EXHIBIT 1.1
3,000,000 SHARES
SIGNATURE RESORTS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
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_________, 1997
▇▇▇▇▇▇▇▇▇▇ SECURITIES
▇▇▇▇▇▇▇, SACHS & CO.
As Representatives of the several Underwriters
c/▇ ▇▇▇▇▇▇▇▇▇▇ SECURITIES
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
SECTION 1. Introductory. Signature Resorts, Inc., a Maryland
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corporation (the "Company"), proposes to issue and sell 1,600,000 shares of its
authorized but unissued common stock, $.01 par value (the "Common Stock"), and
the several stockholders of the Company listed in Schedule A annexed hereto (the
"Selling Stockholders"), propose to sell 1,400,000 shares of the Company's
issued and outstanding Common Stock to the several underwriters named in
Schedule B annexed hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"). Said aggregate of 3,000,000 shares are
herein called the "Firm Common Shares." In addition, the Company and the
Selling Stockholders propose to grant to the Underwriters an option to purchase
up to 450,000 additional shares (the "Option Common Shares") as provided in
Section 6 hereof. The Firm Common Shares and, to the extent such option is
exercised, the Option Common Shares are hereinafter collectively referred to as
the "Common Shares."
Concurrently with the offering of the Common Shares, the Company
proposes to issue and sell an aggregate of
$100,000,000 principal amount of its _____% Convertible Subordinated Notes Due
2007 (the "Notes").
You have advised the Company and the Selling Stockholders 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
hereinafter referred to, or as soon thereafter as in your judgment is advisable.
The Company and the Selling Stockholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The
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Company hereby represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-_____) with
respect to the Common Shares has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, and has
been filed with the Commission. There have been delivered to you two
signed copies of such registration statement and any amendments thereto,
together with two copies of each exhibit filed therewith. Conformed copies
of such registration statement and amendments (but without exhibits) and of
the related preliminary prospectus have been delivered to you in such
reasonable quantities as you have requested for each of the Underwriters.
The Company will next file with the Commission one of the following: (i)
prior to effectiveness of such registration statement, a further amendment
thereto, including the form of final prospectus, or (ii) a final prospectus
in accordance with Rules 430A and 424(b) of the Rules and Regulations. As
filed, such amendment and form of final prospectus, or such final
prospectus, shall include all Rule 430A Information (as hereinafter
defined) and, except to the extent that you shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to
you prior to the date and time that this Agreement was executed and
delivered by the parties hereto, or, to the extent not completed at such
date and time, shall contain only such specific additional information and
other
changes (beyond that contained in the latest Preliminary Prospectus) as the
Representatives shall have approved.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date, shall also mean such
registration statement as so amended; provided, however, that such term
shall also include all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations. The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred to
in the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule
430A Information. The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Common Shares in the form in which it
is first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no filing pursuant to Rule 424(b) of the Rules and
Regulations is required, shall mean the form of final prospectus included
in the Registration Statement at the time such registration statement
becomes effective. The term "Rule 430A Information" means information with
respect to the Common Shares and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective pursuant
to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and the
Rules and Regulations and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including each Closing Date (as hereinafter defined), the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
will contain all material statements and information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, and neither the Registration Statement nor the Prospectus, nor
any amendment or supplement thereto, will include 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;
provided, however, no representation or warranty contained in this Section
2(b) shall be applicable to information contained in or omitted from any
Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished pursuant to Section 5 of this Agreement to
the Company by or on behalf of any Underwriter, directly or through the
Representatives, specifically for use in the preparation thereof.
(c) The Company has been duly formed and is validly existing as a
corporation, is in good standing under the laws of the State of Maryland,
with full power and authority (corporate and other) to conduct its business
as currently conducted or as described in the Prospectus.
(d) Each of the Significant Subsidiaries (as defined in the Indenture
dated as of January __, 1997 by and between the Company and Norwest Bank
Minnesota, National Association) has been duly formed and is validly
existing as a partnership,
limited liability company or corporation, as applicable, 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 currently conducted or described in
the prospectus.
(e) The Company and each of Significant Subsidiaries are in
possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of their respective businesses, all of which are valid and in full
force and effect; the Company and each of the Significant Subsidiaries are
duly qualified to do business and in good standing as a foreign
corporation, partnership or limited liability company, as applicable, in
each jurisdiction in which the conduct of their respective businesses
requires such qualification, except where the failure to be so qualified
and in good standing would not have a material adverse effect on the
condition (financial or otherwise), business, properties, results of
operations or prospects of the Company and the Significant Subsidiaries,
considered as one entity (a "Material Adverse Effect"); and to the
Company's knowledge 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 or qualification.
(f) The Company has an authorized and outstanding capital stock as
set forth under the column captioned "Actual" under the heading
"Consolidated Capitalization" in the Prospectus; the issued and outstanding
shares of Common Stock have been duly authorized and validly issued, are
fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or
purchase securities and will conform to the description thereof contained
in the Registration Statement and the Prospectus. The form of certificate,
if any, evidencing the Common Stock complies with all applicable
requirements of Maryland law. Except as disclosed in or contemplated by the
Prospectus and the financial statements of the Company and the related
notes thereto, as of the First Closing Date the Company does not have
outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or
to purchase such 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.
(g) The Common Shares to be sold by the Company in the public offering
contemplated by this Agreement, when issued, delivered and paid for in the
manner set forth in this Agreement, will be duly authorized and validly
issued, fully paid and nonassessable, will be registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), have been duly authorized for quotation by the Nasdaq
National Market upon official notice of issuance and will conform to the
description thereof contained in the Prospectus. No preemptive rights or
other rights to subscribe for or purchase Common Stock exist with respect
to the issuance and sale of the Common Shares by the Company pursuant to
this Agreement. Except for the Selling Stockholders, no shareholder of the
Company has any right which has not been waived to require the Company to
register the sale of any Common Stock owned by such shareholder under the
Act in the public offering contemplated by this Agreement. No further
approval or authority of the shareholders or the Board of Directors of the
Company will be required for the issuance and sale of the Common Shares to
be sold by the Company as contemplated herein. No further approval or
authority of the Board of Directors of the Company will be required for the
transfer and sale of the Common Shares to be sold by the Selling
Stockholders as contemplated herein. The description of the Company's share
option, share bonus and other share plans or arrangements, and the options
or other rights granted and exercised 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.
(h) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding obligation of the Company in accordance
with its terms. The making and performance of this Agreement by the
Company and the consummation of the transactions herein contemplated, will
not violate any provisions of any partnership agreement, certificate of
partnership, charter, bylaws or other organizational documents, as
applicable, of the Company or any of the
Significant Subsidiaries and will not conflict with, result in the breach
or violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under (i) any agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other instrument
to which the Company or any of the Significant Subsidiaries is a party or
by which the Company, any of the Significant Subsidiaries or any of the
Existing Resorts (as defined in the Prospectus) may be bound or affected or
(ii) any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or
other governmental body applicable to the Company, any of the Significant
Subsidiaries or any of the Existing Resorts, in each case except as would
not have a Material Adverse Effect. No consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body is required, including the satisfaction of any
requirements pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended, for the execution and delivery of this Agreement or
the consummation of the transactions contemplated by this Agreement, except
for compliance with the Act, the Exchange Act, the Blue Sky and Canadian
securities laws applicable to the public offering of the Common Shares by
the several Underwriters, the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD"), and except for any
such consent, approval, authorization or other order as has been or will be
obtained prior to the First Closing Date.
(i) Ernst and Young LLP ("E & Y") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇
▇▇▇▇▇▇▇▇") who have expressed their opinion with respect to the financial
statements and schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants as required by the Act
and the Rules and Regulations.
(j) The consolidated financial statements of the Company, together
with the related notes thereto, set forth in the Registration Statement and
the Prospectus fairly present the financial condition of such entities as
of the dates indicated and the results of operations and changes in
financial position for the periods presented. 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
and the pro forma adjustments have been properly applied to the historical
amounts in the compilation of such statements. Such statements, schedules
and related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis as certified by the
independent accountants named in Section 2(h). No other financial
statements or schedules are required to be included in the Registration
Statement. The selected financial data set forth in the Prospectus under
the captions "Consolidated Capitalization", "Selected Combined Historical
Financial Information of the Company" and "Summary Consolidated Historical
and Pro Forma Financial Information" fairly present the information set
forth therein on the basis stated in the Registration Statement.
