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Exhibit 1
SHOLODGE, INC.
$35,000,000
__% Senior Subordinated Notes Due 2006, Series A
UNDERWRITING AGREEMENT
[ ], 1996
▇.▇. ▇▇▇▇▇▇▇▇ & CO., L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
INTERSTATE/▇▇▇▇▇▇▇ ▇▇▇▇ CORPORATION
As Representatives of the Several Underwriters
c/o ▇.▇. ▇▇▇▇▇▇▇▇ & Co., L.L.C.
J.C. Bradford Financial Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
ShoLodge, Inc., a Tennessee corporation (the "Company"), proposes to
sell to the underwriters named in Schedule I hereto (the "Underwriters") for
whom you are acting as the representatives (the "Representatives") an aggregate
$35,000,000 in principal amount of its __% Senior Subordinated Notes Due 2006,
Series A (the "Firm Notes"). The Firm Notes are to be sold to the Underwriters,
acting severally and not jointly, in such amounts as are set forth in Schedule I
hereto opposite the name of such Underwriter. The Company also proposes to grant
to the Underwriters an option to purchase up to $5,250,000 in principal amount
of ___% Senior Subordinated Notes Due 2006, Series A of the Company as provided
for in Section 2 of this Agreement (the "Option Notes"). The Firm Notes and the
Option Notes purchased pursuant to this Agreement are herein called the "Notes."
The Notes are to be issued pursuant to an Indenture, to be dated as of [ ]
, 1996, between the Company and Bankers Trust Company, New York, New York as
trustee (the "Trustee"). Such Indenture, as amended and supplemented, is herein
referred to as the "Indenture."
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
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(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), a registration statement on Form S-3
(Registration No.333-_______), including the related preliminary
prospectus, preliminary prospectus supplement and a Statement of
Eligibility on Form T-1 with respect to the Trustee (File No.
22-_______) pursuant to the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), has filed such amendment thereto, if any,
and such amended preliminary prospectuses and amended preliminary
prospectus supplements as may have been required to the date hereof,
and will file such additional amendments thereto and such amended
prospectuses and prospectus supplements as may hereafter be required,
relating to the Notes. The Company has met all of the eligibility
requirements for the use of a registration statement on Form S-3.
Copies of such registration statement and any amendments, including any
post-effective amendments, and all forms of the related prospectuses
and prospectus supplements contained therein, any supplements thereto
and all documents incorporated by reference therein, have been
delivered to you. Such registration statement, including the
prospectus, prospectus supplement, Part II, all financial schedules and
exhibits thereto, all documents incorporated therein by reference, and
all information deemed to be a part of such Registration Statement
pursuant to Rule 430A under the Securities Act, as amended at the time
when it shall become effective, and any related registration statement
that is to be effective upon filing filed pursuant to Rule 462(b) is
herein referred to as the "Registration Statement," and the prospectus
and prospectus supplement included as part of the Registration
Statement on file with the Commission that discloses all the
information that was omitted from the prospectus on the effective date
pursuant to Rule 430A of the Rules and Regulations (as defined below)
and in the form filed pursuant to Rule 424(b) under the Securities Act
is herein referred to as the "Final Prospectus." The prospectus and
prospectus supplement included as part of the Registration Statement,
together with all documents incorporated by reference therein, on the
date when the Registration Statement became effective is referred to
herein as the "Effective Prospectus." Any prospectus and prospectus
supplement included in the Registration Statement and in any amendment
thereto prior to the effective date of the Registration Statement,
together with all documents incorporated by reference therein, is
referred to herein as a "Preliminary Prospectus." For purposes of this
Agreement, "Rules and Regulations" means the rules and regulations
promulgated by the Commission under either the Securities Act, or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
the Trust Indenture Act, as applicable.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus, at the time of filing thereof, complied with the
requirements of the Securities Act and the Rules and Regulations, and
did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; except that the foregoing does
not apply to statements or omissions made in reliance upon and in
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conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that the
only information so provided is the information included in the last
paragraph on the cover page and under the caption "Underwriting" in the
Final Prospectus). When the Registration Statement becomes effective
and at all times subsequent thereto up to and including the First
Closing Date (as hereinafter defined), (i) the Registration Statement,
the Effective Prospectus and Final Prospectus and any amendments or
supplements thereto will contain all statements which are required to
be stated therein in accordance with the Securities Act, the Exchange
Act, the Trust Indenture Act and the Rules and Regulations and will
comply with the requirements of the Securities Act, the Exchange Act,
the Trust Indenture Act and the Rules and Regulations, and (ii) neither
the Registration Statement, the Effective Prospectus nor the Final
Prospectus nor any amendment or supplement thereto will include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they are made, not
misleading; except that the foregoing does not apply to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically
for use therein (it being understood that the only information so
provided is the information included in the last paragraph on the cover
page and under the caption "Underwriting" in the Final Prospectus) or
information contained in the Statement of Eligibility and Qualification
on Form T-1 of the Trustee other than information furnished to the
Trustee by the Company specifically for inclusion therein.
(c) The Company and each subsidiary of the Company (as defined
herein, the term "subsidiary" includes any corporation, joint venture
or partnership in which the Company or any subsidiary of the Company
has an ownership interest) is duly organized and validly existing and
in good standing under the laws of the respective jurisdictions of
their organization or incorporation, as the case may be, with full
power and authority (corporate, partnership and other, as the case may
be) to own, lease and operate their properties and conduct their
businesses as now conducted and are duly qualified or authorized to do
business and are in good standing in all jurisdictions wherein the
nature of its business or the character of property owned or leased may
require it to be qualified or authorized to do business. The Company
and its subsidiaries hold all licenses, consents and approvals, and
have satisfied all eligibility and other similar requirements imposed
by federal and state regulatory bodies, administrative agencies or
other governmental bodies, agencies or officials, in each jurisdiction
in which the Company has an office and any other jurisdiction in which
such license, consent, approval or requirement is material to the
conduct of the business in which it is engaged.
(d) The outstanding shares of capital stock of the Company and
its corporate subsidiaries have been duly authorized and validly
issued, fully paid and nonassessable and were not issued in violation
of any preemptive or similar rights.
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All of the outstanding stock of each of the Company's corporate
subsidiaries is owned by the Company, clear of any lien, encumbrance,
pledge, equity or claim of any kind. The partnership and joint
venture interests of each partnership and joint venture subsidiary are
duly authorized, validly issued, and are owned by the Company,
directly or indirectly, clear of any lien, encumbrance, pledge, equity
or claim of any kind, except as may be set forth in the respective
partnership or joint venture agreement.
