CENDANT CORPORATION
(a Delaware corporation)
$___________________
Debt Securities
UNDERWRITING AGREEMENT
Dated:
1
CENDANT CORPORATION
(a Delaware corporation)
$___________________
Debt Securities
UNDERWRITING AGREEMENT
[Date]
To the Underwriters named in Schedule I
Ladies and Gentlemen:
CENDANT CORPORATION, a Delaware corporation (the "Company"), proposes
to issue and sell to the underwriters named in Schedule I the principal amount
of certain of its debt securities specified in Schedule II (the "Initial Debt
Securities") on the terms and conditions stated herein and in Schedule II. The
Company also grants to the Underwriters, severally and not jointly, the option
described in Section 2 to purchase all or any part of the additional principal
amount of debt securities as set forth in Schedule II to cover over-allotments
(the "Option Debt Securities") on the terms and conditions stated herein and in
Schedule II. The Option Debt Securities together with the Initial Debt
Securities are herein called the "Debt Securities". The Debt Securities will be
issued pursuant to an indenture dated as of January , 1998 (the "Indenture")
between the Company and The Bank of Nova Scotia Trust Company of New York,
trustee (the "Trustee"). As used herein, unless the context otherwise requires,
the term "Underwriters" shall mean the firm or firms named as Underwriter or
Underwriters in Schedule I and the term "you" shall mean the Underwriter or
Underwriters, if no underwriting syndicate is purchasing the Offered Securities
(as
2
defined below), or the representative or representatives of the Underwriters,
if an underwriting syndicate is purchasing the Offered Securities, as indicated
in Schedule I.
[The Initial Debt Securities and the Option Debt Securities are
convertible into shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock"), as specified in Schedule II. The shares of Common
Stock issuable upon conversion of any Initial Debt Securities are referred to
herein as the "Firm Shares". The shares of Common Stock issuable upon
conversion of any Option Debt Securities are referred to herein as the
"Additional Shares", which, together with the Firm Shares, are collectively
herein called the "Shares".] The Debt Securities and the Shares, if any, are
collectively referred to as the "Offered Securities". The Offered Securities
may be sold pursuant to delayed delivery contracts, a form of which is attached
as Schedule IV (the "Delayed Delivery Contracts"), as specified in Schedule II.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Registration No. 333- )
including a prospectus, relating to certain of its debt securities (including
the Offered Securities), Preferred Stock and Common Stock, and the offering
thereof from time to time in accordance with Rule 415 under the Securities Act
of 1933, as amended (the "1933 Act"). Such registration statement has been
declared effective by the Commission. As provided in Section 3(a), a prospectus
supplement reflecting the terms of the Offered Securities, the terms of the
offering thereof and the other matters set forth therein has been prepared and
will be filed pursuant to Rule 424 under the 1933 Act. Such prospectus
supplement, in the form first filed after the date hereof pursuant to Rule 424,
is herein referred to as the "Prospectus Supplement". Such registration
statement, as amended at the date hereof, together with the Rule 462(b)
Registration Statement under the 1933 Act, including the exhibits thereto and
the documents incorporated by
3
reference therein, is herein called the "Registration Statement", and the basic
prospectus included therein relating to all offerings of Debt Securities,
Preferred Stock and Common Stock under the Registration Statement, as
supplemented by the Prospectus Supplement, is herein called the "Prospectus",
except that, if such basic prospectus is amended or supplemented on or prior to
the date on which the Prospectus Supplement is first filed pursuant to Rule
424, the term "Prospectus" shall refer to the basic prospectus, as so amended
or supplemented and as supplemented by the Prospectus Supplement, in either
case including the documents filed by the Company with the Commission pursuant
to the Securities Exchange Act of 1934, as amended (the "1934 Act"), that are
incorporated by reference therein.
You have advised us that you and the other Underwriters, acting
severally and not jointly, desire to purchase the Initial Debt Securities and
that you have been authorized by the other Underwriters to execute this
Underwriting Agreement ("this Agreement") on their behalf.
Section 1. Representations and Warranties. (a) The Company represents
and warrants to and agrees with each Underwriter that:
(i) On the original effective date of the Registration Statement, on
the effective date of the most recent post-effective amendment thereto, if
any, on the date of the filing of any Rule 462(b) Registration Statement,
and on the date of the filing by the Company of any annual report on Form
10-K after the original filing of the Registration Statement, the
Registration Statement complied in all material respects with the
requirements of the 1933 Act and the rules and regulations of the
Commission thereunder (the "1933 Act Regulations"), the Trust Indenture Act
of 1939, as amended (the "1939 Act"), and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations") and did not
contain an untrue
4
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the state ments therein not
misleading; on the date hereof, at the Closing Time (as defined below) and
at each Delivery Date (as defined below), if any, the Registration
Statement, and any amendments thereof, and the Prospectus, and any
amendments thereof and supplements thereto, comply and will comply in all
material respects with the requirements of the 1933 Act, the 1933 Act
Regulations, the 1939 Act and the 1939 Act Regulations and neither the
Registration Statement nor any amendments thereof include or will include
an untrue statement of a material fact or omit or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and neither the Prospectus, nor any
amendments thereof and supplements thereto, include or will include an
untrue statement of a material fact or omit or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to statements or omissions made in
reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of any Underwriter, directly or through you,
expressly for use in the Registration Statement or the Prospectus. At the
Closing Time and at each Delivery Date, if any, the Designated Indenture
(as defined below) will comply in all material respects with the
requirements of the 1939 Act and the 1939 Act Regulations.
(ii) The documents incorporated by reference in the Prospectus, at the
time they were filed with the Commission, complied in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations") and, when read together with the
5
other information in the Prospectus, do not and will not, on the date
hereof, at the Closing Time and at each Delivery Date, if any, include 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,
in light of the circumstances under which they were made, not misleading.
(iii) Ernst & Young LLP, who has reported upon the audited
financial statements and schedules included or incorporated by reference in
the Registration Statement, is an independent public accountant as required
by the 1933 Act and the 1933 Act Regulations with respect to the Company
and each corporation whose financial statements have been included in the
Registration Statement for each of the years reported on by such
accountant.
(iv) This Agreement has been duly authorized, executed and delivered
by the Company.
(v) The consolidated financial statements included or incorporated by
reference in the Registration Statement present fairly the consolidated
financial position and stockholders' equity and the consolidated results of
operations and consolidated statements of cash flows of the entities
purported to be shown thereby at the indicated dates and for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The financial statement schedules, if any,
included or incorporated by reference in the Registration Statement present
fairly the information required to be stated therein. The selected
financial data included or incorporated by reference in the Prospectus
present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited consolidated financial statements
incorporated by reference in the Registration
6
Statement. The pro forma financial statements and other pro forma financial
information included or incorporated by reference in the Prospectus present
fairly the information shown therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma bases described
therein, and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(vi) The Company is duly organized and is validly existing in good
standing as a corporation under the laws of the State of Delaware with
corporate power and corporate authority under such laws to own, lease and
operate its properties and conduct its business as described in the
Prospectus. The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it
owns or leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise.
(vii) The Company's only subsidiaries are listed in Schedule III
hereto (each a "Company Subsidiary" and collectively hereinafter referred
to as the "Company Subsidiaries"). Each Subsidiary is duly organized and is
validly existing and in good standing under the laws of the jurisdiction of
its incorporation with corporate power and corporate authority under such
laws to own, lease and operate its properties and conduct its business.
Each Subsidiary is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdic tion in which it
owns or leases
7
property of a nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so
qualify or be in good standing would not have a material adverse effect on
the Company and its Subsidiaries, considered as one enterprise. All of the
outstanding shares of capital stock of each Company Subsidiary have been
duly authorized and validly issued and are fully paid and nonassessable and
are owned by the Company, directly or through one or more Company
Subsidiaries, free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind (each, a "Lien") except for such
Liens as are not, individually or in the aggre gate, material to the Company
and its Subsidiaries considered as one enterprise.
(viii) The Designated Indenture, each supplement thereto, if any, to
the date hereof and the supplement thereto or resolutions adopted by the
Board of Directors of the Company (the "Board") or by a special committee
designated by the Board setting forth the terms of the Offered Securities
(the Indenture, as so supplemented by such supplement or supplements or
resolutions adopted by the Board or by a special committee designated by
the Board, being herein referred to as the "Designated Indenture"), have
been duly authorized by the Company. The Designated Indenture as executed
is or will be substantially in the form filed as an exhibit to the
Registration Statement. The Designated Indenture, when duly executed and
delivered (to the extent required by the Indenture) by the Company and the
Trustee, will constitute a valid and binding obliga tion of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent
8
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(ix) The sale and issuance of the Offered Securities have been duly
authorized by requisite corporate action on the part of the Company. When
executed, authenticated, issued and delivered in the manner provided for in
the Designated Indenture and sold and paid for as provided herein and in
any Delayed Delivery Contracts, the Debt Securities will constitute valid
and binding obligations of the Company entitled to the benefits of the
Designated Indenture and enforceable against the Company in accordance with
their terms, except to the extent that enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law);
the Offered Securities conform to the description thereof in the Prospectus
and such description conforms to the rights set forth in the instruments
defining the same.
