5,550,000 Shares
Vistana Inc.
Common Stock
Underwriting Agreement
dated February __, 1997
▇▇▇▇▇▇▇▇▇▇ Securities
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Underwriting Agreement
February __, 1997
▇▇▇▇▇▇▇▇▇▇ SECURITIES
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
As Representatives of the several Underwriters
c/▇ ▇▇▇▇▇▇▇▇▇▇ SECURITIES
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Introductory. Vistana, Inc., a Florida corporation (the "Company"),
proposes to issue and sell to the several underwriters named in Schedule A (the
"Underwriters") an aggregate of 4,625,000 shares of its Common Stock, par value
$0.01 per share (the "Common Stock"); and the shareholders of the Company named
in Schedule B (collectively, the "Selling Shareholders") severally propose to
sell to the Underwriters an aggregate of 925,000 shares of Common Stock. The
4,625,000 shares of Common Stock to be sold by the Company and the 925,000
shares of Common Stock to be sold by the Selling Shareholders are collectively
called the "Firm Common Shares." In addition, the Company and the Selling
Shareholders propose to grant to the Underwriters an option to purchase up to an
additional 832,500 shares of Common Stock as provided in Section 2. The
additional 832,500 shares to be sold by the Company and the Selling Shareholders
pursuant to such option are collectively called the "Optional Common Shares."
The Firm Common Shares and, if and to the extent such option is exercised, the
Optional Common Shares are collectively called the "Common Shares." ▇▇▇▇▇▇▇▇▇▇
Securities and ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. have agreed to act as representatives of the
several Underwriters (in such capacity, the "Representatives") in connection
with the offering (the "Offering") and sale of the Common Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-19045), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A or Rule 434
under the Securities Act, is called the "Registration Statement." Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the "Rule 462(b) Registration Statement", and from and
after the date and time of filing of the Rule 462(b) Registration Statement the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriters to
confirm sales of the Common Shares, is called the "Prospectus"; provided,
however, if the Company has, with the consent of ▇▇▇▇▇▇▇▇▇▇ Securities, elected
to rely upon Rule 434 under the Securities Act, the term "Prospectus" shall mean
the Company's prospectus subject to completion (each, a "preliminary
prospectus") dated February 10, 1997 (such preliminary prospectus is called the
"Rule 434 preliminary prospectus"), together with the applicable term sheet (the
"Term Sheet") prepared and filed by the Company with the Commission
1
under Rules 434 and 424(b) under the Securities Act and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
All references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a preliminary prospectus, the Prospectus or the Term
Sheet, or any amendments or supplements to any of the foregoing, shall include
any copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("▇▇▇▇▇").
You have advised the Company and the Selling Shareholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the Registration Statement or as soon
thereafter as in your judgment is advisable.
On or prior to the First Closing Date (as defined below), the Company will
complete a series of transactions described in the Prospectus under the caption
"Corporate Background and The Formation Transactions" and elsewhere. For the
purposes hereof, the term "Formation Transactions" includes:
1. the transactions designed to transfer from the trusts named in Schedule
C (collectively, the "Existing Shareholders") to the Company all of the
outstanding capital stock and partnership interests owned by the Existing
Shareholders in:
(i) the several corporations (collectively, the "Affiliated
Corporations") and several limited partnerships (collectively, the
"Affiliated Partnerships," and together with the Affiliated Corporations,
the "Affiliated Companies") which are directly or indirectly wholly-owned
and controlled by the Existing Shareholders, and
(ii) the two partnerships between one or more of the Affiliated
Companies and unaffiliated third party partners (collectively, the "Related
Partnerships")
that own all of or a partnership interest in the resorts (including properties
where resorts are under construction or where resorts are to be constructed)
named in Schedule C (collectively, the "Resorts");
3. the other transactions set forth in the Prospectus under the captions
"Corporate Background and the Formation Transactions" and "Prior Income Tax
Status and Planned Distributions" and any actions needed to effectuate such
transactions.
Following the consummation of the Formation Transactions and the Offering
and assuming no sale of any Optional Common Shares, the Selling Shareholders
will, in the aggregate, own approximately 70.5% of the outstanding common stock
of the Company, which will be subject to Shareholders' Agreement (the
"Shareholders' Agreement") by and among the Existing Shareholders.
The Company and each of the Selling Shareholders hereby confirm their
respective agreements with the Underwriters as follows:
Section 1. Representations and Warranties of the Company.
A. Representations and Warranties of the Company. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration Statement
and any Rule 462(b) Registration Statement have been declared effective by the
Commission under the Securities
2
Act. The Company has complied to the Commission's satisfaction with all
requests of the Commission for additional or supplemental information. No
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best knowledge of the
Company, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in all
material respects with the Securities Act and, if filed by electronic
transmission pursuant to ▇▇▇▇▇ (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Common
Shares. Each of the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendment thereto, at the time it became
effective and at all times prior to and including the First Closing Date and
the Second Closing Date, if any, complied and will comply in all material
respects with the Securities Act and did not and will not contain any 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, as amended or supplemented, as of its date and at all times
prior to and including the First Closing Date and the Second Closing Date, if
any, did not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or omissions
from the Registration Statement, any Rule 462(b) Registration Statement, or
any post-effective amendment thereto, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by the
Representatives expressly for use therein. There are no contracts or other
documents required to be described in the Prospectus or to be filed as
exhibits to the Registration Statement which have not been described or filed
as required.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives one complete manually signed copy of the
Registration Statement and each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives
have reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. Neither the Company
nor any of the Affiliated Companies nor any of the Related Partnerships has
distributed or will distribute, prior to the later of the Second Closing Date
(as defined below) and the completion of the Underwriters' distribution of the
Common Shares, any offering material in connection with the offering and sale
of the Common Shares other than a preliminary prospectus, the Prospectus or
the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the
Company, enforceable against the Company in accordance with its terms, except
as rights to indemnification hereunder may be limited by applicable law, and
except as the enforcement of this Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(e) Authorization of the Common Shares. The Common Shares to be purchased
by the Underwriters from the Company have been duly authorized for issuance
and sale pursuant to this
3
Agreement and, when issued and delivered by the Company pursuant to this
Agreement, will be validly issued, fully paid and nonassessable.
(f) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, other than the Selling
Shareholders with respect to the Common Shares included in the Registration
Statement, except for such rights as have been duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is
given in the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings,
business, operations or prospects, whether or not arising from transactions in
the ordinary course of business, of the Company, the Affiliated Companies and
the Related Partnerships, considered as one entity, (any such change is called
a "Material Adverse Change"); (ii) the Company, the Affiliated Companies and
the Related Partnerships, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction or
agreement not in the ordinary course of business; (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company or,
except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries, any Affiliated Entity or any Related Partnership with respect to
any class of capital stock, shares, or interests, as applicable, or repurchase
or redemption by the Company, any subsidiary or any Affiliated Company of any
class of capital stock; (iv) there has not been any change in (1) the Common
Stock (other than upon the sale of the Common Shares hereunder) of the
Company, (2) the ownership interests in any of the Affiliated Companies or the
Related Partnerships or (3) indebtedness material to the Company or any of the
Affiliated Companies or the Related Partnerships (other than in the ordinary
course of business); and (v) neither the Company, nor any of the Affiliated
Companies nor any of the Related Partnerships has sustained any material loss
or interference with its respective businesses or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance.
(h) Independent Accountants. KPMG Peat Marwick LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, are independent public or certified public accountants as
required by the Securities Act.
(i) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly in all material respects the consolidated
financial position of the Company and its Combined Affiliates as of and at the
dates indicated and the results of their operations and cash flows for the
periods specified. The pro forma financial statements included in the
Registration Statement and the Prospectus comply in all material respects with
the applicable requirements of Rule 11-02 of Regulation S-X of the Commission
as interpreted by the Commission in this transaction and the pro forma
adjustments have been properly applied to the historical amounts in the
compilation of such statements. The supporting schedules included in the
Registration Statement present fairly in all material respects the information
required to be stated therein. Such financial statements and supporting
schedules have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved,
except as may be expressly stated in the related notes thereto. No other
financial statements or supporting schedules are required to
4
be included in the Registration Statement. The financial data set forth in
the Prospectus under the captions "Summary Combined Historical and Pro Forma
Financial Information," "Selected Combined Historical Financial Information"
and "Pro Forma Combined Financial Information" and "Capitalization" fairly
present the information set forth therein on a basis consistent with that of
the audited financial statements contained in the Registration Statement. The
pro forma combined financial information of the Company and its subsidiaries
and the related notes thereto included under the captions "Summary Combined
Historical and Pro Forma Financial Information" and "Pro Forma Combined
Financial Information" and elsewhere in the Prospectus and in the Registration
Statement present fairly in all material respects the information contained
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been
properly presented on the bases 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.
(j) Formation and Active Status of the Company, the Affiliated Companies
and the Related Partnerships. Each of the Company and the Affiliated
Corporations has been duly incorporated and is validly existing as a
corporation and the status of such corporation is active under the laws of the
jurisdiction of its incorporation and it has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and, in the case of the Company, to enter into and
perform its obligations under this Agreement; and no proceeding has been
instituted or threatened in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority.
Each of the Related Partnerships has been duly formed and is validly existing
as a partnership, in good standing under the laws of its jurisdiction of
formation, with full power and authority (partnership and other) to own and
lease its properties and conduct its respective businesses as described in the
Prospectus; and no proceeding has been instituted or threatened in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority. Each of the Company, each Affiliated Entity
and each Related Partnership is, and after the consummation of the Formation
Transactions will be, duly qualified as a foreign corporation or partnership,
as applicable, to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except for such
jurisdictions where the failure to so qualify or to be in good standing would
not, individually or in the aggregate, result in a Material Adverse Change;
and no proceeding has been instituted or threatened in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
qualification and good standing. All of the issued and outstanding capital
stock of each subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim. The Company does not own or control, and after the
consummation of Offering and the Formation Transactions will not own or
control, directly or indirectly, any corporation, association or other entity
other than the entities so set forth in the Registration Statement, including
the subsidiaries listed in Exhibit 21 to the Registration Statement.
(k) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capital stock of the Company is as set forth in the Prospectus
under the caption "Capitalization" (other than for subsequent issuances, if
any, pursuant to employee benefit plans described in the Prospectus or upon
exercise of outstanding options or warrants described in the Prospectus). The
Common Stock (including the Common Shares) conforms in all material respects
to the description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock (including the shares of Common Stock owned
by Selling Shareholders) have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance with federal
and state securities laws. No further approval or authority of the
shareholders or the Board of
5
Directors of the Company is required for the issuance and sale of the Common
Shares as contemplated herein. None of the outstanding shares of Common Stock
were issued in violation of any preemptive rights, rights of first refusal or
other similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital
stock of the Company or any of its subsidiaries other than those described in
the Prospectus. The issued and outstanding partnership interests in each of
the Property Partnerships have been validly issued and are fully paid and
nonassessable and have been issued in compliance with all federal and state
securities laws. Except as disclosed in or contemplated by the Prospectus and
the financial statements of the Company and the related notes thereto, neither
the Company, the Affiliated Companies, nor any of the Related Partnerships has
outstanding any options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase these securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its capital
stock, partnership interests or limited liability company interests, as the
case may be, or any such options, rights, convertible securities or
obligations. The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted
thereunder, set forth in the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
(l) Stock Exchange Listing. The Common Shares have been approved for
inclusion on the Nasdaq National Market, subject only to official notice of
issuance.
