EXHIBIT 1.1
[FORM OF UNDERWRITING AGREEMENT: DRAFT]
5,750,000 Shares
CAVANAUGHS HOSPITALITY CORPORATION
Common Stock
UNDERWRITING AGREEMENT
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March __, 1998
CIBC Oppenheimer Corp.
Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC
c/o CIBC Oppenheimer Corp.
CIBC ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Cavanaughs Hospitality Corporation, a Washington corporation (the
"Company"), proposes to sell to you (the "Underwriters") an aggregate of
5,000,000 shares (the "Firm Shares") of the Company's common stock, $0.01 par
value (the "Common Stock"). In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional 750,000 shares (the
"Option Shares") of Common Stock for the purpose of covering over-allotments in
connection with the sale of the Firm Shares. The Firm Shares and the Option
Shares are together called the "Shares." In connection therewith, the Company
and Cavanaughs Hospitality Limited Partnership, a Delaware limited partnership
(the "Operating Partnership") agree with you as follows:
1. Sale and Purchase of the Shares. On the basis of the
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representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at $_________ per share (the "Initial Price"), the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule I to
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this Agreement.
(b) The Company grants to the Underwriters an option to purchase,
severally and not jointly, all or any part of the
Option Shares at the Initial Price. Each Underwriter shall purchase a
percentage (adjusted to eliminate fractions) of the total number of Option
Shares equal to the percentage of the Firm Shares purchased by such
Underwriter. Such option may be exercised only to cover over-allotments in
the sales of the Firm Shares by the Underwriters and may be exercised in
whole or in part at any time on or before 12:00 noon, New York City time,
on the business day before the Firm Shares Closing Date (as defined below),
and from time to time thereafter within 30 days after the date of this
Agreement, in each case upon notice setting forth the number of Option
Shares to be purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase which shall be not more than three business
days following the date of exercise of the option.
2. Delivery and Payment. Delivery by the Company of the Firm Shares
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to the Underwriters for their respective accounts, and payment of the purchase
price therefor by wire transfer of same day funds to the Company at the bank
account designated in writing by the Company at least one business day prior to
the Firm Shares Closing Date, shall take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New York City
time, on the third business day following the date of this Agreement; provided,
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however, that if the Firm Shares sold hereunder are priced after 4:30 p.m., New
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York City time, on any business day, payment and delivery in respect of the Firm
Shares shall take place on the fourth business day following the date of this
Agreement; and further, if it is determined that settlement within the foregoing
time frame is not feasible, then payment and delivery in respect of the Firm
Shares shall occur at such time on such other date, not later than ten business
days after the date of this Agreement, as shall be agreed upon by the Company
and the Underwriters (such time and date of delivery and payment are called the
"Firm Shares Closing Date").
In the event the option with respect to all or any part of the Option
Shares is exercised, delivery by the Company of the Option Shares to the
Underwriters for their respective accounts, and payment of the purchase price
therefor by wire transfer of same day funds to the Company at the bank account
designated in writing by the Company at least one business day prior to the
Option Shares Closing Date (as defined below), shall take place at the offices
of ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP specified above at the time and on the date (which may be
the same date as, but in no event shall be earlier than, the Firm Shares Closing
Date) specified in the notice referred to in Section 1(b) (such time and date of
delivery and payment with respect to each exercise of the option are called an
"Option Shares Closing Date"). The Firm Shares Closing Date and each Option
Shares Closing Date are called, individually, a "Closing Date" and,
collectively, the "Closing Dates."
Unless otherwise indicated, certificates evidencing the Shares shall
be registered in such names and shall be in such
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denominations as the Underwriters shall request at least two full business days
before the Firm Shares Closing Date or, in the case of Option Shares, on the day
of notice of exercise of the option as described in Section 1(b) and shall be
made available to the Underwriters for checking and packaging, at such place as
is designated by the Underwriters, at least one full business day before the
Firm Shares Closing Date (or the Option Shares Closing Date in the case of the
Option Shares).
3. Representations and Warranties of the Company. The Company and
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the Operating Partnership hereby represent and warrant to each Underwriter as
follows:
(a) A registration statement on Form S-1 (File No. 333-44491), with
respect to the Shares, including a preliminary prospectus, has been
carefully prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations (the "Securities Rules") of the Securities and
Exchange Commission (the "Commission") thereunder, filed with the
Commission and declared effective. Such registration statement may have
been amended or supplemented prior to the date of this Underwriting
Agreement; any such amendment of such registration statement or supplement
was so prepared and filed, and any such amendment filed after the effective
time of such registration statement (the "Effective Time") has been
declared effective. Such registration statement (as amended, if
applicable) and the prospectus constituting a part thereof including, in
each case, the information, if any, deemed to be a part thereof pursuant to
Rule 430A under the Securities Rules, is referred to herein as the
"Registration Statement." A prospectus will be prepared and will be filed
pursuant to Rule 424(b) of the Securities Rules on or before the second
business day after the date hereof (or such earlier time as may be required
by the Securities Rules). The term "Prospectus" shall refer to such final
prospectus in the form first filed with the Commission pursuant to Rule
424(b) of the Securities Rules. For purposes of this Underwriting
Agreement, all references to the Registration Statement, the Prospectus,
any preliminary prospectus or any amendment or supplement thereto shall be
deemed to include any copy filed with the Commission pursuant to its
Electronic Data Gathering Analysis and Retrieval System (▇▇▇▇▇), and such
copy shall be identical to any Prospectus delivered to you for use in
connection with the offering of the Securities by the Company. No stop
order suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has been instituted or
threatened by the Commission. Copies of the Registration Statement and
Prospectus, any such amendments or supplements that were filed with the
Commission on or prior to the date of this Underwriting Agreement have been
delivered or made available to you and your counsel.
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(b) Each part of the Registration Statement, when such part became or
becomes effective and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at the Firm
Shares Closing Date and, if later, at an Option Shares Closing Date,
conformed or will conform in all material respects with the requirements of
the Securities Act and the Securities Rules; each part of the Registration
Statement, when such part became or becomes effective, or when such part
was filed with the Commission, did not or will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; the Prospectus and any amendment or supplement thereto, on the
date of filing thereof with the Commission and at the Firm Shares Closing
Date and, if later, at an Option Shares Closing Date, did not or will not
include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing shall not apply to statements in, or omissions from, any such
document in reliance upon, and in conformity with, written information
concerning the Underwriters that was furnished to the Company by the
Underwriters specifically for use in the preparation thereof.
