the Company, that with
regard to the Company each of the conditions set forth in Section 7.4 has been
satisfied.
7.3 All proceedings and other legal matters relating
to this Agreement, and other related matters shall be satisfactory to or
approved by Placement Agent's counsel.
7.4 At the Closing Date, (a) the representations
and warranties of the Company contained in this Agreement shall be true and
correct with the same effect as if made on and as of such Closing Date and the
Company shall have performed all of its obligations hereunder; (b) neither the
Prospectus nor any amendment or supplement thereto shall contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary in light of the circumstances under which they were
made to make the statements therein not misleading; (c) there shall have been
since the respective dates as of which information is given no event materially
and adversely affecting the Company, except changes which the Prospectus
indicates might occur after the date of the Prospectus; (d) the Company shall
not have incurred any material liabilities or material obligations, direct or
contingent, or entered into any material transaction, contract or agreement not
in the ordinary course of business other than as referred to in the Prospectus;
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and (e) no action, suit or proceeding at law or in equity shall be pending or
threatened against the Company which would be required to be set forth in the
Prospectus, and no proceedings shall be pending or threatened against the
Company before or by any commission, board or administrative agency, wherein an
unfavorable decision, ruling or finding would materially adversely affect the
business, property, condition (financial or otherwise), results of operations or
general affairs or prospects of the Company or would adversely affect
transactions contemplated by this Agreement.
If any of the conditions provided for in this
Section 7 shall not have been fulfilled as of the date indicated, all
obligations of Placement Agent under this Agreement may be canceled by notifying
the Company of such cancellation in writing or by telecopy at or prior to the
Closing Date.
8. Conditions of the Company's Obligations. The obligations
of the Company to sell and deliver the Notes are subject to the accuracy (as of
the date hereof and the Closing Date) of and compliance with the representations
and warranties of Placement Agent, to the performance by Placement Agent of its
agreements and obligations hereunder and to the following additional conditions:
8.1 Funding shall have been approved by lender(s) for
an interim construction loan for the Resort (as defined in the Prospectus) in
the principal amount of at least $15,250,000.
8.2 The Company shall be satisfied in its sole
discretion with market conditions for the Project.
8.3 At the Closing Date, no order affecting the
registration of the Notes shall have been issued or any proceedings therefor
initiated or threatened by any governmental authority having jurisdiction.
8.4 Payments for the Notes shall have been deposited
into the escrow account and all conditions to the release of the funds (less
commissions agreed upon) to the Company as set forth in the escrow agreement, if
any, shall have been satisfied.
9. Indemnification.
9.1 The Company agrees to indemnify and hold
harmless Placement Agent and each person, if any, who controls, within the
meaning of the Securities Act of 1993, Placement Agent, against any losses,
claims, damages or liabilities, joint or several (which shall, for all purposes
of this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), to which Placement Agent or such
employees or controlling persons may become subject, under the Securities Laws
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) (i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in (a) the Prospectus,
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as from time to time amended or supplemented; or (b) any application or other
document (in this Section 9 collectively called "Application") executed by the
Company or based on written information furnished by or on behalf of the Company
specifically for use in the preparation thereof filed in any jurisdiction in
order to register or qualify or exempt the Notes under the Securities Laws
thereof, or any amendment or supplement thereto; or (ii) arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Prospectus or any Application, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by Placement Agent specifically for use in the
preparation thereof, and provided further that the indemnity agreement contained
in this section 9.1 shall not inure to the benefit of Placement Agent or any
controlling person from whom the person asserting any such loss, claim, damage
or liability purchased the Notes which are the subject thereof with respect to
the Prospectus if the Prospectus was not delivered to the purchaser in question
and, had the Prospectus been so delivered to him, there would have been no
liability to him by virtue of such untrue statements, alleged untrue statements,
omissions, or alleged omissions. This indemnity will be in addition to any
liability which the Company may otherwise have.