(m) Non-Contravention of Existing Instruments; Procurement of Consents; No
Further Authorizations or Approvals Required. Neither the Company, nor any
Affiliated Entity nor any Related Partnership is in violation of its articles
of incorporation, by-laws, partnership agreement, certificate of partnership
or other organization documents, as applicable, or is in default (or, with the
giving of notice or lapse of time, would be in default) ("Default") under any
indenture, mortgage, deed of trust, agreement, license, permit, loan or credit
agreement, note, contract, franchise, lease or other instrument to which the
Company, any Affiliated Entity or any Related Partnership is a party or by
which it or any of them may be bound including, without limitation, those
listed in Schedule D, or to which any of the property or assets of the
Company, any Affiliated Entity or any Related Partnership is subject (each, an
"Existing Instrument," and collectively the "Existing Instruments"), except
for such Defaults as would not, individually or in the aggregate, result in a
Material Adverse Change. The Company's execution, delivery and performance of
this Agreement and each Consolidation Agreement (as defined below) and the
Company's consummation of the transactions contemplated hereby and by the
Prospectus, including the Formation Transactions, (i) have been duly
authorized by all necessary corporate action, (ii) will not result in any
violation of the provisions of the articles of incorporation, by-laws,
partnership agreement, certificate of partnership or other organization
documents, as applicable, of the Company, any Affiliated Entity or any Related
Partnership, (iii) will not conflict with or constitute a breach of, or
Default or a Debt Repayment Triggering Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company, any Affiliated Entity, any Related
Partnership or any Resort pursuant to any Existing Instrument and the Company
has procured written consents to that effect from every party to any Existing
Instrument who is authorized thereunder to declare or decide upon such
conflicts, breaches, Defaults, Debt Triggering Events, liens, charges or
encumbrances; (iv) will not otherwise require the consent of any party to any
Existing Instrument, except such consents as have been obtained; and (v) will
not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company, any Affiliated
Entity, any Related Partnership or any of the Resorts, including, without
limitation, rules and regulations relating to "roll-up transactions" as such
term is defined in Item 901(c) of Regulation S-K of the Commission. No
consent, approval,
6
authorization or other order of, or registration or filing with, any court or
other governmental or regulatory authority or agency, including the
satisfaction of any requirements pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, is required for the Company's execution,
delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Prospectus, including the
Formation Transactions, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act, applicable
state securities or blue sky laws and from the National Association of
Securities Dealers, Inc. (the "NASD"). As used herein, a "Debt Repayment
Triggering Event" means any event or condition which gives, or with the giving
of notice or lapse of time would give, the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any of its subsidiaries.
(n) Material Agreements. Each of the agreements set forth herein, in the
Prospectus or as exhibits to the Registration Statement in connection with the
Offering and the Formation Transactions including, without limitation, those
listed in Schedule E (each a "Consolidation Agreement" and collectively the
"Consolidation Agreements"), has been, or prior to the consummation of the
Offering and the Formation Transactions will be, duly authorized, executed and
delivered by the parties thereto and constitutes a valid and binding agreement
of the parties thereto; and neither the Company, nor any of the Affiliated
Companies, nor any of the Related Partnerships nor, to the best of the
Company's knowledge, any other party is, or upon the consummation of the
Offering and the Formation Transactions will be, in breach of or default under
any Consolidation Agreement. The Company, each Affiliated Entity and each
Related Partnership and, to the Company's knowledge, each other party to each
Consolidation Agreement, has full legal right, power and authority to enter
into each such agreement and to consummate the transactions contemplated
therein.
(o) No Material Actions or Proceedings. There is no legal or governmental
action, suit or proceeding pending or, to the best of the Company's knowledge,
threatened (i) against or affecting the Company, any of the Affiliated
Companies or any of the Related Partnerships, now, or upon consummation of
Offering and the Formation Transactions, (ii) which has as the subject thereof
any officer or director of, or property owned or leased by, the Company, any
of the Affiliated Companies or any of the Related Partnerships, including the
Resorts, or (iii) relating to environmental or discrimination matters, where
in any such case (A) there is a reasonable possibility that such action, suit
or proceeding might be determined adversely to the Company, any Affiliated
Entity or any of the Related Partnerships and (B) any such actions, suits or
proceedings, if so determined adversely, individually or in the aggregate,
would reasonably be expected to result in a Material Adverse Change or
adversely affect the consummation of the transactions contemplated by this
Agreement. No material labor dispute with the employees of the Company, any
of the Affiliated Companies or any of the Related Partnerships exists or, to
the best of the Company's knowledge, is threatened or imminent.
(p) General Compliance with All Laws. Neither the Company nor any of the
Affiliated Companies or the Related Partnerships has been advised, or has
reason to believe, that the Company or any of the Affiliated Companies or the
Related Partnerships are not conducting, and after the consummation of the
Offering and the Formation Transactions will not be conducting, their
businesses in compliance with all applicable laws, rules and regulations of
the jurisdictions in which any of them is, or upon the consummation of the
Offering and the Formation Transactions will be, conducting business,
including, without limitation, all applicable local, state and federal
environmental laws and regulations, except where failure to be in compliance
would not cause a Material Adverse Change.
7
(q) Compliance with All Laws Regulating Timeshare Business. Each of the
Affiliated Companies and Related Partnerships is and, upon consummation of the
Offering and the Formation Transactions, will be, in compliance with all
federal, state, local and foreign laws and regulations regarding the
marketing, offers to sell and sales of timeshare resorts, including but not
limited to the Federal Trade Commission Act, Truth in Lending Act and
Regulation Z, Equity Opportunity Credit Act and Regulation B, Interstate Land
Sales Full Disclosure Act, Telephone Consumer Protection Act, Telemarketing
and Consumer Fraud and Abuse Prevention Act, Fair Housing Act and Civil Rights
Acts of 1964 and 1968, and all licensure, anti-fraud, telemarketing, price,
gift, sweepstakes and labor laws to which it is or may become subject
(collectively "Timeshare Laws"), except where failure to be in compliance
would not cause a Material Adverse Change. Each of the Affiliated Companies
and the Related Partnerships has filed and, upon consummation of the Offering
and the Formation Transactions, will file, all required documents and
supporting information in compliance with federal, state, local and foreign
laws and regulations, except where failure to be in compliance would not cause
a Material Adverse Change.
(r) Intellectual Property Rights. Upon consummation of the Offering and
the Formation Transactions, the Company, the Affiliated Companies and the
Related Partnerships will own or possess sufficient trademarks, trade names,
patent rights, copyrights, licenses, approvals, trade secrets and other
similar rights including, without limitation, rights to the names "Vistana
Resort," "Vistana's Beach Club," "Oak Plantation Villas by Vistana," "Vistana
Resort at World Golf Village," and "PGA Vacation Resort by Vistana" (subject
to entering into a binding agreement respecting such name) (collectively,
"Intellectual Property Rights") reasonably necessary to conduct their
businesses; and the expected expiration of any of such Intellectual Property
Rights would not result in a Material Adverse Change. None of the Company,
any Affiliated Entity or any Related Partnership has received any notice of
infringement or conflict with asserted Intellectual Property Rights of others,
which infringement or conflict, if the subject of an unfavorable decision,
would result in a Material Adverse Change.
(s) All Necessary Permits, etc. The Company and each Affiliated Entity and
Related Partnership possess such valid and current certificates,
authorizations or permits issued by the appropriate local, state, federal or
foreign regulatory agencies or bodies as are necessary to conduct their
respective businesses as presently conducted, except where failure to possess
such certificates, authorizations or permits, singly or in the aggregate,
could result in a Material Adverse Change.; and neither the Company, any
Affiliated Entity nor any Related Partnership has received any notice of
proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
result in a Material Adverse Change.
(t) Title to Properties. The Company, each of the Affiliated Companies and
each of the Related Partnerships has good and marketable title to all the
properties and assets reflected as owned in the financial statements referred
to in Section 1(A)(i) above (or elsewhere in the Prospectus), in each case
free and clear of any security interests, mortgages, liens, encumbrances,
equities, claims and other defects, except those reflected in the financial
statements or elsewhere in the Prospectus and except such as do not
materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such property
by the Company or such Affiliated Entity or Related Partnership. The real
property, improvements, equipment and personal property held under lease by
the Company, the Affiliated Companies and the Related Partnerships are held
under valid and enforceable leases, with such exceptions as are not material
and do not materially interfere with the use made or proposed to be made of
such real property, improvements, equipment or personal property by such
entities. Upon the consummation of the Formation Transactions and subject to
the prior sale of vacation ownership
8
interests at the Resorts, the Related Partnerships or Affiliated Companies, as
applicable, will have good and marketable title to all of the Resorts, subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except (i)
those reflected in the financial statements or elsewhere in the Prospectus, or
(ii) those which are not material in amount and do not adversely affect the
use made and proposed to be made of such Resort by the Company or the Property
Partnerships. Except as disclosed in the Prospectus, each of the Related
Partnerships or Affiliated Companies, as applicable, owns or leases and, upon
the consummation of the Formation Transactions, will own or lease, all such
properties as are necessary to operate the its Resorts and its other business
as now conducted.
(u) Resort Mortgages. The mortgages and deeds of trust encumbering the
Resorts are not convertible into equity securities of the Company or any
subsidiary of the Company nor, upon the consummation of either the Offering or
the Formation Transactions, will any lender hold a participating interest
therein; such mortgages and deeds of trust are not cross-defaulted or cross-
collateralized to any mortgage or deed of trust encumbering property that is
not to be owned directly or indirectly by the Company; and neither the
Offering nor the Formation Transactions shall cause an acceleration of the
underlying indebtedness.
(v) Tax Law Compliance. The Company and each of the Affiliated Companies
and Related Partnerships have filed all necessary federal, state and foreign
income and franchise tax returns and have paid all taxes required to be paid
by any of them and, if due and payable, any related or similar assessment,
fine or penalty levied against any of them except as may be being contested in
good faith and by appropriate proceedings. The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section 1(A)(i) above in respect of all federal, state and foreign
income and franchise taxes for all periods as to which the tax liability of
the Company or any of its consolidated subsidiaries has not been finally
determined. The Company does not have any knowledge of any tax deficiency
which has been or might be, whether in connection with the consummation of the
Offering, the Formation Transactions or otherwise, asserted or threatened
which could cause a Material Adverse Change.
(w) Company Not an "Investment Company". The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and after receipt
of payment for the Common Shares and consummation of the Formation
Transactions will not be, an "investment company" within the meaning of
Investment Company Act and will conduct its business in a manner so that it
will not become subject to the Investment Company Act.
(x) Insurance. Upon consummation of the Offering and the Formation
Transactions, each of the Company, the Affiliated Companies and the Related
Partnerships will be insured by recognized, to the Company's knowledge
financially sound and reputable institutions with policies in such amounts and
with such deductibles and covering such risks as are generally deemed adequate
and customary for their businesses including, but not limited to, liability,
property and casualty insurance policies in favor of the Company covering each
of the Resorts and the real and personal property owned or leased by the
Company and its subsidiaries against theft, damage, destruction, acts of
vandalism and earthquakes. The Company has no reason to believe that it, any
Affiliated Entity or any Related Partnership will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. None of the Company, any Affiliated
Entity or any Related Partnership has been denied any insurance coverage which
it has sought or for which it has applied. Upon consummation of the Offering
and the Formation Transactions, title insurance in favor of the applicable
Related Partnership or Affiliated Entity will be in force with
9
respect to each of the Resorts (other than "PGA Vacation Resort by Vistana").
(y) No Price Stabilization or Manipulation. None of the Company, the
Affiliated Companies or any of the Related Partnerships 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 Common Stock to facilitate the sale or resale of the Common
Shares.
(z) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any
other person required to be described in the Prospectus which have not been
described as required.
(aa) No Unlawful Contributions or Other Payments. None of the Company, any
of the Affiliated Companies, any of the Related Partnerships nor, to the best
of the Company's knowledge, any employee or agent of the foregoing, has made
any contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.
(bb) Company's Accounting System. Each of the Company, the Affiliated
Companies and the Related Partnerships maintains a system of accounting
controls designed to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(cc) Compliance with Environmental Laws. Except as would not, individually
or in the aggregate, result in a Material Adverse Change (i) none of the
Company, any of the Affiliated Companies nor any Related Partnership is or
will be, as of the Closing Date and after giving effect to the Formation
Transactions, as the case may be, in violation of any federal, state, local or
foreign law or regulation relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to emissions, discharges, releases
or threatened releases of Hazardous Materials (as herein defined), chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum and petroleum products (collectively, "Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environment Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, non-receipt of or noncompliance with any
permits or other governmental authorizations required for the operation of the
business of any of the foregoing entities under applicable Environmental Laws,
or noncompliance with the terms and conditions thereof, nor has any of the
foregoing entities received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges
that any of them is in violation of any Environmental Law; (ii) there is no
claim, action or cause of action filed with a court or governmental authority,
no investigation with respect to which the Company has received written
notice, and no written notice by any person or entity alleging potential
liability for investigatory costs, cleanup costs, governmental responses
costs, natural resources damages, property damages, personal injuries,
attorneys' fees or penalties arising out of, based on or resulting from the
presence, or release into the environment, of any Material of Environmental
Concern at any location owned, leased or operated by the Company or any of its
subsidiaries, now or in the past (collectively, "Environmental Claims"),
pending or, to the best of the Company's knowledge,
10
threatened against the Company or any of its subsidiaries or any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation of
law; and (iii) to the best of the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could
result in a violation of any Environmental Law or form the basis of a
potential Environmental Claim against the Company or any of its subsidiaries
or against any person or entity whose liability for any Environmental Claim
the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law. As used herein, "Hazardous Material"
shall mean (a) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA"), (b) any "hazardous waste" as defined by the Resource Conservation
and Recovery Act, as amended, (c) any petroleum or petroleum product, (d) any
polychlorinated biphenyl and (e) any pollutant or contaminant or hazardous,
dangerous, or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law.