(c) Except as noted therein, the financial statements of the Company
together with the related schedules and notes thereto, set forth or
included in the Registration Statement and Prospectus fairly present the
financial condition of the Company, ▇▇▇▇▇▇▇▇ Investment Company ("BIC"), a
Washington corporation, and their respective subsidiaries (including
partnerships), as of the dates indicated and the results of operations,
changes in financial position, stockholders' equity and cash flows for the
periods therein specified, in conformity with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise stated therein). The summary and selected financial and
statistical data included in the Registration Statement and the Prospectus
present fairly the information shown therein and, to the extent based upon
or derived from the financial statements, have been compiled on a basis
consistent with the financial statements presented therein. In addition,
the pro forma financial statements of the Company and the related notes
thereto, included in the Registration Statement and 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 basis described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein. Furthermore, all financial
statements required by Rule 3-14 of Regulation S-X ("Rule 3-14"), if any,
have been included in the Registration Statement
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and the Prospectus and any such financial statements are in conformity with
the requirements of Rule 3-14. No other financial statements are required
to be set forth in the Registration Statement or the Prospectus under the
Securities Act, the Securities Rules or Regulation S-X.
(d) Coopers & ▇▇▇▇▇▇▇, whose reports are included in the Registration
Statement, during the periods covered by their reports, were independent
public accountants as required by the Securities Act and the Securities
Rules.
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Washington.
The Operating Partnership, North River Drive Company, Cavanaughs
Hospitality Corporation, a Delaware corporation ("Cavanaughs Delaware") and
▇▇▇▇▇▇ Street Limited Partnership (which the Company holds a 50% general
partner interest in only) (hereafter, the "Subsidiaries") have been duly
organized or incorporated, as the case may be, and are validly existing and
in good standing in the jurisdictions of their incorporation or
organization. The Company and each of its Subsidiaries are duly qualified
and in good standing as foreign corporations in each jurisdiction in which
the character or location of the assets or properties (owned, leased or
licensed) or the nature of their business makes such qualification
necessary (including every jurisdiction in which they own or lease
property), except for such jurisdictions where the failure to so qualify
would not have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries, considered as one
enterprise ("Material Adverse Effect"). The Company and its Subsidiaries
do not own, lease or license any asset or property or conduct any business
outside the United States of America. The Company and its Subsidiaries
have all requisite corporate and partnership power and authority, and all
necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or regulatory bodies
or any other person or entity, to own, lease, license and operate their
assets and properties and conduct their business as now being conducted and
as described in the Registration Statement and the Prospectus; except for
such authorizations, approvals, consents, orders, licenses, certificates
and permits the absence of which would not have a Material Adverse Effect;
and no such authorization, approval, consent, order, license, certificate
or permit contains a materially burdensome restriction other than as
disclosed in the Registration Statement and the Prospectus.
(f) The Company and its Subsidiaries own or possess adequate and
enforceable rights to use all trademarks, trademark applications, trade
names, service marks, copyrights, copyright applications, licenses, know-
how and
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other similar rights (collectively, the "Intangibles") necessary for the
conduct of its business as now being conducted and as described in the
Registration Statement and the Prospectus. To the Company's knowledge,
neither the Company nor any of its Subsidiaries has infringed, is
infringing, and have not received any notice of infringement of, any
Intangible of any other person.
(g) The Company and each of its Subsidiaries, as the case may be, have
good title to each of the items of real and personal property which are
reflected in the financial statements referred to in Section 4(d) (except
as described below) or are referred to in the Registration Statement and
the Prospectus as being owned by the Company and its Subsidiaries and valid
and enforceable leasehold interests in each of the items of real and
personal property which are referred to in the Registration Statement and
the Prospectus as being leased by the Company and its Subsidiaries, in each
case free and clear of all liens, encumbrances, claims, security interests
and defects, other than those described in the Registration Statement and
the Prospectus and those which do not and will not have a Material Adverse
Effect. The Company and its subsidiaries no longer own the companies or
the items of personal or real property transferred by the Company and by
BIC in connection with the "Asset Contribution" and the "Spin-off," as
described in the Registration Statement and Prospectus.
(h) Except for the real property transferred pursuant to the Asset
Contribution and Spin-off described in the Registration Statement under
"Certain Relationships and Related Transactions", the Company and its
Subsidiaries have good and marketable title to (i) all properties owned by
the Company, and by ▇▇▇▇▇▇▇▇ Investment Company, a predecessor of the
Company ("BIC"), and their respective subsidiaries (including partnerships)
prior to the Pre-IPO Reorganization Transactions (as hereinafter defined),
and (ii) all properties described in the Registration Statement and the
Prospectus therein as being acquired after October 31, 1997 and owned by
the Company and its Subsidiaries (together with the properties in (i) above
the "Properties"); free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Registration Statement
and the Prospectus, or are not material in relation to the business of the
Company; no lessee under any of the leases pursuant to which the Company
and its Subsidiaries leases properties has an option or right of first
refusal to purchase the premises demised under such lease; the use and
occupancy of each of the Properties complies in all material respects with
all applicable codes and zoning laws and regulations; the Company and its
Subsidiaries have no knowledge of any pending or threatened condemnation or
zoning change that will in any material manner affect the size of, use of,
improvements on, construction on, or access to any of the Properties, which
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would have a material adverse effect upon the proposed use of such
Property; and the Company has no knowledge of any pending or threatened
proceeding or action that will in any material respect affect the size of,
use of, improvement of, construction on, or access to any of the
Properties.
(i) Title insurance in favor of the mortgagee and the Company and its
Subsidiaries is maintained with respect to each of the real properties
described in the Registration Statement (the "Real Properties") in an
amount at least equal to the greater of (i) the cost of acquisition of such
Real Property or (ii) the amount of any mortgage on the Real Property,
whichever is greater.
(j) The mortgages and deeds of trust encumbering the Properties and
assets described in the Registration Statement and the Prospectus are not
convertible into shares of Common Stock or other equity interest in the
Company and/or its Subsidiaries nor does the Company or any Subsidiary hold
a participating interest therein.
(k) There is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board
pending or, to the Company's knowledge, threatened (and the Company knows
of no basis therefor) against, or involving the assets, properties or
businesses of the Company and its Subsidiaries which might materially
adversely affect the value or the operation of any such assets or
properties or the business, results of operations, prospects or condition
(financial or otherwise) of the Company and its Subsidiaries, or which is
required to be disclosed in the Registration Statement and Prospectus.
(l) Except as disclosed in the Registration Statement or the
Prospectus, (i) there is not present on any of the Properties any hazardous
substance, hazardous material, toxic substance, asbestos or waste material
(other than those generated and present in the ordinary course of business
at the Properties in compliance with applicable law) (collectively,
"Hazardous Materials"), (ii) there has not occurred there is not presently
occurring from or at any of such Properties any unlawful spills, releases,
discharges or disposal of Hazardous Materials, and (iii) all such
Properties are in compliance with all applicable local, state and federal
environmental laws, regulations, ordinances and administrative and judicial
orders relating to the generation, recycling, reuse, sale, storage,
handling, transport and disposal of any Hazardous Materials, except for any
failure to comply which would not have a Material Adverse Effect. The
Company has caused Phase I Environmental Surveys to be completed with
respect to each of the Properties and has made available copies of all such
Environmental Surveys to the Underwriters.
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(m) Property and casualty insurance in favor of the Company and its
Subsidiaries is maintained with respect to each of the Properties, in an
amount and on such terms as are reasonable and customary for businesses of
this type.
