EXHIBIT 1
$100,000,000
LA QUINTA INNS, INC.
7 1/4% Senior Notes due 2004
UNDERWRITING AGREEMENT
March 6, 1996
Morgan Stanley & Co.
Incorporated
Goldman, Sachs & Co.
Smith Barney Inc.
c/o Morgan Stanley & Co.
Incorporated
1251 Avenue of the Americas
New York, New York 10020
Dear Sirs and Mesdames:
La Quinta Inns, Inc., a Texas corporation (the "Company"), proposes to
issue and sell to the several Underwriters named in Schedule I hereto (the
"Underwriters") $100,000,000 principal amount of its 7 1/4% Senior Notes due
2004 (the "Securities") to be issued pursuant to the provisions of an Indenture
dated as of September 15, 1995 (the "Indenture") between the Company and
U.S. Trust Company of Texas, N.A., as Trustee (the "Trustee").
The Company wishes to confirm as follows its respective agreements
with you and the other several Underwriters on whose behalf you are acting, in
connection with the several purchases of the Securities by the Underwriters.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 under the Act
(File No. 333-00309) (the "registration statement"), including a prospectus
relating to the offer and sale of $250,000,000 aggregate principal amount of
the Company's debt securities, which registration statement has been declared
effective and
copies of which have been heretofore delivered to you. Such registration
statement in the form in which it was declared effective (including all
financial schedules and exhibits and including all documents incorporated or
deemed to be incorporated by reference therein through the date hereof), is
hereinafter referred to as the "Registration Statement." The Company proposes
to file with the Commission pursuant to Rule 424(b) of the Act, a prospectus
supplement specifically relating to the Securities. Such prospectus
supplement in the form first used to confirm sales of the Securities is
hereinafter referred to as the "Prospectus Supplement." The term "Basic
Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement. The term "Prospectus" means the Basic
Prospectus together with the Prospectus Supplement, PROVIDED that if a
prospectus that meets the requirements of Section 10(a) of the Act is
delivered pursuant to Rule 434(c) under the Act, then (i) the term
"Prospectus" as used in this Agreement means the prospectus subject to
completion (as defined in Rule 434(g) under the Act) as supplemented by (A)
the addition of Rule 430A or other information contained in the form of
prospectus filed pursuant to Rule 434(c)(2) under the Act and (B) the
information contained in the abbreviated term sheet described in Rule
434(c)(3) under the Act, and (ii) the date of such Prospectus shall be deemed
to be the date of such abbreviated term sheet. The term "Prepricing
Prospectus" as used in this Agreement means any preliminary prospectus
supplement specifically related to the Securities together with the Basic
Prospectus. Any reference in this Agreement to the Registration Statement,
any Prepricing Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the Act as of the date of the Registration Statement, such
Prepricing Prospectus or the Prospectus, as the case may be, and any
reference to any amendment or supplement to the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after such date under the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act"), that, upon filing, are
incorporated by reference therein, as required by paragraph (b) of Item 12 of
Form S-3. As used herein, the term "Incorporated Documents" means, at any
time, the documents that at such time are incorporated by reference in the
Registration Statement, any Prepricing Prospectus, the Prospectus, or any
amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company the principal amount of Securities set
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forth opposite the name of such Underwriter in Schedule I hereto (or such
principal amount of Securities increased as set forth in Section 10 hereof)
at 99.4900% of such principal amount plus accrued interest, if any, from
March 11, 1996, to the date of payment and delivery.
3. TERMS OF PUBLIC OFFERING. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after the Registration Statement and this
Agreement have both become effective as in your judgment is advisable and
initially to offer the Securities upon the terms set forth in the Prospectus.
The Company is further advised by you that the Securities are to be offered to
the public initially at 99.4900% of their principal amount (the "Public Offering
Price") plus accrued interest, if any, from March 11, 1996 to the date of
payment and delivery and to certain dealers selected by you at a price that
represents a concession not in excess of .40% of their principal amount under
the Public Offering Price, and that any Underwriter may allow, and such dealers
may reallow, a concession, not in excess of .20% of their principal amount, to
any Underwriter or to certain other dealers.
4. DELIVERY OF THE SECURITIES AND PAYMENT THEREFOR. Payment for the
Securities shall be made by wire transfer to an account specified by the Company
in immediately available funds at 10:00 A.M., New York City time on March 11,
1996, or at such other time on the same or such other date, not later than March
20, 1996, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "Closing Date."
Payment for the Securities shall be made against delivery to you for
the respective accounts of the several Underwriters of the one or more global
certificates representing the Securities registered in the name of Cede & Co.
with any transfer taxes payable in connection with the transfer of the
Securities to the Underwriters duly paid.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters as follows:
(a) The Company shall, if, at the time this Agreement is executed and
delivered, it is necessary for a post-effective amendment thereto to be
declared effective before the offering of the Securities may commence, use
its best efforts to cause such post-effective amendment to become effective
at the earliest possible time. The Company shall comply fully and in a
timely manner with the applicable provisions of Rule 424, Rule 430A and
Rule 434 under the Act.