(e) The capitalization of the Company as of [July 14], 1996 is
as set forth under the caption "Capitalization" in the Effective
Prospectus and the Final Prospectus. The Notes have been duly and
validly authorized and, when executed, authenticated and delivered in
accordance with the Indenture and paid for by the Underwriters pursuant
to this Agreement and the Indenture, will constitute legal and binding
obligations of the Company entitled to the benefits of the Indenture
and will conform in all material respects to the description thereof
contained in the Effective Prospectus and the Final Prospectus. The
Underwriters will receive good and marketable title to the Notes to be
issued and delivered hereunder, free and clear of all liens,
encumbrances, claims, security interests, and restrictions, whatsoever.
(f) The Company has full legal right, power and authority to
enter into this Agreement and the Indenture and to sell and deliver the
Notes to be issued and sold by the Company to the Underwriters as
provided herein, and this Agreement and the Indenture have been duly
authorized, executed and delivered by the Company and constitute valid
and binding agreements of the Company enforceable against the Company
in accordance with their terms. No consent, approval, authorization or
order of any court or governmental agency or body or third party is
required for the performance of this Agreement or the Indenture by the
Company or the consummation by the Company of the transactions
contemplated hereby or thereby, except such as have been obtained and
such as may be required by the National Association of Securities
Dealers, Inc. ("NASD") or under the Securities Act, the Trust Indenture
Act or state securities or Blue Sky laws in connection with the
purchase and distribution of the Notes by the Underwriters. The issue
and sale of the Notes by the Company, the Company's performance of this
Agreement and the Indenture and the consummation of the transactions
contemplated hereby and thereby will not result in a breach or
violation of, or conflict with, any of the terms and provisions of, or
constitute a default by the Company or any of its subsidiaries under,
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or to which the Company or any of its subsidiaries or any of
their respective properties is subject, the charter or by-laws of the
Company or any of its corporate subsidiaries or the partnership or
joint venture agreements of any partnership or joint venture
subsidiary or any statute or any judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to
the Company or
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any of its subsidiaries or any of their respective properties. Neither
the Company nor any of its subsidiaries is in violation of its
respective charter, certificate of incorporation, partnership agreement
or joint venture agreement, as the case may be, or by-laws or any law,
administrative rule or regulation or arbitrators' or administrative or
court decree, judgment or order or in violation or default (there being
no existing state of facts which with notice or lapse of time or both
would constitute a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, deed of trust, mortgage, loan agreement, note, lease,
agreement or other instrument or permit to which it is a party or by
which it or any of its properties is or may be bound, except such
violation or defaults which in the aggregate would not be material to
the Company and its subsidiaries taken as a whole.
(g) The consolidated financial statements and the related
notes of the Company included or incorporated by reference in the
Registration Statement, the Effective Prospectus and the Final
Prospectus present fairly the consolidated financial position, results
of operations and changes in financial position and cash flow of the
Company and its subsidiaries, at the dates and for the periods to which
they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout
the periods indicated. The other financial statements and schedules
included or incorporated by reference in or as schedules to the
Registration Statement conform to the requirements of the Securities
Act, the Exchange Act, the Trust Indenture Act and the Rules and
Regulations and present fairly the information presented therein for
the periods shown. The financial and statistical data set forth in the
Effective Prospectus and the Final Prospectus under the captions
"Prospectus Summary," "Use of Proceeds," "Capitalization," "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and "Business" fairly
presents the information set forth therein on the basis stated in the
Effective Prospectus and the Final Prospectus. Deloitte & Touche LLP,
which has examined certain of the financial statements and schedules as
set forth in its reports incorporated by reference into the
Registration Statement, Effective Prospectus and the Final Prospectus,
are independent accountants as required by the Securities Act and the
Rules and Regulations.
(h) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, and Quarterly Reports on Form 10-Q for
the fiscal quarters ended April 21, 1996 and July 14, 1996, at the time
of filing with the Commission, conformed in all material respects to
the requirements of the Securities Act and the Exchange Act and
the Rules and Regulations and none of such documents or statements
contained any untrue statement of a material fact or omitted to state
a 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.
(i) Subsequent to December 31, 1995, neither the Company nor
any of its subsidiaries has sustained any material loss or interference
with its business or properties
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from fire, flood, hurricane, earthquake, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree, which is not disclosed in the
Effective Prospectus and the Final Prospectus; and subsequent to the
respective dates as of which information is given in the Registration
Statement, the Effective Prospectus and the Final Prospectus, (i)
neither the Company nor any of its subsidiaries has incurred any
material liabilities or obligations, direct or contingent, or entered
into any material transactions not in the ordinary course of business,
and (ii) there has not been any material change in the capital stock,
partnership interests, joint venture interests, long-term debt, credit
facilities, obligations under capital leases or short-term borrowings
of the Company or any of its subsidiaries, or any material adverse
change, or any development involving a prospective material adverse
change, in the general affairs, management, business, prospects,
financial position, net worth or results of operations of the Company
or any of its subsidiaries, except in each case as described in or
contemplated by the Effective Prospectus and the Final Prospectus.
(j) There are no legal or governmental proceedings required to
be described in the Registration Statement, the Effective Prospectus or
the Final Prospectus that are not described as required. Except as
described in the Effective Prospectus and the Final Prospectus, there
is not pending, or to the knowledge of the Company threatened, any
action, suit, proceeding, inquiry or investigation, to which the
Company or any of its subsidiaries, or any of their respective officers
or directors is a party, or to which the property of the Company or any
of its subsidiaries is subject, before or brought by any court or
governmental agency or body, wherein an unfavorable decision, ruling or
finding could prevent or materially hinder the consummation of this
Agreement or result in a material adverse change in the business
condition (financial or other), prospects, financial position, net
worth or results of operations of the Company or any of its
subsidiaries taken as a whole.
(k) There are no contracts or other documents required by the
Securities Act or by the Rules and Regulations to be described in the
Registration Statement, the Effective Prospectus or the Final
Prospectus or to be filed as exhibits to the Registration Statement
which have not been described or filed as required.
(l) Except as described in the Effective Prospectus and the
Final Prospectus, the Company and its subsidiaries each have good and
marketable title to all real and material personal property owned by
them, free and clear of all material liens, charges, encumbrances or
defects except those reflected in the financial statements hereinabove
described. The real and personal property and buildings referred to in
the Effective Prospectus and the Final Prospectus which are leased from
others by the Company or its subsidiaries are held under valid,
subsisting and enforceable leases. The Company or its subsidiaries own
or lease all such properties as are necessary to their operations as
now conducted.
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(m) The Company's system of internal accounting controls taken
as a whole is sufficient to meet the broad objectives of internal
accounting control insofar as those objectives pertain to the
prevention or detection of errors or irregularities in amounts that
would be material in relation to the Company's financial statements.
Except as disclosed in the Effective Prospectus and the Final
Prospectus, neither the Company nor any of its subsidiaries, nor to the
best of the Company's knowledge any employee or agent of the Company or
any subsidiary, director, officer, agent, employee or other person
acting on behalf of the Company or any of its subsidiaries has,
directly or indirectly used any funds of the Company or any of its
subsidiaries for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate
funds; violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment; or received or retained any funds
in violation of any law, rule or regulation.