(n) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
therein, (i) there has not been any material adverse change in the assets
or properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company and its Subsidiaries, whether or
not arising from transactions in the ordinary course of business; (ii) the
Company and its Subsidiaries have not sustained any material loss or
interference with their assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree; and (iii) since
the date of the latest balance sheet included in the Registration Statement
and the Prospectus, except as reflected therein, the Company and its
Subsidiaries have not undertaken any liability or obligation, direct or
indirect, or contingent, except such liabilities or obligations undertaken
in the ordinary course of business, or as are disclosed in the Registration
Statement.
(o) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required. The limited partnership agreement of the Operating Partnership
and each mortgage, commitment letter, line of credit agreement, loan
agreement, guarantee, employee leasing agreement, property management
agreement, franchise agreement, cost reimbursement agreement, employment
contract, stock option agreement, warrant agreement, registration rights
agreement, leasing agreement, construction contract, purchase agreement and
all other agreements of the Company and its Subsidiaries described in the
Registration Statement or the Prospectus or listed as exhibits to the
Registration Statement are in full force and effect and are valid and
enforceable by and against the Company and its Subsidiaries, to the extent
each is a party thereto, in accordance with their terms, assuming the due
authorization, execution and delivery thereof by each of the other parties
thereto. Neither the Company nor its Subsidiaries nor any other party, to
the best of the Company's knowledge, is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or
both would constitute such a default, which default or event would have a
Material Adverse Effect. No default exists, and no event has occurred
which with notice or lapse of time or both would constitute a default, in
the due performance and observance of any term, covenant or condition,
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by the Company and its Subsidiaries, of any other agreement or instrument
to which the Company or any Subsidiary is a party or by which they or their
properties or businesses may be bound or affected, which default or event
would have a Material Adverse Effect.
(p) Neither the Company nor its Subsidiaries is in violation of any
term or provision of their respective charters or by-laws, certificates of
limited partnership, partnership agreements, or other organizational
documents, as the case may be, or of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation or violations would have a Material Adverse
Effect.
(q) Neither the execution, delivery and performance of this Agreement
by the Company and the Operating Partnership, nor the consummation by them
of any of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Shares) will give
rise to a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or provision
of, or constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or its
Subsidiaries pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company and its
Subsidiaries is a party or by which any of them is bound, or any other
properties or businesses are bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation applicable to the
Company and its Subsidiaries or violate any provision of the respective
charters, by-laws, certificates of limited partnership, partnership
agreements, or other organizational documents, as the case may be, of the
Company and its Subsidiaries, except for such consents or waivers which
have already been obtained and are in full force and effect.
(r) The Company has authorized, issued and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus. All of
the outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other similar right. The Shares,
when issued and sold pursuant to this Agreement, will be duly authorized
and validly issued, fully paid and nonassessable and none of them will be
issued in violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any share of capital
stock of the Company or any
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security convertible into or exercisable or exchangeable for, such capital
stock. The Common Stock and the Shares conform in all material respects to
all statements relating thereto contained in the Registration Statement and
the Prospectus.
(s) All the issued and outstanding units of the Operating Partnership
(the "Units") have been duly authorized and validly issued and are fully
paid and non-assessable and none of them was issued in violation of any
preemptive or other similar right. As of the date hereof there are _____
Units issued and outstanding, _____ of which are owned by the Company,
_____ of which are owned by North River Drive Company, the Company's
wholly-owned subsidiary and _____________ of which are owned by
____________. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right calling
for the issuance of, and there is no commitment, plan or arrangement to
issue, any Units or any security convertible into or exercisable or
exchangeable for, such Units. The Units conform in all material respects to
all statements relating thereto contained in the Registration Statement and
the Prospectus.
(t) All of the issued and outstanding capital stock of each corporate
Subsidiary has been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the Company, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or claim. The partnership
agreement of each partnership Subsidiary is in full force and effect and,
all partnership interests in each such partnership Subsidiary held by the
Company are owned as described in the Registration Statement and
Prospectus, in each case, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim, except as described in the
Registration Statement. The Company owns all of the issued outstanding
capital stock of North River Drive Company and Cavanaughs Delaware, and
directly or indirectly all of the partnership interests a 50% general
partnership interest in ▇▇▇▇▇▇ Street Limited Partnership. The Company
does not own equity securities in any entity other than its Subsidiaries.
(u) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
or referred to therein, neither the Company nor any Subsidiary has (i)
issued any securities or incurred any liability or obligation, direct or
contingent, except such liabilities or obligations incurred in the ordinary
course of business including, without limitation, debt financing to
acquire properties (ii) entered into any transaction not in the ordinary
course of business or (iii) declared or paid any dividend or made any
distribution on any shares of its capital stock, or partnership interest,
as the case may be, or redeemed, purchased or otherwise acquired or agreed
to redeem, purchase or otherwise acquire
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any shares of its capital stock, or partnership interests, as the case may
be.
(v) Except as disclosed in the Registration Statement and Prospectus
no holder of any security of the Company or any Subsidiary has the right
which has not been waived to have any security owned by such holder
included in the Registration Statement [or any right to demand registration
of any security owned by such holder.] Each of the Company, the Operating
Partnership and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
__________, __________, and _________ have delivered to the Underwriters
their enforceable written agreement (the "Lock-up Agreements") that such
party will not sell, offer to sell, contract to sell, pledge or otherwise
dispose of or transfer, directly or indirectly, any shares of Common Stock
or other capital stock of the Company, or any securities convertible into
or exchangeable or exercisable for, or any rights to purchase or acquire,
shares or Common Stock or other capital stock for a period of one year
commencing on the date of this Agreement, without the prior written consent
of CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., other than the sale of the Shares in the
Offering and the issuance or transfer of: (i) options to purchase shares
of Common Stock (and shares of Common Stock issuable upon the exercise of
such options) issued pursuant to the Plans (as defined in the Registration
Statement); (ii) shares of Common Stock in connection with estate planning;
(iii) 55,000 restricted shares of Common Stock to be awarded to certain
employees of the Company; and, (iv) securities of the Company or the
Operating Partnership issued in connection with the acquisition by the
Company of real property or interests in entities holding real property,
provided that the recipient or transferee of such securities agrees in
writing to be subject to the lock-up contained in this paragraph (without
giving effect to clauses (i), (ii) and (iii)) for a period ending on the
date that is one year after the date hereof. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ has delivered
to the Underwriters a lock-up agreement whereby he was agreed, subject to
the same exceptions set forth above, not to sell, offer to sell, contract
to sell, pledge or otherwise dispose of or transfer, directly or
indirectly, any shares of Common Stock or other capital stock of the
Company, or any securities convertible into or exchangeable or exercisable
for, or any rights to purchase or acquire, shares of Common Stock or other
capital stock of the Company, for a period of three years commencing on the
date of this Agreement, without the prior written consent of CIBC
▇▇▇▇▇▇▇▇▇▇▇ Corp.; provided, however, he may sell or otherwise transfer
ownership of up to one-third of his shares of Common Stock on each
anniversary of the date of this Agreement without the consent of CIBC
▇▇▇▇▇▇▇▇▇▇▇ Corp.