[(x) The Debt Securities will be convertible into Shares in accordance
with their terms as set forth in the Prospectus. The Shares issuable upon
conversion of such Debt Securities have been duly authorized and, when
issued in accordance with the terms of the Designated Indenture, such
Shares will be validly issued, fully paid and non-assessable. All corporate
action required to be taken for the authorization, issuance and delivery of
such Shares has been validly taken. The issuance of the Debt Securities is
not, and the issuance of such Shares
9
upon conversion thereof will not be, subject to any preemptive rights of
any stockholder of the Company.]
(xi) In the event that any of the Offered Securities are purchased
pursuant to Delayed Delivery Contracts, each of such Delayed Delivery
Contracts has been duly authorized by the Company and, when executed and
delivered on behalf of the Company and duly authorized, executed and
delivered on behalf of the purchaser thereunder, will constitute a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
[(xii) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; no holder thereof is or will be subject to personal
liability by reason of being such a holder; and none of the outstanding
shares of capital stock of the Company was issued in violation of the
preemptive rights of any stockholder of the Company.]
(xiii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein or contemplated thereby, there has not been (A) any material
adverse change in the condition (financial or otherwise), earnings or
business affairs of the Company and its Subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, (B)
any
10
transaction entered into by the Company or any Subsidiary, other than in
the ordinary course of business, that is material to the Company and its
Subsidiaries, considered as one enterprise, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock.
(xiv) Neither the Company nor any Subsidiary is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a material adverse effect on
the condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one enterprise. The execution
and delivery by the Company of this Agreement, the Designated Indenture and
any Delayed Delivery Contracts, the issuance and delivery of the Offered
Securities, the consummation by the Company of the transactions concerning
the Offered Securities contemplated herein and in the Registration
Statement and compliance by the Company with the terms of this Agreement,
the Designated Indenture and any Delayed Delivery Contracts, have, in each
case, been duly authorized by all necessary corporate action on the part of
the Company and do not and will not result in any violation of the
certificate of incorporation or by-laws of the Company, and do not and will
not conflict with, or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary under (A) any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which the
Company or any Subsidiary is a party or by which it may be bound or to
which any of its properties may be
11
subject (except for such conflicts, breaches or defaults or liens, charges
or encumbrances that would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one enterprise) or (B) any
existing applicable law, rule, regulation (other than state securities,
foreign securities or Blue Sky laws, rules and regulations), judgment,
order or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any Subsidiary
or any of their respective properties (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not have a
material adverse effect on the condition (financial or otherwise), earnings
or business affairs of the Company and its Subsidiaries, considered as one
enterprise).
(xv) No authorization, approval, consent or license of any government,
governmental instrumentality or court, domestic or foreign (other than
under the 1933 Act, the 1934 Act, the 1939 Act and the securities or Blue
Sky laws of the various states and foreign securities laws), is required
for the valid authorization, issuance, sale and delivery of the Debt
Securities, [the reservation and issuance of the Common Stock] or for the
execution, delivery or performance of the Designated Indenture by the
Company and for the compliance with the other transactions contemplated in
this Agreement.
(xvi) Except as disclosed in the Prospectus, there is no action, suit
or proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Sub sidiary
that is required to be disclosed in the Prospectus or that could reasonably
be expected to result in any material adverse change in the condition
(financial
12
or otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise, or that could reasonably be
expected to materially and adversely affect the properties or assets of the
Company and its Subsidiaries, considered as one enterprise, or that could
reasonably be expected to adversely affect the consummation of the
transactions contemplated in this Agreement. The aggregate of all pending
legal or governmental proceedings to which the Company or its Subsidiaries
is a party or to which any of its or their respective properties is subject
that are not described in the Prospectus, including ordinary routine
litigation incidental to its or their business, could not reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise.
(xvii) There are no statutes, regulations, contracts or other
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described and filed as required.
(xviii) The Company and each Subsidiary have good and marketable title
to all properties and assets, including, without limitation, intangible
property rights described in the Prospectus as owned by it, free and clear
of all liens, charges, encumbrances, restrictions (other than as described
in paragraph 1(a)(xx) hereof) or defects, except such as (A) are described
13
(1) in the Indenture dated as of October 1, 1994, between the Company and
Bank of America, Illinois, as trustee, (2) in the Indenture and the
Supplemental Indenture No. 1 dated as of February 28, 1996, between the
Company and First Trust of Illinois, National Association, as trustee, (3)
in the 364 Day Credit Agreement, dated as of March 4, 1997, among PHH
Corporation, PHH Vehicle Management Services Inc., the Lenders thereunder
and The Chase Manhattan Bank, (4) in the Five Year Credit Agreement, dated
as of March 4, 1997, among PHH Corporation, the Lenders and The Chase
Manhattan Bank, (5) in the Five Year Revolving Credit and Competitive
Advance Facility Agreement, dated as of October 2, 1996, among the Company,
the lenders thereunder and The Chase Manhattan Bank, (6) in the 364 Day
Revolving Credit and Competitive Advance Facility Agreement, dated as of
October 2, 1996, among the Company, the lenders thereunder and The Chase
Manhattan Bank, (7) in the Indenture dated as of June 5, 1997, between PHH
Corporation and The First National Bank of Chicago and (8) in the Amended
and Restated Pooling and Servicing Agreement dated as of October 5, 1994,
as amended, among Cendant Mobility Funding Corporation, Cendant Mobility
Services, Inc., Citicorp North America, Inc. and Bankers Trust Company, the
Amended and Restated Purchase Agreement dated as of October 5, 1994, as
amended, between Cendant Mobility Services, Inc. and Cendant Mobility
Funding Corporation and the Amended and Restated Investor Funding Agreement
dated as of October 5, 1994, as amended, among Cendant Mobility Funding
Corporation, Bankers Trust Company, Citicorp North America, Inc., as agent,
Bank of America Illinois, as co-agent, and the investors named therein, (B)
are leases of real property in which the Company or its Subsidiaries have
good title and that would be marketable but for the requirement that the
landlord consent to an assignment of the lease or (C) are neither material
in amount nor materially significant in relation to the business of the
Company and its Subsidiaries, considered as one enterprise; all of the
leases and subleases material to the business of the Company and the
Subsidiaries, considered as one enterprise, and under which the Company or
any Subsidiary holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any Subsidiary has any notice
of any material claim of any sort that has been asserted by anyone adverse
to the rights of the Company or any Subsidiary under any of the leases or
subleases mentioned above, or affecting or questioning the rights of such
corporation to the continued possession or use of
14
the leased or subleased properties under any such lease or sublease.
(xix) (a) The Company and each Subsidiary own, possess or have
obtained all material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary to own or
lease, as the case may be, and to operate its or their properties and to
carry on its or their business as presently conducted; (b) neither the
Company nor any of its Subsidiaries has received any notice of proceedings
relating to revocation or modification of any such licenses, permits,
certificates, consents, orders, approvals or authorizations which could
result in a material adverse change of the condition (financial or
otherwise), earnings or financial affairs of the Company and its
Subsidiaries, considered as one enterprise; and (c) the Company and each
Subsidiary are in all respects complying with each license, permit,
certificate, consent, order, approval and other authorization, except where
the failure to do so would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one enterprise.
(xx) Subject to each of the franchise and license agreements entered
into by the Company or any of its Subsidiaries, the Company and each of the
Subsidiaries own or have the unrestricted right to use such patents, patent
licenses, trademarks, trademark licenses, service marks, service ▇▇▇▇
licenses and trade names and registrations thereof as are necessary to
carry on their respective businesses as described in the Prospectus and as
currently conducted, except where the failure to own or possess any of the
Marks or the Ramada Marks would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the
Company and its Subsidiaries, considered as one enterprise. Neither
15
of the Company nor any of its Subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the Marks or the Ramada Marks, or any applications therefor or
registrations thereof, that in the aggregate would materially and adversely
affect the condition (financial or otherwise), earnings or business affairs
of the Company and its Subsidiaries, considered as one enterprise. In
addition to, and not in limitation of, anything else contained in this
paragraph (xx), the Company or a Subsidiary (y) is the exclusive owner of
all rights, title and interest (subject to all existing franchise and
license agreements referred to above) in and to the Marks within the United
States and outside the United States is the owner of the registrations and
applications as are necessary to carry on its business as described in the
Prospectus and as currently conducted, except where the failure to be such
owner would not have a material adverse effect on the condition (financial
or otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise and (z) is the exclusive
licensee in the United States of the Ramada Marks. Such intellectual
property with respect to the Company's Century 21, Coldwell Banker and ERA,
Days Inns of America, Inc. ("Days Inn"), Super 8 Motels, Inc. ("Super 8"),
the Villager Lodge Franchise Systems, Inc. ("Villager Lodge"), the Knights
Franchise Systems, Inc. ("Knights Inn"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Travelodge
Hotels, Inc. ("Travelodge") businesses (each as described in the Prospectus
and as currently conducted) is referred to herein as the "Marks" and such
intellectual property with respect to the Company's Ramada business (as
described in the Prospectus and as currently conducted) is hereinafter
referred to as the "Ramada Marks."