(dd) No Material or Undisclosed Environmental Liability. There is no
liability, alleged liability or potential liability (including, without
limitation, liability, alleged liability or potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties), of the
Company, any of the Affiliated Companies or any of the Related Partnerships
arising out of, based on or resulting from (a) the presence or release into
the environment of any Material of Environmental Concern at any location,
whether or not owned by the Company, any of the Affiliated Companies or any of
the Related Partnerships or (b) any violation or alleged violation of any
Environmental Law, which liability, alleged liability or potential liability
is required to be disclosed in the Registration Statement, other than as
disclosed therein, or which liability, alleged liability or potential
liability, singly or in the aggregate, would, after consummation of the
Formation Transactions, cause a Material Adverse Change.
(ee) Periodic Review of Costs of Environmental Compliance. In the ordinary
course of its business, the Company conducts a periodic review of the effect
of Environmental Laws on the business, operations and properties of the
Company, the Affiliated Companies and the Related Partnerships, in the course
of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of
such review and the amount of its established reserves, the Company has
reasonably concluded that such associated costs and liabilities would not,
individually or in the aggregate, result in a Material Adverse Change.
(ff) No ERISA "Plan Assets." None of the assets of the Company, the
Affiliated Companies or the Related Partnerships constitutes, nor will such
assets, as of either the First or Second Closing Date, constitute "plan
assets" under the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(gg) ERISA Compliance. The Company, the Affiliated Companies, the Related
Partnerships and any "employee benefit plan" (as defined under ERISA)
established or maintained by any of the foregoing entities or their "ERISA
Affiliates" (as defined below) are in compliance in all material respects with
ERISA. "ERISA Affiliate" means, with respect to the Company, any Affiliated
Entity or any Related Partnership, any member of any group of organizations
described in Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company, any
11
Affiliated Entity, any Related Partnership is a member. No "reportable event"
(as defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the
Company, any Affiliated Entity or any Related Partnership or any of their
ERISA Affiliates. No "employee benefit plan" established or maintained by the
Company, any Affiliated Entity, any Related Partnership or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither
the Company, any Affiliated Entity or any Related Partnership nor any of their
ERISA Affiliates has incurred or reasonably expects to incur any liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal
from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of
the Code. Each "employee benefit plan" established or maintained by the
Company, any Affiliated Entity or any Related Partnership or any of their
ERISA Affiliates that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification.
(hh) Broker's or Finder's Fees. Except as described in the Prospectus,
none of the Company nor any of the Affiliated Companies or the Related
Partnerships has incurred any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by this Agreement other than as disclosed
in the Registration Statement.
(ii) Environmental Engineering Firm. No environmental engineering firm
which prepared Phase I environmental assessment reports (or other similar
reports) with respect to the Resorts as set forth in the Registration
Statement was employed for such purpose on a contingent basis or has any
substantial interest in the Company or any of the Affiliated Companies or the
Related Partnerships.
(jj) No Labor Problems. No general labor problem exists or is imminent
with respect to the employees of any of the Resorts, the Company, and each
Affiliated Entity or any of the Related Partnerships.
(kk) Adequate Personal Property. The personal property used and maintained
as part of the Resorts is adequate to enable the Company to continue to
conduct the operations of the Resorts in the manner in which such operations
have normally been conducted by the Property Partnerships.
Any certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
B. Representations and Warranties of the Selling Shareholders. Each Selling
Shareholder represents, warrants and covenants to each Underwriter as follows:
(a) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling Shareholder and is a
valid and binding agreement of such Selling Shareholder, enforceable against
such Selling Shareholder in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
12
(b) Execution and Enforceability of Custody Agreement, Power of Attorney
and Other Agreements. Each of the (i) Custody Agreement signed by such
Selling Shareholder and the Company, as custodian (the "Custodian"), relating
to the deposit of the Common Shares to be sold by such Selling Shareholder
(the "Custody Agreement"), (ii) Power of Attorney appointing certain
individuals named therein as such Selling Shareholder's attorneys-in-fact
(each, an "Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus (the "Power of
Attorney"), (iii) the Shareholder Agreement and (iv) the Indemnity Agreement
(as hereinafter defined) of such Selling Shareholder has been duly authorized,
executed and delivered by such Selling Shareholder and is a valid and binding
agreement of such Selling Shareholder, enforceable against such Selling
Shareholder in accordance with its terms, except as rights to indemnification
thereunder may be limited by applicable law and except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles.
The execution, delivery and performance of this Agreement, the Custody
Agreement, the Power of Attorney, the Shareholders' Agreement, the Indemnity
Agreement, any Trust Agreement, as applicable, and the consummation of the
transactions contemplated hereby and by the foregoing agreements will not
result in a breach or violation by such Selling Shareholder of any of the
terms or provisions of, or constitute a default by such Selling Shareholder
under, any indenture, mortgage, deed of trust, trust (constructive or other),
loan agreement, lease, franchise, license or other agreement or instrument to
which such Selling Shareholder is a party or by which such Selling Shareholder
or any of its properties is bound, any statute, or any judgment, decree,
order, rule or regulation of any court or governmental agency or body
applicable to such Selling Shareholder or any of its properties.
(c) Trust Agreements. Each of the Selling Shareholders severally, and not
jointly, makes the following representations and warranties respecting such
Selling Shareholder and its affiliates (and no Selling Shareholder shall be
deemed to make any representation respecting any of the other Selling
Shareholders or its affiliates):
(I) JGG Holdings Trust. The Irrevocable Trust Agreement creating the
JGG Holdings Trust within which the shares of Common Stock to be beneficially
owned by ▇▇. ▇▇▇ ▇▇▇▇▇▇▇ are held (the "JGG Holdings Trust Agreement") (i) has
been duly authorized, executed and delivered by all necessary parties, (ii)
creates a valid and binding fiduciary relationship under the laws of the State
of Florida, (iii) confers upon ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. (1) all requisite legal
right, power and authority to sell such shares of Common Stock as contemplated
by this Agreement, (2) all requisite legal right, power and authority to vote
such shares in his sole discretion, which right, power and authority is
subject to no time limits, and (3) all requisite legal right, power and
authority to enter into this Agreement and the applicable Consolidation
Agreements on behalf of the JGG Holdings Trust and the beneficiaries
thereunder and to carry out the transactions contemplated hereby and thereby
and (iv) is a valid and binding agreement enforceable in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles. Other than this Agreement, the applicable Power of Attorney and
Custody Agreement, the Amended and Restated Subscription Agreement dated as of
February 10, 1997 (the "Subscription Agreement"), the Registration Rights
Agreement dated as of February 10, 1997 (the "Registration Rights Agreement"),
the Shareholder Option Agreement dated as of February 10, 1997 (the
"Shareholder Option Agreement") and the Shareholders' Agreement, there are no
agreements relating to the Common Stock held under the JGG Holdings Trust
Agreement or to any Common Stock owned (beneficially or otherwise) by ▇▇▇
▇▇▇▇▇▇▇ or control thereof or otherwise related to such Common Stock.
13
(II) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Revocable Trust. The Revocable Trust
Agreement creating the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Revocable Trust within which
shares of Common Stock to be beneficially owned by ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
are held (the "Gellein Trust Agreement") (i) has been duly authorized,
executed and delivered by all necessary parties, (ii) creates a valid and
binding fiduciary relationship under the laws of the State of Florida, (iii)
confers upon ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. (1) all requisite legal right, power and
authority to sell such shares of Common Stock as contemplated by this
Agreement, (2) all requisite legal right, power and authority to vote such
shares in his sole discretion, which right, power and authority is subject to
no time limits, and (3) all requisite legal right, power and authority to
enter into this Agreement and the applicable Consolidation Agreements on
behalf of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Revocable Trust and the beneficiaries
thereunder and to carry out the transactions contemplated hereby and thereby
and (iv) is a valid and binding agreement enforceable in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles. Other than the Gellein Trust Agreement, the Gellein Grantor Trust
Agreement (as defined below), this Agreement, the applicable Lock-Up, Power of
Attorney and Custody Agreements, the Subscription Agreement, the Registration
Rights Agreement, the Shareholder Option Agreement and the Shareholders'
Agreement, there are no agreements relating to the Common Stock held under the
Gellein Trust Agreement or to any Common Stock owned (beneficially or
otherwise) by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. or control thereof or otherwise related
to such Common Stock.
(III) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust. The Revocable Trust Agreement
creating the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust within which the shares of
Common Stock to be beneficially owned by ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ are held (the
"▇▇▇▇▇ Trust Agreement") (i) has been duly authorized, executed and delivered
by all necessary parties, (ii) creates a valid and binding fiduciary
relationship under the laws of the State of Florida, (iii) confers upon
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (1) all requisite legal right, power and authority to sell
such shares of Common Stock as contemplated by this Agreement, (2) all
requisite legal right, power and authority to vote such shares in his sole
discretion, which right, power and authority is subject to no time limits, and
(3) all requisite legal right, power and authority to enter into this
Agreement and the applicable Consolidation Agreements on behalf of the ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ Revocable Trust and the beneficiaries thereunder and to carry out the
transactions contemplated hereby and thereby and (iv) is a valid and binding
agreement enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles. Other than the ▇▇▇▇▇ Trust
Agreement, this Agreement, the applicable Lock-Up, Power of Attorney and
Custody Agreements, the Subscription Agreement, the Registration Rights
Agreement, the Shareholder Option Agreement and the Shareholders' Agreement,
there are no agreements relating to the Common Stock held under the ▇▇▇▇▇
Trust Agreement or to any Common Stock owned (beneficially or otherwise) by
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or control thereof or otherwise related to such Common Stock.
(The JGG Holdings Trust Agreement, the Gellein Trust Agreement and the ▇▇▇▇▇
Trust Agreement are herein collectively referred to as the "Trust
Agreements.")
(IV) Other Trusts. Each other trust which is a party to the
Subscription Agreement has been duly and validly formed and has all requisite
legal right, power and authority to own shares of Common Stock.
(d) Title to Common Shares to be Sold; All Authorizations Obtained. Such
Selling Shareholder has, and on the First Closing Date and the Second Closing
Date (as defined below) will have, good, valid and marketable title to all of
the Common Shares which may be sold by such Selling
14
Shareholder pursuant to this Agreement on such date and the legal right and
power, and all authorizations and approvals required by law, its Trust
Agreement and its other organizational documents to enter into this Agreement
and its Custody Agreement, the Power of Attorney, and the Shareholder
Agreement, as applicable, to sell, transfer and deliver all of the Common
Shares which may be sold by such Selling Shareholder pursuant to this
Agreement and to comply with its other obligations hereunder and thereunder.
(e) Delivery of the Common Shares to be Sold. Delivery of the Common
Shares which are sold by such Selling Shareholder pursuant to this Agreement
will pass good, valid and marketable title to such Common Shares, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, voting
trust, or other claim or defect of title.
(f) Non-Contravention; No Further Authorizations or Approvals Required.
The execution and delivery by such Selling Shareholder of, the performance by
such Selling Shareholder of its obligations under, and the consummation of the
transactions contemplated under this Agreement, the Custody Agreement, the
Power of Attorney, the Indemnity Agreement, and the Trust Agreements will not
contravene or conflict with, result in a breach of, constitute a Default
under, or require the consent of any other party to, the Trust Agreements or
the articles of incorporation, by-laws, or other organizational documents of
such Selling Shareholder or any other agreement or instrument to which such
Selling Shareholder is a party or by which it is bound or under which it is
entitled to any right or benefit, including, without limitation, any
indenture, mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other agreement or instrument to which
such Selling Shareholder is a party or by which such Selling Shareholder or
any of its properties is bound, or any provision of applicable law or any
judgment, order, decree or regulation applicable to such Selling Shareholder
of any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over such Selling Shareholder. No consent,
approval, authorization or other order of, or registration or filing with, any
court or other governmental authority or agency, is required for the
consummation by such Selling Shareholder of the transactions contemplated in
this Agreement, except such as have been obtained or made and are in full
force and effect under the Securities Act, applicable state securities or blue
sky laws and from the NASD.