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(b) The Company shall advise you promptly and, if requested by any of
you, confirm such advice in writing, (i) if and when the Prospectus or form
of prospectus is sent for filing pursuant to Rule 424 under the Act and
when any post-effective amendment to the Registration Statement becomes
effective, (ii) of the receipt of any comments from the Commission that
relate to the Registration Statement or any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement, or of the suspension of qualification of the
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purpose by the Commission or any state securities
commission or other regulatory authority, and (iv) during the period
referred to in subsection (f) below, (A) of any change in the Company's
condition (financial or other), business, prospects, properties, net worth
or results of operations, or of the happening of any event, including the
filing of any information, document or report pursuant to the Exchange Act,
that makes any statement of a material fact made in the Registration
Statement untrue or that requires the making of any additions to or changes
in the Registration Statement in order to state a material fact required by
the Act to be stated therein or to make the statements therein not
misleading or that makes any statement of a material fact made in the
Prospectus (as then amended or supplemented) untrue or that requires the
making of any additions to or changes in the Prospectus (as then amended or
supplemented) in order to state a material fact required by the Act to be
stated therein or in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and (B) of
the necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption of the Securities under any state securities or Blue Sky laws,
the Company shall use every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(c) The Company shall furnish to each of you without charge (i) two
(2) conformed copies (plus one (1) additional similarly conformed copy to
your legal counsel) of the Registration Statement as first filed with the
Commission and of each amendment to
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it, including all exhibits filed therewith, (ii) such number of conformed
copies of the Registration Statement as so filed and of each amendment to
it, without exhibits, as you may reasonably request, (iii) such number of
copies of the Incorporated Documents, without exhibits, as you may request,
and (iv) two (2) copies of each of the exhibits to the Incorporated
Documents.
(d) The Company shall not file any amendment or supplement to the
Registration Statement, whether before or after the time when it becomes
effective, or make any amendment or supplement to the Prospectus, or, prior
to the end of the period of time referred to in subsection (f) below, file
any document pursuant to the Exchange Act that will, upon filing, become an
Incorporated Document, of which you shall not previously have been advised
and provided a copy within two business days (or such reasonable amount of
time as is necessitated by the exigency of such amendment, supplement or
document) prior to the filing thereof and to which you shall reasonably
object in writing.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you
have requested, copies of each form of the Prepricing Prospectus. The
Company consents to the use, in accordance with the provisions of the Act
and with the state securities or Blue Sky laws of the jurisdictions in
which the Securities are offered by the several Underwriters and by
dealers, prior to the date of the Prospectus, of each Prepricing Prospectus
so furnished by the Company.
(f) Promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period as in the reasonable opinion
of counsel for the Underwriters a prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer, the
Company shall expeditiously furnish to each Underwriter and each dealer,
without charge, as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus) as you may reasonably request for the
purposes contemplated by the Act. The Company consents to the use of the
Prospectus and any amendment or supplement thereto by you or any dealer in
accordance with the provisions of the Act and with the state securities or
Blue Sky laws of the jurisdictions in which the Securities are offered by
the several Underwriters and by all dealers to whom Securities may be sold,
both in connection with the offering or sale of the Securities and for such
period of time thereafter as a prospectus is required by the Act to be
delivered in connection therewith.
(g) If during the period specified in subsection (f) above any event
shall occur as a result of which it becomes necessary, in the judgment of
the Company or in the
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reasonable opinion of counsel for the Underwriters, to amend or supplement
the Prospectus (as them amended or supplemented) in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with the Act or any other law, the Company shall,
as promptly as practicable, prepare and, subject to the provisions of
subsection (d) above, file with the Commission an appropriate amendment
or supplement to the Prospectus so that the statements in the Prospectus,
as so amended or supplemented, will not, in the light of the circumstances
under which they were made, be misleading, and the Prospectus, as so
amended or supplemented, will comply with the Act or such other law, and
shall expeditiously furnish to you without charge such number of copies
thereof as you may reasonably request.
(h) Prior to any public offering of the Securities, the Company shall
cooperate with you and with counsel for the Underwriters in connection with
the registration or qualification of the Securities for offering and sale
by the Underwriters and by dealers under the state securities or Blue Sky
laws of such jurisdictions as you may request (provided, that the Company
shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to take any action that
would subject it to consent to service of process in suits, other than
those arising out of the offering or sale of the Securities, in any
jurisdiction in which it is not now so subject). The Company shall
continue such qualification in effect so long as required by law for
distribution of the Securities and shall file such consents to service of
process or other documents as may be necessary or appropriate in order to
effect such registration or qualification (provided, that the Company shall
not be obligated to take any action that would subject it to consent to
service of process in suits, other than those arising out of the offering
or sale of the Securities, in any jurisdiction in which it is not now so
subject).
(i) The Company shall make generally available to its security
holders as soon as reasonably practicable a consolidated earnings statement
covering a period of at least 12 months beginning after the "effective
date" (as defined in Rule 158 under the Act) of the Registration Statement
(but in no event later than 90 days after such date) that shall satisfy the
provisions of Section 11(a) of the Act.
(j) (i) For so long as any of the Securities are outstanding, the
Company shall mail to each of you without charge as soon as available, a
copy of each report of the Company mailed to stockholders or filed with the
Commission,
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and (ii) during the period specified in subsection (f) above, from time
to time such other information concerning the Company as you may
reasonably request.
(k) During the period beginning on the date hereof and continuing to
and including the Closing Date, the Company shall not offer, sell, contract
to sell or otherwise dispose of any debt securities of the Company or
warrants to purchase debt securities of the Company substantially similar
to the Securities (other than (i) the Securities and (ii) commercial paper
issued in the ordinary course of business), without the prior written
consent of Morgan Stanley & Co. Incorporated, which shall not be
unreasonably withheld.
(l) The Company shall use the proceeds from the sale of the
Securities in the manner described in each of the Basic Prospectus and
the Prospectus Supplement under the heading "Use of Proceeds."
(m) The Company shall not voluntarily claim, and shall actively
resist any attempt to claim, the benefit of any usuary laws against the
holders of the Securities.