9.2 Placement Agent agrees to indemnify and hold
harmless the Company against any losses, claims, damages or liabilities (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all attorneys' fees) to which the Company
may become subject under the Securities Laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus, any Application, or any amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Prospectus, any
Application, or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by Placement Agent
specifically for use in the preparation thereof; (ii) any oral solicitations of
Placement Agent; or (iii) any violation by Placement Agent of any applicable
state or federal law or any rule, regulation or instruction thereunder, provided
that such violation is not based upon any violation by the Company of such law,
rule, regulation or instruction. This indemnity will be in addition to any
liability which Placement Agent may otherwise have.
9.3 Promptly after receipt by an indemnified party
under this Section 9 of notice of the commencement of any action (including any
governmental investigations), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 9,
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notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than as to the particular item for
which indemnification is being sought under this Section 9. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, reasonably assume the defense
thereof, subject to the provisions herein stated, with counsel satisfactory to
the indemnifying party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will 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, unless the indemnifying party shall not pursue the
action to its final conclusion. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action, provided that if the indemnified party is a member of the selling
group or a person who controls any member of the selling group within the
meaning of the Securities Act of 1933, the fees and expenses of such counsel
shall be at the expense of the indemnifying party if (a) the employment of such
counsel has been specifically authorized in writing by the indemnifying party or
(b) the named parties to any such action (including any impleaded parties)
include both such member of the selling group or such controlling person and the
indemnifying party and such member of the selling group or such controlling
person shall have been advised by such counsel that there are one or more legal
defenses available to the indemnifying party in conflict with any legal defenses
which may be available to such member of the selling group or controlling person
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such member of the selling group or such
controlling person, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for Placement Agent and
controlling persons, which firm shall be designated in writing by Placement
Agent). No settlement of any action against an indemnified party shall be made
without the consent of the indemnified party, which shall not be unreasonably
withheld in light of all factors of importance to such indemnified party.
10. Contribution. In order to provide for just and equitable
contribution under the Securities Laws in any case in which (a) Placement Agent
makes any claim for indemnification pursuant to Section 9 hereof but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 9 provide for
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indemnification in such case, or (b) contribution under the Securities Laws may
be required on the part of Placement Agent, then the Company and Placement Agent
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees) in either such case (after contribution from others) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and Placement Agent on the other from the Offering. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required in Section 9, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party 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 Placement Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (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 Placement Agent 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 for the Notes bear to the total
underwriting commissions received by Placement Agent. 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 on the one hand
or Placement Agent on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and Placement Agent agree that it would not be just and
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 10. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
Section 10 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 10,
Placement Agent shall not be required to contribute any amount in excess of the
amount by which the total price at which the Notes were offered exceeds the
amount of any damages which Placement Agent 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 shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The foregoing contribution agreement shall in no way affect
the contribution liabilities of any person having liability under Section 10 of
the Securities Act of 1933, other than the Company and Placement Agent. As used
in this Section 10, the term "Placement Agent" includes any person who controls
Placement Agent within the meaning of Section 14 of the Securities Act of 1933.
If the full amount of the contribution specified in this Section is not
permitted by law, then Placement Agent and each person who controls Placement
Agent shall be entitled to such contribution from the Company and its
controlling persons to the full extent permitted by law.
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11. Costs, Expenses and Fees. The Company will pay all costs
and expenses incident to the performance of this Agreement by the Company,
including but not limited to the fees and expenses of counsel to the Company;
the costs and expenses incident to the preparation, printing and distribution of
the Prospectus and all filing and other fees and expenses, and Company will
reimburse Placement Agent for postage expenses in connection with marketing
activities, filing and other fees and expenses not to exceed $2,500. The Company
shall pay any and all transfer taxes on sales hereunder, but shall not be
required to pay any of Placement Agent's expenses other than as herein set
forth.
12. Effective Date. This Agreement shall become effective
March 20, 1998, and all references to the date of its effectiveness or execution
shall be deemed to refer to such date.