(g) No Registration or Other Similar Rights. Such Selling Shareholder does
not have any registration or other similar rights to have any equity or debt
securities registered for sale by the Company under the Registration Statement
or included in the offering contemplated by this Agreement, except for such
rights as are described in the Prospectus under "Shares Eligible for Future
Sale".
(h) No Further Consents, etc. No consent, approval or waiver is required
under any instrument or agreement to which such Selling Shareholder is a party
or by which it is bound or under which it is entitled to any right or benefit,
in connection with the offering, sale or purchase by the Underwriters of any
of the Common Shares which may be sold by such Selling Shareholder under this
Agreement or the consummation by such Selling Shareholder of any of the other
transactions contemplated hereby.
(i) Disclosure Made by Such Selling Shareholder in the Prospectus;
Compliance with Securities Act. All information furnished by or on behalf of
such Selling Shareholder in writing expressly for use in the Registration
Statement and Prospectus is, and on the First Closing Date and the Second
Closing Date will be, true, correct, and complete in all material respects,
and does not, and on the First Closing Date and the Second Closing Date will
not, contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading. Such
15
Selling Shareholder confirms as accurate the number of shares of Common Stock
set forth opposite such Selling Shareholder's name in the Prospectus under the
caption "Principal and Selling Shareholders" (both prior to and after giving
effect to the sale of the Common Shares). To the best knowledge of each
Selling Shareholder, each of the Preliminary Prospectus, the Prospectus and
the Registration Statement has conformed in all material respects to the
requirements of the Securities Act.
(j) No Price Stabilization or Manipulation. Such Selling Shareholder has
not taken and will not 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 Common Stock to facilitate the sale or resale
of the Common Shares.
(k) Confirmation of Company Representations and Warranties. Such Selling
Shareholder has no reason to believe that the representations and warranties
of the Company contained in Section 1(A) hereof are not true and correct,
hereby reaffirms each of the representations and warranties of the Company set
forth in Section 1(A), is familiar with the Registration Statement and the
Prospectus and has no knowledge of any material fact, condition or information
not disclosed in the Registration Statement or the Prospectus which has had or
may cause a Material Adverse Change and is not prompted to sell shares of
Common Stock by any information concerning the Company which is not set forth
in the Registration Statement and the Prospectus.
Any certificate signed by or on behalf of any Selling Shareholder and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Shareholder to each
Underwriter as to the matters covered thereby.
Section 2. Purchase, Sale and Delivery of the Common Shares.
The Firm Common Shares. Upon the terms herein set forth, (i) the Company
agrees to issue and sell to the several Underwriters an aggregate of 4,625,000
Firm Common Shares and (ii) the Selling Shareholders agree to sell to the
several Underwriters an aggregate of 925,000 Firm Common Shares, each Selling
Shareholder selling the number of Firm Common Shares set forth opposite such
Selling Shareholder's name on Schedule B. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Underwriters agree, severally and not
jointly, to purchase from the Company and the Selling Shareholders the
respective number of Firm Common Shares set forth opposite their names on
Schedule A. The purchase price per Firm Common Share to be paid by the several
Underwriters to the Company and the Selling Shareholders shall be $[___] per
share.
The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriters and payment therefor shall be made at
the offices of ▇▇▇▇▇▇▇▇▇▇ Securities, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ (or such other place as may be agreed to by the Company and the
Representatives) at 6:00 a.m. San Francisco time, on the fourth full business
day after the date of this Agreement, or such other time and date not later than
10:30 a.m. San Francisco time, upon 10 business days thereafter as the
Representatives shall designate by notice to the Company (the time and date of
such closing are called the "First Closing Date"). The Company and the Selling
Shareholders hereby acknowledge that circumstances under which the
Representatives may provide notice to postpone the First Closing Date as
originally scheduled include, but are in no way limited to, any determination by
the Company, the Selling Shareholders or the Representatives to recirculate to
the public copies of an amended or supplemented Prospectus or a delay as
contemplated by the
16
provisions of Section 10.
The Optional Common Shares; the Second Closing Date. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Company and
the Selling Shareholders hereby grant an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 925,000 Optional
Common Shares from the Company and the Selling Shareholders at the purchase
price per share to be paid by the Underwriters for the Firm Common Shares. The
option granted hereunder is for use by the Underwriters solely in covering any
over-allotments in connection with the sale and distribution of the Firm Common
Shares. The option granted hereunder may be exercised at any time (but not more
than once) upon notice by the Representatives to the Company and the Selling
Shareholders, which notice may be given at any time within 30 days from the date
of this Agreement. Such notice shall set forth (i) the aggregate number of
Optional Common Shares as to which the Underwriters are exercising the option,
(ii) the names and denominations in which the certificates for the Optional
Common Shares are to be registered and (iii) the time, date and place at which
such certificates will be delivered (which time and date may be simultaneous
with, but not earlier than, the First Closing Date; and in such case the term
"First Closing Date" shall refer to the time and date of delivery of
certificates for the Firm Common Shares and the Optional Common Shares). Such
time and date of delivery, if subsequent to the First Closing Date, is called
the "Second Closing Date" and shall be determined by the Representatives and
shall not be earlier than three nor later than five full business days after
delivery of such notice of exercise. If any Optional Common Shares are to be
purchased, (a) each Underwriter agrees, severally and not jointly, to purchase
the number of Optional Common Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Optional Common Shares to be purchased as the
number of Firm Common Shares set forth on Schedule A opposite the name of such
Underwriter bears to the total number of Firm Common Shares, (b) each Selling
Shareholder shall have the right, severally and not jointly, to sell the number
of Optional Common Shares (subject to such adjustments to eliminate fractional
shares as the Representatives may determine) that bears the same proportion to
the total number of Optional Common Shares to be sold as the number of Optional
Common Shares set forth in Schedule B opposite the name of such Selling
Shareholder bears to the total number of Optional Common Shares, and (c) the
Company agrees that in the event that the Selling Shareholders fail to tender
the aggregate number of Optional Common Shares to be purchased pursuant to
exercise of the option, the Company shall issue and sell the number of Optional
Common Shares equal to the difference between the aggregate number of Optional
Common Shares actually tendered by the Selling Shareholders and the number of
Optional Common Shares to be purchased pursuant to exercise of the option. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company and the Selling
Shareholders. The Company and the Selling Shareholders shall have the right to
allocate the Optional Common Shares to be sold by them in any manner.
Public Offering of the Common Shares. The Representatives hereby advise
the Company and the Selling Shareholders that the Underwriters intend to offer
for sale to the public, as described in the Prospectus, their respective
portions of the Common Shares as soon after this Agreement has been executed and
the Registration Statement has been declared effective as the Representatives,
in their sole judgment, have determined is advisable and practicable.
Payment for the Common Shares. Payment for the Common Shares to be sold by
the Company shall be made at the First Closing Date (and, if applicable, at the
Second Closing Date) by wire transfer of immediately available funds to the
order of the Company provided such payment may be made directly to a title
company acceptable to the Company to facilitate the repayment of any debt as
described in "Use of Proceeds." Payment for the Common Shares to be sold by the
Selling Shareholders
17
shall be made at the First Closing Date (and, if applicable, at the Second
Closing Date) by wire transfer of immediately available funds to the order of
the Custodian.
It is understood that the Representatives have been authorized, for their
own accounts and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Common
Shares and any Optional Common Shares the Underwriters have agreed to purchase.
▇▇▇▇▇▇▇▇▇▇ Securities, individually and not as the Representative of the
Underwriters, may (but subject to Section 10 shall not otherwise be obligated
to) make payment for any Common Shares to be purchased by any Underwriter whose
funds shall not have been received by the Representatives by the First Closing
Date or the Second Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any of
its obligations under this Agreement.
Each Selling Shareholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Common Shares to be sold by such Selling Shareholder to
the several Underwriters, or otherwise in connection with the performance of
such Selling Shareholder's obligations hereunder and (ii) the Custodian is
authorized to deduct for such payment any such amounts from the proceeds to such
Selling Shareholder hereunder and to hold such amounts for the account of such
Selling Shareholder with the Custodian under the Custody Agreement.
Delivery of the Common Shares. The Company and the Selling Shareholders
shall deliver, or cause to be delivered, to the Representatives for the accounts
of the several Underwriters certificates for the Firm Common Shares to be sold
by them at the First Closing Date, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The Company and the Selling Shareholders shall also deliver, or cause
to be delivered, to the Representatives for the accounts of the several
Underwriters, certificates for the Optional Common Shares the Underwriters have
agreed to purchase from them at the First Closing Date or the Second Closing
Date, as the case may be, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. The
certificates for the Common Shares shall be in definitive form and registered in
such names and denominations as the Representatives shall have requested at
least two full business days prior to the First Closing Date (or the Second
Closing Date, as the case may be) and shall be made available for inspection on
the business day preceding the First Closing Date (or the Second Closing Date,
as the case may be) at a location in New York City as the Representatives may
designate. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters.
Delivery of Prospectus to the Underwriters. Not later than 12:00 p.m. on
the second business day following the date the Common Shares are released by the
Underwriters for sale to the public, the Company shall deliver or cause to be
delivered copies of the Prospectus in such quantities and at such places as the
Representatives shall request.
Section 3. Additional Covenants.
A. Covenants of the Company. The Company further covenants and agrees with
each Underwriter as follows:
(a) Representatives' Review of Proposed Amendments and Supplements. During
such period beginning on the date hereof and ending on the later of the First
Closing Date or such date, as in the opinion of counsel for the Underwriters,
the Prospectus is no longer required by law to be
18
delivered in connection with sales by an Underwriter or dealer (the
"Prospectus Delivery Period"), prior to amending or supplementing the
Registration Statement (including any registration statement filed under Rule
462(b) under the Securities Act) or the Prospectus, the Company shall furnish
to the Representatives for review a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed amendment or
supplement to which the Representatives reasonably object.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) of the
receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing of
any post-effective amendment to the Registration Statement or any amendment or
supplement to any preliminary prospectus or the Prospectus, (iii) of the time
and date that any post-effective amendment to the Registration Statement
becomes effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-
effective amendment thereto or of any order preventing or suspending the use
of any preliminary prospectus or the Prospectus, or of any proceedings to
remove, suspend or terminate from listing or quotation the Common Stock from
any securities exchange upon which the Common Stock is listed for trading or
included or designated for quotation, or of the threatening or initiation of
any proceedings for any of such purposes. If the Commission shall enter any
such stop order at any time, the Company will use its best efforts to obtain
the lifting of such order at the earliest possible moment. Additionally, the
Company agrees that it shall comply with the provisions of Rules 424(b), 430A
and 434, as applicable, under the Securities Act and will use its reasonable
efforts to confirm that any filings made by the Company under such Rule 424(b)
were received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities Act
Matters. If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Representatives or counsel for the Underwriters it
is otherwise necessary to amend or supplement the Prospectus to comply with
law, the Company agrees to promptly prepare (subject to Section 3(A)(a)
hereof), file with the Commission and furnish at its own expense to the
Underwriters and to dealers, amendments or supplements to the Prospectus so
that the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Representatives may request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of)
the Blue Sky or state securities laws of those jurisdictions designated by the
Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required for
the distribution of the Common Shares. The Company shall not be required to
qualify as a foreign corporation or to take any action that would subject it
to general service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise the Representatives promptly of the
suspension of the qualification or registration of (or any such
19
exemption relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company shall use its best
efforts to obtain the withdrawal thereof at the earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Common Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Common Stock.
(h) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month
period ending on the final day of the Company's first quarter that ends at
least one year after "the effective date of the Registration Statement" (as
defined in Rule 158(c) under the Securities Act) that satisfies the provisions
of Section 11(a) of the Securities Act.
(j) Periodic Reporting Obligations. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National Market all reports and documents required to be filed under the
Securities Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇"). Additionally, the
Company shall file with the Commission all reports on Form SR as may be
required under Rule 463 under the Securities Act.