(n) The Company and its subsidiaries have filed all federal,
state and all material local income, excise and franchise tax returns
required to be filed through the date hereof and have paid all taxes
shown as due therefrom; and there is no tax deficiency that has been,
nor does the Company or any subsidiary have knowledge of any tax
deficiency which is likely to be, asserted against the Company or any
of its subsidiaries, which if determined adversely could materially and
adversely affect the earnings, assets, affairs, business prospects or
condition (financial or other) of the Company or any of its
subsidiaries taken as a whole.
(o) The Company and its subsidiaries operate their business in
conformity in all material respects with all applicable statutes,
common laws, ordinances, decrees, orders, rules and regulations of
governmental bodies. Each of the hotels owned, leased, operated or
managed, directly or indirectly, by the Company and its subsidiaries is
being operated in compliance in all material respects with all
applicable laws, orders, rules or regulations and has all licenses,
approvals or consents now required to operate as currently being
operated, and the Company and its subsidiaries are not aware of any
existing or imminent matter which may materially adversely impact the
operations or business prospects of any of its hotels other than as
specifically disclosed in the Effective Prospectus and the Final
Prospectus.
(p) The Company and its subsidiaries have filed with the
applicable regulatory authorities all statements, reports, information
or forms now required by any applicable law, regulation or order; all
such filings or submissions were in material compliance with applicable
laws when filed and no deficiencies have been asserted by any
regulatory commission, agency or authority with respect to such filings
or submissions. Neither the Company nor any of its subsidiaries has
failed to maintain in full force and effect any material license or
permit necessary or proper for the conduct of its business, or received
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any notification that any revocation or limitation thereof is
threatened or pending, and, except as disclosed in the Effective
Prospectus and the Final Prospectus, the Company is not aware of any
pending change under any law, regulation, license or permit
which would materially adversely affect their businesses, operations,
property or business prospects. Neither the Company nor any of its
subsidiaries has received any notice of violation of or been
threatened with a charge of violating and is not, to the best of the
Company's knowledge, under investigation with respect to a possible
violation of any provision of any law, regulation or order.
(q) No labor dispute exists with the employees of the Company
or its subsidiaries or is imminent which would materially adversely
affect the Company or its subsidiaries taken as a whole. The Company is
not aware of any existing or imminent labor disturbance by its
employees or by any employees of its subsidiaries which could be
expected to materially adversely affect the condition (financial or
otherwise), results of operations, properties, affairs, management,
business affairs or business prospects of the Company or any of its
subsidiaries.
(r) Except as disclosed in the Effective Prospectus and the
Final Prospectus, the Company or its subsidiaries own or possess, or
can acquire on reasonable terms, the patents, licenses, copyrights,
trademarks, service marks and trade names presently employed by
them in connection with the businesses now operated by them,
including all rights necessary to use and franchise the use of the
"Shoney's Inn", "Shoney's Inn & Suites" and "Innlink" and "▇▇▇▇▇▇
Suites" service marks, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing
which, alone or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in any material adverse
change in the condition (financial or otherwise), results of
operations, properties, affairs, management, business affairs or
business prospects of the Company and its subsidiaries, taken as a
whole.
(s) Neither the Company nor any of its subsidiaries nor to the
knowledge of the Company any of the respective directors, officers,
employees or agents of the Company and its subsidiaries, have taken or
will take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might be expected to
constitute, stabilization or manipulation of the price of the capital
stock or other securities of the Company.
(t) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which each is engaged; and the Company has no reason to
believe that it will not be able to renew such existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a comparable cost.
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(u) Neither the Company nor any of its subsidiaries is or will
be as a result of the consummation of the transactions contemplated by
this Agreement, an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act
of 1940.
(v) Neither the Company nor any agent acting on its behalf has
taken or will take any action that might cause this Agreement or the
sale of the Notes to violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(w) Except as disclosed to the Underwriters in writing,
neither the Company nor any director, officer or holder of five
percent or more of any class of securities of the Company or any of
its subsidiaries is a member or an associate or affiliate of a member
of the "NASD."
(x) The Company has filed with the Commission and the NASD all
reports, documents and statements required to be filed by the Company
pursuant to the Securities Act, the Exchange Act, the Rules and
Regulations and all the rules and regulations of the NASD relating to
the Company's capital stock, and each of such reports, documents and
statements, at the time that they were filed, complied in all material
respects with the requirements of the Securities Act, the Exchange Act
and the Rules and Regulations.
2. Purchase, Sale and Delivery of the Notes.
(a) On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters, severally and not jointly,
agrees to purchase at a purchase price of $[ ] per $1,000 principal
amount, the number of Firm Notes set forth opposite such Underwriter's
name in Schedule I hereto.
(b) The Company also grants to the Underwriters an option to
purchase, solely for the purpose of covering over-allotments in the
sale of Firm Notes, all or any portion of the Option Notes at the
purchase price set forth above plus accrued interest. The option
granted hereby may be exercised as to all or any part of the Option
Notes at any time (but only once) within 30 days after the date the
Registration Statement becomes effective. The Underwriters shall not be
under any obligation to purchase any Option Notes prior to the exercise
of such option. The option granted hereby may be exercised by the
Underwriters by the Representatives giving written notice to the
Company setting forth the amount of Option Notes to be purchased and
the date and time for delivery of and payment for such Option Notes and
stating that the Option Notes referred to therein are to be used for
the purpose of covering over-allotments in connection with the
distribution and sale of the Firm Notes. If such notice is given prior
to the First Closing Date (as defined herein), the date set forth
therein for such delivery and payment shall not be earlier than two
full business days thereafter or the First Closing Date, whichever
occurs later. If such notice is given on or after the First Closing
Date, the date set forth therein for such delivery and
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payment shall not be earlier than three full business days thereafter.
In either event, the date so set forth shall not be more than 15 full
business days after the date of such notice. The date and time set
forth in such notice is herein called the "Option Closing Date." Upon
exercise of the option, the Company shall become obligated to sell to
the Underwriters, and, subject to the terms and conditions herein set
forth, the Underwriters shall become obligated to purchase, for the
account of each Underwriter, from the Company, severally and not
jointly, the amount of Option Notes specified in such notice. Option
Notes shall be purchased for the accounts of the Underwriters in
proportion to the amount of Firm Notes set forth opposite such
Underwriter's name in Schedule I hereto, except that the respective
purchase obligations of each Underwriter shall be adjusted so that no
Underwriter shall be obligated to purchase fractional Option Notes.
(c) Certificates in definitive form for the Firm Notes which
each Underwriter has agreed to purchase hereunder shall be delivered by
or on behalf of the Company to the Underwriters for the account of such
Underwriter against payment by such Underwriter or on its behalf of the
purchase price therefor by certified or official bank check payable in
next day funds to the order of the Company at the offices of ▇.▇.