13. Termination.
13.1 This Agreement, except for Sections 9, 10, 11
and 14 hereof, may be terminated at any time prior to the Closing Date by
Placement Agent if in its Judgment it is impracticable to offer the Notes for
sale by reason of (a) the Company having sustained a loss material to the
Company whether or not insured, by reason of fire, earthquake, flood, accident
or other calamity, or from any labor dispute or court or government action,
order or decree, (b) material governmental restrictions having been imposed on
trading securities generally (not in force and effect on the date hereof), (c) a
banking moratorium having been declared by federal, Arizona or Texas
authorities, (d) an outbreak of major international hostilities or other
national or international calamity having occurred, (e) the passage by the
Congress of the United States or by any state legislative body of any act or
measure, or the adoption of any orders, rules or regulations by any governmental
body or any authoritative accounting institute or board, or any governmental
executive, which is likely to have a material adverse impact on the business,
financial condition, prospects or financial statements of the Company or the
market for the securities offered hereby, or (f) any material adverse change
having occurred, since the respective dates as of which information is given in
the Prospectus, in the condition of the Company (financial or otherwise), or in
the earnings, affairs or business prospects of the Company whether or not
arising in the ordinary course of business, which would make the offering or
delivery of the Notes impracticable.
13.2 If Placement Agent elects to terminate this
Agreement as provided in this Section 13, the Company shall be promptly notified
by Placement Agent, by telephone or telecopy, confirmed by letter.
13.3 This Agreement, except for Sections 9, 10, 11
and 14 hereof, may be terminated at any time prior to the Closing Date by the
Company if any material adverse change has occurred, since the respective dates
as of which information is given in the Prospectus, in the condition of the
Company (financial or otherwise), or in the earnings, affairs or business
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prospects of the Company whether or not arising in the ordinary course of
business, which would, in the reasonable judgment of the Company and its
counsel, make the offering or delivery of the Notes a violation of applicable
Securities Laws.
14. Representations, Warranties and Agreements to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Placement Agent, set forth in or
made pursuant to this Agreement, will remain in full force and effect,
regardless of any investigation made by or on behalf of the Placement Agent or
the Company or any controlling person, and will survive delivery of and payment
for the Notes.
15. Notices. All communications hereunder will be in writing
and, except as otherwise expressly provided herein, if sent to the Placement
Agent, will be mailed, delivered or telephoned and confirmed to Placement Agent
at 0000 Xxxxx Xxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Attn: Xxxxx Xxxxxxx,
with a copy to Xxxx Xxxxxxxxxx, Xxxxxxxx & Xxxxxx, 0000 Xxxxx Xxxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxxxx 00000-0000, or if to the Company at Royal Aloha Vacation
Club, Suite 212, 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxx Xxxxxx 00000, Attn: Xxxx
Xxxxxxxx, with copies to Xxxxx XxXxxx, Xxxxx and Xxxx LLP, 00 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000 and C. Xxxxxxx Xxxxx, Xxxxxxx Xxxxx Xxxxxxx &
Xxxxxxxxx, One Utah Center, Suite 1200, 000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx,
Xxxx 00000.
16. Parties in Interest. This Agreement is made solely for
the benefit of the Company and Placement Agent, their controlling persons,
directors and officers, and their respective successors, assigns, executors and
administrators. No other person shall acquire or have any right under or by
virtue of this Agreement.
17. Headings. The Section headings in this Agreement have
been inserted as a matter of convenience of reference and are not a part of this
Agreement.
18. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona.
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19. Counterparts. This Agreement may be signed in
counterparts by the respective parties.
Very truly yours,
ROYAL ALOHA DEVELOPMENT COMPANY
/s/ Xxxx X. Xxxxxxxx
----------------------------------
Xxxx Xxxxxxxx, President
Accepted as of the date first above written:
FIRST FINANCIAL EQUITY CORPORATION
BY: /s/ Xxxxx X. Xxxxxxx
-----------------------
Its Principal
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