(k) Agreement Not To Offer or Sell Additional Securities. During the
period of 180 days following the date of the Prospectus, the Company will not,
without the prior written consent of ▇▇▇▇▇▇▇▇▇▇ Securities (which consent may
be withheld at the sole discretion of ▇▇▇▇▇▇▇▇▇▇ Securities), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge,
transfer or establish an open "put equivalent position" within the meaning of
Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer, or
announce the offering of, or file any registration statement under the
Securities Act in respect of, any shares of Common Stock, options or warrants
to acquire shares of the Common Stock or securities exchangeable or
exercisable for or convertible into shares of Common Stock (other than as
contemplated by this Agreement with respect to the Common Shares); provided,
however, that the Company may issue shares of its Common Stock or options to
purchase its Common Stock, or Common Stock upon exercise of options, pursuant
to any stock option, stock bonus or other stock plan or arrangement described
in the Prospectus, but only if the holders of such shares, options, or shares
issued upon exercise of such options, agree in writing not to sell, offer,
dispose of or otherwise transfer any such shares or options during such 180
day period without the prior written consent of ▇▇▇▇▇▇▇▇▇▇ Securities (which
consent may be withheld at the sole discretion of the ▇▇▇▇▇▇▇▇▇▇ Securities).
(l) Future Reports to the Representatives. During the period of five years
hereafter the Company will furnish to the Representatives at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and to
O'Melveny & ▇▇▇▇▇ LLP at the address set forth in Section 13 (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of
such fiscal year and statements of income, shareholders' equity and cash flows
for the year then ended and the opinion thereon of the Company's independent
public or certified public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report
filed by the Company with the Commission, the NASD or any securities exchange;
and (iii) as soon as available,
20
copies of any report or communication of the Company mailed generally to
holders of its capital stock.
B. Covenants of the Selling Shareholders. Each Selling Shareholder
further covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional Securities. Such Selling
Shareholder will not, without the prior written consent of ▇▇▇▇▇▇▇▇▇▇ (which
consent may be withheld in its sole discretion), directly or indirectly, sell,
offer, contract or grant any option to sell (including without limitation any
short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise
dispose of any shares of Common Stock, options or warrants to acquire shares
of Common Stock, or securities exchangeable or exercisable for or convertible
into shares of Common Stock currently or hereafter owned either of record or
beneficially (as defined in Rule 13d-3 under Securities Exchange Act of 1934,
as amended) by the undersigned, or publicly announce the undersigned's
intention to do any of the foregoing (collectively for purposes of this
paragraph, to "Sales"), for a period commencing on the date hereof and
continuing through the close of trading on the date 365 days after the date of
the Prospectus; provided, however that Sales pursuant to the Shareholder
Option Agreement, Sales to family members in connection with any bona fide
estate planning of a Selling Shareholder and transfers to or from any grantor
retained annuity trusts shall be allowed without the prior written consent of
▇▇▇▇▇▇▇▇▇▇ Securities provided such transferees shall be bound by this
paragraph and shall agree not to make any Sales for the remainder of such 365
day period without such prior written consent of ▇▇▇▇▇▇▇▇▇▇ Securities.
(b) Delivery of Forms W-8 and W-9. To deliver to the Representatives prior
to the First Closing Date a properly completed and executed United States
Treasury Department Form W-8 (if the Selling Shareholder is a non-United
States person) or Form W-9 (if the Selling Shareholder is a United States
Person).
▇▇▇▇▇▇▇▇▇▇ Securities, on behalf of the several Underwriters, may, in its sole
discretion, waive in writing the performance by the Company or any Selling
Shareholder of any one or more of the foregoing covenants or extend the time for
their performance.
Section 4. Payment of Expenses. The Company and the Selling Shareholders,
jointly and severally, agree to pay in such proportions as they may agree upon
among themselves, all costs, fees and expenses incurred in connection with the
performance of their obligations hereunder and in connection with the
transactions contemplated hereby, including without limitation (i) all expenses
incurred by or on behalf of the Company incident to the Company's issuance and
delivery of the Common Shares (including all printing and engraving costs), (ii)
all fees and expenses of the registrar and transfer agent of the Common Stock,
(iii) all necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Common Shares to the Underwriters, (iv) all fees and
expenses of the Company's counsel, independent public or certified pubic
accountants and other advisors, (v) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
the Registration Statement (including financial statements, exhibits, schedules,
consents and certificates of experts), each preliminary prospectus and the
Prospectus, and all amendments and supplements thereto, and this Agreement, (vi)
all filing fees, attorneys' fees and expenses incurred by the Company or the
Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the Blue Sky laws, and, if requested by
the Representatives, preparing and printing a "Blue Sky Survey" or
21
memorandum, and any supplements thereto, advising the Underwriters of such
qualifications, registrations and exemptions, (vii) the filing fees incident to,
and the reasonable fees and expenses of counsel for the Underwriters in
connection with, the NASD's review and approval of the Underwriters'
participation in the offering and distribution of the Common Shares, (viii) the
fees and expenses associated with listing the Common Shares on the Nasdaq
National Market and (ix) all other fees, costs and expenses referred to in Item
13 of Part II of the Registration Statement. Except as provided in this Section
4, Section 6, Section 8 and Section 9 hereof, the Underwriters shall pay their
own expenses, including the fees and disbursements of their counsel.
The Selling Shareholders further agree with each Underwriter to pay
directly all fees and expenses incident to the performance of their obligations
under this Agreement which are not otherwise specifically provided for herein,
including but not limited to (i) fees and expenses of counsel and other advisors
for such Selling Shareholders, (ii) fees and expenses of the Custodian and (iii)
expenses and taxes incident to the sale and delivery of the Common Shares to be
sold by such Selling Shareholders to the Underwriters hereunder (which taxes, if
any, may be deducted by the Custodian under the provisions of Section 2 of this
Agreement).
This Section 4 shall not affect or modify any separate, valid agreement
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Shareholders, on the other hand.
Section 5. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Shareholders set forth in Sections 1(A) and 1(B) hereof as of the
date hereof and as of the First Closing Date as though then made and, with
respect to the Optional Common Shares, as of the Second Closing Date as though
then made, to the timely performance by the Company and the Selling Shareholders
of their respective covenants and other obligations hereunder, and to each of
the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Representatives
shall have received from KPMG Peat Marwick LLP independent public or certified
public accountants for the Company, a letter dated the date hereof addressed
to the Underwriters, in form and substance satisfactory to the
Representatives, containing statements and information of the type ordinarily
included in accountant's "comfort letters" to underwriters, delivered
according to Statement of Auditing Standards No. 72 (or any successor
bulletin), with respect to the audited and unaudited financial statements and
certain financial information contained in the Registration Statement and the
Prospectus (and the Representatives shall have received an additional three
(3) conformed copies of such accountants' letter for each of the several
Underwriters).
(b) Compliance with Registration Requirements; No Stop Order; No Objection
from NASD. For the period from and after effectiveness of this Agreement and
prior to the First Closing Date and, with respect to the Optional Common
Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with the Commission
(including the information required by Rule 430A under the Securities Act)
in the manner and within the time period required by Rule 424(b) under the
Securities Act; or the Company shall have filed a post-effective amendment
to the Registration Statement containing the information required by such
Rule 430A, and such post-effective amendment shall have become effective;
or, if the Company elected to rely upon Rule 434 under the Securities Act
and obtained the
22
Representatives' consent thereto, the Company shall have filed a Term Sheet
with the Commission in the manner and within the time period required by
such Rule 424(b);
(ii) no stop order suspending the effectiveness of the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment to the Registration Statement, shall be in effect and no
proceedings for such purpose shall have been instituted or threatened by
the Commission; and
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change. For the period from and after the date of
this Agreement and prior to the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date in the judgment of the
Representatives there shall not have occurred any Material Adverse Change.
(d) Opinion of Counsel for the Company. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received the
favorable opinion of ▇▇▇▇, Gerber & ▇▇▇▇▇▇▇▇▇, counsel for the Company, dated
as of such Closing Date, the form of which is attached as Exhibit A, which
opinion may rely, as to matters of Florida corporate law, on the opinion of
Dean, Mead, Egerton, Bloodworth, Capouano & ▇▇▇▇▇▇▇, P.A., as to matters of
Florida law governing the vacation ownership industry, on the opinion of ▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇ LLP, and, as to matters of South Carolina law governing the
vacation ownership industry, on the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, L.L.P. (and the Representatives shall have received an additional
five (5) conformed copies of such counsel's legal opinion for each of the
several Underwriters). In addition, the Representatives shall have received
an opinion of Weil, Gotshal & ▇▇▇▇▇▇ respecting the rights, title and interest
of the Company in and to the Intellectual Property Rights.
(e) Opinion of Counsel for the Underwriters. On each of the First Closing
Date and the Second Closing Date the Representatives shall have received the
favorable opinion of O'Melveny & ▇▇▇▇▇ LLP, counsel for the Underwriters,
dated as of such Closing Date, with respect to certain matters and the
Representatives shall have received an additional five (5) conformed copies of
such counsel's legal opinion for each of the several Underwriters.
(f) Officers' Certificate. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board of the Company, the
President of the Company and the Chief Operating Officer of the Company, dated
as of such Closing Date, certifying as to such matters as the Representatives
shall have reasonably requested, including, without limitation, certification
to the effect set forth in subsections (b)(ii) and (c)(ii) of this Section 5,
and further to the effect that:
(i) for the period from and after the date of this Agreement and prior
to such Closing Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set
forth in Section 1(A) of this Agreement are true and correct with the same
force and effect as though expressly made on and as of such Closing Date;
and
(iii) the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to
such Closing Date.
23
(g) Bring-down Comfort Letter. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received from KPMG Peat
Marwick LLP, independent public or certified public accountants for the
Company, a letter dated such date, in form and substance satisfactory to the
Representatives, to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the First Closing Date or
Second Closing Date, as the case may be (and the Representatives shall have
received one (1) additional conformed copy of such accountants' letter for
each of the several Underwriters).
(h) Opinion of Counsel for the Selling Shareholders. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the
Selling Shareholders, dated as of such Closing Date, the form of which is
attached as Exhibit B (and the Representatives shall have received an
additional five (5) conformed copies of such counsel's legal opinion for each
of the several Underwriters).
(i) Selling Shareholders' Certificate. On each of the First Closing Date
and the Second Closing Date the Representatives shall received a written
certificate executed by each Selling Shareholder, dated as of such Closing
Date, to the effect that:
(ii) the representations, warranties and covenants of such Selling
Shareholder set forth in Section 1(B) of this Agreement are true and
correct with the same force and effect as though expressly made by such
Selling Shareholder on and as of such Closing Date; and
(iii) such Selling Shareholder has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such Closing Date.
(j) Selling Shareholders' Documents. On the date hereof, the Company and
the Selling Shareholders shall have furnished for review by the
Representatives copies of the Powers of Attorney and Custody Agreements
executed by each of the Selling Shareholders and such further information,
certificates and documents as the Representatives may reasonably request.
(k) Lock-Up Agreements from Certain Directors, Officers and Shareholders of
the Company Other Than Selling Shareholders. On the date hereof, the Company
shall have furnished to the Representatives an agreement in the form of
Exhibit C hereto from each director, officer, certain other employees of the
Company and each beneficial owner of Common Stock (as defined and determined
according to Rule 13d-3 under the Exchange Act, except that a 365 day period
shall be used rather than the sixty day period set forth therein) and such
agreement shall be in full force and effect on each of the First Closing Date
and the Second Closing Date.
(l) Consummation of Formation Transactions. The Formation Transactions
shall have been consummated or shall occur simultaneously with the closing of
the purchase and sale of the Firm Common Shares.
(m) Indemnity Agreement. The Company shall have received and delivered to
the Representatives the indemnity agreement ("Indemnity Agreement") by and
between the Company, and certain of the Selling Shareholders and executive
officers pursuant to which the Selling Shareholders jointly and severally
agree to indemnify and hold harmless the Company and the Underwriters against
certain losses, claims, damages, liabilities or expenses, in a form acceptable
to the Underwriters.