(k) Except as disclosed in the Prospectus, the Company is not in
violation of any of its articles of organization or by-laws, and is not in
breach or default with respect to any provision of any agreement, judgment,
decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which it is a party or by which it
or any of its properties are bound, or to which any of the property or
assets of the Company is subject except for any such violation, breach or
default that could not have a Material Adverse Effect.
(l) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been described or filed as required.
(m) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or threatened to which
the Company or any of the Significant Subsidiaries are a party or of which
any Resort owned or leased by the Significant Subsidiaries is the subject,
or related to environmental or discrimination matters, which actions, suits
or proceedings could reasonably be anticipated to
individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or have a Material Adverse
Effect. Neither the Company nor any of the Significant Subsidiaries is a
party or subject to the provisions of any material injunction, judgment,
decree or order of any court, regulatory body, administrative agency or
other governmental body.
(n) Except as set forth in the Prospectus, the Company or the
Significant Subsidiaries have good and marketable title to all of the
Existing Resorts, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those reflected in the financial statements
or elsewhere in the Prospectus. Except as disclosed in the Prospectus, the
Company and each of the Significant Subsidiaries owns or leases all such
properties as are necessary to operate the Existing Resorts as now
conducted or as proposed to be conducted, except with respect to the Poipu
Resort and the San ▇▇▇▇ Bay intervals.
(o) From September 30, 1996 through the date hereof, and except as
described in or specifically contemplated by the Prospectus: (i) the
Company has not incurred any material liabilities or obligations, indirect,
direct or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of
business or which could result in a material reduction in the future
earnings of the Company; (ii) the Company has not sustained any loss or
interference with its respective businesses or properties from fire, flood,
windstorm, accident or other calamity, whether or not
covered by insurance, that would have a Material Adverse Effect; (iii) the
Company has not paid or declared any dividends or other distributions with
respect to its capital stock, shares or interests, as applicable (other
than such dividends or distributions paid to shareholders to satisfy tax
liabilities) and the Company is not in arrears or default in the payment of
principal or interest on any outstanding material debt obligations; (iv)
there has not been any change (excluding transfers) in the capital stock
(other than the sale of the Common Shares under this Agreement) of the
Company, or indebtedness material to the Company (other than in the
ordinary course of business); and (v) there has not been any material
adverse change in the condition (financial or otherwise), business,
properties, or results of operations of the Company and its Subsidiaries,
considered as one entity (a "Material Adverse Change"); provided that the
representations and warranties contained in this section 2(o) shall not
apply to either the offering and sale of the Notes or the Company's
execution and performance of the registration statement (File No.333-06027,
the prospectus related thereto, the underwriting agreement, dated as of
August 14, 1996, by and between the Company and the Representatives or the
consummation (or the effects thereof) of the transactions contemplated
therein.
(p) Except as specifically disclosed in or specifically contemplated
by the Prospectus, the Company will have sufficient trademarks, trade
names, patent rights, copyrights, licenses or other similar rights and
proprietary knowledge (collectively, "Intangibles"), approvals and
governmental authorizations to conduct its businesses; the expiration of
any Intangibles, approvals or governmental authorizations will not have a
Material Adverse Effect; and the Company has no knowledge of any material
infringement by of any of the Significant Subsidiaries of any Intangibles,
and there is no claim being made against the Company or any of the
Significant Subsidiaries regarding any Intangible or other infringement
which could have a Material Adverse Effect.
(q) Neither the Company nor any of the Significant Subsidiaries has
been advised, or has reason to believe, that the Company or any of the
Significant Subsidiaries is not conducting its businesses in compliance
with all applicable laws, rules and regulations of the jurisdictions in
which any of them
is, including, without limitation, all applicable local, state and federal
environmental laws and regulations, in each case except as would not have a
Material Adverse Effect.
(r) The Company and each of the Significant Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns and
have paid all taxes shown as due thereon; and the Company has no knowledge
of any tax deficiency which has been or might be asserted or threatened
against the Company in each case except as would not have a Material
Adverse Effect.
(s) [Intentionally Omitted]
(t) Neither the Company nor any of the Significant Subsidiaries has at
any time during the last five years (i) made any unlawful contribution to
any candidate for foreign office or failed to disclose fully any
contribution in violation of law or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
(u) Neither the Company nor any of the Significant Subsidiaries has
taken or will take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Common Shares.
(v) The Company and the Significant Subsidiaries have and will
maintain liability, property and casualty insurance (insured by insurers of
recognized financial responsibility) in favor of the
Company, or the Significant Subsidiaries, with respect to each of the
Existing Resorts (except with respect to the Poipu Resort, such insurance
therefor being obtained and/or maintained by the Poipu Partnership), in an
amount and on such terms as is reasonable and customary for businesses of
the type proposed to be conducted by the Company, including, among other
things, insurance against theft, damage, destruction and acts of vandalism.
The Company has not received from any insurance company notice of any
material defects or deficiencies affecting the insurability of any such
Existing Resort.
(w) Title insurance in favor of the Company or the Significant
Subsidiaries is in force with respect to each of the Existing Resorts in an
amount reasonably acceptable to the Representatives (except with respect to
the St. Maarten Resorts).
(x) The mortgages and deeds of trust encumbering the Existing Resorts
and Merger Properties are not convertible nor does the Company hold a
participating interest therein and such mortgages and deeds of trust are
not cross-defaulted or cross-collateralized to any Existing Resort not to
be owned directly or indirectly by the Company.
(y) The Company and each of the Significant Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local
rules, laws and regulations relating to the protection of human health and
safety, the environment or any Hazardous Material (as hereinafter defined)
("Environmental Laws"), (ii) has received, or will have received, as of the
Closing Date, as the case may be, all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) is or will be, as of the Closing Date, as
the case may be, in compliance with all terms and conditions of any such
permit, license or approval, in each case except as would not have a
Material
Adverse Effect. 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.
(z) To the Company's knowledge, 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 arising out of,
based on or resulting from (a) the presence or release into the environment
of any Hazardous Material at any location, whether or not owned by the
Company, 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.
(aa) The Company is not, nor will it conduct its business in a manner
in which it would become an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(bb) The assets of neither the Company nor any of the Significant
Subsidiaries constitute, nor will such assets, as of the Closing Date,
constitute "plan assets" under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
(cc) The Company and each of the Significant Subsidiaries maintain and
will maintain a system of internal accounting controls sufficient 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 financial and corporate
books and records 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.
(dd) Neither the Company nor any of the Significant Subsidiaries 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.
(ff) To the Company's knowledge, no labor problem exists or is
imminent with respect to the employees of any of the Existing Resorts, the
Company or any of the Significant Subsidiaries which could have a Material
Adverse Effect.
(gg) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company as to the matters
covered thereby.
(hh) The Company is in compliance with all federal, state, local and
foreign laws and regulations regarding the marketing, offers to sell and
sales of vacation intervals in each state in which the Company is doing
business, including but not limited to the Federal Trade Commission Act,
Regulation Z (the truth-in-lending act), Equity Opportunity Credit Act and
Regulation B, Interstate Land Sales Full Disclosure Act, Real Estate
Standards Practices Act, Telephone Consumer Protection Act, Telemarketing
and Consumer Fraud and Abuse Prevention Act, Fair Housing Act and Civil
Rights Acts of 1964 and 1968, in each case except as would not have a
Material Adverse Effect. The Company has filed all required documents and
supporting information
in compliance with federal, state, local and foreign laws and regulations,
and the Company is in compliance with all licensure, anti-fraud,
telemarketing, price, gift and sweepstakes and labor laws to which it is or
may become subject, in each case except as would not have a Material
Adverse Effect. The Company and each of the Significant Subsidiaries has,
or upon the First Closing Date will have, all permits and licenses which
are required to sell vacation intervals in each state and foreign
jurisdiction where it conducts business, in each case except as would not
have a Material Adverse Effect.