▇▇▇▇▇▇▇▇ & Co., L.L.C., ("Bradford"), ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as may be agreed upon by
Bradford and the Company, at 10:00 A.M., Nashville time, on the third
full business day after this Agreement becomes effective, or, at the
election of the Representatives, on the fourth full business day after
this Agreement becomes effective, if it becomes effective after 4:30
P.M. Eastern time, or at such other time not later than the seventh
full business day thereafter as the Representatives and the Company may
determine, such time of delivery against payment being herein referred
to as the "First Closing Date." The First Closing Date and the Option
Closing Date are herein individually referred to as the "Closing Date"
and collectively referred to as the "Closing Dates." Certificates in
definitive form for the Option Notes which each Underwriter shall have
agreed to purchase hereunder shall be similarly delivered by or on
behalf of the Company on the Option Closing Date. The certificates in
definitive form for the Notes to be delivered will be in good delivery
form and in such denominations and registered in such names as ▇▇▇▇▇▇▇▇
▇▇▇ request not less than 48 hours prior to the First Closing Date or
the Option Closing Date, as the case may be. Such certificates will be
made available for checking and packaging at a location in New York,
New York as may be designated by you, at least 24 hours prior to the
First Closing Date or the Option Closing Date, as the case may be. It
is understood that you may (but shall not be obligated to) make payment
on behalf of any Underwriter or Underwriters for the Notes to be
purchased by such Underwriter or Underwriters. No such payment shall
relieve such Underwriter or Underwriters from any of its or their
obligations hereunder.
3. Offering by the Underwriters. After the Registration Statement
becomes effective, the several Underwriters propose to offer for sale to the
public the Firm Notes and any Option Notes which may be sold at the price and
upon the terms set forth in the Final Prospectus. The serveral Underwriters
agree that they will deliver the Preliminary Prospectus, the Effective
Prospectus and the Final Prospectus as required by Rule 15c2-8 enacted under
the Exchange Act.
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4. Covenants of the Company. The Company covenants and agrees with each
of the Underwriters that:
(a) The Company shall comply with the provisions of and make
all requisite filings with the Commission pursuant to Rules 424 and
430A of the Rules and Regulations and to notify you promptly (in
writing, if requested) of all such filings. The Company shall notify
you promptly of any request by the Commission for any amendment of or
supplement to the Registration Statement, the Effective Prospectus or
the Final Prospectus or for additional information; the Company shall
prepare and file with the Commission, promptly upon your request, any
amendments of or supplements to the Registration Statement, the
Effective Prospectus or the Final Prospectus which, in your opinion,
may be necessary or advisable in connection with the distribution of
the Notes; and the Company shall not file any amendment of or
supplement to the Registration Statement, the Effective Prospectus or
the Final Prospectus which is not approved by you after reasonable
notice thereof, such approval not to be unreasonably withheld or
delayed. The Company shall advise you promptly of the issuance
by the Commission or any jurisdiction or other regulatory body of any
stop order or other order suspending the effectiveness of the
Registration Statement, suspending or preventing the use of any
Preliminary Prospectus, the Effective Prospectus or the Final
Prospectus or suspending the qualification of the Notes for offering
or sale in any jurisdiction, or of the institution of any proceedings
for any such purpose; and the Company shall use its best efforts to
prevent the issuance of any stop order or other such order and, should
a stop order or other such order be issued, to obtain as soon as
possible the lifting thereof.
(b) The Company will take or cause to be taken all necessary
action and furnish to whomever you direct such information as may be
reasonably required in qualifying the Notes for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the
Underwriters may designate and will continue such qualifications in
effect for as long as may be reasonably necessary to complete the
distribution of the Notes.
(c) Within the time during which a Final Prospectus relating
to the Notes is required to be delivered under the Securities Act, the
Company shall comply with all requirements imposed upon it by the
Securities Act, as now and hereafter amended, and by the Rules and
Regulations, as from time to time in force, so far as is necessary to
permit the continuance of sales of or dealings in the Notes as
contemplated by the provisions hereof and the Final Prospectus. If
during such period any event occurs as a result of which the Final
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary to
amend the Registration Statement or supplement the Final Prospectus to
comply with the Securities Act, the Company shall promptly notify you
and shall amend the Registration Statement or supplement the Final
Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
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(d) The Company will furnish without charge to the
Representatives and make available to the Underwriters copies of the
Registration Statement (four of which shall be signed and shall be
accompanied by all exhibits, including any which are incorporated by
reference, which have not previously been furnished), each Preliminary
Prospectus, the Effective Prospectus and the Final Prospectus, and all
amendments and supplements thereto, including any prospectus or
supplement prepared after the effective date of the Registration
Statement, in each case as soon as available and in such quantities as
the Underwriters may reasonably request.
(e) The Company will (i) deliver to you at such office or
offices as you may designate as many copies of the Preliminary
Prospectus and Final Prospectus as you may reasonably request, and (ii)
for a period of not more than nine months after the Registration
Statement becomes effective, send to the Underwriters as many
additional copies of the Final Prospectus and any supplement thereto as
you may reasonably request.
(f) The Company shall make generally available to its security
holders, in the manner contemplated by Rule 158(b) under the Securities
Act as promptly as practicable and in any event no later than 45 days
after the end of its fiscal quarter in which the first anniversary of
the effective date of the Registration Statement occurs, an earnings
statement satisfying the provisions of Section 11(a) of the Securities
Act covering a period of at least 12 consecutive months beginning after
the effective date of the Registration Statement.
(g) The Company will apply the net proceeds from the sale of
the Notes as set forth under the caption "Use of Proceeds" in the Final
Prospectus.
(h) During a period of five years from the effective date of
the Registration Statement, the Company will furnish to the
Representatives copies of all reports and other communications
(financial or other) furnished by the Company to its stockholders and,
as soon as available, copies of any reports or financial statements
furnished or filed by the Company to or with the Commission or any
national securities exchange on which any class of securities of the
Company may be listed.
(i) The Company will, from time to time, after the effective
date of the Registration Statement file with the Commission such
reports as are required by the Securities Act, the Exchange Act and the
Rules and Regulations, and shall also file with state securities
commissions in states where the Notes have been sold by you (as you
shall have advised us in writing) such reports as are required to be
filed by the securities acts and the regulations of those states.
(j) If at any time during the 25 day period after the
Registration Statement is declared effective, any rumor, publication or
event relating to or affecting the Company shall occur as a result of
which, in your opinion, the market price for the Notes has been
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or is likely to be materially affected (regardless of whether such
rumor, publication or event necessitates a supplement to or amendment
of the Final Prospectus), the Company will, after written notice from
you advising it as to the effect set forth above, prepare, consult with
you concerning the substance of and disseminate a press release or
other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
(k) The Company will not take, directly or indirectly, any
action designed to cause or result in, or which might constitute or be
expected to constitute, stabilization or manipulation of the price of
the Notes or of any other security to facilitate the sale or resale of
the Notes.