(w) All necessary corporate or partnership action, as the case may be,
has been duly and validly taken by the Company and the Operating
Partnership to authorize the execution, delivery and performance of this
Agreement and the
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issuance and sale of the Shares by the Company. This Agreement has been
duly and validly authorized, executed and delivered by the Company and the
Operating Partnership and constitutes and will constitute the legal, valid
and binding obligations of the Company and the Operating Partnership
enforceable against the Company and the Operating Partnership in accordance
with its terms. Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company and the Operating Partnership of this Agreement and the
issuance and sale of the Shares by the Company (except such as may be
required under the Securities Act or such additional steps as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the New York Exchange ("NYSE"), if any) has been obtained or
made and is in full force and effect. The Shares have been approved for
listing on the NYSE, subject only to official notice of issuance.
(x) Neither the Company nor any Subsidiary is involved in any labor
dispute nor, to the knowledge of the Company, is any such dispute
threatened or contemplated.
(y) The Company and its Subsidiaries are conducting their business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, the Americans with Disabilities Act of 1990 and all applicable
local, state and federal employment, truth-in-advertising, franchising and
immigration laws and regulations, except where the failure to be so in
compliance would not have a Material Adverse Effect.
(z) No transaction has occurred between or among the Company and its
Subsidiaries, or any of the Company's Pre-IPO Reorganization Transactions
affiliates, and any of their officers or directors or any affiliate or
affiliates of any such officer or director that is required to be described
in and is not described in the Registration Statement and the Prospectus.
(aa) The Company and its Subsidiaries have not taken, and will not
take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of any of the Shares.
(bb) The Company and its Subsidiaries and BIC have filed all federal,
state, local and foreign tax returns which are required to be filed through
the date hereof (and will file all such tax returns when and as required to
be filed after the date hereof, or have received extensions thereof, and
have
12
paid all taxes shown on such returns to be due on or prior to the date
hereof (and will pay all taxes shown on such returns to be due after the
date hereof) and all assessments received by it to the extent that the same
are material and have become due.
(cc) All shares of Common Stock of the Company issued in connection
with the Pre-IPO Reorganization Transactions (as defined below) (the
"Reorganization Shares") were duly authorized for issuance by the Company,
and are validly issued, fully-paid and non-assessable. The Reorganization
Shares were offered and sold in compliance with all applicable laws
(including, without limitation, federal and state securities laws). "Pre-
IPO Reorganization Transactions" as used in this Agreement shall mean the
reorganization transactions, share and OP Unit issuances, mergers, spin-
offs, property and asset contributions and transfers, and other
transactions contemplated by the joint resolutions of the shareholders and
boards of directors of the Company and BIC dated August __, 1997 and
October __, 1997, and any resolutions supplementing such resolutions (the
"Reorganization Resolutions").
(dd) The execution and delivery of all agreements and documents
executed in connection with or in contemplation of the Pre-IPO
Reorganization Transactions (the "Reorganization Transaction Documents")
and the performance of the obligations set forth therein and the
consummation of the transactions contemplated thereby and by the
Reorganization Resolution have been duly and validly authorized by all
necessary corporate, shareholder or partnership action, as the case may be,
by or on behalf of the parties thereto. Except as described in the
Prospectus, each of the Pre-IPO Reorganization Transactions and the
performance of the obligations contemplated thereby and by the
Reorganization Resolution have been completed on the date hereof. The
consummation of the Pre-IPO Reorganization Transactions did not give rise
to a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or provision
of, or constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company, BIC, or their
respective subsidiaries pursuant to the terms of, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company, BIC or
their subsidiaries is or was a party or by which any of them is bound, or
any other of their properties or businesses are bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company, BIC and their respective subsidiaries
(including, without limitation, any partnership holding title to any
Property prior to the Pre-IPO Reorganization Transactions) or violate any
provision of their
13
respective charters, by-laws, certificates of limited partnership,
partnership agreements, or other organizational documents, as the case may
be, except for such violations as have been cured or consents or waivers
which have already been obtained and are in full force and effect as of the
date hereof, or where the failure to cure such violations or obtain, in the
aggregate, would not have a Material Adverse Effect.
(ee) The contribution by the Company and BIC of certain assets not
related to the Company's core hospitality business, pursuant to the
Reorganization Resolutions is a tax free transaction under Section
[361][357] of the Internal Revenue Code of 1986, as amended (the "Code")
and will not result in a loss or gain to the Company or BIC. The pro rata
distribution of all of the shares of capital stock of Inland Northwest
Corporation and Huckleberry Bay Corporation (the "Subsidiaries' Stock") by
the Company to the holders of the Common Stock of the Company, pursuant to
the Reorganization Resolutions qualifies as a distribution within the
meaning of Code Section 355(a) and accordingly, no gain or loss will be
recognized by (and no amount will be included in the income of) the
Company's stockholders upon the receipt of the such capital stock and,
under Code Section 355(c), no gain or loss will be recognized by the
Company on the distribution of the Subsidiaries' Stock to the Company's
stockholders.
(ff) The Operating Partnership possesses such certificates,
authorizations, licenses or permits issued by the appropriate local, state,
federal or foreign regulatory agencies or bodies necessary to own and
operate the Properties, and to conduct the business being conducted by it,
or proposed to be conducted by it as described in the Prospectus, except
for such certificates, authorizations, licenses and permits, the failure to
obtain, maintain or possess which would not have a Material Adverse Effect,
and the Company and its Subsidiaries have not received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority, license or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect.
(gg) (A) At the Closing Time, the Operating Partnership will have good
and marketable title or a valid leasehold estate, as the case may be, to
each of the Properties and other real property interests indicated in the
Prospectus to be owned or leased by the Operating Partnership, in each case
free and clear of all liens, encumbrances, claims, security interests and
defects, other than (i) those referred to in the Prospectus, and (ii)
mortgages on each of the Properties, and (iii) those which would not have a
Material Adverse Effect.
14
(hh) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
4. Conditions of the Underwriters' Obligations. The obligations of
-------------------------------------------
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a) of this Agreement.
(b) No order preventing or suspending the use of the Prospectus shall
have been or shall be in effect and no order suspending the effectiveness
of the Registration Statement shall be in effect and no proceedings for
such purpose shall be pending before or threatened by the Commission, and
any requests for additional information on the part of the Commission (to
be included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the satisfaction of you and your counsel.
(c) The representations and warranties of the Company and the
Operating Partnership contained in this Agreement shall be true and correct
when made and on and as of each Closing Date as if made on such date and
the Company and the Operating Partnership shall have performed all
covenants and agreements and satisfied all the conditions contained in this
Agreement required to be performed or satisfied by them at or before such
Closing Date.