(ii) Except as set forth in the Prospectus, no person has an option
or right of first refusal to purchase all or part of any of the Existing
Resorts (other than the Poipu Resort) or any interest therein. Each of the
Existing Resorts complies with all applicable codes, laws and regulations
(including, without limitation, building and zoning codes and laws relating
to handicapped access), except as would not have a Material Adverse Effect.
The Company has no knowledge of any pending or threatened condemnation
proceedings, zoning changes, or other proceedings or actions that will in
any manner affect the size of, number of vacation intervals planned for,
the use of any improvements on, or access to, the Existing Resorts.
(jj) To the Company's knowledge, no dispute exists or is imminent
between the Company and Promus Hotels, Inc. or between the Company and
Westin Hotels & Resorts and no officer or director of the Company has any
agreement or understanding (verbally or in writing) with Westin Hotels &
Resorts except as set forth in the Prospectus.
(kk) The Common Shares have been approved for listing on the NASDAQ
National Market, subject to official notice of issuance.
(ll) The Company has full legal right, power and authority to enter
into the Agreement and Plan of Merger dated as of September 22, 1996 by and
between the Company and AVCOM International, Inc., as amended (the "Merger
Agreement") and perform the transactions contemplated thereby. The Merger
Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding obligation of the Company in accordance
with its terms. The making and performance of the Merger Agreement by the
Company and the consummation of the transactions therein contemplated, will
not violate any provisions of any partnership agreement, certificate of
partnership, charter, bylaws or other
organizational documents, as applicable, of the Company or any of the
Significant Subsidiaries and will not conflict with, result in the breach
or violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under (i) any agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other instrument
to which the Company or any of the Significant Subsidiaries is a party or
by which the Company, any of the Significant Subsidiaries or any of the
Existing Resorts may be bound or affected or (ii) any statute or any
authorization, judgment, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other governmental body
applicable to the Company, any of the Significant Subsidiaries or any of
the Existing Resorts, in each case except as would not have a Material
Adverse Effect. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body is
required, including the satisfaction of any requirements pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, for the
execution and delivery of the Merger Agreement or the consummation of the
transactions contemplated by the Merger Agreement, except for compliance
with the Act, the Exchange Act, the Blue Sky and Canadian securities laws
applicable to the transactions contemplated by the Merger Agreement, and
except for any such consent, approval, authorization or other order as has
been or will be obtained prior to the First Closing Date.
Agreement, and affirms that the Company has performed all the covenants to
be performed by it contained therein.]
[(mm) The Company has received from its independent certified public
accountants a letter opining that the Merger Agreement and the consummation
of the transactions contemplated therein will qualify for pooling of
interest treatment in accordance with Opinion No. 16 of the Financial
Accounting Principles Board.]
SECTION 3. Representations and Warranties of the Selling Stockholders.
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Each of the Selling Stockholders hereby reaffirms each of its representations,
warranties and covenants set forth in the Power of Attorney for sale of Common
Stock of Signature Resorts, Inc. by such Selling Stockholder dated as of
January , 1997.
SECTION 4. Representations and Warranties of the Underwriters. The
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Representatives, on behalf of the several Underwriters, represent and warrant to
the Company and the Selling Stockholders that the information set forth (i) on
the cover page of the Prospectus with respect to price, underwriting discounts
and commissions and terms of offering and (ii) under "Underwriting" in the
Prospectus was furnished to the Company by and on behalf of the Underwriters for
use in connection with the preparation of the Registration Statement and the
Prospectus and is correct in all material respects. The Representatives
represent and warrant that they have been authorized by each of the other
Underwriters as the Representatives to enter into this Agreement on their behalf
and to act for each Underwriter in the manner herein provided.
SECTION 6. Purchase, Sale and Delivery of Common Shares. On the
--------------------------------------------
basis of the representations, warranties and agreements set forth herein, and
subject to the terms and conditions set forth herein, (i) the Company agrees to
issue and sell to the Underwriters 1,600,000 of the Firm Common Shares; (ii)
each of the Selling Stockholders agrees to sell to the Underwriters the number
of Firm Common Shares set forth opposite the name of such Selling Stockholder in
Schedule A annexed hereto; and (iii) the Underwriters agree, severally and not
jointly, to purchase from the Company and the Selling Stockholders the number of
Firm Common Shares set forth opposite the name of such Underwriter in Schedule B
annexed hereto. The purchase price per share to be paid by the several
Underwriters to the Company and the Selling Stockholders shall be [$_____] per
share.
Delivery of certificates for the Firm Common Shares to be purchased by
the Underwriters and payment therefor shall be made at such place as set forth
below at such time and date, not later than the third (or, if the Firm Common
Shares are priced as contemplated by Rule 15c6-1(c) of the Securities Exchange
Act of 1934, after 4:30 p.m. Washington, D.C. time, the fourth) full business
day following the first date that any of the Common Shares are released by you
for sale to the public, as you shall
designate by at least 48 hours prior notice to the Company (or at such other
time and date, not later than one week after such third full business day as may
be agreed upon by the Company and the Representatives) (the "First Closing
Date"); provided, however, that if the Prospectus is at any time prior to the
First Closing Date recirculated to the public, the First Closing Date shall
occur upon the later of the third or fourth, as the case may be, full business
day following the later of the first date that any of the Common Shares are
released by you for sale to the public and the date that is 48 hours after the
date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by
or on behalf of the Company and the Selling Stockholders to you, for the
respective accounts of the Underwriters against payment by you, for the accounts
of the several Underwriters, by wire transfer of immediately available funds in
proportion to the number of Firm Common Shares to be sold by the Company and the
Selling Stockholders, respectively,to the order of (i) the Company or other
agent designated by the Company and (ii) the Custodian. The certificates for
the Firm Common Shares shall be registered in such names and denominations as
you shall have requested at least two full business days prior to the First
Closing Date, and shall be made available for checking and packaging on the
business day preceding the First Closing Date at a location in New York, New
York or such other location, as may be designated by you. 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.
In addition, on the basis of the representations, warranties and
agreements set forth herein, and subject to the terms and conditions set forth
herein, the Company and the Selling Stockholders hereby grant an option to the
several Underwriters to purchase, severally and not jointly, up to an aggregate
of 450,000 Option Common Shares, from the Company and the Selling Stockholders
in proportion to the number of Firm Common Shares to be sold by the Company and
each of the Selling Stockholders, respectively, at the purchase price per share
to be paid for the Firm Common Shares, for use solely in covering any over-
allotments made by you for the account of the Underwriters in the sale and
distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) within 30 days after the first
date that any of the Common Shares are released by you for sale to the public,
upon written notice by you to the Company and the Selling Stockholders setting
forth the aggregate number of Option Common Shares as to which the Underwriters
are exercising the option, the names and denominations in which the certificates
for such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by you, but if at any time other than the First
Closing Date shall not be earlier than three nor later than five full business
days after delivery of such notice of exercise. References herein to "Closing
Date" shall mean the First Closing Date and/or the Second Closing Date, as the
context requires. The number of Option Common Shares to be purchased by each
Underwriter from the Company shall be determined by multiplying the number of
Option Common Shares to be sold by the Company pursuant to such notice of
exercise by a fraction, the numerator of which is the number of Firm Common
Shares to be purchased by such Underwriter as set forth opposite its name in
Schedule B and the denominator of which is 3,000,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). The number of Optional Common Shares to be purchased from
each of the Selling Stockholders shall be determined by multiplying the number
of Optional Common Shares to be sold by such Selling Stockholder pursuant to
such notice of exercise by a fraction, the numerator of which is the number of
Firm Common Shares to be purchased by such Underwriter as set forth opposite its
name in Schedule B and the denominator of which is 3,000,000. Certificates for
the Option Common Shares will be made available for checking and packaging on
the business day preceding the Second Closing Date at a location in New York,
New York or such other location, as may be designated by you. Payment for the
Option Common Shares shall be the same as for the Firm Common Shares purchased
from the Company and the Selling Stockholders as specified in the two preceding
paragraphs. At any time before lapse of the option, you may cancel such option
by giving written notice of such cancellation to the Company and the Selling
Stockholders. If the option is cancelled or expires unexercised in whole or in
part, the Company will deregister under the Act the number of Option Shares as
to which the option has not been exercised.