5. Expenses. The Company agrees with the Underwriters that (a) whether
or not the transactions contemplated by this Agreement are consummated or this
Agreement becomes effective or is terminated, the Company will pay all fees and
expenses incident to the performance of the obligations of the Company
hereunder, including, but not limited to, (i) the Commission's registration fee,
(ii) the expenses of printing (or reproduction) and distributing the
Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), each Preliminary Prospectus, the Effective
Prospectus, the Final Prospectus, any amendments or supplements thereto, the
Indenture and this Agreement and other underwriting documents, including
Underwriter's Questionnaires, Underwriter's Powers of Attorney, Blue Sky
Memoranda, Selected Dealer Agreements and Agreements Among Underwriters, (iii)
fees and expenses of accountants and counsel for the Company, (iv) expenses of
registration or qualification of the Notes under state Blue Sky and securities
laws, including the fees and disbursements of counsel to the Underwriters in
connection therewith, (v) filing fees paid or incurred by the Underwriters and
related fees and expenses of counsel to the Underwriters in connection with
filings with the NASD, (vi) all travel, lodging and reasonable living expenses
incurred by the Company in connection with marketing, dealer and other meetings
attended by the Company and the Underwriters in marketing the Notes, (vii) the
costs and charges of the Company's transfer agent and registrar and the cost of
preparing the certificates for the Notes, (viii) the fees and expenses of the
Trustee in connection with the Indenture and the Notes and (ix) all other costs
and expenses incident to the performance of the Company's obligations hereunder
not otherwise provided for in this Section ; and (b) actual, accountable
out-of-pocket expenses, including counsel fees, disbursements and expenses,
incurred by the Underwriters in connection with investigating, preparing to
market and marketing the Notes and proposing to purchase and purchasing the
Notes under this Agreement, will be borne and paid by the Company if the sale
of the Notes provided for herein is not consummated (i) by reason of the
termination of this Agreement by the Company pursuant to Section 12(a)(i), (ii)
by reason of termination of this Agreement by the Underwriters pursuant to
Sections 12(b)(iii), 12(b)(iv) or 12(b)(v), or (iii) because of any failure or
refusal on the part of the Company to comply with the terms or fulfill any of
the conditions of this Agreement.
6. Conditions of the Underwriters' Obligations. The respective
obligations of the
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Underwriters to purchase and pay for the Firm Notes shall be subject, in their
discretion, to the accuracy of the representations and warranties of the Company
herein as of the date hereof and as of the Closing Date as if made on and as of
the Closing Date, to the accuracy of the statements of the Company's officers
made pursuant to the provisions hereof, to the performance by the Company of all
of its covenants and agreements hereunder and to the following additional
conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective not later than 5:30
P.M., Washington, D.C. time, on the day following the date of this
Agreement, or such later time and date as shall have been consented to
by the Representatives and all filings required by Rule 424 and Rule
430A of the Rules and Regulations shall have been made; 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 threatened or, to the knowledge of the Company or the
Underwriters, shall be contemplated by the Commission; any request of
the Commission for additional information (to be included in the
Registration Statement or the Final Prospectus or otherwise) shall have
been complied with to your satisfaction; and the NASD, upon review of
the terms of the public offering of the Notes, shall not have objected
to such offering, such terms or the Underwriters' participation in the
same.
(b) No Underwriter shall have advised the Company that the
Registration Statement, Preliminary Prospectus, the Effective
Prospectus or Final Prospectus, any documents incorporated therein by
reference, or any amendment or any supplement thereto, contains an
untrue statement of fact which, in your judgment, is material, or omits
to state a fact which, in your judgment, is material and is required to
be stated therein or necessary to make the statements therein not
misleading and the Company shall not have cured such untrue statement
of fact or stated a statement of fact required to be stated therein.
(c) The Representatives shall have received an opinion, dated
the Closing Date, from Boult, Cummings, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, PLC, counsel
for the Company, to the effect that:
(i) The Company is validly existing in good standing
as a corporation under the laws of the State of
Tennessee, with all requisite corporate power and authority
to own, lease and operate its properties and conduct its
business as now conducted, and is duly qualified to do
business as a foreign corporation in good standing in all
other jurisdictions where the failure to so qualify would
have a material adverse effect upon the business of the
Company and its subsidiaries taken as a whole.
(ii) Each corporate subsidiary of the Company
is validly existing in good standing under the laws of
the jurisdiction of its incorporation, has all requisite
corporate
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power and authority to own, lease and operate its
properties and to conduct its business as now conducted; each
such corporate subsidiary is duly qualified or authorized to
do business as a foreign corporation and is in good standing
in all jurisdictions where the failure to so qualify would
have a material adverse effect upon the business of the
Company and its subsidiaries taken as a whole. The corporate
records reflect that all outstanding stock of each of the
corporate subsidiaries is owned beneficially and of record by
the Company, free and clear of all liens, encumbrances,
equities and claims. The partnership and joint ventures in
which the Company or its subsidiaries are partners or joint
venturers were formed in accordance with applicable
partnership law and, to the knowledge of such counsel, such
partnership and joint venture interests are owned clear of any
lien, encumbrance, pledge, equity or claim of any kind. To
such counsel's knowledge, no options or warrants or other
rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into any shares of
capital stock or of ownership interests in any of the
Company's subsidiaries are outstanding, except such rights as
may be set forth in the partnership or joint venture
agreements.
(iii) The Notes have been duly and validly authorized
and, when executed by the Company, authenticated by the
Trustee in accordance with the Indenture and delivered in
accordance with this Agreement, will constitute legal and
binding obligations of the Company entitled to the benefits of
the Indenture, except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfers, fraudulent
conveyances or other laws affecting creditor's rights
generally. Upon issuance and delivery thereof and payment
therefor as provided in the Underwriting Agreement, the
Underwriters will receive good and marketable title to the
Notes to be issued and delivered pursuant to this Agreement,
free and clear of all liens, encumbrances, claims, security
interests and restrictions. The Notes conform in all material
respects to the description thereof contained in the Final
Prospectus.
(iv) The Company has all requisite corporate right,
power and authority to enter into and perform its obligations
under this Agreement and the Indenture and to issue, sell and
deliver the Notes to be sold by it to the Underwriters as
provided herein, and this Agreement and the Indenture have
been duly authorized,
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executed and delivered by the Company and each constitutes the
valid and legally binding obligation of the Company
enforceable against the Company in accordance with its terms,
subject to the usual and customary exceptions in legal
opinions of this nature.