(xxi) To the best knowledge of the Company, no labor problem exists
with its employees, with employees of any Subsidiary or, to the best
16
knowledge of the Company without having made any inquiry or independent
investigation, with the employees of any party which licenses a franchise,
directly or indirectly, from a Subsidiary (a "Franchisee") or is imminent
that could reasonably be expected to materially adversely affect the
Company and its Subsidiaries, considered as one enterprise.
(xxii) To the best knowledge of the Company, no dispute exists or is
imminent with any Franchisee or with the Franchisees that could reasonably
be expected to materially adversely affect the Company and the
Subsidiaries, considered as one enterprise.
(xxiii) Neither the Company nor any of its Subsidiaries has taken or
will take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of
the price of the Offered Securities.
(xxiv) The Company and each Subsidiary are in material compliance with
all applicable existing federal, state and local laws and regulations
relating to protection of human health or the environment and have no
liability or, to the best knowledge of the Company, alleged liability under
any such law which is required to be disclosed in the Registration
Statement that is not so disclosed.
(xxv) All United States federal income tax returns of the Company and
each Subsidiary required by law to be filed have been filed and all taxes
shown on such returns or otherwise assessed which are due and payable have
been paid, except tax assessments being contested in good faith and as to
which adequate reserves have been provided. All other tax returns of the
Company and each Subsidiary required to be filed pursuant to applicable
foreign, state, local or other law have been filed, except insofar as the
failure to file such returns would
17
not have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries considered as one enterprise, and all taxes shown on such
returns or otherwise assessed which are due and payable have been paid,
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 books of the Company and its Subsidiaries in respect of any
income and corporate franchise tax liability for any years not finally
determined are believed to be adequate to meet any assessments or
reassessments for additional income or corporate franchise tax for any
years not finally determined, except to the extent of any inadequacy that
would not have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries considered as one enterprise.
(xxvi) Each Franchisee is such by virtue of being a party to a
franchise contract with either the Company or a Subsidiary and assuming
each such contract has been duly authorized, executed and delivered by the
parties thereto, other than the Company or a Subsidiary, each such contract
constitutes a valid, legal and binding obligation of each party thereto,
enforceable against the Company or a Subsidiary in accordance with its
terms, except (A) for any one or more of such franchise contracts as would
not have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise, and (B) to the extent that
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (2) general principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity or at law).
18
(xxvii) The Company and each Subsidiary have complied and are
currently complying in all material respects with the rules and regulations
of the United States Federal Trade Commission and the comparable laws,
rules and regulations of each state or state agency applicable to the
franchising business of the Company and such Subsidiary in each state in
which the Company or such Subsidiary is doing business. The Company and
each Subsidiary have complied and are currently complying in all material
respects with the Federal Real Estate Settlement Procedures Act and the
real estate brokerage laws, rules and regulations of each state or state
agency applicable to the real estate franchising business of the Company
and such Subsidiary in each state in which the Company or such Subsidiary
is doing business.
(xxviii) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(b) Any certificate signed by any officer of the Company or any
Subsidiary and delivered to you or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company or by a Subsidiary, as
applicable, to each Underwriter as to the matters covered thereby.
Section 2. Purchase and Sale. (a) On the basis of the representations
and warranties herein contained (except as may be otherwise specified in
Schedule II) and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at the purchase price
to the Underwriters set forth in Schedule II, the principal amount of Initial
Debt Securities set forth opposite the name of such Underwriter in Schedule I.
19
(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 the additional principal amount of Option Debt
Securities as set forth in Schedule II at the same purchase price as shall
be applicable to the Initial Debt Securities. The option hereby granted
will expire 30 days after the date hereof, and may be exercised, in whole
or from time to time in part (but not more than twice), only for the
purpose of covering over-allotments that may be made in connection with the
offering and distribution of the Initial Debt Securities upon notice by you
to the Company setting forth the principal amount of Option Debt Securities
as to which the several Underwriters are exercising this option, and the
time and date of payment and delivery thereof. Such time and date of
delivery (each, a "Delivery Date") shall be determined by you but shall not
be later than seven full business days after the exercise of such option,
nor in any event prior to the Closing Time. If the option is exercised as
to all or any portion of the Option Debt Securities, each of the
Underwriters, acting severally and not jointly, will purchase from the
Company that portion of the aggregate number of Option Debt Securities
being purchased which the number of Initial Debt Securities set forth
opposite the name of such Underwriter bears to the total number of Initial
Debt Securities (such proportion is hereinafter referred to as such
Underwriter's "underwriting obligation proportion").
(c) Payment of the purchase price for, and delivery of, the Initial
Debt Securities shall be made at the date, time and location specified in
Schedule II, or at such other date, time or location as shall be agreed
upon by the Company and you, or as shall otherwise be provided in Section
11 (such date and time of payment and delivery being herein
20
called the "Closing Time"). Unless otherwise specified in Schedule II,
payment shall be made to the Company by you by wire or bank transfer of
same day funds payable to the account of the Company, against delivery to
you for the respective accounts of the several Underwriters of the Initial
Debt Securities. Such Initial Debt Securities shall be in such authorized
denominations and registered in such names as you may request in writing at
least two full business days before the Closing Time. Such Initial Debt
Securities, which may be in temporary form, will be made available in New
York City for examination and packaging by you not later than 10:00 A.M. on
the business day prior to the Closing Time. In addition, in the event that
any or all of the Option Debt Securities are purchased by the Underwriters,
payment of the purchase price for, and delivery of, such Option Debt
Securities shall be made at the same location as set forth above, or at
such other place as the Company and you shall determine, on each Delivery
Date as specified in the notice from you to the Company. Payment for the
Option Debt Securities shall be made by wire or bank transfer of same day
funds.
(d) If specified in Schedule II, the Underwriters may solicit offers
to purchase Offered Securities from the Company pursuant to Delayed
Delivery Contracts substantially in the form of Schedule IV with such
changes therein as the Company may approve. Any Delayed Delivery Contracts
are to be with institutional investors of the types set forth in the
Prospectus. If Delayed Delivery Contracts are specified in Schedule II, at
the Closing Time, the Company will enter into Delayed Delivery Contracts
(for the minimum principal amount of Offered Securities per De layed
Delivery Contract specified in Schedule II) with all purchasers proposed by
the Underwriters and previously approved by the Company as provided below,
but not for an aggregate principal amount of Offered Securities less than
or greater than the minimum and maximum
21
aggregate principal amounts specified in Schedule II. The Underwriters will
not have any responsibility for the validity or performance of Delayed
Delivery Contracts.
(e) You are to submit to the Company, at least three business days
prior to the Closing Time, the names of any institutional investors with
which it is proposed that the Company enter into Delayed Delivery
Contracts, the principal amount of Offered Securities to be purchased by
each of them and the date of delivery thereof, and the Company will advise
you, at least two business days prior to the Closing Time, of the names of
the institutions with which the making of Delayed Delivery Contracts is
approved by the Company and the principal amount of Convertible Debt
Securities to be covered by each such Delayed Delivery Contract.
(f) As compensation for arranging Delayed Delivery Contracts, the
Company will pay (by wire or bank transfer of same day funds) to you at the
Closing Time, for the accounts of the Underwriters, a fee equal to that
percentage of the principal amount of Offered Securities for which Delayed
Delivery Contracts are made at the Closing Time as is specified in Schedule
II or the amount of such fee may be deducted from the payment delivered
pursuant to Section 2(b).
(g) The principal amount of Debt Securities agreed to be purchased by
each Underwriter shall be reduced by the principal amount of Debt
Securities covered by Delayed Delivery Contracts as to such Underwriter, as
set forth in a notice delivered by you to the Company; provided, however,
that the total principal amount of Debt Securities to be purchased by all
Underwriters shall be the principal amount of Debt Securities covered by
this Agreement, less the principal amount of Debt Securities covered by all
Delayed Delivery Contracts.
22
(h) It is understood that each Underwriter has authorized you, for its
account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Debt Securities that it has agreed to purchase.
You, individually and not as Representatives, may (but shall not be
obligated to) make payment of the purchase price for the Debt Securities to
be purchased by any Underwriter whose payments shall not have been received
by the Closing Time or each Delivery Date, if any, as the case may be.
Section 3. Certain Covenants of the Company. The Company covenants
with each Underwriter as follows:
(a) If reasonably requested by you in connection with the offering of
the Offered Securities, the Company will prepare a preliminary prospectus
supplement containing such information as you and the Company deem
appropriate and, immediately following the execution of this Agreement, the
Company will prepare a Prospectus Supplement that complies with the 1933
Act and the 1933 Act Regulations and that sets forth the principal amount
of the Offered Securities and their terms not otherwise specified in the
Indenture, the name of each Underwriter participating in the offering and
the principal amount of the Offered Securities that each severally has
agreed to purchase, the name of each Underwriter, if any, acting as
representative of the Underwriters in connection with the offering, the
price at which the Offered Securities are to be purchased by the
Underwriters from the Company, any initial public offering price, any
selling concession and reallowance any delayed delivery arrangements and
such other information as you and the Company deem appropriate in
connection with the offering of the Offered Securities. The Company will
promptly transmit copies of the Prospectus Supplement to the Commission for
filing pursuant to Rule 424 under the 1933 Act and will furnish to the
Underwriters as
23
many copies of any preliminary prospectus supplement and the Prospectus as
you shall reasonably request.