24
(n) Resort-Related Documents. On or before the First Closing Date, the
Company or the Property Partnerships, as applicable, shall have made available
to you or your counsel with respect to each Resort, each of which has been
received and approved prior to the date hereof:
(i) Evidence satisfactory to the Underwriters that such Resort is owned
by the applicable Property Partnership, subject to the prior sale of any
vacation ownership interests at such Resort;
(ii) Policies or certificates of insurance relating to the Resort
evidencing coverages and in amounts customarily obtained by owners of
similar Resorts;
(iii) UCC, judgment and tax lien searches confirming that the personal
property comprising a part of the Resort is subject to no liens other than
as disclosed in the Prospectus;
(iv) An engineering (structural) report from an engineer or engineers,
together with Phase I environmental reports, each in a form satisfactory to
you, respecting each Resort; and
(v) If such Resort is subject to an existing mortgage that will be
prepaid in whole or in part from the proceeds of the Offering (an "Existing
Mortgage"), a letter dated not earlier than 10 days prior to the First
Closing Date from the holder of such Existing Mortgage indicating that the
mortgagor or grantor under such Existing Mortgage is not then in default
and indicating the principal amount required to satisfy all amounts then
secured by such Existing Mortgage and the additional amount required for
each day after the date of such letter necessary to satisfy all obligations
secured thereby, together with all documentation and consents necessary to
permit the repayment of all amounts owed and, if applicable, the release of
the Existing Mortgage.
(o) Written Assurances under the Existing Instruments. On or before the
First Closing Date, the Company shall have made available to you or your
counsel the written consents referred to in Section 1(A)(m), clause (iii)
(regarding, among other matters, the absence of any default under the Existing
Instruments to be caused by the Formation Transactions).
(p) Additional Documents. On or before each of the First Closing Date and
the Second Closing Date, the Representatives and counsel for the Underwriters
shall have received such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass upon the issuance
and sale of the Common Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Shareholders at any
time on or prior to the First Closing Date and, with respect to the Optional
Common Shares, at any time prior to the Second Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Section 4, Section 6, Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
Section 6. Reimbursement of Underwriters' Expenses. If this Agreement is
terminated by the Representatives pursuant to Section 5, Section 7, Section 11,
or Section 17, or if the sale to the Underwriters of the Common Shares on the
First Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company or the Selling Shareholders to perform any
25
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse the Representatives and the other Underwriters (or such Underwriters
as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Representatives and the Underwriters in connection with the proposed
purchase and the offering and sale of the Common Shares, including, but not
limited to, fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.
Section 7. Effectiveness of this Agreement. This Agreement shall not
become effective until the later of (i) the execution of this Agreement by the
parties hereto and (ii) notification by the Commission to the Company and the
Representatives of the effectiveness of the Registration Statement under the
Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any party
by notice to each of the other parties hereto, and any such termination shall be
without liability on the part of (a) the Company or the Selling Shareholders to
any Underwriter, except that the Company and the Selling Shareholders shall be
obligated to reimburse the expenses of the Representatives and the Underwriters
pursuant to Sections 4 and 6 hereof, (b) any Underwriter to the Company or the
Selling Shareholders, or (c) any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
Section 8. Indemnification.
(a) Indemnification of the Underwriters. Each of the Company and each of
the Selling Shareholders, jointly and severally, agree to indemnify and hold
harmless each Underwriter, its officers and employees, and each person, if
any, who controls any Underwriter within the meaning of the Securities Act and
the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment
thereto, including any information deemed to be a part thereof pursuant to
Rule 430A or Rule 434 under the Securities Act, 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 (ii) upon any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the
Company or the Selling Shareholders contained herein; or (iv) in whole or in
part upon any failure of the Company or the Selling Shareholders to perform
its respective obligations hereunder or under law; or (v) any act or failure
to act or any alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Common Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon any
matter covered by clause (i) or (ii) above, provided that the Company shall
not be liable under this clause (v) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss, claim,
damage, liability or action resulted directly from any such acts or failures
to act undertaken or omitted to be taken by such Underwriter through its gross
26
negligence or willful misconduct; and to reimburse each Underwriter and each
such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by ▇▇▇▇▇▇▇▇▇▇ Securities) as such expenses are
reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however,
that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising
out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company and the Selling Shareholders by
the Representatives expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and provided, further, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit
of any Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Common Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and 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 required by law so to have been delivered, at or prior to
the written confirmation of the sale of the Common Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense; and provided,
further, that the liability of each Selling Shareholder under this Section
8(a) or otherwise for any claim covered by this Section 8(a) shall not exceed
the net proceeds otherwise received by such Selling Shareholder pursuant to
this Agreement. The indemnity agreement set forth in this Section 8(a) shall
be in addition to any liabilities that the Company and the Selling
Shareholders may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement, the Selling Shareholders and each person, if any, who
controls the Company or any Selling Shareholder within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage, liability
or expense, as incurred, to which the Company, or any such director, officer,
Selling Shareholder or controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based
upon any untrue or alleged untrue statement of a material fact contained in
the Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto), or arises out of or is based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any preliminary prospectus, the Prospectus (or any
amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company and the Selling Shareholders by
the Representatives expressly for use therein; and to reimburse the Company,
or any such director, officer, Selling Shareholder or controlling person for
any legal and other expense reasonably incurred by the Company, or any such
director, officer, Selling Shareholder or controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action. Each of the Company and each of
the Selling Shareholders, hereby acknowledges that the only information that
the Underwriters have furnished to the Company and the Selling Shareholders
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) are the
27
statements set forth (A) as the first paragraph on the inside front cover page
of the Prospectus concerning stabilization by the Underwriters and (B) in the
table in the first paragraph, the second paragraph and the sixth paragraph
under the caption "Underwriting" in the Prospectus; and the Underwriters
confirm that such statements are correct. The indemnity agreement set forth
in this Section 8(b) shall be in addition to any liabilities that each
Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 8 or to
the extent it is not prejudiced as a proximate result of such failure. In
case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party's
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with local counsel),
approved by the indemnifying party (▇▇▇▇▇▇▇▇▇▇ Securities in the case of
Section 8(b) and Section 9), representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall be at the expense
of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 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 against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 8(c) hereof, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of
28
judgment in any pending or threatened action, suit or proceeding in respect of
which any indemnified party is or could have been a party and indemnity was or
could have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
Section 9. Contribution. If the indemnification provided for in Section 8
is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders, on the
one hand, and the Underwriters, on the other hand, from the offering of the
Common Shares pursuant to this Agreement 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 relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Shareholders,
on the one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions or inaccuracies in the representations and warranties
herein 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 Selling Shareholders, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the Common
Shares pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Common Shares
pursuant to this Agreement (before deducting expenses) received by the Company
and the Selling Shareholders, and the total underwriting discount received by
the Underwriters, in each case as set forth on the front cover page of the
Prospectus (or, if Rule 434 under the Securities Act is used, the corresponding
location on the Term Sheet) bear to the aggregate initial public offering price
of the Common Shares as set forth on such cover. The relative fault of the
Company and the Selling Shareholders, on the one hand, and the Underwriters, on
the other hand, shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representation or warranty relates to information supplied by the
Company or the Selling Shareholders, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section 8(c) with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 9; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 8(c) for purposes of indemnification.
The Company, the Selling Shareholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 9 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 in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public. No person guilty of fraudulent
29
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. The Underwriters' obligations to contribute
pursuant to this Section 9 are several, and not joint, in proportion to their
respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.
Section 10. Default of One or More of the Several Underwriters. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the several Underwriters shall fail or refuse to purchase Common Shares
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Common Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on Schedule A
bears to the aggregate number of Firm Common Shares set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Common Shares and the
aggregate number of Common Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Common Shares to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Common Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party to any
other party except that the provisions of Section 4, Section 6, Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
In any such case either the Representatives or the Company shall have the right
to postpone the First Closing Date or the Second Closing Date, as the case may
be, but in no event for longer than seven days in order that the required
changes, if any, to the Registration Statement and the Prospectus or any other
documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
Section 11. Termination of this Agreement. Prior to the First Closing
Date, this Agreement maybe terminated by the Representatives by notice given to
the Company and the Selling Shareholders if at any time (i) trading or quotation
in any of the Company's securities shall have been suspended or limited by the
Commission or by the Nasdaq Stock Market or trading in securities generally on
either the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or the NASD; (ii) a
general banking moratorium shall have been declared by any of federal, New York,
Florida or California authorities; (iii) there shall have occurred any outbreak
or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial
change in United States' or international political, financial or economic
30
conditions, as in the judgment of the Representatives is material and adverse
and makes it impracticable to market the Common Shares in the manner and on the
terms described in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Representatives there shall have
occurred any Material Adverse Change; or (v) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Representatives may interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured. Any termination pursuant to
this Section 11 shall be without liability on the part of (a) the Company or the
Selling Shareholders to any Underwriter, except that the Company and the Selling
Shareholders shall be obligated to reimburse the expenses of the Representatives
and the Underwriters pursuant to Section 4 parts (vi) and (vii) and Section 6
hereof, (b) any Underwriter to the Company or the Selling Shareholders, or (c)
of any party hereto to any other party except that the provisions of Section 8
and Section 9 shall at all times be effective and shall survive such
termination.
Section 12. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Shareholders, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
Section 13. Notices. All communications hereunder shall be in writing and
shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representatives:
▇▇▇▇▇▇▇▇▇▇ Securities
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
31
with a copy to:
▇▇▇▇▇▇▇▇▇▇ Securities
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
O'Melveny & ▇▇▇▇▇ LLP
Embarcadero Center West
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Company and/or the Selling Shareholders:
Vistana, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
with a copy to:
▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 14. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and personal representatives, and no
other person will have any right or obligation hereunder. The term "successors"
shall not include any purchaser of the Common Shares as such from any of the
Underwriters merely by reason of such purchase.
Section 15. Partial Unenforceability. The invalidity or unenforceability
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
32
Section 16.
(a) Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or the courts
of the State of California in each case located in the City and County of San
Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
(c) Waiver of Immunity. With respect to any Related Proceeding, each party
irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
Section 17. Failure of One or More of the Selling Shareholders to Sell and
Deliver Common Shares. If one or more of the Selling Shareholders shall fail to
sell and deliver to the Underwriters the Common Shares to be sold and delivered
by such Selling Shareholders at the First Closing Date pursuant to this
Agreement, then the Underwriters may at their option, by written notice from the
Representatives to the Company and the Selling Shareholders, either (i)
terminate this Agreement without any liability on the part of any Underwriter
or, except as provided in Sections 4, 6, 8 and 9 hereof, the Company or the
Selling Shareholders, or (ii) purchase the shares which the Company and other
Selling Shareholders have agreed to sell and deliver in accordance with the
terms hereof. If one or more of the Selling Shareholders shall fail to sell and
deliver to the Underwriters the Common Shares to be sold and delivered by such
Selling Shareholders pursuant to this Agreement at the First Closing Date or the
Second Closing Date, then the Underwriters shall have the right, by written
notice from the Representatives to the Company and the Selling Shareholders, to
postpone the First Closing Date or the Second Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
Section 18. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement
33
may be executed in two or more counterparts, each one of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement may not be amended or modified unless in
writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition
is meant to benefit. The Table of Contents and the Section headings herein are
for the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business
person who was adequately represented by counsel during negotiations regarding
the provisions hereof, including, without limitation, the indemnification
provisions of Section 8 and the contribution provisions of Section 9, and is
fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the
risks in light of the ability of the parties to investigate the Company, its
affairs and its business in order to assure that adequate disclosure has been
34
made in the Registration Statement, any preliminary prospectus and the
Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.
Very truly yours,
VISTANA, INC.,
a Florida corporation
By:
---------------------------------
Name:
Title:
SELLING SHAREHOLDERS
JGG Holdings Trust
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Trustee
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Revocable Trust
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Trustee
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Trustee
35
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives in San Francisco, California as of the date first above
written.