(v) No consent, approval, authorization or order of
any court or governmental agency or body or third party is
required for the performance of this Agreement and the
Indenture by the Company or the consummation by the Company of
the transactions contemplated hereby and thereby, except (i)
such as have been obtained from third parties, (ii) such as
have been obtained under the Securities Act and Trust
Indenture Act and (iii) such as may be required by the NASD
and under state securities or Blue Sky laws in connection with
the purchase and distribution of the Notes by the several
Underwriters and except such as will not, if not obtained,
have a material adverse effect on the transactions
contemplated hereby. The performance of this Agreement and
the Indenture by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby
(including the use of proceeds from the sale of the Notes as
described in the Final Prospectus) will not conflict with or
result in a breach or violation by the Company or any of its
subsidiaries of any of the terms or provisions of, or
constitute a default by the Company under, any material
indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument known to such counsel to which
the Company or any of its subsidiaries is a party or to which
the Company, any of its subsidiaries or any of their
respective properties is subject, the charter or by-laws of
the Company or any of its subsidiaries, any statute, or any
judgment, decree, order, rule or regulation of any court or
governmental agency or body (other than state securities or
blue sky laws, as to which such counsel expresses no opinion)
known to such counsel to be applicable to the Company, any of
its subsidiaries or any of their respective properties.
(vi) Except as described in the Final Prospectus,
there is not pending, or to such counsel's knowledge,
threatened, any action, suit, proceeding, inquiry or
investigation, to which the Company or any of its subsidiaries
is a party, or to which the property of the Company or any of
its subsidiaries is subject, before or brought by any court or
governmental agency or body, which, if determined adversely to
the Company or any of its subsidiaries, would result in any
material adverse change in the business, financial position,
net worth or results of operations, or would materially
adversely affect the properties or assets, of the Company and
its subsidiaries taken as a whole.
(vii) To such counsel's knowledge, no default exists,
and no event has occurred which with notice or after the lapse
of time to cure or both, would constitute a default, in the
due performance and observance of any term, covenant or
condition of any material indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument known
to such counsel to which the Company or any of its
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subsidiaries is a party or to which it or its properties is
subject, or of the Charter or by-laws of the Company or any of
its subsidiaries which would result in any material adverse
change in the business, financial condition, net worth or
results of operations, or could materially adversely affect
the properties or assets of the Company and its subsidiaries
taken as a whole.
(viii) The Registration Statement and all post
effective amendments thereto have become effective under the
Securities Act, and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are threatened, pending or
contemplated by the Commission. All filings required by Rule
424 and Rule 430A of the Rules and Regulations have been made;
the Registration Statement, the Effective Prospectus and Final
Prospectus, and any amendments or supplements thereto (except
for the financial statements and schedules included therein as
to which such counsel need express no opinion), as of their
respective effective or issue dates, complied as to form in
all material respects with the requirements of the Securities
Act and the Rules and Regulations; the descriptions in the
Registration Statement, the Effective Prospectus and the Final
Prospectus of statutes, regulations, legal and governmental
proceedings, and contracts and other documents are accurate in
all material respects and present fairly the information
required to be stated; and such counsel does not know of any
pending or threatened legal or governmental proceedings,
statutes or regulations required to be described in the
Registration Statement or the Final Prospectus which are not
described as required or of any contracts or documents of a
character required to be described in the Registration
Statement or the Final Prospectus or to be filed as exhibits
to the Registration Statement which are not described and
filed as required.
(ix) Neither the Company nor any of its subsidiaries
is, or will be as a result of the consummation of the
transactions contemplated by this Agreement, an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that the Registration Statement, the
Effective Prospectus and the Final Prospectus or any amendment or supplement
thereto contains an untrue statement of a material fact or omits to state a
material
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fact required to be stated therein or necessary to make the statements therein
not misleading (except that such counsel need express no view as to financial
statements, schedules and other financial information included therein).
The opinions to be rendered pursuant to paragraph (c) may be limited to
federal law, and as to state law matters, to the laws of the state of Tennessee.
Such counsel may also rely on opinion of other counsel as to matters of local
law provided that such counsel shall state that they believe both they and you
are justified in relying on such opinion.
(d) The Underwriters shall have received an opinion or
opinions, dated the Closing Date, of Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC, counsel
for the Underwriters, with respect to the Registration Statement and
the Final Prospectus, and such other related matters as the
Underwriters may require, and the Company shall have furnished to such
counsel such documents as they may reasonably request for the purpose
of enabling them to pass upon such matters.
(e) The Representatives shall have received from Deloitte &
Touche LLP, a letter dated the date hereof and, at the Closing Date, a
second letter dated the Closing Date, in form and substance
satisfactory to the Representatives, stating that they are independent
public accountants with respect to the Company and its subsidiaries
within the meaning of the Securities Act and the applicable Rules and
Regulations, and to the effect that:
(i) In their opinion, the audited financial
statements and financial statement schedules examined by them
and included or incorporated by reference in the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and
the published Rules and Regulations and are presented in
accordance with generally accepted accounting principles; and
they have made a review in accordance with standards
established by the American Institute of Certified Public
Accountants of the interim financial statements, selected
financial data, and/or condensed financial statements derived
from audited financial statements of the Company;
(ii) The unaudited selected financial information
included in the Final Prospectus under the captions "SUMMARY
FINANCIAL DATA" and "SELECTED FINANCIAL AND OPERATING DATA"
for each of the fiscal years ended December 26, 1993,
December 25, 1994 and December 31, 1995, agrees with the
corresponding amounts in the audited financial statements
incorporated by reference in the Final Prospectus or
previously reported on by them;
(iii) On the basis of a reading of the latest
available interim financial statements (unaudited) of the
Company, if any, a reading of the minute books of
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the Company and its subsidiaries, inquiries of officials of
the Company responsible for financial and accounting matters
and other specified procedures, all of which have been agreed
to by the Representatives, nothing came to their attention
that caused them to believe that:
(A) Any unaudited interim financial
statements included or incorporated by reference in
the Registration Statement or the Final Prospectus do
not comply as to form in all material respects with
the applicable accounting requirements of the federal
securities laws and the published rules and
regulations thereunder or are not in conformity with
generally accepted accounting principles applied on a
basis substantially consistent with the basis for the
audited financial statements incorporated by
reference in the Registration Statement or in the
Final Prospectus;
(B) Any other unaudited financial statement
data included or incorporated by reference in the
Registration Statement or the Final Prospectus do not
agree with the corresponding items in the unaudited
financial statements from which data was derived and
any such unaudited data were not determined on a
basis substantially consistent with the basis for the
corresponding amounts in the unaudited financial
statements included or incorporated by reference in
the Registration Statement or the Final Prospectus;
(C) At a specified date not more than five
days prior to the date of delivery of such respective
letter, there was any decline in stockholders' equity
or increase in long-term debt of the Company, or
other items specified by the Underwriters in each
case as compared with amounts shown in the latest
balance sheets included or incorporated by reference
in the Final Prospectus, except in each case for
changes, decreases or increases which the Final
Prospectus discloses have occurred or may occur or
which are described in such letters; and
(D) For the period from the closing date of
the latest statements of income included or
incorporated by reference in the Effective Prospectus
and the Final Prospectus to a specified date not more
than five days prior to the date of delivery of such
respective letter, there were any decreases in total
revenues or net income of the Company, or other items
specified by the Underwriters, or any increases in
any items specified by the Underwriters, in each case
as compared with the corresponding period of the
preceding year, except in each case for decreases
which the Final Prospectus discloses have occurred or
may occur or which are described in such letter.