(d) The Underwriters shall have received on each Closing Date a
certificate, addressed to the Underwriters and dated such Closing Date, of
the chief executive officer or the chief financial officer of the Company,
to the effect that such person has carefully examined the Registration
Statement, the Prospectus and this Agreement and that the representations
and warranties of the Company and the Operating Partnership in this
Agreement are true and correct on and as of such Closing Date with the same
effect as if made on such Closing Date and the Company and the Operating
Partnership have performed all covenants and agreements and satisfied all
conditions contained in this Agreement required to be performed or
satisfied by them at or prior to such Closing Date.
(e) The Underwriters shall have received at the time this Agreement is
executed and on each Closing Date, a letter or letters signed by Coopers &
▇▇▇▇▇▇▇, addressed to the Underwriters and dated, respectively, the date of
this Agreement and each such Closing Date, in form and substance
satisfactory to the Underwriters, as to their status as independent
accountants within the meaning of the Securities Act and the Securities
Rules and matters relating to the financial statements and other financial
and statistical
15
information included in the Registration Statement and the Prospectus.
[RIDER 15-1 TO COME] [Comfort letter paragraph to come]
(f) The Underwriters shall have received on each Closing Date from
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler LLP, counsel for the Company, an
opinion, addressed to the Underwriters and dated such Closing Date, and
stating in effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Washington. Each of the Subsidiaries is duly incorporated, or
organized, as the case may be, and is validly existing and in good
standing in the respective jurisdiction of its organization or
incorporation, the Company and its Subsidiaries are duly qualified and
in good standing as foreign corporations in Idaho, Montana and Oregon.
To the best of such counsel's knowledge, except for the Operating
Partnership, North River Drive Company, Cavanaughs Delaware and ▇▇▇▇▇▇
Street Limited Partnership, the Company has no other subsidiary and
does not control, directly or indirectly, any corporation,
partnership, joint venture, association or other business
organization; and the Company and its Subsidiaries have all requisite
corporate and partnership power and authority to own, lease, license
and operate their assets and properties and conduct their business as
now being conducted and as described in the Registration Statement and
the Prospectus; except for such authorizations, approval, consents,
orders, licenses, certificates, and permits the absence of which would
not have a Material Adverse Effect.
(ii) The Company has authorized, issued and outstanding capital
stock as set forth under the caption "Description of Capital Stock" in
the Prospectus; the certificates evidencing the Shares are in due and
proper legal form and have been duly authorized for issuance by the
Company; all of the outstanding shares of Common Stock have been duly
authorized and validly issued; and all of the outstanding shares of
Common Stock are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other similar right under
Washington law, or under any document, agreement or instrument known
to us. The Shares, when issued and sold pursuant to this Agreement,
will be duly and validly issued, fully paid and nonassessable and none
of them will have been issued in violation of any preemptive or other
similar right. Except as disclosed in the Registration Statement and
the Prospectus, to the knowledge of such counsel, there is no
outstanding option, warrant or other right calling for the issuance
of, and, there is no commitment, plan or arrangement to issue, any
share of capital stock, of the Company or any
16
security convertible into or exercisable or exchangeable for, capital
stock of the Company. The Common Stock and the Shares conform in all
material respects to all statements relating thereto contained in the
Registration Statement and the Prospectus.
(iii) All necessary corporate and partnership action has been
duly and validly taken by the Company and the Operating Partnership to
authorize the execution, delivery and performance of this Agreement
and the issuance and sale of the Shares by the Company. This
Agreement has been duly and validly executed and delivered by the
Company and the Operating Partnership.
(iv) The information set forth under the caption "Description of
Capital Stock" in the Prospectus to the extent that it constitutes
matters of law, summaries of legal matters, documents, or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects.
(v) The descriptions contained in the Registration Statement and
the Prospectus of statutes, legal and governmental proceedings,
contracts and other documents are accurate, and insofar as such
statements constitute a summary of documents referred to therein,
matters of law or legal conclusions are fair summaries of the material
provisions thereof and accurately present the information required
with respect to such documents and matters. To the best of our
knowledge, there are no statutes, [governmental proceedings],
agreements and other documents required to be described in the
Registration Statement which have not been so described. To the best
of our knowledge there are no agreements and other documents required
to be filed as exhibits to the Registration Statement which have not
been so filed.
(vi) All the issued and outstanding Units have been duly
authorized and validly issued; and all of the outstanding Units are
fully paid and non-assessable and none of them was issued in violation
of any preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, to the knowledge of such
counsel, there is no outstanding option, warrant or other right
calling for the issuance of Units, and there is no commitment, plan or
arrangement to issue, any Unit, or any security convertible into or
exercisable or exchangeable for, Units. The Units conform in all
material respects to all statements relating thereto contained in the
Registration Statement and the Prospectus.
(vii) To the best of such counsel's knowledge, neither the
execution, delivery and performance of this
17
Agreement by the Company or the Operating Partnership nor the
consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by the Company
of the Shares) will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or result in
the breach of any term or provision of, or constitute a default (or
any event which with notice or lapse of time, or both, would
constitute a default) under, or require consent or waiver under, or
result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or any of its
Subsidiaries pursuant to the terms of, any indenture, mortgage, deed
of trust, note, franchise, license, permit or other agreement or
instrument known to such counsel and to which the Company or any of
its Subsidiaries is a party or by which any of them or any of their
properties or businesses are bound, or violate any judgment, decree,
order, statute, rule or regulation or any provision of the charters,
by-laws, certificates of limited partnership, partnership agreements
or other organizational documents, as the case may be, of the Company
or any of its Subsidiaries.
(viii) The Operating Partnership possesses such certificates,
authorizations, licenses or permits issued by the appropriate local,
state, federal or foreign regulatory agencies or bodies necessary to
own and operate the Properties, and to conduct the business being
conducted by it, or proposed to be conducted by it as described in the
Prospectus, except for such certificates, authorizations, licenses and
permits, the failure to obtain, maintain or possess which would not
have a Material Adverse Effect.
(ix) To the best of such counsel's knowledge, no default exists,
and no event has occurred which with notice or lapse of time, or both,
would constitute a default, in the due performance and observance by
the Company or any Subsidiary of any term, covenant or condition of
any material agreement, instrument or other document to which the
Company or any Subsidiary is a party or by which their assets or
properties or businesses are bound or affected except for those which
in the aggregate would not have a Material Adverse Effect.
(x) The Reorganization Shares were duly authorized for issuance
by the Company, and are validly issued, fully-paid and non-assessable.
To the best of our knowledge, the Reorganization Shares were offered
and sold materially in compliance with all applicable laws (including,
without limitation, federal and state securities laws).