(b) If at any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Offered Securities any event
shall occur or condition exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or counsel for the Company, to
amend the Registration Statement or amend or supplement the Prospectus in
order that 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 not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall be
necessary, in the opinion of either such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(f), such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectus comply with such require ments.
(c) During the period when the Prospectus is required by the 1933 Act
to be delivered in connection with sales of the Offered Securities, the
Company will, subject to Section 3(f), file promptly all documents required
to be filed with the Commission pursuant to Section 13, Section 14 or
Section 15(d) of the 1934 Act.
(d) During the period when the Prospectus is required by the 1933 Act
to be delivered in connection with sales of the Offered Securities, the
Company will inform you of its intention to file any amendment to the
Registration Statement, any supplement to the Prospectus or any document
that
24
would as a result thereof be incorporated by reference in the Prospectus;
and the Company will furnish you with copies of any such amendment,
supplement or other document at a reasonable time in advance of filing,
except any current report on Form 8-K filed with the Commission with
respect to a press release issued by the Company that is not reasonably
expected to have a material effect on the Company or the price of the
Common Stock; provided, however, that the Company shall inform you of its
intention to file documents pursuant to Section 14(d) of the 1934 Act and
shall furnish you with copies of such documents immediately upon the filing
thereof; and provided further that you or your counsel shall not be
entitled to object thereto other than pursuant to Section 3(b).
(e) During the period when the Prospectus is required by the 1933 Act
to be delivered in connection with sales of the Offered Securities, the
Company will notify you immediately, and confirm the notice in writing, (i)
of the effectiveness of any amendment to the Registration State ment, (ii)
of the mailing or the delivery to the Commission for filing of any
supplement to the Prospectus or any document that would as a result thereof
be incorporated by reference in the Prospectus, (iii) of the receipt of any
comments from the Commission with respect to the Registration Statement,
the Prospectus or the Prospectus Supplement, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
supplement to the Prospectus or for additional information relating thereto
or to any document incorporated by reference in the Prospectus and (v) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the suspension of the
qualification of the Offered Securities for offering or sale in any
jurisdiction, or of the institution or threatening of any proceeding for
any of such purposes. The Company will use every reasonable effort to
prevent the issuance of any such stop
25
order or of any order suspending such qualification and, if any such order
is issued, to obtain the lifting thereof at the earliest possible moment.
(f) The Company has furnished or will furnish to you one signed copy
of the Registration Statement (as originally filed), of any Rule 462(b)
Registration Statement, and of all amendments thereto, whether filed before
or after the Registration Statement became effective, copies of all
exhibits and documents filed therewith or incorporated by reference therein
(through the end of the period when the Prospectus is required by the 1933
Act to be delivered in connection with sales of the Offered Securities) and
signed copies of all consents and certificates of experts, as you may
reasonably request, and has furnished or will furnish to you, for each of
the Underwriters, ten conformed copies of the Registration Statement (as
originally filed), of any Rule 462(b) Registration Statement and of each
amendment thereto (including documents incorporated by reference into the
Prospectus but without exhibits).
(g) The Company will use its best efforts, in cooperation with the
Underwriters, to qualify the Offered Securities for offering and sale under
the applicable securities laws of such states and other jurisdictions as
you may designate and to maintain such qualifications in effect for a
period of not less than one year from the date hereof; provided, however,
that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. The Company will file such
statements and reports as may be required by the laws of each jurisdiction
in which the Offered Securities have been qualified as above pro vided. The
Company will also supply you with such
26
information as is necessary for the determination of the legality of the
Offered Securities for investment under the laws of such jurisdictions as
you may request.
(h) The Company will make generally available to its security holders
as soon as practicable, but not later than 45 days after the close of the
period covered thereby, an earnings statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regula tions),
covering (i) a period of 12 months beginning after the effective date of
the Registration Statement (or, if applicable, any Rule 462(b) Registration
Statement) and covering a period of 12 months beginning after the effective
date of any post-effective amendment to the Registration Statement but not
later than the first day of the Company's fiscal quarter next following
such respective effective dates and (ii) a period of 12 months beginning
after the date of this Agreement but not later than the first day of the
Company's fiscal quarter next following the date of this Agreement.
(i) If and to the extent specified in Schedule II hereto, the Company
will use its best efforts to cause the Offered Securities to be duly
authorized for listing on the New York Stock Exchange and to be registered
under the 1934 Act.
(j) For a period of two years after the Closing Time, the Company will
furnish to you and, upon request, to each Underwriter, copies of all annual
reports, quarterly reports and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
by the Commission, and such other documents, reports and information as
shall be furnished by the Company to its stockholders or security holders
generally.
(k) Between the date hereof and the Closing Time or such other date as
may be specified in
27
Schedule II, the Company will not, without your prior consent, offer or
sell, or enter into any agreement to sell, any debt securities issued or
guaranteed by the Company with a maturity of more than one year in any
public offering (other than the Offered Securities). This limitation is not
applicable to the public offering of tax exempt securities guaranteed by
the Company or to such other public offering of long-term debt as may be
specified in Schedule II.
(l) The Company has agreed not to sell or otherwise dispose of, any
shares of Common Stock or any securities convertible into, or exercisable
or exchangeable for, Common Stock [other than shares issuable upon
conversion of the Debt Securities] without the prior written consent of
[___________] on behalf of the Underwriters for a period of 90 days after
the date of the Prospectus Supplement (except for Common Stock issued upon
conversion of the 4 3/4% Convertible Senior Notes due 2003 or the Company's
3% Convertible Subordinated Notes Due 2002 or issued pursuant to the
Company's stock option or employee benefit plans or issued by the Company
in connection with strategic acquisitions or issued or sold pursuant to
employee benefit plans of the Company existing at the Closing Time or sold
in connection with an employee's decision to direct that 401(k)
contributions be invested in Common Stock, provided that any such shares in
excess of 5% of the then outstanding shares of Common Stock shall remain
subject to the foregoing restriction) or exercise any right to have
securities of the Company registered by the Company under the 1933 Act.
(m) The Company has complied and will comply with all the provisions
of Florida H.B. 1771, codified as Section 517.075 of the Florida statutes,
and all regulations promulgated thereunder relating to issuers doing
business in Cuba.
Section 4. Payment of Expenses. The Company
28
will pay and bear all costs and expenses incident to the performance of its
obligations under this Agreement, including, without limitation, (a) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), as originally filed and as amended, any
preliminary prospectus supplements and the Prospectus and any amendments or
supplements thereto, and the cost of furnishing copies thereof to the
Underwriters, (b) the preparation, printing and distribution of this Agreement,
the Designated Indenture, the Offered Securities, any Delayed Delivery
Contracts, the Blue Sky Survey, (c) the delivery of the Debt Securities to the
Underwriters, (d) the fees and disbursements of the Company's counsel and
accountants and the fees and disbursements of the Company's counsel (including,
without limitation, local counsel upon whom such counsel may rely in rendering
their opinion required by Section 5 and 6 hereof), (e) the qualification of the
Offered Securities under the applicable securities laws, (f) any fees charged
by rating agencies for rating the Debt Securities, (g) the reasonable fees and
disbursements of counsel in connection with the Blue Sky Survey, (h) any
applicable fees for listing the Offered Securities on an exchange and (i) the
fees and expenses of the Trustee, including the fees and disbursements of
counsel for the Trustee, in connection with the Designated Indenture and the
Offered Securities.
If this Agreement is terminated by you in accordance with the
provisions of Section 5 or Section 10(a)(i), the Company shall reimburse the
Underwriters for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters, incurred by
them in connection with the public offering of the Offered Securities.
Section 5. Conditions of the Underwriters' Obligations. Except as
otherwise provided in Schedule II hereto, the obligations of the several
Underwriters to purchase and pay for the Debt Securities that they have
29
respectively agreed to purchase hereunder, including any Option Debt Securities
as to which the option granted in Section 2 has been exercised and the Delivery
Date determined by you is the same as the Closing Time, are subject to (i) the
accuracy of the representations and warranties of the Company contained herein
or in certificates of the Company's officers delivered pursuant to the
provisions hereof, (ii) the performance by the Company of its obligations
hereunder, (iii) the delivery to the Underwriters at the Closing Time by the
Company of all of the Initial Debt Securities, and (iv) the following further
conditions:
(a) The Registration Statement shall have become effective prior to
the date hereof or, with your consent, at a later time and date no later,
however, than the first business day following the date hereof, or at such
later date as you may agree to in writing with the approval of a majority
in interest of the several underwriters; and at the Closing Time, no stop
order suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act and no proceedings for that purpose shall
have been instituted or shall be pending or, to your knowledge or the
knowledge of the Company, shall be contemplated by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel for the
Underwriters.