(n) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provision hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating
this Agreement pursuant to Section 10 or Section 11 hereof) or if this
Agreement shall be terminated by the Underwriters 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, the Company agrees to reimburse you
for all reasonable out-of-pocket expenses (including reasonable fees and
expenses of counsel for the Underwriters) incurred by you in connection
herewith.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(a) The Company and the transactions contemplated by this Agreement
meet the requirements for using Form S-3 under the Act. The registration
statement in the form in which it became or becomes effective and also in
such form as it may be when any post-effective amendment thereto shall
become effective and the Prospectus and any supplement or amendment thereto
when filed with the Commission under Rule 424(b) under the Act, complied or
will comply in all material respects with the provisions of the Act; the
Registration Statement does not and will not at any such time contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and
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the Prospectus and any supplement or amendment thereto will not at any
such time contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that this representation
and warranty does not apply (A) to statements in or omissions from the
registration statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by or on behalf of any Underwriter through you expressly
for use therein or (B) to that part of the Registration Statement that
constitutes the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the
Trustee (the "Form T-1").
(b) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the provisions of the Act.
(c) The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when
such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act, and any further Incorporated Documents so
filed will, when they are filed, conform in all material respects with the
requirements of the Exchange Act; no such document when it was filed (or,
if an amendment with respect to any such document was filed, when such
amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and no such further
document, when it is filed, will contain an untrue statement of a material
fact or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(d) All of the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 (the "Form 10-K"), which is
incorporated by reference into the Registration Statement. The Company and
each of the Subsidiaries that is a "significant subsidiary" (as defined in
Regulation S-X under the Act) (collectively, the "Significant
Subsidiaries") has been duly organized, is validly existing (if applicable,
as a corporation in good standing) under the laws of its jurisdiction of
organization and has full corporate (or partnership) power and authority to
carry on its business as it is currently being conducted (and, in the case
of the
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Company, to execute, deliver and perform this Agreement) and to own,
lease and operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified could not reasonably be expected to have a material
adverse effect, singly or in the aggregate, on the condition (financial or
other), business, properties, net worth or results of operations of the
Company and the Subsidiaries, taken as a whole (a "Material Adverse
Effect").
(e) All of the issued and outstanding shares of capital stock of, or
other ownership interests in, each Significant Subsidiary have been duly
authorized and validly issued, and certain shares of capital stock of each
Significant Subsidiary are owned, directly or through Subsidiaries, by the
Company as set forth on Exhibit 21 to the Form 10-K. All such shares or
other ownership interests in each Significant Subsidiary are fully paid and
nonassessable, and are free and clear of any security interest, mortgage,
pledge, claim, lien or encumbrance (each, a "Lien"), except for Liens that
are in the aggregate immaterial to the business of the Company and the
Subsidiaries, taken as a whole. There are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities, commitments of
sale, or Liens related to or entitling any person to purchase or otherwise
to acquire any shares of the capital stock of any Significant Subsidiary.
(f) Neither the Company nor any of the Significant Subsidiaries is in
violation of or in default in the performance of any of their respective
charters or bylaws (or partnership agreements, as the case may be) or any
bond, debenture, note or any other evidence of indebtedness or any
indenture, mortgage, deed of trust or other contract, lease or other
instrument to which the Company or any of the Significant Subsidiaries is a
party or by which it or any of them is bound, or to which any of the
property or assets of the Company or any of the Significant Subsidiaries is
subject, except as could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(g) This Agreement has been duly and validly executed and delivered
by the Company, and constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms
(assuming the due execution and delivery thereof by you), except as rights
to indemnity and contribution hereunder may be limited by Federal or state
securities laws, court decisions or public policy.
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(h) The Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized by all necessary corporate action of the
Company, and when duly executed and delivered by the Company in accordance
with its terms (assuming the due execution and delivery thereof by the
Trustee), will be a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that a waiver of rights under any usury laws may be unenforceable
and subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws, now or hereafter in effect,
relating to or affecting creditors' rights and remedies generally and to
general principles of equity (regardless of whether enforcement is sought
at law or in equity).
(i) The Securities have been duly authorized by the Company and on
the Closing Date, the Indenture and the Securities will have been duly
executed by the Company and will conform in all material respects to the
descriptions thereof in the Prospectus. When the Securities are issued,
executed and authenticated in accordance with the Indenture and paid for in
accordance with the terms of this Agreement, the Securities will be legal,
valid and binding obligations of the Company enforceable against the
Company in accordance with their terms and entitled to the benefits of the
Indenture, except to the extent that a waiver of rights under any usury
laws may be unenforceable and subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws, now or
hereafter in effect, relating to or affecting creditors' rights and
remedies generally and to general principles of equity (regardless of
whether enforcement is sought at law or in equity).
(j) The execution and delivery of this Agreement, the Indenture and
the Securities by the Company and the performance of this Agreement, the
Indenture and the Securities (i) does not require any consent, approval,
authorization or order of or registration or filing with any court,
regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required for the registration of the
Securities under the Act and the Trust Indenture Act and compliance with
the state securities or Blue Sky laws of various jurisdictions, all of
which have been or will be effected in accordance with this Agreement) and
(ii) will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default or cause an acceleration of any
obligation under, any of the respective charters or bylaws (or partnership
agreements, as the case may be) of the Company or any of the Significant
Subsidiaries or any material bond, note, debenture or other evidence of
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indebtedness or any material indenture, mortgage, deed of trust or other
material contract, lease or other instrument to which the Company or any of
the Significant Subsidiaries is a party or by which any of them is bound,
or to which any of the property or assets of the Company or any of the
Significant Subsidiaries is subject, or any order of any court or
governmental agency or authority entered in any proceeding to which the
Company or any of the Significant Subsidiaries was or is a party or by
which any of them is bound or (solely with respect to actions by the
Company or the Significant Subsidiaries) violate any applicable Federal,
state or local law, rule, administrative regulation or ordinance or
administrative or court decree, any of the foregoing of which could, singly
or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(k) Except as disclosed in the Registration Statement and the
Prospectus, there is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, pending against the
Company or any of the Significant Subsidiaries that is required to be
disclosed in the Registration Statement or the Prospectus, or that could,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect or materially and adversely to affect the performance of the
Company's obligations pursuant to this Agreement, the Indenture or the
Securities and, to the best of the Company's knowledge, no such proceedings
are contemplated or threatened. No action has been taken with respect to
the Company or any of the Significant Subsidiaries, and no statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency that suspends the effectiveness of the Registration Statement,
prevents or suspends the use of any Prepricing Prospectus or suspends the
sale of the Securities in any jurisdiction referred to in Section 5(h)
hereof; no injunction, restraining order or order of any nature by a
Federal or state court of competent jurisdiction has been issued with
respect to the Company or any of the Significant Subsidiaries that suspends
the effectiveness of the Registration Statement, prevents or suspends the
use of any Prepricing Prospectus or suspends the sale of the Securities in
any jurisdiction referred to in Section 5(h) hereof; other than the
litigation matters or proceedings described in the Form 10-K under the
caption "Item 3. Legal Proceedings", no action, suit or proceeding before
any court or arbitrator or any governmental body, agency or official
(domestic or foreign), is pending against or, to the best of the Company's
knowledge, threatened against, the Company or any of the Significant
Subsidiaries that, if adversely determined, could, singly or in the
aggregate, reasonably be expected in any manner to invalidate this
Agreement, the Indenture or the Securities; and every request of the
Commission, or any securities authority or agency of any
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jurisdiction, for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) has been complied
with in all material respects. No contract or document of a character
required to be described in the Registration Statement or the Prospectus
or to be filed as an exhibit to or incorporated by reference in the
Registration Statement is not so described or filed or incorporated by
reference as required.