18
(xi) The best of such counsel's knowledge the execution and
delivery of the Reorganization Transaction Documents and the
performance of the obligations set forth therein and the consummation
of the transactions contemplated thereby [and by the Reorganization
Resolution] have been duly and validly authorized by all necessary
corporate, shareholder or partnership action, as the case may be, by
or on behalf of the parties thereto. Except as described in the
Prospectus, and except for those obligations and transactions that do
not and will not in the aggregate result in a Material Adverse Effect,
each of the Pre-IPO Reorganization Transactions and the performance of
the obligations and transactions contemplated thereby have been
completed as of the date hereof. [To the best of such counsel's
knowledge the consummation of the Pre-IPO Reorganization Transactions
did not give rise to a right to terminate or accelerate the due date
of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event which
with notice or lapse of time or both would constitute a default)
under, or require any consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company, BIC, or their respective
subsidiaries pursuant to the terms of, any indenture, mortgage, deed
of trust or other agreement or instrument to which the Company, BIC or
their subsidiaries is or was a party or by which any of them is bound,
or any other properties or businesses are bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company, BIC and their respective subsidiaries
(including, without limitation, any partnerships holding title to any
Property prior to the Pre-IPO Reorganization Transactions) or violate
any provision of their respective charters, by-laws, certificates of
limited partnership, partnership agreements, or other organizational
documents, as the case may be, except where, as of the date hereof,
such violations have been cured or consents or waivers have already
been obtained and are in full force and effect, or where the failure
to cure such violations or obtain such consents or waivers, in the
aggregate, would not have a Material Adverse Effect.]
(xii) The contribution by the Company and BIC of certain assets
not related to the Company's core hospitality business, pursuant to
the Reorganization Resolutions is a tax free transaction under Section
[361][357] of the Internal Revenue Code of 1986, as amended (the
"Code") and will not result in a loss or gain to the Company or BIC.
The pro rata distribution of all of the shares of capital stock of
Inland Northwest Corporation and Huckleberry Bay Corporation (the
19
"Subsidiaries' Stock") by the Company to the holders of the Common
Stock of the Company, pursuant to the Reorganization Resolutions
qualifies as a distribution within the meaning of Code Section 355(a)
and accordingly, no gain or loss will be recognized by (and no amount
will be included in the income of) the Company's stockholders upon the
receipt of the such capital stock and, under Code Section 355(c), no
gain or loss will be recognized by the Company on the distribution of
the Subsidiaries' Stock to the Company's stockholders.
(xiii) To the best of such counsel's knowledge, neither the
Company nor any Subsidiary is in violation of any term or provision of
its charter, by-laws, certificate of limited partnership, partnership
agreement, or other organizational document, as the case may be, and
neither the Company nor any Subsidiary, is in violation of any term or
provision of any franchise, license, permit, judgment, decree, order,
statute, rule or regulation.
(xiv) No consent, approval, authorization or order of any court
or governmental agency or body is required for the performance by the
Company and the Operating Partnership of this Agreement or the
consummation of the transactions contemplated hereby, except such as
have been obtained.
(xv) To the best of such counsel's knowledge, there is no
litigation or governmental or other proceeding or investigation before
any court or before or by any public body or board pending or
threatened against, or involving the assets, properties or businesses
of, the Company and its Subsidiaries which is reasonably likely to
have a Material Adverse Effect, or which is required to be described
in the Registration Statement and Prospectus.
(xvi) The Registration Statement, the Prospectus and each
amendment or supplement thereto (except for the financial statements
and notes and schedules and other financial, pro forma and statistical
information included therein, as to which such counsel expresses no
opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Securities Rules.
(xvii) The Registration Statement has become effective under the
Securities Act, and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or are threatened or pending. The Shares have
20
been approved for listing, subject to notice of issuance, on the NYSE.
(xviii) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company and the Operating Partnership, representatives of the Underwriters
and their counsel and representatives of the independent certified public
accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus
(except as specified in the foregoing opinion), on the basis of the
foregoing (relying as to materiality to a large extent upon the statements
of officers and other representatives of the Company) no facts have come to
the attention of such counsel which have caused such counsel to believe
that the Registration Statement at the time it became effective and at each
Closing Date contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus as of its
date and at each Closing Date contained any untrue statement of a material
fact or omitted 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 (it being understood that such counsel need not
express any belief with respect to the financial statements and schedules
and other financial, pro forma and statistical information included in the
Registration Statement or the Prospectus).
(g) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be satisfactory
in form and substance to the Underwriters and their counsel, ▇▇▇▇▇▇ & ▇▇▇▇▇
LLP, and the Underwriters shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP a
favorable opinion, addressed to the Underwriters and dated such Closing
Date, with respect to the Shares, the Registration Statement and the
Prospectus, and such other related matters, as the Underwriters may
request, and the Company shall have furnished to ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP such
documents as they may reasonably request for the purpose of enabling them
to pass upon such matters.
To the extent deemed advisable by ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ &
Handler, LLP or ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, they may rely as to matters of fact on
certificates of responsible officers of the Company and its Subsidiaries and
public officials and on the
21
opinions of other counsel satisfactory to the Underwriters [(which shall include
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Associates P.S.)] as to matters which are governed by laws
other than the laws of the State of Delaware and the federal laws of the United
States; provided, however, that such counsel shall state that in their opinion
-------- -------
that they believe the Underwriters and they are justified in relying on such
other opinions. Copies of such certificates and other opinions shall be
furnished to the Underwriters and counsel for the Underwriters.
(h) The Underwriters shall have received on each Closing Date a
certificate, including exhibits thereto, addressed to the Underwriters and
dated such Closing Date, of the Secretary of the Company, signed in such
capacity, as to the (i) articles of incorporation and by-laws of the
Company; (ii) organizational documents of the Subsidiaries;
(iii) resolutions authorizing the execution and delivery of the
Registration Statement, this Agreement and the performance of the
transactions contemplated by this Agreement, the Registration Statement and
the Prospectus; and (iv) incumbency of the person or persons authorized to
execute and deliver the Registration Statement, this Agreement and any
other agreements, documents or other instruments contemplated by this
Agreement or the offering of the Shares. In addition, such certificate
shall state that: (x) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that purpose
has been instituted or is threatened by the Commission; and (y) since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amendment or supplement to the Registration
Statement or Prospectus that has not been set forth.
(i) The Underwriters shall have received on each Closing Date
certificates of the Secretaries of State (or comparable officials) where
the Company and its Subsidiaries are incorporated, or formed, and/or doing
business as to the good standing of the Company and its Subsidiaries,
listing all charter documents on file, qualification of the Company or its
Subsidiaries to do business as foreign corporations, payment of taxes and
filing of annual reports.
(j) The Company and its Subsidiaries shall have furnished to you such
further certificates and documents as you or your counsel shall have
reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Underwriters and their counsel. The Company will furnish
the Underwriters with such conformed copies of such opinions, certificates,
letters and other documents as the Underwriters shall reasonably request.