(b) At the Closing Time, you shall have received a signed opinion of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, in New York, in its capacity as
special counsel for the Company, dated as of the Closing Time, together
with signed or reproduced copies of such opinion for each of the other
Underwriters, in form and substance reasonably satisfactory to Counsel for
the Underwriters to the effect as attached hereto as Exhibit 1.
30
(c) At the Closing Time, you shall have received signed opinions of
Counsel for the Company, and ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, special South Dakota
counsel for the Company, dated as of the Closing Time, together with signed
or reproduced copies of such opinions for each of the other Underwriters,
in form and substance reasonably satisfactory to counsel for the
Underwriters to the effect, with respect to the opinion of Counsel for the
Company, as attached hereto as Exhibit 2.
(d) At the Closing Time, you shall have received a signed opinion of
▇▇▇▇▇▇▇▇, Rosenwein & ▇▇▇▇▇▇▇, special trademark counsel for the Company
with respect to the Coldwell Banker franchise system, dated as of the
Closing Time, together with signed or reproduced copies of such opinion for
each of the other Underwriters, in form and substance reasonably
satisfactory to counsel for the Underwriters.
The opinions referred to above in clauses (b), (c) and (d) shall be to
such further effect with respect to other legal matters relating to this
Agreement and the sale of the Offered Securities pursuant to this Agreement as
counsel for the Underwriters may reasonably request. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Company,
as the case may be, and certificates of public officials; provided that such
certificates have been delivered to the Un derwriters.
In giving the opinions referred to above in clauses (b), (c) and (d),
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than those in which they are expert, upon opinions of other counsel who
shall be counsel reasonably satisfactory to counsel for the Underwriters, in
which case the opinion shall state that they believe you and they are justified
and entitled to so rely.
31
(e) At the Closing Time, you shall have received the favorable opinion
of [________], counsel for the Underwriters, dated as of the Closing Time,
together with signed or reproduced copies of such opinion for each of the
other Underwriters.
(f) At the Closing Time, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the 1933 Act and
the 1933 Act Regulations and in all material respects shall conform to the
requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act
and the 1939 Act Regulations, the Company shall have complied in all
material respects with Rule 430A (if it shall have elected to rely thereon)
and (A) the Registration Statement, as it may then be amended or
supplemented, shall 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 and (B) the Prospectus, as it
may be amended or supplemented, will not include an untrue state ment 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, (ii) there shall not have been, since the
respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company
and its Subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business, (iii) no action, suit or proceeding
shall be pending
32
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary that would be required to be set forth in the Prospectus other
than as set forth therein and no proceedings shall be pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary
before or by any federal, state or other commission, board or
administrative agency wherein an unfavorable decision, ruling or finding
would materially adversely affect the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise, other than as set forth in the
Prospectus, (iv) the Company shall have complied in all material respects
with all agreements and satisfied in all material respects all conditions
included herein on its part to be performed and satisfied at or prior to
the Closing Time and (v) the other representations and warranties of the
Company set forth in Section 1(a) shall be accurate as though expressly
made at and as of the Closing Time. At the Closing Time, you shall have
received a certificate of the Chairman of the Board or the President and
the Chief Financial Officer of the Company, dated as of the Closing Time,
to such effect, it being understood that such certificate shall not
constitute personal representations and warranties of the signing
individual.
(g) You shall have received a letter or letters at the date hereof
substantially in the form attached hereto as Schedule V hereto, and a
letter or letters to be delivered at the Closing Time reaffirming the
statements made in each such letter or letters, except that the inquiries
and procedures specified therein shall have been carried out to a specified
date not more than five days prior to the Closing Time.
(h) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Time, there shall not have been any downgrading, nor
any notice given of intended or potential downgrading or of a possible
change that does not indicate the direction of the possible change, in the
rating accorded any
33
of the Company's securities, including the Offered Securities, by any
"nationally recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the 1933 Act.
(i) The Company shall have complied with the provisions of Section
3(a) hereof with respect to the furnishing of Prospectuses and Supplemental
Prospectuses on the business day next succeeding the date of this
Agreement, in such quantities as you reasonably request.
(j) At the Closing Time, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the
issuance and sale of the Offered Securities as herein contemplated and the
matters referred to in Section 5(c) and in order to evidence the accuracy
and completeness of any of the representations, warranties or statements of
the Company, the performance of any of the covenants of the Company, or the
fulfillment of any of the conditions herein contained; and all proceedings
taken by the Company at or prior to the Closing Time in connection with the
authorization, issuance and sale of the Offered Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you
and to counsel for the Underwriters.
(k) The Debt Securities shall have been duly authorized for listing by
the New York Stock Exchange subject to official notice of issuance thereof
and notice of a satisfactory distribution of the Debt Securities. If any of
the conditions specified in this Section 5 shall not have been fulfilled
when and as required by this Agreement to be fulfilled, this Agreement may
be terminated by you on notice to the Company at any time at or prior to
the Closing Time, and such termination shall be
34
without liability of any party to any other party, except as provided in
Section 4 herein. Notwithstanding any such termination, the provisions of
Sections 7, 8 and 9 shall remain in effect.
Section 6. Conditions to Purchase of Option Debt Securities. In the
event that the Underwriters exercise their option granted in Section 2 to
purchase all or any of the Option Debt Securities, and each Delivery Date
determined by you pursuant to Section 2 is later than the Closing Time, the
obligations of the several Underwriters to purchase and pay for the Option Debt
Securities that they shall have respectively agreed to purchase pursuant to
this Agreement (collectively, the "purchased Option Debt Securities") 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, the delivery to the Underwriters at the Delivery Date by the Company
of such Option Debt Securities and to the following further conditions:
(a) The Registration Statement shall remain effective at each Delivery
Date, and, at each Delivery Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act and no proceedings for that purpose shall have been institut
ed or shall be pending, or, to your knowledge or the knowledge of the
Company, shall be threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with
to the reasonable satisfaction of counsel for the Underwriters.
(b) At each Delivery Date, the provisions of Sections 5(e)(i) through
5(e)(v) shall have been complied with at and as of each Delivery Date and,
at each Delivery Date, you shall have received a certificate of the
Chairman of the Board or the President and the Chief Financial Officer of
the Company, dated as of each Delivery Date, to such
35
effect, it being understood that such certificate shall not constitute
personal representations and warranties of the signing individual.
(c) At each Delivery Date, you shall have received the favorable
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, in its role as special
counsel for the Company, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., General Counsel for the
Company, together with signed or reproduced copies of such opinions for
each of the other Underwriters, respectively, dated as of each Delivery
Date, relating to the purchased Option Debt Securities and otherwise to the
same effect required by Sections 5(b) and 5(c), as the case may be, and
each such counsel shall have been furnished with all such documents,
certificates and opinions as such counsel may reasonably request for the
purpose of enabling such counsel to deliver such opinion or opinions.
The opinions referred to above shall be to such further effect with
respect to other legal matters relating to this Agreement and the sale of the
Offered Securities pursuant to this Agreement as counsel for the Underwriters
may reasonably request. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company, and certificates of
public officials; provided that such certificates have been delivered to the
Underwriters.
In giving the opinions referred to above, each such counsel may rely,
as to all matters governed by the laws of jurisdictions other than those in
which they are expert, upon opinions of other counsel who shall be counsel
reasonably satisfactory to counsel for the Underwriters, in which case the
opinion shall state that they believe you and they are justified and entitled
to so rely.
(d) At each Delivery Date, you shall have received the favorable
opinion of [ ], counsel for
36
the Underwriters, dated as of each Delivery Date, relating to the purchased
Option Debt Securities and otherwise to the same effect as the opinion
required by Section 5(d).
(e) At each Delivery Date, you shall have received a separate letter
from Deloitte & Touche LLP, in form and substance satisfactory to you and
dated as of each Delivery Date, to the effect that they reaffirm the
statements made in their respective letter furnished pursuant to
Section 5(f), except that the specified date referred to shall be a date
not more than five days prior to each Delivery Date.
(f) At each Delivery Date, counsel for the Underwriters shall have
been furnished with all such documents, certificates and opinions as they
may reasonably request for the purpose of enabling them to pass upon the
issuance and sale of the purchased Option Debt Securities as contemplated
in the Underwriting Agreement and the matters referred to in Section 6(d)
and in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company, the performance
of any of the covenants of the Company, or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company at or
prior to each Delivery Date in connection with the authorization, issuance
and sale of the purchased Option Debt Securities as contemplated in the
Underwriting Agreement shall be reasonably satisfactory in form and
substance to you and to counsel for the Underwriters.
Section 7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter, as the case may be, within the meaning of Section 15 of the 1933
Act, as follows:
(i) against any and all loss, liability, claim,
37
damage and expense whatsoever, as incurred, arising out of an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including all documents
incorporated therein by reference, 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 an untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus supplement 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;
(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 investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any 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
fees and disbursements of counsel chosen by you, reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any 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 is not paid under subparagraph (i) or (ii)
above;
provided, however, that this indemnity agreement does not
38
apply to any loss, liability, claim, damage or expense to the extent arising
out of an 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 you expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
supplement or the Prospectus (or any amendment or supplement thereto); and
provided, further, however, that the foregoing indemnification with respect to
any preliminary prospectus supplement shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such losses, claims, damages or liabilities purchased any of the
Offered Securities if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if such
is required by law, at or prior to the written confirmation of the sale of such
Offered Securities to such person and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.