(l) The firm of accountants that has certified or shall certify the
applicable consolidated financial statements and supporting schedules of
the Company filed or to be filed with the Commission as part of the
Registration Statement and the Prospectus are independent public
accountants with respect to the Company and the Subsidiaries, as required
by the Act and the Exchange Act. The consolidated financial statements,
together with related notes, set forth in the Prospectus and the
Registration Statement comply as to form in all material respects with the
requirements of the Act and the Exchange Act and fairly present, in all
material respects, the financial position of the Company and the
Subsidiaries at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated, in
accordance with generally accepted accounting principles in the United
States of America consistently applied throughout such periods, except as
disclosed in the notes to such financial statements; and the other
financial and statistical information and the supporting schedules included
in the Prospectus and in the Registration Statement present fairly, in all
material respects, the information required to be stated therein.
(m) Except as disclosed in the Registration Statement, subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, (i) neither the Company nor any of the
Significant Subsidiaries has incurred any liabilities or obligations,
direct or contingent, that are material to the Company and the
Subsidiaries, taken as a whole, nor entered into any transaction not in the
ordinary course of business that is material to the Company and the
Subsidiaries, taken as a whole, (ii) there has been no decision or judgment
in the nature of litigation adverse to the Company or any of the
Significant Subsidiaries, and (iii) there has been no material adverse
change in the condition (financial or other), business, net worth or
results of operations of the Company and the Subsidiaries, taken as a whole
(any of the above, a "Material Adverse Change").
(n) Neither the Company nor any of the Subsidiaries is involved in
any labor dispute nor, to the best of the Company's knowledge, is any labor
dispute imminent, other
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than routine disciplinary and grievance matters, and the Company is not
aware (without any independent verification) of any existing or imminent
labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors, that could reasonably be expected to
result in a Material Adverse Effect.
(o) The Company and each of the Significant Subsidiaries possess such
licenses, certificates, authorizations, approvals, franchises, trademarks,
service marks, trade names, permits and other rights issued by local,
state, federal or foreign regulatory agencies or bodies as are necessary to
conduct the businesses now conducted by them and the lack of which could
reasonably be expected to have a Material Adverse Effect on the Company and
the Subsidiaries, taken as a whole, and neither the Company nor any of the
Significant Subsidiaries has, to be the best of the Company's knowledge,
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization, approval, franchise,
trademark, service mark, trade name, permit or right that, if the subject
of any unfavorable decision, ruling or finding, could reasonably be
expected to have a Material Adverse Effect.
(p) The Company has not and, to the best of the Company's knowledge,
none of the Subsidiaries nor any employee or agent of the Company has,
directly or indirectly, paid or delivered any fee, commission or other sum
of money or item or property, however characterized, to any finder, agent,
government official or other party, in the United States or any other
country, that is in any manner related to the business or operations of the
Company that the Company knows or has reason to believe to have been
illegal under any federal, state or local laws of the United States or any
other country having jurisdiction; and the Company has not participated,
directly or indirectly, in any boycotts or other similar practices in
contravention of law affecting any of its actual or potential customers.
(q) All material tax returns required to be filed by the Company or
any of the Subsidiaries in any jurisdiction have been filed, other than
those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due or claimed to be due from such entities have been paid,
other than those being contested in good faith or for which adequate
reserves have been provided or those currently payable without penalty or
interest.
(r) Except as disclosed in the Prospectus or except as could not,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (a) to the best
- 13 -
of the Company's knowledge, neither the Company nor the Subsidiaries is
in violation of any Federal, state or local law or regulation relating
to pollution or protection of public heath or welfare or the environment,
including, without limitation, the storage, handling, transportation,
emissions, discharges, releases or threatened releases of pollutants,
contaminates, hazardous or toxic materials, substances or wastes, or
petroleum or petroleum products ("Environmental Laws"), (b) the Company
and each of the Subsidiaries have received all permits, licenses or
other approvals required of them under applicable Environmental Laws
to conduct their respective businesses, and the Company and each of the
Subsidiaries are in compliance with all terms and conditions of any
such permit, license or approval and (c) neither the Company nor, to
the best of the Company's knowledge, any of the Subsidiaries, has
received any notice or communication from any governmental agency or
any written notice from any other person regarding violation of or
liability under Environmental Laws and (d) there is no pending action
or proceeding, or to the best of the Company's knowledge, pending or
threatened claim or investigation against the Company or any of
the Subsidiaries regarding violation of or liability under Environmental
Laws.