You have advised the Company and the Selling Stockholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to issue a receipt therefor. You, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Common Shares to be purchased by any Underwriter whose funds
shall not have been received by you 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.
Subject to the terms and conditions hereof, the Underwriters propose
to make a public offering of their respective portions of the Common Shares as
soon after the effective date of the Registration Statement as in the judgment
of the Representatives is advisable and at the public offering price set forth
on the cover page of and on the terms set forth in the Prospectus.
SECTION 7. Covenants of the Company. The Company covenants and
------------------------
agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the filing
of the Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide evidence
satisfactory to you of such timely filing. The Company will promptly
advise you in writing (i) of the receipt of any comments of the Commission,
(ii) of any request of the Commission for amendment of or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information,
(iii) when the Registration Statement shall have become effective and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose. 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. The Company will
not file any amendment or supplement to the Registration Statement (either
before or after it becomes
effective), any Preliminary Prospectus or the Prospectus of which you have
not been furnished with a copy a reasonable time prior to such filing or to
which you reasonably object or which is not in compliance with the Act and
the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration
Statement or the Prospectus which in your judgment may be necessary or
advisable to enable the several Underwriters to continue the distribution
of the Common Shares and will use its best efforts to cause the same to
become effective as promptly as possible. The Company will fully and
completely comply with the provisions of Rule 430A of the Rules and
Regulations with respect to information omitted from the Registration
Statement in reliance upon such Rule.
(c) If at any time within the applicable period referred to in Section
10(a)(3) of the Act or Rule 174 of the Rules and Regulations during which a
prospectus relating to the Common Shares is required to be delivered under
the Act any event occurs, as a result of which the Prospectus, including
any amendments or supplements, would include an untrue statement of a
material fact, or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or if
it is necessary at any time to amend the Prospectus, including any
amendments or supplements, to comply with the Act or the Rules and
Regulations, the Company will promptly advise you thereof and will promptly
prepare and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment or
supplement which will effect such compliance and will use its best efforts
to cause the same to become effective as soon as possible; and, in case any
Underwriter is required to deliver a prospectus after the applicable time
period, the Company upon request, but at the expense of such Underwriter,
will promptly prepare such amendment or amendments to the Registration
Statement and such Prospectus or Prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Act and Rule
174 of the Rules and Regulations, as applicable.
(d) As soon as practicable, but not later than 45 days (or 90 days if
such quarter is the fiscal year end) after
the end of the first quarter ending after one year following the effective
date of the Registration Statement (as defined in Rule 158(c) of the Rules
and Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a period
of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last
paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the applicable period referred to in
Section 10(a)(3) of the Act or Rule 174 of the Rules and Regulations, will
furnish to you or mail to your order copies of the Registration Statement,
the Prospectus, the Preliminary Prospectus and all amendments and
supplements to any such documents in each case as soon as available and in
such quantities as you may reasonably request, for the purposes
contemplated by the Act and the Rules and Regulations.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions
from the application of) the Blue Sky and Canadian securities laws of such
jurisdictions as you designate, will comply with such laws and will
continue such qualifications, registrations and exemptions in effect so
long as reasonably required for the distribution of the Common Shares. The
Company will not be required to qualify as a foreign corporation or to file
a general consent to service of process in any such jurisdiction where it
is not presently qualified or where it would be subject to taxation as a
corporation. The Company will advise you promptly of the suspension of the
qualification or registration of (or any such 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, with your cooperation, will use its
best efforts to obtain the withdrawal thereof.
(g) During the period of five years after the date of this Agreement,
the Company will furnish to the
Representatives and their counsel and, upon request of the Representatives,
to each of the other Underwriters: (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
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, 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, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
(h) During the period of 90 days after the first date that any of
the Common Shares are released by you for sale to the public, without your
prior written consent (which consent may be withheld at your sole
discretion), the Company will not, other than as disclosed in the
Prospectus, issue, offer, sell, grant options to purchase or otherwise
dispose of any of the Company's equity securities or any other securities
convertible into or exchangeable with its Common Stock or other equity
security of the Company, except, in each case, to grant options or to sell
shares of Common Stock pursuant to the Company's 1996 Equity Participation
Plan or the Company's Employee Stock Option Plan, each as described in the
Prospectus, to grant options or to sell shares of Common Stock in
connection with the offering and sale of the Notes or to grant options or
to sell or issue shares of Common Stock in connection with the Merger
Agreement.
(i) The Company will apply the net proceeds of the sale of the Common
Shares sold by it in accordance with the statements under the caption "Use
of Proceeds" in the Prospectus.
(j) As necessary, the Company will use its best efforts to qualify or
register its Common Shares for sale in non-issuer transactions under (or
obtain exemptions from the application of) the Blue Sky laws of the State
of California and the provincial laws of Canada as specified by the
Representatives (and thereby permit market making transactions and
secondary trading in the Company's Common Shares in California and such
Canadian provinces as
specified by the Representatives), will comply with such Blue Sky or
Canadian provincial laws and continue such qualifications, registrations
and exemptions in effect for a period of five years after the date hereof.
(k) The Company will use its best efforts to continue the quotation
of the Common Shares as a national market system security on the Nasdaq
National Market.
(l) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of formation of the Company, a registrar (which may
be the same entity as the transfer agent).
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
SECTION 8. Payment of Expenses. Whether or not the transactions
-------------------
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limiting the
generality of the foregoing, (i) all expenses incident to the 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 Shares,
(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 and the Company's independent accountants, (v)
all costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement, each
Preliminary Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Agreement Among Underwriters, the Selected Dealers Agreement, the
Underwriters' Questionnaire, the Underwriters' Power of Attorney and the
preliminary and final Blue Sky memoranda, (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 or the provincial securities
laws of Canada, (vii) the filing fee of the NASD and the fees and expenses
related to the inclusion of the Common Shares on the Nasdaq National Market, and
(viii) all other fees, costs and expenses referred to in Item 13 of Part II of
the Registration Statement. Except as provided in this Section 8, Section 10 and
Section 12 hereof, the Underwriters and the Selling Stockholders shall pay all
of their own expenses, including the fees and disbursements of their counsel
(excluding those relating to qualification, registration or exemption under the
Blue Sky and Canadian provincial securities laws and the preliminary and final
Blue Sky memoranda, which fees shall be paid on the First Closing Date or the
Second Closing Date, as applicable).
This Section 8 shall not affect any agreement between the Company and
the Selling Stockholders relating to the payment of expenses. This Section 8
shall not affect any agreement to which the Company is a party relating to the
payment of expenses incurred in connection with the issuance and sale of the
Notes.
SECTION 9. Conditions of the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Option Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company set forth herein as of the date hereof and
as of the First Closing Date or the Second Closing Date, as the case may be, to
the accuracy of the statements of the Company's officers and the Selling
Stockholders made pursuant to the provisions hereof, to the performance of the
Company and the Selling Stockholders of their respective obligations hereunder,
and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M. (or, in the case of a registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations relating to the Common Shares,
not later than 10:00 P.M.), Washington, D.C. Time, on the date of this
Agreement, or at such later time as shall have been consented to by you; if
the filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) of the Rules and Regulations, the Prospectus shall
have been filed in the manner and within the time period required by Rule
424(b) of the Rules and Regulations; and prior to such
Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge
of the Company or you, shall be contemplated by the Commission; and any
request of the Commission for inclusion of additional information in the
Registration Statement, or otherwise, shall have been complied with to your
satisfaction.