(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, and of Section 20 of the
1934 Act, from and against any and all loss, liability, claim, damage and
expense described in the indemnity agreement in Section 7(a), 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 supplement or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of such Underwriter expressly for use in the Registration Statement
(or any amendment thereto) or
39
such preliminary prospectus supplement or the Prospectus (or any amendment
or supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to any of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed
as they are incurred. In the case of any such separate firm for the
Underwriters and such control persons of Underwriters, such firm shall be
designated in writing by ______________. In the case of any such separate
firm for the Company, and such directors,
40
officers and control persons of the Company, such firm shall be designated
in writing by the Company. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
Section 8. Contribution. If the indemnification provided for in
Sections 7(a) and 7(b) is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, then each
indemnifying party under such paragraph (it being understood that an
indemnifying party is one who would have had an obligation to provide
indemnification pursuant to Section 7 had such indemnification been
enforceable), in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses,
41
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect (A) the relative benefits received by the Underwriters, and (B) that
the Company is responsible for the balance or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the allocation referred to in clause (i)
above but also the relative fault of the indemnifying party or parties on the
one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, 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 hand in connection with the offering of the
Offered Securities shall be deemed to be in the same respective proportions as
the net proceeds from the offering of the Offered Securities (before deducting
expenses) received by the Company and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus Supplement, bear to the aggregate public
offering price of the Offered Securities. The relative fault of the Company on
the one hand and of the Underwriters on the other hand 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 by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this Section 8
are several in proportion to the respective number of Offered Securities they
have purchased hereunder, and not joint.
The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 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 that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, 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 8, no Underwriter shall be
required to contribute any amount in
42
excess of the amount by which the total price at which the Offered Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that 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 ▇▇▇▇ ▇▇▇) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
Section 9. Representations, Warranties and Agreements to Survive
Delivery. The representations, warranties, indemnities, agreements and other
statements of the Company or its officers set forth in or made pursuant to this
Agreement will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, any Underwriter or any
person who controls the Company or any Underwriter within the meaning of
Section 15 of the 1933 Act and will survive delivery of and payment for the
Offered Securities.
Section 10. Termination of Agreement. (a) You may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, 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 outbreak of hostilities or escalation thereof or other calamity
or crisis the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable to
43
market the Offered Securities or enforce contracts for the sale of the Offered
Securities or (iii) if trading in any securities of the Company has been
suspended by the Commission, the New York Stock Exchange or any other exchange
or quotation system on which securities of the Company are listed, or if
trading generally on either the American Stock Exchange or the New York Stock
Exchange or in the over-the-counter market has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by order of the Commission
or any other governmental authority or (iv) if a banking moratorium has been
declared by either federal, New Jersey or New York authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party,
except to the extent provided in Section 4 herein. Notwithstanding any such
termination, the provisions of Sections 7, 8 and 9 shall remain in effect.
Section 11. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to purchase the Offered
Securities that it or they are obligated to purchase (the "Defaulted Offered
Securities"), you shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted Offered
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, you have not completed such arrangements within such
24-hour period, then:
(a) if the aggregate principal amount of Defaulted Offered Securities
does not exceed 10% of the aggregate principal amount of the Offered
Securities to be purchased pursuant to this Agreement, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting
44
obligation proportions bear to the underwriting obligation proportions (as
defined below) of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Offered Securities
exceeds 10% of the aggregate principal amount of the Offered Securities to
be purchased pursuant to this Agreement, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 11 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either you or the Company shall have the right to postpone
the Closing Time or the Delivery Date, as applicable 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. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 11.
Section 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered,
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed as set forth in Schedule I. Notices to the
Company shall be directed to it at ▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., General Counsel.
Section 13. Parties. This Agreement is made solely for the benefit of
the several Underwriters, the Company and, to the extent expressed, any person
who controls the Company or any of the Underwriters within the meaning of
Section 15 of the 1933 Act, and the directors of the Company, its officers who
have signed the Registration Statement, and their respective
45
executors, administrators, successors and assigns and, subject to the
provisions of Section 11, no other person shall acquire or have any right under
or by virtue of this Agreement. The term "successors and assigns" shall not
include any purchaser, as such purchaser, from any Underwriter of the Offered
Securities. If there are two or more Underwriters, all of their obligations
hereunder are several and not joint.
Section 14. Governing Law and Time. This Agreement shall be governed
by the laws of the State of New York. Specified times of the day refer to New
York City time.
Section 15. Counterparts. This Agreement may be executed in one or
more counterparts and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
Section 16. Headings. All headings of the sections and subparts
thereof of this Agreement are for convenience of reference only and shall not
be deemed a part of this Agreement.
46
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and each
Underwriter in accordance with its terms.
Very truly yours,
CENDANT CORPORATION
By:
---------------------------
Name:
Title:
Confirmed and Accepted, as of the date first above written:
[UNDERWRITERS]
By:
By:
---------------------------
Name:
Title:
47
SCHEDULE I
to Underwriting
Agreement dated
[_____________]
CENDANT CORPORATION
Debt Securities
Principal Amount
Underwriter Purchased
----------- ---------
$
Total..........................................................$
48
SCHEDULE II
to Underwriting
Agreement
dated [________]
CENDANT CORPORATION
Debt Securities
Principal amount to be issued: $
Over-allotment option: $
Current ratings: [ ]
Interest rate: ____% per annum, payable semiannually
Interest accrues from:
Date of maturity:
Initial Conversion Price: $______ per share (___________shares of
Common Stock for every $1,000 principal
amount of Convertible Debt Securities)
Redemption provisions:
Sinking fund requirements:
Initial public offering price: ____% of the principal amount plus
accrued interest from the date of
issuance of the Initial Debt Securities.
Purchase price: ____% of the principal amount plus
accrued interest from the date of
issuance of the Initial Debt Securities
to the date of delivery (payable in same
day funds).
Closing date, time and location:
Delayed delivery contracts:
49
Listing requirement:
Other terms and conditions:
50
SCHEDULE III
to Underwriting Agreement
dated [____________]
SUBSIDIARIES OF THE COMPANY
SCHEDULE IV
to Underwriting Agreement
dated [_______________]
CENDANT CORPORATION
Debt Securities
DELAYED DELIVERY CONTRACT
CENDANT CORPORATION
▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned hereby agrees to purchase from Cendant Corporation, a
Delaware corporation (the "Company"), and the Company agrees to sell to the
undersigned on _______, 19__ (the "Delivery Date"), ________________________
principal amount of the Company's [Title of Offered Securities] (the "Offered
Securities"), offered by the Company's Prospectus dated _______, 1996, as
supplemented by its Prospectus Supplement dated _______, 19__ , receipt of
which is hereby acknowledged, at a purchase price of % of the principal amount
thereof, plus interest accrued on the amount thereof, principal amount at the
rate borne by the Offered Securities from _______, 19__ to the Delivery Date,
and on the further terms and conditions set forth in this contract.
Payment for the Offered Securities shall be made to the Company or its
order by certified or official bank check in New York Clearing House funds, at
the offices of _______________, _____________, New York, New York, at A.M., New
York City time, on the Delivery Date (or in such other funds and/or at such
other place as the Company and the undersigned may agree upon in writing), upon
delivery of the Offered Securities to the undersigned, in such authorized
denominations and
54
registered in such names as the undersigned may request in writing addressed to
the Company not less than five business days prior to the Delivery Date.
The obligation of the undersigned to take delivery of and make payment
for the Offered Securities on the Delivery Date shall be subject only to the
conditions that (1) the purchase of the Offered Securities by the undersigned
shall not, on the Delivery Date, be prohibited under the laws of any
jurisdiction to which the undersigned is subject and that govern such
investment, and (2) the Company, on or before , 19 , shall have sold to the
Underwriters of the Offered Securities (the "Underwriters") such principal
amount of the Offered Securities as is to be sold to them pursuant to the
Underwriting Agreement dated the date hereof between the Company and the
Underwriters. The obligation of the undersigned to take delivery of and make
payment for the Offered Securities shall not be affected by the failure of any
Underwriter or other purchaser to take delivery of and make payment for the
Offered Securities pursuant to other contracts similar to this contract.
Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned, at its address set forth below, a
notice to such effect, accompanied by a copy of the opinion of counsel for the
Company delivered to the Underwriters in connection therewith.