▇▇▇▇▇▇▇▇▇▇ SECURITIES
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
BY: ▇▇▇▇▇▇▇▇▇▇ SECURITIES
By:
--------------------------
Name:
Title:
36
SCHEDULE A
Number of
Firm Common
Shares
Underwriter to be Purchased
----------- ---------------
▇▇▇▇▇▇▇▇▇▇ Securities ................ [________]
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. .................... [________]
[___] ................................ [________]
[___] ................................ [________]
[___] ................................ [________]
---------
Total 5,550,000
=========
Schedule A-1
SCHEDULE B
Number of Maximum
Firm Number of
Common Optional
Shares Common Shares
Selling Shareholder to be Sold to be Sold
------------------- ---------- ----------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. 231,250 208,125
Revocable Trust
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 462,500 416,250
Revocable Trust
JGG Holdings Trust 231,250 208,125
------- -------
Total: 925,000 832,000
======= =======
Schedule B-1
SCHEDULE C
Existing Shareholders
---------------------
Name
----
1. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Revocable Trust
2. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Retained Annuity Grantor Trust dated the 18th day
of October 1996
3. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Irrevocable Trust
4. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Irrevocable Trust
5. JGG Holdings Trust
6. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust
7. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Grantor Annuity Trust
8. ▇▇▇▇▇▇▇▇▇ Male Gift Trust
9. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Gift Trust
10. ▇▇▇▇▇ ▇▇▇▇▇ Gift Trust
11. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Grantor Annuity Trust #1
12. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Grantor Annuity Trust #2
13. ARA Trust
14. DLA Trust
Schedule C-1
The Resorts
-----------
Name Location
---- --------
1. Vistana Resort Orlando, Florida
2. Vistana's Beach Club ▇▇▇▇▇▇▇▇▇▇ Island, Florida
3. Oak Plantation Villas Kissimmee, Florida
by Vistana
4. Vistana Resort at St. Augustine, Florida
World Golf Village
5. PGA Vacation Resort by Vistana St. Augustine, Florida
6. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Schedule C-2
SCHEDULE D
Certain Existing Instruments
----------------------------
===============================================================================================
TITLE DATE LENDER BORROWER AMOUNT
-----------------------------------------------------------------------------------------------
1. Loan and 10/13/93 NationsCredit Vistana Line of Credit with
Security Commercial Development, maximum principal
Agreement Corporation Ltd. amount not to
f/k/a Greyrock exceed $21,043,723.
Capital Group, Five Notes executed
Inc. as successor totalling
to US West $31,340,361.72.
Financial
Services, Inc.
-----------------------------------------------------------------------------------------------
2. Second Loan 4/28/95 NationsCredit Vistana Line of Credit with
and Security Commercial Development, maximum principal
Agreement Corporation Ltd. amount not to
f/k/a Greyrock exceed $9,800,000.
Capital Group, One promissory
Inc. note executed for
$9,425,954.34.
-----------------------------------------------------------------------------------------------
3. Loan Agreement 5/26/95 ▇▇▇▇▇ & Vistana Line of credit with
Greenwood Development, maximum principal
Capital, an Ltd. amount not to
Indiana Trust exceed $4,500,000.
-----------------------------------------------------------------------------------------------
4. Credit 3/30/95 First National Vistana $8,000,000. One
Agreement Bank of Boston Development, promissory note
(agent) Ltd. executed for
$7,221,000.
-----------------------------------------------------------------------------------------------
5. Credit 3/30/95 First National Vistana $14,000,000.
Agreement Bank of Boston, Development,
Agent Ltd.
-----------------------------------------------------------------------------------------------
6. Office Building 5/18/94 Finova Capital Vistana $ 5,250,000.
Loan Corporation, a Development,
Delaware Ltd.
corporation
-----------------------------------------------------------------------------------------------
Schedule D-1
===============================================================================================
TITLE DATE LENDER BORROWER AMOUNT
-----------------------------------------------------------------------------------------------
7. Receivables 10/30/91 Finova Capital Vistana Sum of the
Loan Corporation Development Receivables Loan,
f/k/a Greyhound Ltd. the Product Loan
Real Estate and the Term Loan
Finance Company not to exceed
$85,000,000.
-----------------------------------------------------------------------------------------------
8. Product Loan 6/21/94 Finova Capital Vistana Non-revolving line
Agreement Corporation Development, of credit not to
f/k/a Greyhound Ltd. exceed $7,000,000.
Financial
Corporation, a
Delaware
corporation
-----------------------------------------------------------------------------------------------
9. Term Loan 5/26/95 Finova Capital Vistana Three notes in the
Agreement Corporation, a Development, aggregate amount
Delaware Ltd. of $4,000,000.
corporation
-----------------------------------------------------------------------------------------------
10. Credit Facilities 6/25/96 Finova Capital Oak Three lines of
and Security Corporation, a Plantation credit
Agreement Delaware Joint Venture with the aggregate
corporation amount not to
exceed $40,000,000:
(1) Term Loan --a
non-revolving line
of credit with
maximum principal
amount not to
exceed $18,275,000.
(2) Working Capital
Loan--a non-
revolving line of
credit with
maximum principal
amount not to
exceed $2,500,000.
(3) Receivables
Loan--a revolving
line of credit with
maximum principal
amount not to
exceed $25,000,000.
-----------------------------------------------------------------------------------------------
Schedule D-2
===============================================================================================
TITLE DATE LENDER BORROWER AMOUNT
-----------------------------------------------------------------------------------------------
11. Acquisition and 7/24/96 Finvoa Capital Vistana WGV, Non-revolving line
Construction Corporation, a Ltd. of Credit with
Loan and Delaware maximum principal
Security corporation amount not to
Agreement exceed $18,600,000.
Loan is divided into
(1) an Acquisition
Component
Amount (not to
exceed $3,000,000)
and (2) a
Construction
Component
Amount (not to
exceed $15,600,000).
-----------------------------------------------------------------------------------------------
12. Gift Shop Loan 12/9/93 First Union Vistana $1,080,000.
National Bank of Development
Florida Ltd.
-----------------------------------------------------------------------------------------------
13. VDL Vehicle 9/24/96 First Union Vistana $81,500.
Loan National Bank of Development,
Florida Ltd.
-----------------------------------------------------------------------------------------------
14. Warehouse 8/5/94 First Union Vistana Revolving line of
Loan and National Bank of Development, credit with
Security Florida Ltd. maximum principal
Agreement amount not to
exceed $5,000,000
-----------------------------------------------------------------------------------------------
15. General Store 9/8/95 First Union Vistana Combination
Loan National Bank of Management, Construction and
Florida Ltd. Term Loan not to
exceed the lesser of
(1) 80% of Lender
approved appraised
market value or (2)
$1,100,000.
-----------------------------------------------------------------------------------------------
16. Equipment Loan 8/30/96 First Union Vistana Non-revolving line
National Bank of Management, of credit with
Florida Ltd. maximum principal
amount not to
exceed $750,000.
After September 15,
1997, any
outstanding
advances are
converted into a
term loan.
-----------------------------------------------------------------------------------------------
Schedule D-3
===============================================================================================
TITLE DATE LENDER BORROWER AMOUNT
-----------------------------------------------------------------------------------------------
17. VML Vehicle 9/24/96 First Union Vistana Non-revolving line
Loan National Bank of Management, of credit with
Florida Ltd. maximum principal
amount not to
exceed $895,000.
On April 5, 1997,
any outstanding
advances are
converted into a
term loan
-----------------------------------------------------------------------------------------------
18. VDL Vehicle 2/94 First Union Vistana Non-revolving line
Loan National Bank Development, of credit with
Ltd. maximum principal
amount not to
exceed $170,000.
===============================================================================================
Schedule D-4
SCHEDULE E
Certain Consolidation Agreements
--------------------------------
1. Registration Rights Agreement dated February 10, 1997;
2. Employment Agreements between the Company and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. Avril, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇, each dated as of February 10, 1997;
3. Vistana, Inc. Stock Plan (the "Stock Plan") dated December 7, 1996;
4. The Non-Qualified Stock Option Agreements under the Stock Plan;
5. Vistana, Inc. Employee Stock Purchase Plan dated as of December 26, 1996;
6. The Vistana, Inc. Indemnification Agreements dated December 16, 1996; and
7. Amended and Restated Subscription Agreement relating to the Formation
Transactions.
Schedule E-1
EXHIBIT A
Opinion of counsel for the Company, or, for matters regarding Timeshare
Laws, of special counsel specified in the Prospectus and acceptable to the
Representatives, to be delivered pursuant to Section 5(d) of the Underwriting
Agreement.
References to the Prospectus in this Exhibit A include any supplements
thereto at the Closing Date.
(i) The Company has been duly incorporated and is validly existing as a
corporation and its status is active under the laws of Florida.
(ii) The Company has corporate power and authority to own, lease and
operate its Resorts and other properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement.
(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
Resorts or other property or the conduct of business, except for such
jurisdictions where the failure to so qualify or to be in good standing would
not, individually or in the aggregate, result in a Material Adverse Change.
(iv) Each Affiliated Company has been duly incorporated and is validly
existing as a corporation in good standing (or its status is active, as
applicable) under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and, to the best knowledge
of such counsel, is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually or in
the aggregate, result in a Material Adverse Change. Each Affiliated
Partnership and each Related Partnership has been duly formed and is validly
existing as a partnership in good standing under the laws of the jurisdiction
of its formation, with full power and authority (partnership and other) to
own, lease and operate its properties and to conduct its business as described
in the Prospectus and, to the best knowledge of such counsel, is duly
qualified as a foreign partnership to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change.
(v) All of the issued and outstanding capital stock of each such Affiliated
Company has been duly authorized and validly issued, is fully paid and non-
assessable and is owned by the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien, encumbrance or, to
the best knowledge of such counsel, any pending or threatened claim.
A-1
(vi) The authorized, issued and outstanding capital stock of the Company
(including the Common Stock) conform to the descriptions thereof set forth in
the Prospectus. All of the outstanding shares of Common Stock (including the
shares of Common Stock owned by Selling Shareholders) have been duly
authorized and validly issued, are fully paid and nonassessable and, to the
best of such counsel's knowledge, have been issued in compliance with the
registration and qualification requirements of federal and state securities
laws. The form of certificate used to evidence the Common Stock is in due and
proper form and complies with all applicable requirements of the articles of
incorporation and by-laws of the Company and the Business Corporation Act of
the State of Florida. The description of the Company's Stock Plan and
Employee Stock Purchase Plan, and the options or other rights granted and
exercised thereunder, set forth in the Prospectus accurately and fairly
presents in all material respects the information required to be shown with
respect to such plans, arrangements, options and rights.
(vii) No shareholder of the Company or any other person has any preemptive
right, right of first refusal or other similar right to subscribe for or
purchase securities of the Company.
(viii) The Underwriting Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms except as rights to indemnification
thereunder may be limited by applicable law and, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally or
by general equitable principles.
(ix) The Common Shares to be purchased by the Underwriters from the Company
have been duly authorized for issuance and sale pursuant to the Underwriting
Agreement and, when issued and delivered by the Company pursuant to the
Underwriting Agreement against payment of the consideration set forth therein
and payment and cancellation of all applicable Florida documentary stamp
taxes, will be validly issued, fully paid and nonassessable.
(x) Each of The Registration Statement and the Rule 462(b) Registration
Statement, if any, has been declared effective by the Commission under the
Securities Act. To the best knowledge of such counsel, no stop order
suspending the effectiveness of either of the Registration Statement or the
Rule 462(b) Registration Statement, if any, has been issued under the
Securities Act and no proceedings for such purpose have been instituted or are
pending or are contemplated or threatened by the Commission. Any required
filing of the Prospectus and any supplement thereto pursuant to Rule 424(b)
under the Securities Act has been made in the manner and within the time
period required by such Rule 424(b).
(xi) The Registration Statement, including any Rule 462(b) Registration
Statement, the Prospectus including any document incorporated by reference
therein, and each amendment or supplement to the Registration Statement and
the Prospectus including any document incorporated by reference therein, as of
their respective effective or issue dates (other than the financial
statements, statistical data included therein or derived therefrom and
supporting schedules included or incorporated by reference therein or in
exhibits to or excluded from the Registration Statement, as to which no
opinion need be rendered) comply
A-2
as to form in all material respects with the applicable requirements of the
Securities Act.
(xii) The Common Shares have been approved for listing on the Nasdaq
National Market.
(xiii) The statements in the Prospectus under the heading "Description of
Capital Stock" and "Shares Eligible for Future Sale" insofar as such
statements constitute matters of law, summaries of legal matters, the
Company's articles of incorporation or by-law provisions, documents or legal
proceedings, or legal conclusions, has been reviewed by such counsel and
fairly present and summarize, in all material respects, the matters referred
to therein.
(xiv) To the best knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other than those
disclosed therein.
(xv) The Company and each entity which owns a Resort has obtained all
necessary approvals and permits from the timeshare authority of the state in
which the subject Resort is located necessary to offer for sale and sell
timeshare interests and offer purchase money financing in connection with such
sales in accordance with the applicable laws and regulations of the state in
which the Resort is located governing the marketing and sale of timeshare
interests in real property and all other states where timeshare interests are
offered.