22
5. Covenants of the Company. The Company and the Operating
------------------------
Partnership covenant and agree as follows:
(a) The Company will cause the Prospectus to be filed as required by
Section 3(a) hereof (but only if the Underwriters or their counsel have not
reasonably objected thereto by notice to the Company after having been
furnished a copy a reasonable time prior to filing) and will notify you
promptly of such filing. During the period in which a prospectus relating
to the Shares is required to be delivered under the Securities Act or such
date which is 90 days after the Closing Date, whichever is later, the
Company will notify the Underwriters promptly of the time when any
subsequent amendment to the Registration Statement has become effective or
any subsequent supplement to the Prospectus has been filed, of any request
by the Commission for any amendment or supplement to the Registration
Statement or Prospectus or for additional information; the Company will
prepare and file with the Commission, promptly upon the request of the
Underwriters, any amendments or supplements to the Registration Statement
or Prospectus that, in their or their counsel's opinion, may be necessary
or advisable in connection with your distribution of the Shares; and the
Company will file no amendment or supple ment to the Registration Statement
or Prospectus to which the Underwriters or their counsel shall reasonably
object by notice to the Company after having been furnished a copy a
reasonable time prior to the filing.
(b) The Company will advise the Underwriters, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification or
registration of the Shares for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceeding for any such purpose; and
it will promptly use its best efforts to prevent the issuance of any stop
order or suspension of qualification or registration or to obtain its
withdrawal if such a stop order or suspension of qualification or
registration should be issued.
(c) The Company will comply with all requirements imposed upon it by
the Securities Act or the Securities Rules, as from time to time in force,
so far as necessary to permit the continuance of sales of, or dealings in,
the Shares as contemplated by the provisions hereof and the Prospectus. If
during such period where a prospectus relating to the Shares is required to
be delivered under the Securities Act any event occurs as a result of
which, in the opinion of your counsel, the Registration Statement contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omits to state a material
fact necessary to make the statements
23
therein, in the light of the circumstances then existing under which they
were made, not misleading, or if during such period it is necessary to
amend or supplement the Registration Statement or Prospectus to comply with
the Securities Act, the Company will promptly notify you and will promptly
amend or supplement the Registration Statement or Prospectus (at the
expense of the Company) so as to correct such statement or omission or
effect such compliance.
(d) The Company shall make generally available to its security holders
and to the Underwriters as soon as practicable, but not later than 45 days
after the end of the 12-month period beginning at the end of the fiscal
quarter of the Company during which the Effective Time occurs (or 90 days
if such 12-month period coincides with the Company's fiscal year), an
earning statement (which need not be audited) of the Company, covering such
12-month period, which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Securities Rules.
(e) The Company shall furnish to the Underwriters and their counsel,
without charge, signed copies of the Registration Statement (including all
exhibits thereto and amendments thereof) and all amendments thereof and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Securities Rules, as many copies of
the Prospectus and any amendments thereof and supplements thereto as the
Underwriters may reasonably request.
(f) For a period of three years after the date of this Agreement, the
Company shall supply to the Underwriters, copies of such financial
statements and other periodic and special reports as the Company may from
time to time distribute generally to the holders of any class of its
capital stock and furnish to the Underwriters a copy of each annual or
other report it shall be required to file with the Commission.
(g) Neither the Company nor the Operating Partnership shall sell,
offer to sell, contract to sell, pledge or otherwise dispose of or
transfer, directly or indirectly, any shares of Common Stock or other
capital stock of the Company, or any securities convertible into or
exchangeable or exercisable for, or any rights to purchase or acquire,
shares or Common Stock or other capital stock of the Company for a period
of one year commencing on the date of this Agreement, without the prior
written consent of CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., other than the sale of the
Shares in the Offering and the issuance or transfer of: (i) options to
purchase shares of Common Stock (and shares of Common Stock issuable upon
the exercise of such options) issued pursuant to the Plans; (ii) shares of
Common Stock in connection with estate planning; (iii) 55,000 restricted
shares of Common Stock to be awarded
24
to certain employees of the Company; and, (iv) securities of the Company or
the Operating Partnership issued in connection with the acquisition by the
Company of real property or interests in entities holding real property,
provided that the recipient or transferee of such securities agrees in
writing to be subject to the lock-up contained in this paragraph (without
giving effect to clauses (i), (ii) and (iii)) for a period ending on the
date that is one year after the date hereof. .
(h) On or before the Firm Shares Closing Date, the Company shall make
all filings required under applicable securities laws and by the NYSE
(including any required registration under the Exchange Act). On or before
the date of this Agreement, the Shares shall be listed on the NYSE.
(i) The Company and the Operating Partnership agree to pay, or
reimburse if paid by the Underwriters, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all
costs and expenses incident to the performance of the obligations of the
Company and the Operating Partnership under this Agreement including those
relating to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, the Prospectus, all
amendments and supplements to the Registration Statement and the
Prospectus, and the printing, filing and distribution of this Agreement;
(ii) the preparation and delivery of certificates for the Shares to the
Underwriters; (iii) if applicable, the registration or qualification of the
Shares for offer and sale under the securities laws of the various
jurisdictions, including the reasonable fees and disbursements of counsel
for the Underwriters in connection with any such registration and
qualification; (iv) the furnishing (including cost of shipping and mailing)
to the Underwriters of copies of the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by
this Section to be so furnished, as may be reasonable requested for use in
connection with the offering and the sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold; (v) the filing fees of the NASD
in connection with its review of the terms of the transactions contemplated
hereby; (vi) the furnishing (including costs of shipping and mailing) to
the Underwriters of copies of all reports and information required by 5(f);
(vii) listing of the Shares on the NYSE; and (viii) all transfer taxes, if
any, with respect to the sale and delivery of the Shares by the Company to
the Underwriters. Subject to the provisions of Section 8, the Underwriters
agree to pay, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the performance of the obligations of the Underwriters under
this Agreement not payable by the Company and the Operating Partnership
pursuant to the preceding
25
sentence, including, without limitation, the fees and disbursements of
counsel for the Underwriters.
6. Indemnification.
---------------
(a) The Company and the Operating Partnership agree to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any and all losses, claims, damages
and liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted), to
which they, or any of them, may become subject under the Securities Act,
the Exchange Act or other federal or state law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities arise
out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or arise out of
or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that such indemnity
-------- -------
shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue
statement or omission was made in the Registration Statement or the
Prospectus, or such amendment or supplement, in reliance upon and in
conformity with information concerning the Underwriters furnished in
writing to the Company by the Underwriters specifically for use therein.
This indemnity agreement will be in addition to any liability which the
Company and Operating Partnership may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and the Operating Partnership, each person,
if any, who controls the Company and the Operating Partnership within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, each director of the Company and each officer of the Company and the
Operating Partnership who signs the Registration Statement, to the same
extent as the foregoing indemnity from the Company and the Operating
Partnership to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement
or omission or alleged untrue statement or omission which was made in the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto, concerning the Underwriters furnished in writing to the
Company by the Underwriters specifically for use therein;
26
provided, however, that the obligation of each Underwriter to indemnify the
-------- -------
Company (including any controlling person, director or officer thereof)
shall be limited to the underwriting discounts and commissions received by
such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 6(a) or 6(b) shall be available to
any party who shall fail to give notice as provided in this Section 6(c) if
the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the approval by
the indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except as
provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
parties and the indemnified party in the conduct of the defense of such
action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or
(iii) the indemnifying parties shall not have employed counsel to assume
the defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement
27
of any action, suit, proceeding or claim effected without its written
consent.
7. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in
Section 6 is due in accordance with its terms but for any reason is held to be
unavailable from the Company and the Operating Partnership or the Underwriters,
the Company and the Operating Partnership and the Underwriters shall contribute
to the aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted, but after deducting any contribution received by the Company
and the Operating Partnership from persons other than the Underwriters, such as
persons who control the Company within the meaning of the Securities Act,
officers of the Company who signed the Registration Statement and directors of
the Company who may also be liable for contribution) to which the Company and
the Operating Partnership and one or more of the Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Operating Partnership on the one hand and the Underwriters
on the other from the transactions contemplated hereby or, if such allocation is
not permitted by applicable law or indemnification is not available as a result
of the indemnifying party not having received notice as provided in Section 6
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Operating Partnership on the one hand and the Underwriter on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Operating Partnership and the Underwriters shall be deemed to be in the same
proportion as (i) the total proceeds from the offering of the Shares (net of
underwriting discounts but before deducting expenses) received by the Company
and the Operating Partnership, as set forth in the table on the cover page of
the Prospectus, bear to (ii) the underwriting discounts and commissions received
by the Underwriters, as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and the Operating Partnership or
the Underwriter shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to information
supplied by the Company and the Operating Partnership or the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the Operating
Partnership and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 7, in no
28
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discount and commission applicable to the Shares purchased by
such Underwriter hereunder; provided, however, that no person guilty of
-------- -------
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 7,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
immediately preceding sentence of this Section 7. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The
Underwriters' obligations to contribute pursuant to this Section 7 are several
in proportion to their respective underwriting commitments and not joint.
8. Termination. This Agreement may be terminated with respect to
-----------
the Shares to be purchased on a Closing Date by the Underwriters by notifying
the Company at any time:
(a) in the absolute discretion of the Underwriters at or before any
Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Underwriters will in the future materially disrupt, the
securities markets; (ii) if there has occurred any new outbreak or material
escalation of hostilities or other calamity or crisis the effect of which
on the financial markets of the United States is such as to make it, in the
judgment of the Underwriters, inadvisable to proceed with the transactions
contemplated hereby; (iii) if there shall be such a material adverse change
in general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is
such as to make it, in the judgment of the Underwriters, inadvisable or
impracticable to market the Shares; (iv) if trading in the Shares has been
suspended by the Commission or trading generally on the NYSE has been
suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for
29
prices for securities have been required, by said exchanges or by order of
the Commission, the NASD, or any other governmental or regulatory
authority; or (v) if a banking moratorium has been declared by any state or
federal authority, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 4 shall not have been fulfilled when and as required
by this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company and the Operating Partnership shall not be under any liability to any
Underwriter, and no Underwriter shall be under any liability to the Company and
the Operating Partnership, except that: (i) if this Agreement is terminated by
the Underwriters or the Underwriters because of any failure, refusal or
inability on the part of the Company and the Operating Partnership to comply
with the terms or to fulfill any of the conditions of this Agreement, the
Company and the Operating Partnership will reimburse the Underwriters for all
reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder; and (ii) no Underwriter who shall have failed or refused
to purchase the Shares agreed to be purchased by it under this Agreement,
without some reason sufficient hereunder to justify cancellation or termination
of its obligations under this Agreement, shall be relieved of liability to the
Company or to the other Underwriters for damages occasioned by its failure or
refusal.
9. Substitution of Underwriters. If one or more of the Underwriters
----------------------------
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 8) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Underwriters may find one or more substitute underwriters to
purchase such Shares or make such other arrangements as the Underwriters may
deem advisable or the remaining Underwriter may agree to purchase all of the
Shares, in each case upon this Agreement. If no such arrangements have been
made by the close of business on the business day following such Closing Date:
(a) if the number of Shares to be purchased by the defaulting
Underwriter on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
the nondefaulting Underwriter shall be obligated to purchase such Shares on
the terms herein set forth in proportion to their respective obligations
hereunder; provided, however, that in no event shall the maximum number of
-------- -------
Shares that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by more than one-ninth of such number
of Shares without the written consent of such Underwriter, or
30
(b) if the number of Shares to be purchased by the defaulting Underwriter
on such Closing Date shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to an additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Underwriters to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Underwriters or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or the
Prospectus) may be effected by the Underwriters and the Company. If the number
of Shares to be purchased on such Closing Date by such defaulting Underwriter
shall exceed 10% of the Shares that all the Underwriters are obligated to
purchase on such Closing Date, and the nondefaulting Underwriter or the Company
shall make arrangements pursuant to this Section within the period stated for
the purchase of the Shares that the defaulting Underwriter agreed to purchase,
this Agreement shall terminate with respect to the Shares to be purchased on
such Closing Date without liability on the part of the nondefaulting Underwriter
to the Company and without liability on the part of the Company, except in both
cases as provided in Sections 5(i), 6, 7, 8 and 9. The provisions of this
Section shall not in any way affect the liability of any defaulting Underwriter
to the Company or the nondefaulting Underwriter arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes of
this Agreement.
10. Miscellaneous. The respective agreements, representations,
-------------
warranties, indemnities and other statements of the Company and the Operating
Partnership or their officers and of the Underwriters set forth in or made
pursuant to this Agreement shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company and the
Operating Partnership or any of the officers, directors or controlling persons
referred to in Sections 6 and 7 hereof, and shall survive delivery of and
payment for the Shares. The provisions of Sections 5(i), 6, 7, 8 and 9 shall
survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and the Operating Partnership and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, or the Company or the Operating
Partnership, and directors and officers of the Company and the Operating
Partnership, and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not
31
include any purchaser of Shares from any Underwriter merely because of such
purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or facsimile if subsequently confirmed in
writing, (a) if to the Underwriters, c/o CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., CIBC
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, with a copy to ▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (b) if to the Company, to its agent
for service as such agent's address appears on the cover page of the
Registration Statement, with a copy to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇, Scholer,
Fierman, ▇▇▇▇ & Handler, LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
32
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
CAVANAUGHS HOSPITALITY CORPORATION
By: ___________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
CAVANAUGHS HOSPITALITY LIMITED
PARTNERSHIP
By: CAVANAUGHS HOSPITALITY
CORPORATION
By: _________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
CONFIRMED AND ACCEPTED
as of the date first
above written
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
By:__________________________
Name:
Title:
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇
SECURITIES, LLC
By: CIBC ▇▇▇▇▇▇▇▇▇▇▇
Corp., its
Representative
By:__________________________
Name:
Title:
33
SCHEDULE I
Number of Firm
Shares to
Name Be Purchased
---- --------------
1. CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. ______________
2. Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC ______________
3. ______________
4. ______________
TOTAL 5,000,000
34