(s) To the best of the Company's knowledge, there are no costs and
liabilities associated with Environmental Laws that could, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(t) To the best of the Company's knowledge, neither the Company nor
any of the Subsidiaries has (A) violated any Federal or state law relating
to discrimination in the hiring, promotion or pay of employees nor any
applicable wage or hour laws, nor any provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") or the rules and regulations
promulgated thereunder, or (B) engaged in any unfair labor practice that,
with respect to any matter specified in clause (A) or (B) above, could
reasonably be expected to result, singly or in the aggregate, in a Material
Adverse Effect. There is (i) no significant unfair labor practice
complaint pending against the Company or any of the Subsidiaries or, to the
best of the Company's knowledge, threatened against any of them, before the
National Labor Relations Board or any state or local labor relations board,
and no significant grievance or significant arbitration proceeding arising
out of or under any collective bargaining agreement is so pending against
the Company or any of the Subsidiaries or, to the best of the Company's
knowledge, threatened against any of them and (ii) to the best of the
Company's knowledge, no union representation question existing with respect
to the employees of the Company or any of the Subsidiaries and, to
- 14 -
the best of the Company's knowledge, no union organizing activities are
taking place, except (with respect to any matter specified in clause (i)
or (ii) above) such as would not, singly or in the aggregate, have a
Material Adverse Effect.
(u) To the best of the Company's knowledge, (i) each of the Company
and the Subsidiaries has good and marketable title to all property (real
and personal) described in the Prospectus as being owned by it, in fee
simple in the case of real property (other than in the case of certain
buildings the land under which is leased to the Company pursuant to long-
term leases that are valid, subsisting and enforceable against the
Company), free and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Registration Statement and
the Prospectus or in a document filed as an exhibit to the Registration
Statement and (ii) all the property described in the Registration Statement
and the Prospectus as being held under lease by each of the Company and the
Significant Subsidiaries is held by it under valid, subsisting and
enforceable leases, except (with respect to any matter specified in clause
(i) or (ii) above) such as would not, singly or in the aggregate, have a
Material Adverse Effect.
(v) Other than as described in the Registration Statement and the
Prospectus, no holder of any security of the Company has any right to
require registration of any security of the Company because of the filing
of the registration statement or consummation of the transactions
contemplated by this Agreement, except such rights as have been satisfied
or waived.
(w) The Company has complied with all provisions of Florida Statutes,
Section 517.075, relating to issuers doing business with Cuba.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of the any Prepricing Prospectus or the
Prospectus, in the light of the circumstances under which they were made) not
- 15 -
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission that has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
such Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this subsection (a) with respect
to any Prepricing Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of any
such loss, claim, damage, liability or expense arising from the sale of the
Securities by such Underwriter to any person if a copy of the Prospectus shall
not have been delivered or sent to such person within the time required by the
Act and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, provided that the Company
has delivered the Prospectus to the several Underwriters in requisite quantity
on a timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability that the Company may otherwise
have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have failed
to assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both such
Underwriter or such controlling person and the indemnifying parties and such
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and any indemnifying party by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding or
- 16 -
separate but substantially similar or related actions, suits or proceedings
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Underwriters and controlling persons, which firm shall be designated
in writing by Morgan Stanley & Co. Incorporated, and that all such fees and
expenses shall be reimbursed as they are incurred. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the indemnifying parties agree to indemnify and
hold harmless any Underwriter, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each Underwriter, but
only with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer or any such
controlling person based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect of
which indemnity may be sought against any Underwriter pursuant to this
subsection (c), such Underwriter shall have the rights and duties given to the
indemnifying parties by subsection (b) above (except that if the Company shall
have assumed the defense thereof such Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Company, its directors, any such officer and any
such controlling person shall have the rights and duties given to the
Underwriters by subsection (b) above. The foregoing indemnity agreement shall
be in addition to any liability that any Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under subsection (a) or (c) above in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then an indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified
- 17 -
party as a result of such losses, claims, damages, liabilities or expenses
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other
hand from the offering of the Securities, 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 on the one hand
and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or by the Underwriters on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by a
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in subsection (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in subsection (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price of the Securities underwritten by it and distributed to the public exceeds
the amount of any damages that such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 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 7 are several in proportion
to the respective principal amounts of Securities set forth opposite their names
in Schedule I hereto
- 18 -
(or such principal amounts of securities increased as set forth in Section 10
hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any person
controlling the Company, (ii) acceptance of any Securities and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters to purchase the Securities hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment thereto to be declared effective
before the offering of the Securities may commence, such post-effective
amendment shall have become effective not later than 5:30 P.M., New York
City time, on the date hereof, or at such later date and time as shall be
consented to in writing by you, and all filings, if any, required by Rules
424, 430A and 434 under the Act shall have been timely made; no stop order
suspending the effectiveness of the registration statement shall have been
issued and no proceeding for that purpose shall have been instituted or, to
the knowledge of the Company or any Underwriter, threatened by the
Commission, and any request of the Commission for additional information
(to be included in the registration statement or the Prospectus or
otherwise) shall have been complied with to your satisfaction.
- 19 -
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any downgrading or any notice of any intended or
potential downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded any
of the Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act, (ii) any change in or affecting the
condition (financial or other), business, properties, net worth, or results
of operations of the Company or the Subsidiaries not contemplated by the
Prospectus, that, in your reasonable opinion, would materially adversely
affect the market for the Securities, or (iii) any event or development
relating to or involving the Company or any officer or director of the
Company that makes any statement made in the Prospectus untrue in any
material respect or that, in the opinion of the Company and its counsel or
the Underwriters and their counsel, requires the making of any addition to
or change in the Prospectus in order to state a material fact required by
the Act or any other law to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, if amending or supplementing the Prospectus to
reflect such event or development would, in your reasonable opinion,
materially adversely affect the market for the Securities.