(b) There shall have been furnished to you, as Representatives of the
Underwriters, on each Closing Date, in form and substance satisfactory to
you, except as otherwise expressly provided below:
(i) An opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company
(exclusive of environmental matters, matters relating to real property
ownership and condition, indebtedness of the Company, regulation of
the Company's business and property, the Company's
relationship with Promus Hotels Corporation and Westin Hotels &
Resorts and any matters relating to AVCOM International, Inc. and its
subsidiaries and affiliates) addressed to the Underwriters and dated
the First Closing Date, or the Second Closing Date, as the case may
be, to the effect that:
(1) The description of the Common Stock contained in the
section entitled "Description of Capital Stock" in the Prospectus
is an accurate summary in all material respects of the
information required therein by Form S-1;
(2) Except as disclosed in or specifically contemplated by
the Prospectus and except for the Notes, such counsel is not
aware of any outstanding options, warrants or other rights
calling for the issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock of the Company
or any security convertible into or exchangeable for capital
stock of the Company;
(3)(a)(i) The Registration Statement has become effective
under the Act; (ii) to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued; (iii) to
such counsel's knowledge, no proceedings for that purpose have
been instituted or are pending or contemplated by the Commission;
and (iv) any required filing of the Prospectus and any supplement
thereto pursuant to Rule 424(b) of the Rules and Regulations has
been made in the manner and within the time period required by
such Rule 424(b);
(b) The Registration Statement and the Prospectus comply as
to form in all material respects with the applicable requirements
for registration statements on Form S-1 under the Act and the
Rules and Regulations, it being understood
that such counsel need not express any opinion with respect to
the financial statements, schedules and other financial and
statistical data included in the Registration Statement or the
Exhibits thereto;
(c) To such counsel's knowledge, there are no contracts,
agreements, documents, franchises, leases or licenses of a
character required to be disclosed in the Registration Statement
or Prospectus or required to be filed as exhibits to the
Registration Statement which are not disclosed or filed, as
required; and
(d) To such counsel's knowledge, there are no legal or
governmental actions, suits or proceedings pending or threatened
against the Company which are required to be described in the
Prospectus which are not described as required;
(4) The Company has the corporate power and authority to
enter into this Agreement, to sell and deliver the Common Shares
to be sold by it to the several Underwriters and to consummate
the other transactions contemplated herein; this Agreement has
been duly and validly authorized by all necessary action by the
Company, has been duly and validly executed and delivered by and
on behalf of the Company, and is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as
enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except as to
those provisions relating to indemnity or contribution for
liabilities arising under the Act as to which no opinion need be
expressed;
(5) No approval, authorization, order, consent,
registration, filing, qualification, license or permit of or with
any court, regulatory, administrative or other governmental body
is required for the execution and delivery of this Agreement by
the Company or the consummation of the transactions contemplated
by this Agreement, except (i) such as have been obtained and are
in full force and effect under the Act, (ii) such as may be
required under applicable Blue Sky or Canadian securities laws in
connection with the purchase and distribution of the Common
Shares by the Underwriters; (iii) clearing of such offering with
the NASD; and (iv) such as to which the failure to so obtain
would not have a Material Adverse Effect;
(6) The execution and performance of this Agreement and the
consummation of the transactions herein contemplated will not
conflict with, result in the breach of, or constitute, either by
itself or upon notice or the passage of time or both, a default
under, any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument known to such
counsel to which the Company is a party or by which the Company
may be bound or affected which is material to the Company;
violate any of the provisions of the partnership certificate,
partnership agreement, charter or bylaws, or other organizational
documents, as applicable, of the Company, in each case except as
would not have a Material Adverse Effect;
(7) Except for the Selling Stockholders and except as
otherwise set forth in the Prospectus, no holders of securities
of the Company have rights to register shares of Common Stock or
other securities because of the filing of the Registration
Statement by the Company or the
offering or other transactions contemplated hereby; and
(8) The Company will not be an "investment company" within
the meaning of the 1940 Act;
Such counsel shall also include a statement to the effect that
nothing has come to such counsel's attention that would lead such
counsel to believe that either at the effective date of the
Registration Statement or at the applicable Closing Date the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, contains any untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, it being
understood that, in addition to the matters excluded in paragraph
(b)(i) above, such counsel express no belief as to the financial
statements, schedules and other financial and statistical data
included in the Registration Statement or Prospectus or in the
exhibits to the Registration Statement.
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of the Company and the Significant
Subsidiaries, officers of the Company and the Significant
Subsidiaries, and governmental officials, in which case their opinion
is to state that they are so doing and that the Underwriters are
justified in relying on such opinions or certificates and copies of
each of said opinions or certificates are to be attached to the
opinion.
(ii) An opinion of Ballard, Spahr, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, local
counsel for the Company, on matters of Maryland law, addressed to the
Underwriters and dated the First Closing Date, or the Second Closing
Date, as the case may be, to the effect that:
(1) The Company has been duly formed and is validly
existing as a corporation, is in good standing under the laws of
the State of Maryland, and is duly qualified to do business as a
foreign corporation and is in good standing in those
jurisdictions where the conduct of the Company's business
requires it to be qualified, and has the requisite corporate
power and authority to own its Resorts and conduct its business
as described in the Registration Statement;
[(2) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus; all outstanding
shares of Common Stock (including the Common Shares), have been
duly and validly issued, are fully paid and nonassessable, have
been issued in compliance with federal and state securities laws,
were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase any
securities; and the certificates representing the Common Shares
to be delivered hereunder are in due and proper form under
Maryland law, and when duly countersigned by the Company's
transfer agent and registrar, and delivered to you or upon your
order against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement, the Common
Shares represented thereby will be duly authorized and validly
issued, fully paid and nonassessable, will not have been issued
in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities granted under the
laws of the State of Maryland, the Articles of Incorporation or
Bylaws of the Company or any agreement or instrument filed with
the Commission as an exhibit to the Registration Statement; and
will conform in all material respects to the description thereof
contained in the Registration Statement;]
(3) The information set forth in the Prospectus under the
headings "Description of
Capital Stock", "Certain Provisions of Maryland Law and of the
Company's Charter and Bylaws" and "Shares Eligible for Future
Sale" to the extent that such information constitutes matters of
Maryland law or legal conclusions involving Maryland law, has
been reviewed by such counsel and is correct in all material
respects.