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(iv) They have carried out certain specified
procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information specified by
you which are derived from the general accounting records of
the Company, which appear or are incorporated by reference in
the Registration Statement and the Final Prospectus and have
compared and agreed such amounts, percentages and financial
information with the accounting records of the Company or to
analyses and schedules prepared by the Company from its
detailed accounting records.
In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases, it shall be a further
condition to the obligations of the Underwriters that the Underwriters
shall have determined, after discussions with officers of the Company
responsible for financial and accounting matters and with Deloitte &
Touche LLP, that such changes, decreases or increases as are set forth
in such letters do not reflect a material adverse change in the
stockholders' equity or long-term debt of the Company as compared with
the amounts shown in the latest balance sheets of the Company included
or incorporated by reference in the Registration Statement or the
Final Prospectus, or a material adverse change in total revenues or
net income of the Company, in each case as compared with the
corresponding period of the prior year.
(f) There shall have been furnished to the Representatives a
certificate, dated the Closing Date and addressed to you, signed by the
Chief Executive Officer and by the Chief Financial Officer of the
Company to the effect that:
(i) the representations and warranties of the Company
in Section 1 of this Agreement are true and correct, as if
made at and as of the Closing Date, and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings
for that purpose have been initiated or are pending, or to
their knowledge, threatened under the Securities Act;
(iii) all filings required by Rule 424 and Rule 430A
of the Rules and Regulations have been made;
(iv) they have carefully examined the Registration
Statement, the Effective Prospectus and the Final Prospectus,
the documents incorporated therein by reference and any
amendments or supplements thereto, and such documents do not
include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and
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(v) since the effective date of the Registration
Statement, there has occurred no event required to be set
forth in an amendment or supplement to the Registration
Statement, the Effective Prospectus or the Final Prospectus
which has not been so set forth.
(g) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Final Prospectus, and
except as stated therein, neither the Company nor any of its
subsidiaries has sustained any material loss or interference with its
business or properties from fire, flood, hurricane, earthquake,
accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or governmental action, order or
decree, or become a party to or the subject of any litigation which is
material to the Company, nor shall there have been any material adverse
change, or any development involving a prospective material adverse
change, in the business, properties, key personnel, capitalization, net
worth, results of operations or condition (financial or other) of the
Company, which loss, interference, litigation or change, in your
judgment shall render it unadvisable to commence or continue the
offering of the Notes at the offering price to the public set forth on
the cover page of the Prospectus or to proceed with the delivery of the
Notes.
(h) At or prior to the Closing Date, none of the following
events shall have occurred: (i) suspension in the trading in
securities on the New York Stock Exchange, the American Stock Exchange
or the over-the-counter market; (ii) the establishment of minimum or
maximum prices on the New York Stock Exchange, the American Stock
Exchange or the over-the-counter market; (iii) the declaration of a
banking moratorium by federal or state authorities; (iv) suspension
in the trading of securities of the Company on any exchange or market;
or (v) a material change in general economic, political or financial
conditions or the effect of international conditions on the financial
markets in the United States shall, in your reasonable judgment, make
it inadvisable to proceed with the offering of the Notes at the
offering price to the public set forth on the cover page of this Final
Prospectus or to proceed with the delivery of the Notes.
All such opinions, certificates, letters and documents delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory to the Representatives and their counsel. The
Company shall furnish to the Representatives such conformed copies of such
opinions, certificates, letters and documents in such quantities as the
Representatives shall reasonably request.
The respective obligations of the Underwriters to purchase and pay for
the Option Notes shall be subject, in their discretion, to each of the foregoing
conditions to purchase the Firm Notes, except that all references to the
"Closing Date" shall be deemed to refer to the Option Closing Date, if it shall
be a date other than the Closing Date.
7. Condition of the Company's Obligations. The obligations hereunder of
the Company are subject to the condition set forth in Section 6(a) hereof.
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8. Indemnification and Contribution.
(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 Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based in whole or in
part upon (i) any inaccuracy in the representations and warranties of
the Company contained herein, (ii) any failure of the Company to
perform its obligations hereunder or under law or (iii)
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus,
the Effective Prospectus or Final Prospectus, or any document
incorporated therein by reference or any amendment or supplement
thereto, or in any Blue Sky application or other written information
furnished by the Company filed in any state or other jurisdiction in
order to qualify any or all of the Notes under the securities laws
thereof (a "Blue Sky Application"). The Company agrees to indemnify and
hold harmless each Underwriter, and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, against all
losses, claims, damages, or liabilities, joint or several, to which
such Underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon the Company's omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, the Effective
Prospectus or Final Prospectus, any document incorporated therein by
reference or any amendment or supplement thereto or any Blue Sky
Application a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse each
Underwriter and each such controlling person for any legal or other
expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred.
Notwithstanding the foregoing, the Company will not be liable
in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Preliminary Prospectus, the Effective
Prospectus, any document incorporated therein by reference or Final
Prospectus or such amendment or such supplement or any Blue Sky
Application in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically
for use therein (it being understood that the only information so
provided by the Underwriters is the information included in the last
paragraph on the cover page and under the caption "Underwriting" in
any Preliminary Prospectus and the Final Prospectus and the Effective
Prospectus).
(b) Each Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act against any
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losses, claims, damages or liabilities to which the Company or any such
director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) 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 Effective Prospectus or Final Prospectus, or any
amendment or supplement thereto, or any Blue Sky Application, or arise
out of or are based upon the omission or the alleged omission to state
in the Registration Statement, any Preliminary Prospectus, the
Effective Prospectus or Final Prospectus or any amendment or supplement
thereto or any Blue Sky Application 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 reliance upon and in conformity with
written information furnished to the Company by any Underwriter
specifically for use therein (it being understood that the only
information so provided is the information included in the last
paragraph on the cover page and under the caption "Underwriting" in any
Preliminary Prospectus,the Effective Prospectus and the Final
Prospectus); and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are
incurred. This indemnity agreement will be in addition to any
liability which such Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, including
governmental proceedings, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this
Section 8 notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; and after
notice from the indemnifying party to such indemnified party of its
election to so assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 8 for any
legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation except that the indemnified party shall have the right to
employ separate counsel if, in its reasonable judgment, it is advisable
for the indemnified party and any other Underwriter to be represented
by separate counsel, and in that event the fees and expenses of
separate counsel shall be paid by the indemnifying party.