By the execution hereof, the undersigned represents and warrants to
the Company that (1) its investment in the Offered Securities is not, as of the
date hereof, prohibited under the laws of any jurisdiction to which the
undersigned is subject and that govern such investment, (2) all necessary
corporate action for the due execution and delivery of this contract and the
payment for and purchase of the Offered Securities has been taken by it and no
further authorization or approval of any governmental or other regulatory
authority is required for such execution, delivery, payment or purchase and (3)
upon the acceptance
55
by the Company and the mailing or delivery of a copy as provided below, this
contract will constitute a valid and binding agreement of the undersigned in
accordance with its terms.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that the Company will not accept Delayed Delivery
Contracts for an aggregate principal amount of the Offered Securities in excess
of $ and that the acceptance of any Delayed Delivery Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance on a copy hereof
and mail or deliver a signed copy to the undersigned at its address set forth
below. This will become a binding contract between the Company and the
undersigned when such copy is so mailed or delivered.
56
This contract shall be governed by the laws of the State of New York.
Yours very truly,
------------------------------------
(Name of Purchaser)
By:
---------------------------------
Title:
------------------------------------
------------------------------------
(Address)
Accepted as of the date first above written:
CENDANT CORPORATION
By:
-------------------------------
Name:
Title:
PURCHASER - PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone number of the representative of the Purchaser
with whom details of delivery on the Delivery Date may be discussed is as
follows: (Please print.)
Telephone No.
Name (including Area Code)
---- ---------------------
57
SCHEDULE V
to Underwriting Agreement
dated [_______________]
MATTERS TO BE COVERED BY LETTER OR LETTERS
OF INDEPENDENT PUBLIC ACCOUNTANTS
To the extent that a report or opinion of Deloitte & Touche, LLP, on
the Consolidated Financial Statements of Cendant Corporation is included or
incorporated by reference in the Registration Statement or any exhibit thereto,
the Prospectus or any Prospectus Supplement, such firm, to the extent
applicable, shall have furnished to you the following letter or letters (in
each case in form and substance satisfactory to you):
(1) At the date hereof, a letter (the "Comfort Letter"), to the effect
that:
(a) They are independent accountants with respect to the Company and
its subsidiaries within the meaning of the 1933 Act and the applicable
published 1933 Act Regulations.
(b) In their opinion, the audited consolidated financial statements
and the related financial statement schedules of the Company reported on by
them included or incorporated by reference in such annual report on Form
10-K comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the published 1933 Act
Regulations with respect to Registration Statements on Form S-3 and the
▇▇▇▇ ▇▇▇ and the published 1934 Act Regulations with respect to annual
reports on Form 10-K.
(c) Such letter shall further state that they have performed such
other procedures, specified by you, not constituting an audit, as they have
agreed to perform and report on with respect to certain
58
amounts, percentages, numerical data and other financial information in the
Form 10- K identified by you and have compared certain of such amounts,
percentages, numerical data and financial information with, and have found
such items to be in agreement with or derived from, the detailed accounting
records of the Company and its subsidiaries.
(d) On the basis of procedures (but not an examination in accordance
with generally accepted auditing standards) consisting of:
(i) a reading of minutes of all meetings of the Company's
shareholders, Board of Directors (including the audit, executive and
compensation committees) from the date of the latest audited con-
solidated financial statements of the Company and its subsidiaries;
(ii) a reading of the unaudited condensed consolidated financial
statements of the Company and its subsidiaries included or
incorporated by reference in the quarterly report on Form 10-Q for
each Form 10-Q filed; and
(iii) inquiries of certain officials of the Company who have
responsibility for financial and accounting matters as to (A) whether
the unaudited condensed consolidated financial statements referred to
in (ii) above comply as to form in all material respects with the ap
plicable accounting requirements of the 1934 Act and the published
1934 Act Regulations with respect to Form 10-Q and (B) whether such
unaudited condensed consolidated financial statements are in
conformity with generally accepted accounting principles applied on a
basis substan tially consistent with that of the audited consolidated
financial statements referred to above;
59
nothing came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements included or incorporated by
reference in such quarterly report on Form 10-Q do not comply as to form in all
material respects with the applicable accounting requirements of the 1934 Act
and the published 1934 Act Regulations with respect to Form 10-Q, or that such
unaudited condensed consolidated financial statements are not in conformity
with generally accepted accounting principles applied on a basis substantially
consistent with that of audited consolidated financial statements referred to
above, except as disclosed in the notes to such unaudited condensed
consolidated financial statements.
(e) Such letter shall further state that they have performed such
other procedures, specified by you, not constituting an audit, as they have
agreed to perform and report on with respect to certain amounts,
percentages, numerical data and other financial information in the Form 10-
Qs identified by you and have compared certain of such amounts,
percentages, numerical data and financial information with, and have found
such items to be in agreement with or derived from, the detailed accounting
records of the Company and its subsidiaries.
(f) On the basis of the inquiries and procedures referred to in
Section 1(d) of Schedule III (but carried out to the specified date
referred to in Section 2(a) of Schedule III), nothing came to their
attention that caused them to believe that, from the date of the latest
balance sheet of the Company and its subsidiaries included or incorporated
by reference in the Prospectus to such specified date, there was:
(i) any change in the capital stock of the Company, as compared
with the amount shown in such latest balance sheet;
60
(ii) any decrease in stockholders' equity of the Company and its
subsidiaries, as compared with the amounts shown in such latest
balance sheet;
(iii) any increase in long-term debt of the Company and its
subsidiaries, as compared with the corresponding total amount of such
debt outstanding at the date of such latest balance sheet; or
(iv) any decrease from the date of such latest balance sheet to
such specified date in consolidated net revenue of the Company and its
subsidiaries or in the total amount or per share amount (on a primary
and fully diluted basis) of consolidated net income of the Company and
its subsidiaries, as compared with the corresponding period of the
preceding year, except in all instances for changes or decreases that
the Prospectus discloses have occurred or may occur or that are
described in the Closing Letter.
(g) Such letter shall further state that they have performed such
other procedures, specified by you, not constituting an audit, as they have
agreed to perform and report on with respect to certain amounts,
percentages, numerical data and other financial information in the
Registration Statement, the Prospectus and the exhibits to the Registration
Statement or in the documents incorporated by reference in the Prospectus
identified by you, and have compared certain of such amounts, percentages,
numerical data and financial information with, and have found such items to
be in agreement with or derived from, the detailed accounting records of
the Company and its subsidiaries.
(2) At the Closing Time, a letter dated the Closing Time (the "Closing
Letter"), to the effect that they
61
reaffirm as of the date of the Closing Letter (and as though made on the date
of the Closing Letter) all statements made in the comfort letter, if any,
except that the inquiries and procedures specified therein shall have been
carried out to a specified date not more than five days prior to the date of
the Closing Letter.
62
EXHIBIT 1
SKADDEN, ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ OPINION
Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth above, we are of the opinion that:
(1) the Notes, the Indenture and the authorized capital stock of the
Company conform in all material respects as to legal matters to the description
thereof contained in the Prospectus;
(2) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(3) the execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Underwriting Agreement will not
(i) contravene any provision of the Amended and Restated Certificate of
Incorporation of the Company as currently in effect or the Amended and Restated
By-Laws of the Company as currently in effect, (ii) contravene any agreement or
other instrument binding upon the Company or any of its subsidiaries that is
listed as an exhibit to (a) the Registration Statement or (b) the Company's
Annual Report on Form 10-K for the fiscal year ending December 31, ____, as
amended, or (iii) violate any present statute, rule or regulation
(collectively, "Requirements of Law") or any order, judgment or decree of any
court or governmental agency or body (collectively, "Orders") having
jurisdiction over the Company or any of its properties or assets. The opinion
expressed in clause (iii) of this paragraph (3) is based on our review of those
Requirements of Law which are ordinarily applicable to transactions of the type
provided for in the Underwriting Agreement, but without making any special
investigation concerning any other Requirements of Law, and those Orders
specifically identified to us by the Company as being Orders to which it is
subject (no such Orders have been so identified to such counsel). In
63
addition, we express no opinion in this paragraph (3) with respect to (i) any
state securities or Blue Sky laws, rules or regulations or (ii) the information
contained in, or the accuracy, completeness or correctness of, the Prospectus
or the Registration Statements or the compliance thereof as to form with the
Securities Act of 1933 (the "Act") and the General Rules and Regulations
thereunder, which matters are dealt with in paragraphs (1) above and (5) below
and the second paragraph following paragraph (7) below;
(4) based upon our review of those Requirements of Law which are
ordinarily applicable to transactions of the type provided for in the
Underwriting Agreement, but without having made any special investigation
concerning any other Requirements of Law, no consent, approval, authorization
or Order of, or filing or registration with, any court or governmental agency
or body having jurisdiction over the Company and its Subsidiaries or any of
their respective properties or assets is required for the execution, delivery
and performance of the Underwriting Agreement by the Company or the
consummation by the Company of the transactions contemplated thereby except for
(i) such as have been obtained under the Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or (ii) such as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Securities by you, as to which we express no
opinion;
[(5) the statements made in the Prospectus under the caption
"Description of Capital Stock," to the extent such statements constitute
summaries of legal matters and documents or legal conclusions, have been
reviewed by us and fairly present the information disclosed therein in all
material respects;]
(6) (i) each document filed pursuant to the Exchange Act, and
incorporated by reference in the Prospectus (other than the financial
statements, notes and schedules thereto and other financial information
included in or omitted from such document as to which we
64
need express no opinion), when filed, appeared on its face to be responsive as
to form in all material respects with the requirements of the Exchange Act and
the applicable rules and regulations of the Commission thereunder and (ii) each
of the Registration Statements and the Prospectus (other than the financial
statements, notes and schedules thereto and other financial information
included in or omitted from the Registration Statement or Prospectus, and the
Form T-1, as to which we express no opinion), as of their respective effective
or issue dates, appeared on their face to be responsive as to form in all
material respects with the requirements of the Act and the applicable rules and
regulations thereunder; and such counsel does not have actual knowledge of any
contracts or other documents of a character required to be filed as an exhibit
to the Registration Statement which are not filed as required; and
(7) the Company is not required to be registered or regulated as an
"investment company" as such term is defined under the Investment Company Act
of 1940, as amended.