(ii) Opinions of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ and/or
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, each a special real estate and timeshare
counsel for the Company, addressed to the Underwriters and dated as of
the First Closing Date, or the Second Closing Date, which opinions
shall state to the effect that (it being understood that such counsel
shall only have to opine as to the laws of the jurisdictions in which
it is duly licensed to pratice law in):
(1) The Company has obtained the material approvals and
permits from the timeshare authority of the state in which the
subject Resort is located ("Home State") necessary to offer for
sale and sell timeshare interests and offer purchase money
financing in connection with such sales ("Home State Approvals")
in accordance with the applicable laws and regulations of the
state in which the Resort is located specifically governing the
marketing and sale of timeshare interests in real property ("Home
State Timeshare Laws");
(2) All of the permits and/or approvals issued by timeshare
authorities of states other than the state where each applicable
Resort is located ("Foreign State") for the offering for sale and
sale of timeshare interests in such Resort (collectively, the
"Foreign State Approvals"), constitute the material approvals and
permits necessary to be issued by such Foreign State to permit
the offering for sale and sale of timeshare interests in such
Resort in accordance with the laws and regulations of the Foreign
State specifically governing the offering for sale and sale of
timeshare interests in real property located outside of the
Foreign State ("Foreign State Timeshare Laws");
(3) To such counsel's knowledge and based upon its review of
certificates and letters from state timeshare authorities, the
Company and other
pertinent parties (collectively, "Reliance Certificates and
Letters"), the Company has not received any written notice from
any regulatory authority that it is in violation of any
applicable federal or state law or regulation regarding the
offering for sale and sale of timeshare interests in the Existing
Resorts, the violation of which would have a Material Adverse
Effect on the ownership or operation of the Existing Resorts;
(4) To such counsel's knowledge, there are no material
franchises, licenses, leases, contracts, agreements or other
documents (collectively, the "Material Agreements") entered into
by the Company outside the ordinary course of business, which
involve matters relating to the ownership, purchase money
financing and/or use of real property and/or the offering for
sale or sale of timeshare interests in the Existing Resorts,
which are of a character required to be disclosed in the
Registration Statement or to be filed as exhibits to the
Registration Statement which are not disclosed or filed;
(5) To such counsel's knowledge and based upon such
counsel's review of Reliance Certificates and Letters, there are
no real estate or timeshare related governmental actions,
governmental suits or governmental proceedings pending or
threatened against the Company with respect to the business and
property relating to the Existing Resorts except (a) those which
have been disclosed in the Registration Statement, and (b) those
which would not have a Material Adverse Effect;
(6) The consummation by the Company of the transactions
contemplated by the Underwriting Agreement do not require the
consent, approval, authorization, registration or qualification
of (i) any governmental agency or authority of the timeshare
authority of the states where each of the Existing Resorts are
located, (ii) any lender which has a recorded security interest
in the Existing Resorts, (iii) Westin Hotels & Resorts or any
related entities under that certain agreement by and between W &
S
Hotel L.L.C. and Argosy/Koar Group, Inc., dated May 3, 1996
("Westin Agreement"), (iv) Promus Hotels, Inc. (or any subsidiary
or affiliate of Promus Hotels, Inc.) under any Licensee
Agreements and Management Agreements with Promus Hotels, Inc. (or
any of its subsidiaries or affiliates) (collectively, the
"Embassy License Agreements and Management Agreements"), except
those which have been obtained and are in full force and effect
and those as to which the failure to so obtain would not have a
Material Adverse Effect;
(7) The consummation by the Company of the transactions
contemplated by the Underwriting Agreement as they relate to the
Existing Resorts do not conflict with or result in a material
breach or violation by the Company of: (i) any of the terms and
provisions of any loans which encumber the Existing Resorts, (ii)
any terms or provisions of the Home State Approvals where each of
the Existing Resorts are located; (iii) any terms or provisions
of the Foreign State Approvals; (iv) the Westin Agreement; (v)
the Embassy License Agreements and Management Agreements, or if
such transactions would have constituted such a breach, violation
or default had the necessary consents or approvals not been
obtained, consents or approvals have been obtained and are in
full force and effect;
(8) The owner of each of the Existing Resorts, if required
by law, has obtained a brokerage or sales license from the state
timeshare authority in order to offer purchase money financing in
connection with the sale of timeshare interests in the applicable
Resorts. The owner of each of the Existing Resorts, if required
by law, has obtained a brokerage or sales license from the state
timeshare authority in order to offer for sale and sell timeshare
interests in the State of California or has contracted with a
licensed broker to provide any of the aforementioned services;
and
(9) A statement to the effect that 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 and has not made any
independent check or verification thereof, during the course of
such participation (relying as to the factual matters upon the
Reliance Certificates and Letters), no facts came to the
Counsel's attention that have caused it to believe that the
Registration Statement at the time it became effective and as of
the date hereof or the Prospectus 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
in light of the circumstances under which they were made, not
misleading; provided, however, that this statement is limited
solely to the statements or omissions relating to (i)
indebtedness secured by the Existing Resorts (it being understood
that the counsel's review of the Registration Statement has been
limited to legal and other non-financial matters with respect
thereto), (ii) ownership of the Existing Resorts (it being
understood that our review thereof has been limited to the review
of certain title reports), (iii) regulation by each Home State
and each Foreign State with respect to the issuance of the Home
State Approvals and the Foreign State Approvals, (iv) the
Property Partnerships' and the Company's contractual
relationships with Promus or Westin, and (v) the statements in
the Prospectus under the caption "Business - Governmental
Regulation," to the extent that such information constitutes
matters of law or legal conclusions as it pertains to the
ownership, operation, sale and
offering of sale of timeshare interests in the Existing Resorts;
In rendering such opinions, each such counsel may rely as to
matters of local law, on opinions of local counsel, and as to
matters of fact, on certificates of officers of the Company as
applicable, and of governmental officials, in which case their
opinion is to state that they are doing so and certificates and
copies of each of said opinions or certificates are attached to
the opinion.
(iii) Opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, in addition to the
opinion set forth above in section 8(c)(ii), as counsel for the
Company in connection with the Merger Agreement, addressed to the
Underwriters and dated as of the First Closing Date, or the Second
Closing Date, which opinions shall state to the effect that:
(1) The Company had the corporate power and authority to
enter into the Merger Agreement and to consummate the
transactions contemplated therein; the Merger Agreement has been
duly and validly authorized by all necessary action by the
Company, has been duly and validly executed and delivered by and
on behalf of the Company, and is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and except as to those
provisions relating to indemnity or contribution for liabilities
arising under the Act as to which no opinion need be expressed;
(2) The registration statement and the prospectus filed
with the Commission on November 20, 1996, and the Merger
Agreement were duly and validly authorized by all necessary
action by the Company and conformed in all material respects with
the applicable requirements for registration statements on Form
S-4 under the Act and the Rules and Regulations.
(iv) Such opinion or opinions of O'Melveny & ▇▇▇▇▇ LLP, counsel
for the Underwriters, dated the First Closing Date or the Second
Closing Date, as the case
may be, with respect to the formation of the Company and other legal
matters relating to this Agreement, the validity of the Common Shares,
the Registration Statement and the Prospectus and other related
matters as you may reasonably require, and the Company shall have
furnished to such counsel such documents and shall have exhibited to
them such papers and records as they may reasonably request for the
purpose of enabling them to pass upon such matters. In connection with
such opinions, such counsel may rely on representations or
certificates of officers of the Company and governmental officials, as
applicable.
(v) A certificate of the Company, executed by the Chairman of
the Board or President and the chief financial or accounting officer
of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that:
(1) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of
the date of this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied with each of the agreements and satisfied all of the
conditions on its part to be performed or satisfied on or prior
to such Closing Date;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and to the knowledge
of the Company no proceedings for that purpose have been
instituted or are pending or contemplated under the Act;
(3) Each of the respective signers of each certificate has
carefully examined the Registration Statement and the Prospectus;
in his opinion and to the knowledge of the Company, the
Registration Statement and the Prospectus and any amendments or
supplements thereto contain all
statements required to be stated therein; and neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided, however, that such certificate does not
require any representation concerning statements in, or omissions
from, the Registration Statement or Prospectus, which are based
upon and conform to information furnished by the Underwriters
pursuant to Section 5 hereof;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction
or event has occurred which should have been set forth in an
amendment to the Registration Statement or in a supplement to or
amendment of any prospectus which has not been disclosed in such
a supplement or amendment;
(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and
except as specifically disclosed in or contemplated by the
Prospectus and except for Note Offering, there has not been any
Material Adverse Change or a development involving a Material
Adverse Change; and no legal or governmental action, suit or
proceeding is pending or threatened against the Company, or, to
the knowledge of the Company, any of the Existing Resorts which
would have a Material Adverse Effect; since such dates and except
as so disclosed, the Company has not entered into any verbal or
written agreement or other transaction which is not in the
ordinary course of business, incurred any liability or
obligation, direct, contingent or indirect, made any change in it
capital stock, made any change in its short-term debt or funded
debt or repurchased or otherwise acquired any of the Company's
capital stock which could be reasonably expected to have a
Material Adverse Effect; and the Company has not declared or paid
any dividend, or made any other distribution (other than
dividends or distributions paid to shareholders to satisfy tax
liabilities), upon its capital stock payable to shareholders of
record on a date prior to the First Closing Date or the Second
Closing Date, as the case may be; and
(6) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and except
as disclosed in or contemplated by the Prospectus, none of the
Resorts has sustained a material loss or damage by strike, fire,
flood, windstorm, hurricane, typhoon, accident or other calamity
(whether or not insured).