(c) You shall have received on the Closing Date, an opinion of Latham
& Watkins, counsel for the Company, dated the Closing Date and addressed to
the several Underwriters, to the effect that:
(i) the Securities, when executed and authenticated in
accordance with the terms of the Indenture and delivered to and paid
for by you in accordance with the terms of this Agreement, will
constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws then or thereafter in
effect relating to or affecting rights and remedies of creditors, and
to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity) and to the discretion of
the court before which any proceeding therefor may be brought;
(ii) the Indenture, assuming due authorization, execution and
delivery thereof by the Trustee, will be a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency,
- 20 -
fraudulent conveyance, reorganization, moratorium and similar laws
then or thereafter in effect relating to or affecting rights and
remedies of creditors, and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at
law or in equity) and to the discretion of the court before which
any proceeding therefor may be brought;
(iii) the Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Registration
Statement and the Prospectus under the headings "Description of Debt
Securities" and "Description of Senior Notes";
(iv) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the
best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the
Act and no proceedings therefor have been initiated by the Commission;
and any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) or Rule 434 under the Act has been
made in the manner and within the time period required by Rule 424(b)
and Rule 430A under the Act; the Indenture has been duly qualified
under the Trust Indenture Act;
(v) To the best of such counsel's knowledge no consent,
approval, authorization or order of, or filing with, any federal or
New York court or governmental agency or body is required to be
obtained or made by the Company for the consummation of the sale of
the Securities by the Company pursuant to this Agreement, except (A)
such as have been obtained under the Act and the Trust Indenture Act
and (B) such as may be required under the state securities laws in
connection with the purchase and distribution of the Securities by the
Underwriters;
(vi) The Registration Statement and the Prospectus comply as to
form in all material respects with the requirements for registration
statements on Form S-3 under the Act and the rules and regulations of
the Commission thereunder; it being understood, however, that such
counsel need express no opinion with respect to (A) the financial
statements, schedules and other financial and statistical data
included in the Registration Statement or the Prospectus or
incorporated therein or (B) the Form T-1. In passing upon the
compliance as to form of the Registration Statement and the
Prospectus, such counsel may assume that the statements made and
incorporated by reference therein are correct and complete;
- 21 -
(vii) Neither the purchase of the Securities by the Underwriters
nor the sale of the Securities by the Company pursuant to the terms of
this Agreement will result in the breach of or a default under those
agreements identified to such counsel by an officer of the Company as
material to the Company; and
(viii) The statements set forth in the Prospectus under the heading
"Plan of Distribution" and in the first, second and sixth paragraphs
under the heading "Underwriters", insofar as such statements
constitute a summary of legal matters, are accurate in all material
respects.
Such opinion may be limited to the internal laws of the State of New
York and the Federal laws of the United States. Such counsel may rely as to
factual matters on certificates of officers of the Company and of state
officials, in which case their opinion shall state that they are so doing.
Such opinion also shall take further exceptions that shall be reasonably
acceptable to the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the
Company, representatives of the Underwriters and their counsel, at which
the contents of the Registration Statement and Prospectus and related
matters were discussed and, although such counsel need not pass upon and
need not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus and such counsel may state that they have made no independent
check or verification thereof, during the course of such participation,
(relying as to materiality to a large extent upon the statements of
officers and other representatives of the Company), no facts came to such
counsel's attention that caused such counsel to believe that the
Registration Statement (as amended or supplemented, if applicable, and
including the Incorporated Documents), at the time such Registration
Statement or any post-effective amendment became effective and on the date
hereof, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus
(including the Incorporated Documents) as amended or supplemented, as
of its date and as of the Closing Date, contained an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; it being
understood that such counsel need express no belief with respect to
(i) the financial statements, schedules and other financial and
- 22 -
statistical data included in the Registration Statement or the
Prospectus or incorporated therein or (ii) the Form T-1.
(d) You shall have received on the Closing Date, an opinion of John
F. Schmutz, Esq., Vice President and General Counsel of the Company, dated
the Closing Date and addressed to the several Underwriters, to the effect
that:
(i) To the best of such counsel's knowledge, no authorization,
approval, consent or order of, or registration or filing with, any
court or governmental authority or agency is required to be obtained
or made by the Company for the valid sale of the Securities to you,
except (A) such as have been obtained under the Act and the Trust
Indenture Act and (B) such as may be required under the state
securities or Blue Sky laws or regulations of any jurisdiction in the
United States in connection with the purchase and distribution of the
Securities by the Underwriters;
(ii) The Company has corporate power and authority to enter into
this Agreement, the Indenture and the Securities and each of this
Agreement, the Indenture and the Securities has been duly authorized
by all necessary corporate action by the Company, and each of this
Agreement and the Indenture has been duly executed and delivered by
the Company;
(iii) Neither the purchase of the Securities by the Underwriters
nor the sale of the Securities by the Company pursuant to the terms of
this Agreement will conflict with or constitute a breach of or a
default under the certificate or articles of incorporation or bylaws,
or other organizational documents, of the Company or any of the
Significant Subsidiaries or the terms of any material agreement or
instrument to which the Company or any of the Significant Subsidiaries
is a party or by which any of them is bound, or to which any of the
properties of the Company or any of the Significant Subsidiaries is
subject, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of the Significant Subsidiaries, or result in any violation of any
statute, rule or regulation applicable to the Company or, to the best
of such counsel's knowledge, any judgment, injunction, order or decree
of any court or governmental agency or body having jurisdiction over
the Company or any of the Significant Subsidiaries or any of their
respective properties;
(iv) Each of the Company and, to the best of such counsel's
knowledge, the Significant Subsidiaries that
- 23 -
is a corporation has been duly incorporated and is validly
existing and is a corporation in good standing under the laws of
its jurisdiction of its incorporation, and each of the Company
and, to the best of such counsel's knowledge, the Significant
Subsidiaries has the corporate (or partnership) power and
authority and all necessary governmental authorizations,
approvals, orders, licenses, certificates, franchises and permits
of and from all governmental regulatory officials and bodies to
own and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus and is
duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction in which such
qualification is required wherein it owns or leases material
property or conducts business, except where the failure so to
qualify could not reasonably be expected to have a Material
Adverse Effect;
(v) All of the issued and outstanding capital stock of, or other
ownership interests in, each Significant Subsidiary has been duly
authorized and validly issued, and is fully paid and nonassessable
and, except as otherwise set forth in the Registration Statement and
the Prospectus, certain shares of capital stock of, or other ownership
interests in, each Significant Subsidiary are owned by the Company,
either directly or through Subsidiaries, as set forth on Exhibit 21 to
the Form 10-K, free and clear of any perfected security interest or,
to the best of such counsel's knowledge, any other security interests,
claims, liens, equities or encumbrances;
(vi) Except as described in the Registration Statement and the
Prospectus, there is no holder of any security of the Company or any
other person who has the right, contractual or otherwise, to cause the
Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, the Securities or the right to have any
securities of the Company included in the registration statement or
the right, as a result of the filing of the registration statement, to
require registration under the Act of any securities of the Company,
except such rights as have been satisfied or waived;
(vii) To the best of such counsel's knowledge (A) there are no
franchises, contracts, indentures, mortgages, leases, loan agreements,
notes or other agreements or instruments to which the Company or any
Significant Subsidiary is a party or by which any of them may be bound
that are required to be described in
- 24 -
the Registration Statement or the Prospectus or to be filed as
exhibits to or incorporated by reference in the Registration
Statement other than those described therein or filed or
incorporated by reference as exhibits thereto, (B) no default
exists in the due performance or observance of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument, except for defaults that would not, singly or in the
aggregate, have a Material Adverse Effect and (C) the statements
in the Form 10-K under the caption "Item 3. Legal Proceedings"
insofar as they relate to statements of law or legal conclusions,
are accurate in all material respects;
(viii) The Company and the Significant Subsidiaries own all
patents, trademarks, trademark registrations, service marks, service
mark registrations, trade names, copyrights, licenses, inventions,
trade secrets and rights described in the Prospectus as being owned by
them or any of them or necessary for the conduct of their respective
businesses, and such counsel is not aware of any claim to the contrary
or any challenge by any other person to the rights of the Company and
the Significant Subsidiaries with respect to the foregoing;
(ix) To the best of such counsel's knowledge, there is no
current, pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of the Significant Subsidiaries or any of
their respective properties of a character required to be disclosed in
the Registration Statement and the Prospectus that is not adequately
so disclosed;
(x) At the time it became effective and on the Closing Date, the
Registration Statement (except for (A) financial statements, the notes
thereto and related schedules and other financial, numerical,
statistical or accounting data included or incorporated therein or
omitted therefrom and (B) the Form T-1, as to which no opinion need be
expressed) and the Prospectus complied and complies as to form in all
material respects with the applicable requirements of the Act; and
each of the Incorporated Documents (except for financial statements,
the notes thereto and related schedules and other financial,
numerical, statistical or accounting data included therein or omitted
therefrom, as to which no opinion need be expressed) complies as to
form in all material respects with the Exchange Act;
(xi) The statements in the Registration Statement and the
Prospectus, insofar as they are descriptions of
- 25 -
contracts, agreements or other legal documents, or refer to
statements of law or legal conclusions, are accurate and present
fairly the information required to be shown; and
(xii) Neither the Company nor any of the Subsidiaries is an
"investment company" required to be registered under Section 8 of the
Investment Company Act of 1940, as amended (the "Investment Company
Act"), or an entity "controlled by an investment company" required to
be registered under Section 8 of the Investment Company Act.
Such opinion may be limited to the internal laws of the State of Texas
and the Federal laws of the United States. Such opinion shall take further
exceptions that shall be reasonably acceptable to the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the
Company, your representatives and your counsel, at which the contents of
the Registration Statement and Prospectus (including the Incorporated
Documents) and related matters were discussed and, although such counsel is
not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus, on the basis of the foregoing, relying as to
the factual matters underlying the determination of materiality to a large
extent upon the statements of officers and other representatives of the
Company, no facts came to such counsel's attention that caused such counsel
to believe that the Registration Statement (as amended or supplemented, if
applicable, and including the Incorporated Documents), at the time such
Registration Statement or any post-effective amendment became effective
and on the date hereof, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (other than
information omitted therefrom in reliance on Rule 430A under the Act),
or the Prospectus, as amended or supplemented, as of its date and as of
the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; it being understood that such counsel need express no
belief with respect to (i) the financial statements, schedules and other
financial and statistical data included in the Registration Statement or
the Prospectus or incorporated therein or (ii) the Form T-1.
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(e) You shall have received on the Closing Date an opinion of Davis
Polk & Wardwell, counsel for the Underwriters, dated the Closing Date and
addressed to the several Underwriters, with respect to the matters referred
to in clauses (i), (ii), (iii), (iv), (v), (vi) and (viii) and in the last
paragraph of subsection (c) above and such other related matters as you may
request.
(f) You shall have received letters addressed to the several
Underwriters, and dated the date hereof and the Closing Date from KPMG Peat
Marwick LLP, independent certified public accountants, substantially in the
forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company (other
than in the ordinary course of business) from that set forth or
contemplated in the Prospectus (or any amendment or supplement thereto);
(iii) there shall not have been, since the respective dates as of which
information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in
the Registration Statement and the Prospectus (or any amendment or
supplement thereto), any Material Adverse Change; (iv) the Company and the
Subsidiaries shall not have any liabilities or obligations, direct or
contingent (whether or not in the ordinary course of business), that are
material to the Company and the Subsidiaries, taken as a whole, other than
those reflected in the Registration Statement and the Prospectus (or any
amendment or supplement thereto); and (v) all the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all material respects on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall
have received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of the Company (or such
other officers as are acceptable to you), to the effect set forth in this
Section 8(g) and in Sections 8(b)(i) and 8(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date
to have performed or complied in all material respects with any of its
agreements herein contained and required to be performed or complied with
by it hereunder at or prior to the Closing Date.