[We have been orally advised by the Commission that] [The Designated
Indenture has been qualified under the Trust Indenture Act and] the
Registration Statement was declared effective under the Act at __ a.m. on
__, 199_ and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement under the Act has been issued and
no proceedings for that purpose have been initiated or are threatened by the
Commission.
In addition, we have participated in conferences with officers and
representatives of the Company, representatives of the independent accountants
of the Company, and you and your counsel at which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although we are not passing upon and do not assume any responsibility for,
the accuracy, completeness or fairness of the
65
statements contained in the Registration Statement or the Prospectus and we
have made no independent check or verification thereof, except as set forth in
numbered paragraph 5 hereof, on the basis of the foregoing, no facts have come
to our attention that have led us to believe that the Registration Statement,
on the original effective date of the Registration Statement, on the effective
date of the most recent post-effective amendment thereto, if any, on the date
of the filing of any annual report on Form 10-K after the filing of the
Registration Statement, on the date of the Underwriting Agreement, or at the
Closing Time, contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, or any amendment or
supplement thereto, at the time the Prospectus Supplement was issued at the
time any such amended or supplemented Prospectus was issued or at the Closing
Time, contained or contains an untrue statement of a material fact or omitted
or omits 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, except that we express no opinion or belief with respect to the
financial statements, schedules and other financial data included therein or
excluded therefrom.
Very truly yours,
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EXHIBIT 2
COMPANY COUNSEL OPINION
Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth herein, I am of the opinion that:
1. the Company has been duly organized and is subsisting in good
standing as a corporation under the laws of the State of Delaware with
corporate power and corporate authority under such laws to own, lease and
operate its properties and conduct its business as described in the Prospectus;
2. the Company is qualified to do business and is in good standing as
a foreign corporation in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise;
3. each of the subsidiaries that is incorporated in Delaware (a
"Delaware Subsidiary") has been duly organized and is subsisting and in good
standing as a corporation under the laws of Delaware with corporate power and
corporate authority under such laws to own, lease and operate its properties
and conduct its business;
4. each subsidiary is qualified to do business and is in good standing
as a foreign corporation in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise;
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5. each of the Indenture and the Supplemental Indenture has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Trustee, constitutes a valid and
binding obligation of the Company, enforceable against the Compa ny in
accordance with its terms, except to the extent that (a) enforcement thereof
may be limited by (1) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws affecting enforcement of creditors'
rights generally and (2) general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and (b) the
waiver contained in Section 514 of the Designated Indenture may be limited by
applicable law;
6. the Notes have been duly authorized by the Company and assuming
that the Notes have been duly authenticated by the Trustee in the manner
described in its certificate delivered today (which fact I have not
independently determined), the Notes have been duly executed, issued and
delivered by the Company and constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except to the extent that (a)
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
enforcement of creditors' rights generally and (2) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law) and (b) the waiver contained in Section 514 of the Indenture may be
limited by applicable law;
[7. all of the outstanding shares of capital stock of the Company have
been duly authorized by all requisite corporate action on the part of the
Company and have been validly issued and are fully paid and nonassessable; no
holder thereof is or will be subject to personal liability by reason of being
such a holder; and none of the outstanding shares of capital stock of the
Company were issued in violation of the preemptive rights of any stockholder of
the Company;]
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[8. the Shares issuable upon conversion of the Notes have been duly
authorized and validly reserved for issuance by the Company upon such
conversion and, when issued in accordance with the terms of the Indenture, such
Shares will be validly issued, fully paid and nonassessable; all corporate
action required to be taken for the authorization, issuance and delivery of
such Shares has been validly taken; the issuance of the Notes is not, and the
issuance of such Shares upon conversion thereof will not be, subject to any
preemptive rights of any stockholder of the Company;]
[9. the authorized, issued and outstanding capital stock of the
Company is as described in the Prospectus under the caption "Description of
Capital Stock";]
10. all of the outstanding shares of capital stock of each Delaware
Subsidiary have been duly authorized by all requisite corporate action on the
part of the relevant Delaware Subsidiary and have been validly issued and are
fully paid and nonassessable; All of the shares of capital stock of each of
the Company Subsidiaries are owned by the Company free and clear of any
pledge, lien, security interest, charge, claim, encumbrance or equity (each a
"Lien") except for such Liens as are not, individually or in the aggregate,
material to the Company and its subsidiaries, considered as one enterprise;
11. there are no statutes or regulations, or any pending or, to my
knowledge, threatened legal or governmental proceedings against the Company or
any subsidiary, required to be described in the Prospectus that are not
described as required, nor are there any contracts or documents required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required; furthermore, no default
69
exists in the due performance or observance by the Company, or any subsidiary,
or, to my knowledge, any other party thereto, of any material obligation,
agreement, covenant or condition contained in any contract, indenture, loan
agreement, note, lease or other agreement or instrument that is described in
the Registration Statement or the Prospectus or filed as an exhibit to the
Registration Statement, except such defaults that do not have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise;
12. the provisions of the contracts and agreements that are summarized
in the Prospectus or in the Company's Proxy Statement dated [_______] (the
"Proxy") under the heading "Certain Relationships and Related Transactions" and
"Executive Compensation" conform in all material respects to the description
thereof contained in the Prospectus or Proxy and such description fairly
presents the information disclosed;
13. the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
14. the execution and delivery of the Underwriting Agreement by the
Company, the execution and delivery of the Indenture, the Supplemental
Indenture and the Notes by the Company and compliance by the Company with the
terms of the Underwriting Agreement, the Indenture and the Supplemental
Indenture (a) do not and will not constitute or result in a breach of or a
default under any of the terms or provisions of, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any subsidiary under (i) any indenture, mortgage or loan
agreement, or any other agreement, including without limitation the Credit
Agreement (as defined in the Prospectus) or instrument to which the Company or
any subsidiary is a party or by which it may be bound or to which any of its
properties may be subject, (ii) any judgment, order or decree applicable to the
Company or any subsidiary of any government, governmental
70
instrumentality or court, domestic, or foreign, having jurisdiction over the
Company or any subsidiary or any of their properties, and (B) do not and will
not result in a violation of any applicable law, rule or regulation (except for
the federal securities laws, and the securities or blue sky laws of the various
states, as to which I express no opinion) except, in each case, for such
breaches, defaults or violations that would not have a material adverse effect
on the condition (financial or otherwise), earnings or business affairs of the
Company and its subsidiaries, considered as one enterprise;
15. except as previously disclosed to you in writing, (i) the Company
or its subsidiaries are the beneficial owners of the U.S. trademarks and
service marks set forth in the Prospectus, with the exception of the Ramada
▇▇▇▇; (ii) there is no claim, suit, action or proceeding pending or, to the
best of my knowledge, threatened against the Company or any subsidiary that
involves a claim of infringement of any trademark or service marks which
infringement (if the subject of any unfavorable decision) would have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise; and (iii) the current use of the trademarks and service marks by
the Company or any of its subsidiaries does not, to the best of my knowledge,
infringe upon any right of any third party which infringement (if the subject
of any unfavorable decision) would reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise;
16. all corporate action required to be taken for consummation of the
Merger has been validly taken.
In addition, I have participated in conferences with other officers
and representatives of the Company, representatives of the independent
accountants of the Company, and you and your counsel at which the contents of
the Registration Statement and the Prospectus and related matters were
discussed and, although I am not passing upon, and do not assume any
responsibility for,
71
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and I have made no independent check
or verification thereof, except as otherwise specifically referred to in
paragraph 12 of this opinion, on the basis of the foregoing, no facts have come
to my attention that have led me to believe that the Registration Statement, on
the original effective date of the Registration Statement, on the effective
date of the most recent post-effective amendment thereto, if any, on the date
of the filing of any annual report on Form 10-K after the filing of the
Registration Statement, on the date of the Underwriting Agreement, or at the
Closing Time, contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, or any amendment or
supplement thereto, at the time the Prospectus Supplement was issued, at the
time any such amended or supplemented Prospectus was issued or at the Closing
Time, contained or contains an untrue statement of a material fact or omitted
or omits 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, except that I express no opinion or belief with respect to the
financial statements, schedules and other financial data included therein or
excluded therefrom or with respect to the Statement of Eligibility of the
Trustee under the Trust Indenture Act on Form T-1.
Very truly yours,
72