(vi) On the date that this Agreement is executed and also on
the First Closing Date and the Second Closing Date a letter addressed
to you, as Representatives of the Underwriters, from E & Y and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, as applicable, independent accountants, the first one to be
dated the day of this Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a Second Closing) to
be dated the Second Closing Date, in form and substance satisfactory
to the Representatives, to the effect that:
(1) E & Y and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ are independent certified
public accountants with respect to the Company within the meaning
of the Act and the Rules and Regulations;
(2) It is their opinion that the financial statements,
historical summaries and any supplementary financial information
and supporting schedule included in the Registration Statement
and the Prospectus examined by them comply as to form in all
material respects with the applicable accounting requirements of
the Act and the Rules and Regulations;
(3) The financial statements of each of the Existing
Resorts for the three years ended December 31, 1995 and the nine
months ended September 30, 1996 and the nine months ended
September 30, 1995, to the extent applicable, were reviewed by
them in
accordance with the standards established by the American
Institute of Certified Public Accountants and based upon their
review they are not aware of any material modifications that
should be made to such financial statements or historical
summaries for them to be in conformity with generally accepted
accounting principles currently in effect in the United States
and such financial statements comply as to form in all material
respects with the applicable requirements of the Act and the
Rules and Regulations;
(4) Based upon procedures set forth in detail in such
letter, including a reading of the latest available interim
financial statements of the Company and inquiries of officials of
the Company responsible for financial and accounting matters,
nothing has come to their attention which causes them to believe
that:
(a) the unaudited financial information with respect to the
results of operations for and at the end of each of the three
years (or such lesser period, if applicable) in the period ended
December 31, 1995 and any subsequent quarters included in the
Registration Statement under the captions "Summary" and "Selected
Combined Historical Financial Information of the Company" do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations
or are not presented in conformity with generally accepted
accounting principles currently in effect in the United States
applied on a basis substantially consistent with that of the
audited financial statements included in the Registration
Statement, or do not agree with the corresponding amounts in the
audited financial statements for each of the years then ended, or
that with respect to the unaudited pro forma financial
statements, such financial statements do not comply as to form in
all material respects with the applicable accounting requirements
of the Act and the Rules and Regulations and the pro forma
adjustments have
not been properly applied to the historical amounts in the
compilation of such statements, or
(b) at a specified date not more than five days prior to the
date of this Agreement, other than changes resulting from the
offering and sale of the Notes or the Merger Agreement, (i) there
has been any change in the assets or shareholders' equity of the
Company as compared with the amounts shown in the September 30,
1996 balance sheet of the Company included in the Registration
Statement, (ii) there has been any increase in indebtedness or
other liabilities related to the Existing Resorts as compared
with the amounts shown in the September 30, 1995 historical or
pro forma balance sheets related to the Existing Resorts or
during the period September 30, 1996 to a specified date not more
than five days prior to the date of this Agreement, or (iii)
there were any decreases, as compared with the corresponding
period in the preceding year, in combined revenues or net income
of the Existing Resorts, except in all instances for changes,
increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur; and
(5) In addition to the examination referred to in their
opinions and the procedures referred to above, they have carried
out certain specified procedures, not constituting an audit, with
respect to certain amounts, percentages and financial information
which are included in the Registration Statement and Prospectus
and which were specified by you, and have found such amounts,
percentages and financial information to be in agreement with, or
derived from, the relevant accounting, financial and other
records of the Company and each of the Property Partnerships.
(d) The Firm Common Shares and the Option Common Shares shall have
been approved for listing on the Nasdaq National Market, subject to
official notice of issuance, and the NASD, upon review of the terms of the
public offering, shall not have objected to such offering, such terms or
the Underwriters' participation in the same.
(e) The Company shall have furnished to you such further certificates
and documents as you shall have reasonably requested.
(f) There shall have been delivered to you the Firm Common Shares
and, if any Option Common Shares are purchased, the Option Common Shares in
the manner required pursuant to Section 6 hereof.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to O'Melveny & ▇▇▇▇▇ LLP, counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you request. Any certificate signed by
any 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 the Underwriters as to each of the statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representatives to the Company and the Selling Stockholders without liability on
the part of any Underwriter, the Company or the Selling Stockholders, except for
the expenses to be paid or reimbursed by the Company pursuant to Sections 8 and
10 hereof and except to the extent provided in Section 12 hereof.
SECTION 10. Reimbursement of Underwriters' Expenses. Notwithstanding
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any other provisions hereof, if this Agreement shall be terminated by you
pursuant to Section 15, or if the sale to the Underwriters of the Common Shares
at the First Closing is not consummated because of any willful refusal,
inability or failure on the part of the Company or any Selling Stockholder to
perform any agreement herein or to comply with any provision hereof without
reasonable justification therefor, the Company agrees to reimburse you and the
other Underwriters upon demand for all out-of-pocket expenses that shall have
been reasonably incurred by you and them in connection with the proposed
purchase and the sale of the Common Shares, including but not limited to fees
and disbursements of counsel relating directly to the offering contemplated by
the Prospectus. Any such termination shall be
without liability of any party to any other party except that the
provisions of this Section 10, Section 8 and Section 12 shall at all times be
effective and shall apply.
SECTION 11. Effectiveness of Registration Statement. You and the
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Company will use your and its best efforts to cause the Registration
Statement to become effective, to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement and, if such stop
order be issued, to obtain as soon as possible the lifting thereof.
SECTION 12. Indemnification. (a) The Company agrees to indemnify
---------------
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act against any losses, claims, damages,
liabilities or expenses, joint or several, to which such Underwriter or such
controlling person may become subject, under the Act, the Exchange Act or other
federal, state or Canadian statutory laws or regulations, 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 losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in any of them not misleading, or arise out
of or are based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained herein or any failure of the Company to
perform its obligations hereunder or under law and will reimburse each
Underwriter and each such controlling person for any legal and other expenses 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 Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or as a result of or any amendment or
supplement thereto in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 5 hereof; and provided the
indemnity agreement contained in this Section 12(a) shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages, liabilities or expenses purchased the Common Shares concerned
to the extent that any such loss, claim, damage liability or expense of such
Underwriter results from the fact that a copy of the Prospectus was not sent or
given to such person at or prior to the written confirmation of sale of such
Common Shares to such person as required by the Act. In addition to their other
obligations under this Section 12(a) the Company agrees that they will reimburse
expenses as provided in this Section 12(a) as incurred, but no less frequently
than quarterly, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligations to reimburse each
Underwriter for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, each Underwriter shall promptly return it to the Company together with
interest, compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by Bank of America NT&SA, San Francisco, California (the
"Prime Rate"). Any such interim reimbursement payments which are not made to an
Underwriter within 30 days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, each person, if any, who controls the Company within the meaning of
the Act, against any losses, claims, damages, liabilities or expenses to which
the Company, any such director,
officer, or controlling person may become subject under the Act, the Exchange
Act or other federal or state statutory laws or regulations, 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 losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, 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 the information furnished to the Company pursuant to
Section 5 hereof; and will reimburse the Company, or any such director, officer
or any controlling person of the Company for any legal and other expense
reasonably incurred by the Company, any such director, officer or controlling
person of the Company in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its other obligations under this Section 12(b), each
Underwriter severally agrees that it will reimburse expenses as provided in this
Section 12(b) as incurred, but no less frequently than quarterly,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters, obligation to reimburse the Company (and, to
the extent applicable, each officer, director or controlling person of the
Company) for such expenses and the possibility that such payments might later be
held to have been improper by a court of competent jurisdiction. To the extent
that any such interim reimbursement payment is so held to have been improper,
the Company (and, to the extent applicable, each officer, director or
controlling person of the Company) shall promptly return it to the Underwriters
together with interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made within 30 days
of a request for reimbursement, shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
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, notify the indemnifying party in writing of the commencement thereof;
but the omission to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise under the indemnity agreement contained in this Section 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 may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, that 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 there may be a conflict 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 its 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 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 such counsel in
connection with the assumption of legal defenses 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 representing all indemnified parties who are parties to such
action or set of related actions) or (ii) the indemnifying party shall not have
employed counsel reasonably 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) If the indemnification provided for in this Section is required by
its terms, but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under Sections 12(a), 12(b)
or 12(c) hereof in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any losses, claims, damages, liabilities or expenses referred to herein (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Underwriters from the offering of the Common Shares 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 Underwriters 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 respective relative benefits received by
the Company and the Underwriters shall be deemed to be in the same proportion,
in the case of the Company as the total price paid to the Company for the Common
Shares sold by it to the Underwriters (net of underwriting commissions, but
before deducting expenses), and in the case of the Underwriters as the
underwriting commissions received by them bears to the total of such amounts
paid to the Company and received by the Underwriters as underwriting
commissions. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact or the inaccurate or the alleged inaccurate representation
and/or warranty relates to information supplied by the Company or the
Underwriters 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 (c) of this Section, 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 (c) of this
Section with respect to notice of commencement of any action shall apply if a
claim for contribution is to be made under this Section (d); provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section (c) of this Section for purposes of
indemnification. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section were determined
solely 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 the immediately
preceding paragraph. Notwithstanding the provisions of this Section, no
Underwriter shall be required to contribute any amount in excess of the amount
of the total 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 misrepresentation (within the meaning of Section
11(f) of the 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 are several in proportion to their
respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 12(a) or 12(b)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Constitution and Rules of the Board of Governors of
the New York Stock Exchange, Inc. or pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by service of a
written demand for arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 12(a) and 12(b)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 12(a) or 12(b) hereof.