(xvi) To such counsel's knowledge, here are no Existing Instruments
required to be described or referred to in the Registration Statement or to be
filed as exhibits thereto other than those described or referred to therein or
filed as exhibits thereto; and the descriptions thereof and references thereto
are correct in all material respects.
(xvii) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company's execution, delivery and performance of
the Underwriting Agreement and consummation of the transactions contemplated
thereby and by the Prospectus, except as required under the Securities Act,
applicable state securities or blue sky laws and from the NASD.
(xviii) The execution and delivery of the Underwriting Agreement and each
Consolidation Agreement by the Company and the performance by the Company of
its obligations thereunder (other than performance by the Company of its
obligations under the indemnification section of the Underwriting Agreement,
as to which no opinion need be rendered) and the transactions contemplated
thereunder and by the Prospectus, including the Formation Transactions, (i)
have been duly authorized by all necessary corporate action on the part of the
Company; (ii) will not result in any violation of the provisions of the
articles of incorporation, by-laws, partnership agreement, certificate of
partnership or other organization documents, as applicable, of the Company,
any Affiliated Entity or any Related Partnership; (iii) will not conflict with
or constitute a breach of, or Default or a Debt Repayment Triggering Event
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, any subsidiary, any
Affiliated Entity, any Related Partnership or any Resort pursuant to any
Existing Instrument including,
A-3
without limitation, those listed in Schedule C, except for such conflicts,
breaches, Defaults, Debt Triggering Events, liens, charges or encumbrances as
would not, individually or in the aggregate, result in a Material Adverse
Change; and the Company has procured written consents to that effect from
every party to any Existing Instrument who is authorized thereunder to declare
or decide upon such conflicts, breaches, Defaults, Debt Triggering Events,
liens, charges or encumbrances; (iv) will not otherwise require the consent of
any party to any Existing Instrument, except such consents as have been
obtained; and (v) will not result in any violation of any law, administrative
regulation or administrative or court decree applicable to the Company, any
subsidiary, any Affiliated Entity, any Related Partnership or any of the
Resorts, except where failure to be in compliance with such law, regulation or
decree would not cause a Material Adverse Change.
(xix) The consummation of the Formation Transactions does not constitute a
roll-up transaction as such term is defined in Item 901(c) of Regulation S-K
of the Rules and Regulations. All of the shares of Common Stock to be issued
by the Company in connection with the Formation Transactions other that the
Common Shares to be sold to the Underwriters are exempt from registration
under the Securities Act.
(xx) Each of the Consolidation Agreements, including, without limitation,
those listed in Schedule D, has been, or prior to the consummation of the
Offering and the Formation Transactions will be, duly authorized, executed and
delivered by the parties thereto and constitutes a valid and binding agreement
of the parties thereto; and neither the Company, nor any of the Affiliated
Companies, nor any of the Related Partnerships nor, to the best of such
counsel's knowledge, any other party is, or upon the consummation of the
Offering and the Formation Transactions will be, in breach of or default under
any Consolidation Agreement. Each of the Consolidation Agreements constitutes
the legally valid and binding obligation of the Company and the other parties
thereto, enforceable against the Company and such parties in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights
generally (including, without limitation, fraudulent conveyance laws) and by
general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or at law.
(xxi) Upon consummation of the Formation Transactions, every partnership
that owns a Resort will be directly or indirectly a wholly-owned subsidiary of
the Company. Upon consummation of the formation transactions, every
partnership that owns a Resort will have only one general partner and that
general partner will be directly or indirectly a wholly-owned subsidiary of
the Company.
(xxii) Each of the Trust Agreements (i) has been duly authorized, executed
and delivered by all necessary parties, (ii) creates a valid and binding
fiduciary relationship under the applicable state law, and (iii) confers upon
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as the case may be, (1) all
requisite legal right, power and authority to sell such shares as contemplated
by the Underwriting Agreement, (2) all requisite legal right, power and
authority to vote such shares in his sole discretion, which right, power and
authority is
A-4
subject to no time limits, and (3) all requisite legal right, power and
authority to enter into the Underwriting Agreement and the Consolidation
Agreements, as applicable, on behalf of such trust and the beneficiaries
thereunder and to carry out the transactions contemplated thereby. To the
best knowledge of such counsel, other than the Trust Agreements, the
Underwriting Agreement, the Powers of Attorney, the Custody Agreements, the
Subscription Agreement, the Registration Rights Agreement and the Shareholder
Agreement, there are no agreements relating to any shares of Common Stock held
under the Trust Agreements or control thereof.
(xxiii) The Company is not, and after receipt of payment for the Common
Shares will not be, an "investment company" within the meaning of Investment
Company Act.
(xxiv) Except as disclosed in the Prospectus under the caption "Shares
Eligible for Future Sale", to the best knowledge of such counsel, there are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by the Underwriting Agreement, other than the
Selling Shareholders, except for such rights as have been duly waived.
(xxv) Neither the Company nor any Affiliated Entity nor any Related
Partnership is in violation of its articles of incorporation or by-laws or
other organizational document, any applicable law, including, without
limitation, any Environmental Law or any Timeshare Law, administrative
regulation or administrative or court decree or is in Default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any material Existing Instrument, except in each such case for
such violations or Defaults as would not, individually or in the aggregate,
result in a Material Adverse Change.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Underwriters at which the contents
of the Registration Statement and the Prospectus, and any supplements or
amendments thereto, 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 or the Prospectus (other than as specified above), and
any supplements or amendments thereto, on the basis of the foregoing, nothing
has come to their attention which would lead them to believe that either the
Registration Statement or any amendments thereto, at the time the Registration
Statement or such amendments became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date or at the First Closing Date or the Second Closing
Date, as the case may be, contained an 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 express no belief as to
the financial statements or schedules or other financial or statistical data
contained therein or derived therefrom, included or incorporated by reference
in the Registration Statement or the Prospectus or any amendments or
supplements thereto).
A-5
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws, to the extent they deem proper and specified
in such opinion, upon the opinion (which shall be dated the First Closing Date
or the Second Closing Date, as the case may be, shall be satisfactory in form
and substance to the Underwriters, shall expressly state that the Underwriters
may rely on such opinion as if it were addressed to them and shall be furnished
to the Representatives) of other counsel of good standing whom they believe to
be reliable and who are satisfactory to counsel for the Underwriters; provided,
however, that such counsel shall further state that they believe that they and
the Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials.
A-6
EXHIBIT B
The opinion of such counsel pursuant to Section 5(h) shall be rendered to
the Representatives at the request of the Company and shall so state therein.
References to the Prospectus in this Exhibit B include any supplements thereto
at the Closing Date.
(i) The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of, and is a valid and binding agreement of, such
Selling Shareholder, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by applicable law and
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(ii) The execution and delivery by such Selling Shareholder of, and the
performance by such Selling Shareholder of its obligations under, the
Underwriting Agreement, its Custody Agreement, the Shareholder Agreement, the
Indemnity Agreement, and its Power of Attorney will not contravene or conflict
with, result in a breach of, or constitute a default under, the articles of
incorporation or by-laws, partnership agreement, trust agreement or other
organizational documents, as the case may be, of such Selling Shareholder, or
violate or contravene any provision of applicable law or regulation, or
violate, result in a breach of or constitute a default under the terms of any
other agreement or instrument to which such Selling Shareholder is a party or
by which it is bound, or any judgment, order or decree applicable to such
Selling Shareholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Shareholder.
(iii) Such Selling Shareholder has good and valid title to all of the
Common Shares which may be sold by such Selling Shareholder under the
Underwriting Agreement and has the legal right and power, and all
authorizations and approvals required under the applicable Trust Agreement or
other organizational documents, as the case may be, to enter into the
Underwriting Agreement and its Custody Agreement and its Power of Attorney, to
sell, transfer and deliver all of the Common Shares which may sold by such
Selling Shareholder under the Underwriting Agreement and to comply with its
other obligations under the Underwriting Agreement, its Custody Agreement and
its Power of Attorney.
(iv) Each of the Custody Agreement, the Shareholder Agreement, the
Indemnity Agreement and Power of Attorney of such Selling Shareholder has been
duly authorized, executed and delivered by such Selling Shareholder and is a
valid and binding agreement of such Selling Shareholder, enforceable in
accordance with its terms, except as rights to indemnification thereunder may
be limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles.
(v) Each of the Trust Agreements (i) has been duly authorized, executed and
delivered by all necessary parties, (ii) creates a valid and binding fiduciary
relationship under the applicable state law, (iii) confers upon ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇. or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as
B-1
the case may be, (1) all requisite legal right, power and authority to sell
such shares as contemplated by the Underwriting Agreement, (2) all requisite
legal right, power and authority to vote such shares in his sole discretion,
which right, power and authority is subject to no time limits, and (3) all
requisite legal right, power and authority to enter into the Underwriting
Agreement and the Consolidation Agreements, as applicable, on behalf of such
trust and the beneficiaries thereunder and to carry out the transactions
contemplated thereby and (iii) is a valid and binding agreement enforceable in
accordance with its terms, except as may be limited by applicable law and
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles. To the
best knowledge of such counsel, other than the Trust Agreements, the
Subscription Agreement, the Registration Rights Agreement and the
Shareholders' Agreement, there are no agreements relating to any shares of
Common Stock held under the Trust Agreements or control thereof.
(vi) Assuming that the Underwriters purchase the Common Shares which are
sold by such Selling Shareholder pursuant to the Underwriting Agreement for
value, in good faith and without notice of any adverse claim, the delivery of
such Common Shares pursuant to the Underwriting Agreement will pass good and
valid title to such Common Shares, free and clear of either any security
interest, mortgage, pledge, lieu encumbrance or other claim.
(vii) No consent, approval, authorization or other order of, or
registration or filing with, any court or governmental authority or agency, is
required for the consummation by such Selling Shareholder of the transactions
contemplated in the Underwriting Agreement, except as required under the
Securities Act, applicable state securities or blue sky laws, and from the
NASD.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware, the General Corporation Law of the
State of California, the laws of the State of New York or the federal law of the
United States, to the extent they deem proper and specified in such opinion,
upon the opinion (which shall be dated the First Closing Date or the Second
Closing Date, as the case may be, shall be satisfactory in form and substance to
the Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Representatives) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters; provided,
however, that such counsel shall further state that they believe that they and
the Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on certificates
of the Selling Shareholders and public officials.
B-2
EXHIBIT C
[Date]
▇▇▇▇▇▇▇▇▇▇ Securities
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
As Representatives of the Several Underwriters
c/▇ ▇▇▇▇▇▇▇▇▇▇ Securities
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: Vistana, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain
shares of Common Stock of the Company ("Common Stock") or securities convertible
into or exchangeable or exercisable for Common Stock. The Company proposes to
carry out a public offering of Common Stock (the "Offering") for which you will
act as the representatives of the underwriters. The undersigned recognizes that
the Offering will be of benefit to the undersigned and will benefit the Company
by, among other things, raising additional capital for its operations. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not, without the prior written consent of ▇▇▇▇▇▇▇▇▇▇
Securities (which consent may be withheld in its sole discretion), directly or
indirectly, sell, offer, contract or grant any option to sell (including without
limitation any short sale), pledge, transfer, establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act
of 1934, or otherwise dispose of any shares of Common Stock, options or warrants
to acquire shares of Common Stock, or securities exchangeable or exercisable for
or convertible into shares of Common Stock currently or hereafter owned either
of record or beneficially (as defined in Rule 13d-3 under Securities Exchange
Act of 1934, as amended) by the undersigned, or publicly announce the
undersigned's intention to do any of the foregoing (collectively for purposes of
this paragraph, "Sales"), for a period commencing on the date hereof and
continuing through the close of trading on the date 180 days after the date of
the Prospectus; provided, however, that Sales to family members in connection
with bona fide estate planning of the undersigned and transfers to or from any
grantor retained annuity trusts shall be allowed without the prior written
consent of ▇▇▇▇▇▇▇▇▇▇ Securities (provided advance written notice is provided to
▇▇▇▇▇▇▇▇▇▇ Securities) and provided further that such transferees shall be bound
by this agreement and shall agree not to make any Sales for the remainder of
such 180 day period without the prior written consent of ▇▇▇▇▇▇▇▇▇▇ Securities.
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
C-1
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of any
Common Stock owned either of record or beneficially by the undersigned,
including any rights to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
-------------------------------------------
Printed Name of Holder
By:
---------------------------------------
Signature
-------------------------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
C-2