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(i) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably
requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to the Underwriters, or to counsel for the Underwriters, shall be
deemed a representation and warranty by the Company to each Underwriter as to
the statements made therein.
9. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by the
Company of its obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectus, the
Incorporated Documents, and all amendments or supplements to any of them, as may
be reasonably requested for use in connection with the offering and sale of the
Securities; (iii) the preparation, printing, authentication, issuance and
delivery of the Securities, including any stamp taxes in connection with the
original issuance and sale of the Securities; (iv) the printing (or
reproduction) and delivery of this Agreement, the Indenture, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the Securities;
(v) the registration or qualification of the Securities for offer and sale under
the state securities or Blue Sky laws of the several states as provided herein
(including the reasonable fees, expenses and disbursements of counsel for the
Underwriters relating to the preparation, printing or reproduction, and delivery
of the preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (vi) the filing fees and the fees and expenses of counsel for
the Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (vii) the transportation and
other expenses incurred by or on behalf of Company representatives in connection
with presentations to prospective purchasers of the Securities; and (viii) the
fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company.
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10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Securities may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company by notifying you, or by you, on behalf of the several Underwriters, by
notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Securities that it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate principal amount of Securities that such
defaulting Underwriter or Underwriters are obligated but fail or refuse to
purchase is not more than one-tenth of the aggregate principal amount of
Securities that the Underwriters are obligated to purchase on the Closing Date,
each non-defaulting Underwriter shall be obligated, severally, in the proportion
that the principal amount of Securities set forth opposite its name in Schedule
I hereto bears to the aggregate principal amount of Securities set forth
opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify, to purchase the Securities that such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase;
PROVIDED that in no event shall the principal amount of Securities that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such
principal amount of Securities without the written consent of such Underwriter.
If any one or more of the Underwriters shall fail or refuse to purchase
Securities that it or they are obligated to purchase on the Closing Date and the
aggregate principal amount of Securities with respect to which such default
occurs is more than one-tenth of the aggregate principal amount of Securities
that the Underwriters are obligated to purchase on the Closing Date and
arrangements satisfactory to you and the Company for the purchase of such
Securities by one or more non-defaulting Underwriters or other party or parties
approved by you and the Company are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case that does not
result in termination of this Agreement, any of you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any such default of any such Underwriter under this
Agreement. The term
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"Underwriter" as used in this Agreement includes, for all purposes
of this Agreement, any party not listed in Schedule I hereto who,
with your approval and the approval of the Company purchases
Securities that a defaulting Underwriter is obligated, but fails
or refuses, to purchase.
Any notice under this Section 10 may be given by
telegram, telecopy or telephone but shall be subsequently
confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be
subject to termination in your absolute discretion, without
liability on the part of any Underwriter to the Company by notice
to the Company if prior to the Closing Date (i) trading in
securities generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been
suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York or Texas shall have been
declared by either federal or state authorities, or (iii) there
shall have occurred any outbreak or escalation of hostilities or
other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which
on the financial markets of the United States is such as to make
it, in your reasonable judgment, impracticable or inadvisable to
commence or continue the offering of the Securities at the
offering price to the public set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the
Securities by the Underwriters. Notice of such termination may be
given to the Company by telegram, telecopy or telephone and shall
be subsequently confirmed by letter.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The
statements set forth in the last paragraph on the cover page, the
stabilization legend on the inside cover page, and the statements
in the third paragraph under the caption "Underwriters" in any
Prepricing Prospectus and in the Prospectus constitute the only
information furnished by or on behalf of the Underwriters through
you expressly for use therein as such information is referred to
in Sections 6(a) and 7 hereof.
13. MISCELLANEOUS. Except as otherwise provided in
Sections 5, 10 and 11 hereof, notice given pursuant to any
provision of this Agreement shall be in writing and shall be
delivered (i) if to the Company, at the office of the Company at
Weston Centre, 112 E. Pecan Street, P.O. Box 2636, San Antonio,
Texas 78299-2636, Attention: John F. Schmutz, Esq., Vice
President and General Counsel; or (ii) if to the Underwriters,
care of Morgan Stanley & Co. Incorporated, 1251 Avenue of the
Americas, New York, New York 10020, Attention: Debt Syndicate
Department.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors
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and officers and the other controlling persons referred to in
Section 7 hereof and their respective successors and assigns, to
the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the
term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of
any of the Securities in his status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall
be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be performed
within the State of New York.
This Agreement may be signed in various counterparts
that together constitute one and the same instrument. If signed
in counterparts, this Agreement shall not become effective unless
at least one counterpart hereof shall have been executed and
delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth
the agreement among the Company and the several Underwriters.
Very truly yours,
LA QUINTA INNS, INC.
By: /s/ JOHN F. SCHMUTZ
---------------------------
Name: John F. Schmutz
Title: Vice President and General Counsel
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
Smith Barney Inc.
Acting severally on behalf
of themselves and on behalf
of the other several
Underwriters named herein.
By Morgan Stanley & Co.
Incorporated
By: /s/ JENNIFER HARRIS
--------------------------
Name: Jennifer Harris
Title: Vice President
- 32 -
SCHEDULE I
LA QUINTA INNS, INC.
PRINCIPAL AMOUNT
UNDERWRITERS OF SECURITIES
------------ -------------
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . . $ 33,400,000
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . . $ 33,300,000
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . $ 33,300,000
------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000,000
------------
------------
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