The Company will not, without prior written consent of each
Representative, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding
(or related cause of action or portion thereof) in respect of which
indemnification may be sought hereunder (whether or not such
Underwriter is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional
release of such Underwriter from all liability arising out
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of such claim, action, suit or proceeding (or related cause of action
or portion thereof).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding part of this Section 8 is for any reason held to be
unavailable to the Underwriters, or the Company or is insufficient to
hold harmless an indemnified party, then the Company shall contribute
to the damages paid by the Underwriters, and the Underwriters shall
contribute to the damages paid by the Company provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, there shall be considered the
relative benefits received by each party from the offering of the Notes
(taking into account the portion of the proceeds of the offering
realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate under the
circumstances. The Company and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated as
one entity for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in
the aggregate exceeds the underwriting discount applicable to the Notes
purchased by such Underwriter under this Agreement, less the aggregate
amount of any damages which such Underwriter and its controlling
persons have otherwise been required to pay in respect of the same or
any similar claim. The Underwriters' obligations to contribute
hereunder are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section , each person,
if any, who controls an Underwriter within the meaning of Section 15 of
the Securities Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act, shall have the same rights to contribution as the
Company.
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls any Underwriter within the meaning of the
Securities Act; and the obligations of the Underwriters under this
Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the
Securities Act.
9. Default of Underwriters. If any Underwriter defaults in its
obligation to purchase Notes hereunder and if the total amount of Notes which
such defaulting Underwriter agreed but
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failed to purchase is ten percent or less of the total amount of Notes to be
sold hereunder, the non-defaulting Underwriters shall be obligated severally to
purchase (in the respective proportions which the amount of Notes set forth
opposite the name of each non-defaulting Underwriter in Schedule I hereto bears
to the total amount of Notes set forth opposite the names of all the
non-defaulting Underwriters), the Notes which such defaulting Underwriter or
Underwriters agreed but failed to purchase. If any Underwriter so defaults and
the total number of Notes with respect to which such default or defaults occur
is more than ten percent of the total amount of Notes to be sold hereunder, and
arrangements satisfactory to the other Underwriters and the Company for the
purchase of such Notes by other persons (who may include the non-defaulting
Underwriters) are not made within 36 hours after such default, this Agreement,
insofar as it relates to the sale of the Notes, will terminate without liability
on the part of the non-defaulting Underwriters or the Company except for (i) the
provisions of Section 8 hereof, and (ii) the expenses to be paid or reimbursed
by the Company pursuant to Section 5. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve a defaulting Underwriter from liability
for its default.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the Underwriters set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, any Underwriter or any
controlling person, (ii) any termination of this Agreement and (iii) delivery of
and payment for the Notes.
11. Effective Date. This Agreement shall become effective at whichever
of the following times shall first occur: (i) at 11:30 A.M., Washington, D.C.
time, on the next full business day following the date on which the Registration
Statement becomes effective or (ii) at such time after the Registration
Statement has become effective as the Representatives shall release the Firm
Notes for sale to the public; provided, however, that the provisions of Sections
5, 8, 10, and 11 hereof shall at all times be effective. For purposes of this
Section 11, the Firm Notes shall be deemed to have been so released upon the
release by the Representatives for publication, at any time after the
Registration Statement has become effective, of any newspaper advertisement
relating to the Firm Notes or upon the release by the Representatives of
telegrams offering the Firm Notes for sale to securities dealers, whichever may
occur first.
12. Termination.
(a) The Company's obligations under this Agreement may be
terminated by the Company by notice to the Representatives (i) at any
time before it becomes effective in accordance with Section 11 hereof,
or (ii) in the event that the condition set forth in Section 7 shall
not have been satisfied at or prior to the First Closing Date.
(b) This Agreement may be terminated by the Representatives by
notice to the Company (i) at any time before it becomes effective in
accordance with Section 11 hereof;
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(ii) in the event that at or prior to the First Closing Date the
Company shall have failed, refused or been unable to perform any
agreement on the part of the Company to be performed hereunder or any
other condition to the obligations of the Underwriters hereunder is not
fulfilled; (iii) if at or prior to the Closing Date trading in
securities on the New York Stock Exchange, the American Stock Exchange
or the over-the-counter market shall have been suspended or materially
limited or minimum or maximum prices shall have been established on
either of such Exchanges or such market, or a banking moratorium shall
have been declared by Federal or state authorities; (iv) if at or prior
to the Closing Date trading in securities of the Company shall have
been suspended on any exchange or market; or (v) if there shall have
been such a material change in general economic, political or financial
conditions or if the effect of international conditions on the
financial markets in the United States shall be such as, in your
reasonable judgment, makes it inadvisable to commence or continue the
offering of the Notes at the offering price to the public set forth on
the cover page of the Prospectus or to proceed with the delivery of the
Notes.
(c) Termination of this Agreement pursuant to this Section 12
shall be without liability of any party to any other party other than
as provided in Sections 5 and 8 hereof.
13. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to the Representatives in care of ▇.▇. ▇▇▇▇▇▇▇▇ & Co.,
L.L.C., ▇.▇. ▇▇▇▇▇▇▇▇ Financial Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, or if sent to the Company shall
be mailed, delivered or telegraphed and confirmed in writing to the Company at
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇.
14. Miscellaneous. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and, the Company and their respective
successors and legal representatives. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Company and the several Underwriters and for
the benefit of no other person except that (i) the representations and
warranties of the Company contained in this Agreement shall also be for the
benefit of any person or persons who control any Underwriter within the meaning
of Section 15 of the Securities Act, and (ii) the indemnities by the
Underwriters shall also be for the benefit of the directors of the Company,
officers of the Company who have signed the Registration Statement, and any
person or persons who control the Company within the meaning of Section 15 of
the Securities Act. No purchaser of Notes from any Underwriter will be deemed a
successor because of such purchase. The validity and interpretation of this
Agreement shall be governed by the laws of the State of Tennessee. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. You hereby represent and warrant to the Company that you have
authority to act hereunder on behalf of the
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several Underwriters, and any action hereunder taken by you will be binding upon
all the Underwriters.
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If the foregoing is in accordance with your understanding of
our agreement, please indicate your acceptance thereof in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between the Company and each of the several Underwriters.
Very truly yours,
SHOLODGE, INC.
By:_________________________________
Title: _____________________________
Confirmed and accepted as of the
date first above written.
▇.▇. ▇▇▇▇▇▇▇▇ & CO., L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
INTERSTATE/▇▇▇▇▇▇▇ ▇▇▇▇ CORPORATION
For themselves and as Representatives
of the several Underwriters
By:________________________________
Partner
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SCHEDULE I
UNDERWRITERS
Principal Amount of Firm
Underwriter Notes to Be Purchased
▇.▇. ▇▇▇▇▇▇▇▇ & Co., L.L.C................................... $___________
▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc............................................ $___________
Interstate/▇▇▇▇▇▇▇ Lane Corporation ......................... $___________
-------------------------------------------------
TOTAL $35,000,000
=================================================
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