SECTION 13. Default of Underwriters. It shall be a condition to this
-----------------------
Agreement and the obligation of the Company and each of the Selling Stockholders
to sell and deliver the Common Shares hereunder, and of each Underwriter to
purchase the Common Shares in the manner as described herein, that, except as
hereinafter in this Section provided, each of the Underwriters shall purchase
and pay for all the Common Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representatives of all such shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in its or
their obligations to purchase the Common Shares hereunder on either the First or
Second Closing Date and the aggregate number of Common Shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Closing Date does not exceed 10% of the total number of Shares which the
Underwriters are obligated to purchase on such Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Common Shares which such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of Common Shares
with respect to which such default occurs is more than 10% of the total number
of Common Shares which the Underwriters are obligated to purchase on such
Closing Date, and arrangements satisfactory to the Representatives and the
Company for the purchase of such Common Shares or Notes by other persons are not
made within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriters, the Company or the
Selling Stockholders except for the expenses to be paid by the Company and the
Selling Stockholders pursuant to Section 8 hereof and except to the extent
provided in Section 12 hereof.
In the event that the Common Shares to which a default relates are to
be purchased by the non-defaulting Underwriters or by another party or parties,
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, for not more than
five business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
SECTION 14. Effective Date. This Agreement shall become effective
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immediately as to Sections 8, 10, 12, 15 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 P.M., California time, on the first full business
day following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section 14, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising Underwriters that the Common Shares are released for public offering or
(ii) offering the Common Shares for sale to securities dealers, whichever may
occur first.
SECTION 15. Termination. Without limiting the right to terminate
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this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Stockholders or by you by notice to the Company and the
Selling Stockholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company and the Selling
Stockholders to any Underwriter (except for the expenses to be paid or
reimbursed by the Company pursuant to Sections 8 and 10 hereof and except
to the extent provided in Section 12 hereof) or of any Underwriter to the
Company and the Selling Stockholders (except to the extent provided in
Section 12 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over
the counter market by the NASD, or trading in securities generally shall
have been suspended on either such Exchange or in the over the counter
market by the NASD, or a general banking moratorium shall have been
established by federal, New York or California authorities; (ii) if an
outbreak of major hostilities or other national or international calamity
or any substantial change in political, financial or economic conditions
shall have occurred or shall have accelerated or escalated to such an
extent, as, in the judgment of the Representatives, to affect adversely the
marketability of the Common Shares; (iii) if any adverse event shall have
occurred or shall exist which makes untrue or incorrect in any material
respect any statement or information contained in the Registration
Statement or Prospectus or which is not reflected in the Registration
Statement or Prospectus but should be reflected therein in order to make
the statements or information contained therein not misleading in any
material respect; or (iv) if there shall be any action, suit or proceeding
pending or threatened, or there shall have been any development involving
particularly the business or properties or securities of the Company or the
transactions contemplated by this Agreement, which, in the reasonable
judgment of the Representatives, may materially and adversely affect the
Company's business or earnings and makes it impracticable or inadvisable to
offer or sell the Common Shares. Any termination pursuant to this Section
15(b) shall be without liability on the part of any Underwriter to the
Company or the Selling Stockholders or on the part of the Company or the
Selling Stockholder to any Underwriter (except for expenses to be paid or
reimbursed by the Company and the Selling Stockholders pursuant to Sections
8 and 10 hereof and except to the extent provided in Section 12 hereof).
SECTION 16. Failure of the Selling Stockholders to Sell and Deliver.
--------------------------------------------------------
If any of the Selling Stockholders shall fail to sell and deliver to the
Underwriters the Common Shares to be sold and delivered by such Selling
Stockholder under the terms of this Agreement, then the Underwriters may at
their option, by written notice from you to the Company and such Selling
Stockholder, either (i) terminate this Agreement without any liability on the
part of any Underwriter or, except as provided in Sections 8, 10 and 12 thereof,
the Company or the Selling Stockholders, or (ii) purchase the shares which the
Company and the non-defaulting Selling Stockholders have agreed to sell and
deliver in accordance with the terms hereof. In the event of a
failure by a Selling Stockholder to sell and deliver as referred to in this
Section, either you or the company shall have the right to postpone the Closing
Date for a period not exceeding seven business days in order that the necessary
changes in the Registration Statement, the Prospectus and any other documents,
as well as any other arrangements, may be effected.
SECTION 17. Representations and Indemnities to Survive Delivery. The
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respective indemnities, agreements, representations, warranties and other
statements of the Company, of the Company's officers, of the Selling
Stockholders 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 Stockholders 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 18. Notices. All communications hereunder shall be in
-------
writing and, if sent to the Representatives shall be mailed, delivered,
telecopied or telegraphed and confirmed to ▇▇▇▇▇▇▇▇▇▇ Securities at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Telecopier: (415) 249-
5513, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ with a copy to O'Melveny & ▇▇▇▇▇ LLP, Embarcadero Center West ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.; and if sent to the Company or the Selling
Stockholders shall be mailed, delivered or telegraphed and confirmed to the
Company or the Selling Stockholder, as applicable at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇., Esq. The Company, the Selling Stockholder
or you may change the address for receipt of communications hereunder by giving
notice to the others.
SECTION 19. Successors. This Agreement will inure to the benefit of
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and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 13 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 13, and in each case their
respective successors, personal representatives and assigns, and no other
person will have any right or obligation hereunder. No such assignment shall
relieve any party of its obligations 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 20. Underwriters' Representatives. You will act as
-----------------------------
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you, as
Representatives, will be binding upon all of the Underwriters.
SECTION 21. Partial Unenforceability. The invalidity or
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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.
SECTION 22. Applicable Law. This Agreement shall be governed by and
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construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 23. Knowledge. As used in this Agreement, the term knowledge
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or best knowledge on the part of an entity shall include the knowledge of such
entity's officers and any other employees with managerial responsibilities and
such entity shall only make such statement after conducting a diligent
investigation on the subject matter thereof.
SECTION 24. General. This Agreement constitutes the entire agreement
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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 may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholder and you.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement among the Company, the Selling Stockholders and
the several Underwriters, including you, all in accordance with its terms.
[Signature Page to Follow]
Very truly yours,
SIGNATURE RESORTS, INC.
By:___________________________
Its______________________
______________________________
As Attorney-In-Fact for each of the Selling
Stockholders named in the attached Schedule A
The foregoing Underwriting Agreement is hereby
confirmed and accepted by us in San Francisco,
California as of the date first above written.
▇▇▇▇▇▇▇▇▇▇ SECURITIES
▇▇▇▇▇▇▇, SACHS & CO.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By: ▇▇▇▇▇▇▇▇▇▇ SECURITIES
By:________________________
Managing Director
SCHEDULE A
Number of Shares
Selling Stockholder to be Sold
------------------- ----------------
SCHEDULE B
Amount of
Securities
to be
Underwriter Purchased
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▇▇▇▇▇▇▇▇▇▇ Securities [_______]
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. [_______]
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. [_______]