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AVATAR HOLDINGS INC.
$100,000,000
___% Convertible Subordinated Notes due 2005
UNDERWRITING AGREEMENT
January __, 1998
CIBC Oppenheimer Corp.
SBC Warburg Dillon Read Inc.
c/o CIBC Oppenheimer Corp.
CIBC Oppenheimer Tower
World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Avatar Holdings Inc., a Delaware corporation (the "Company"),
proposes to sell to you (together, the "Underwriters"), $100,000,000 aggregate
principal amount of the Company's ___% Convertible Subordinated Notes due 2005
(the "Firm Notes") which are to be issued by the Company pursuant to the
provisions of an indenture, to be dated as of January __, 1998 (such indenture,
as amended or supplemented, is herein referred to as the "Indenture"), between
the Company and The Chase Manhattan Bank (the "Trustee"). In addition, the
Company proposes to grant to the Underwriters an option to purchase additional
Notes in an aggregate principal amount of up to $15,000,000 (the "Additional
Notes") from it for the purpose of covering over-allotments in connection with
the sale of the Firm Notes. The Firm Notes and the Additional Notes are together
called the "Notes." The Notes and the shares of the Company's common stock, par
value $1.00 per share (the "Common Stock") issuable upon conversion of the Notes
(the "Conversion Shares"), are herein sometimes referred to as the "Securities."
1. Sale and Purchase of the Notes. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
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(a) The Company agrees to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at a purchase price of ___% of the principal
amount thereof (the "Initial Price"), the principal amount of Firm
Notes set forth opposite the name of such Underwriter in Schedule I to
this Agreement.
(b) The Company grants to the Underwriters an option to
purchase, severally and not jointly, all or any part of the Additional
Notes at the Initial Price. The principal amount of Additional Notes to
be purchased by each Underwriter shall be the same percentage (adjusted
by the Underwriters to eliminate fractions) of the total principal
amount of Additional Notes to be purchased by the Underwriters as such
Underwriter is purchasing of the Firm Notes. Such option may be
exercised only to cover over-allotments in connection with the sales of
the Firm Notes by the Underwriters and may be exercised in whole or in
part at any time on or before 12:00 noon, New York City time, on the
business day before the Firm Notes Closing Date (as defined below), and
only once thereafter within 30 days after the date of this Agreement,
in each case upon written or telegraphic notice, or verbal or
telephonic notice confirmed by written or telegraphic notice, by the
Underwriters to the Company no later than 12:00 noon, New York City
time, on the business day before the Firm Notes Closing Date or at
least two and no more than five business days before the Additional
Notes Closing Date (as defined below), as the case may be, setting
forth the principal amount of Additional Notes to be purchased and the
time and date (if other than the Firm Notes Closing Date) of such
purchase.
2. Delivery and Payment. Delivery by the Company of the Notes
to the Underwriters, and payment of the purchase price by certified or official
bank check or checks payable in New York Clearing House (same day) funds to the
Company, shall take place at the offices of CIBC Xxxxxxxxxxx Corp., at CIBC
Xxxxxxxxxxx Tower, World Financial Center, New York, New York 10281, at 10:00
a.m., New York City time, on the third business day (the fourth business day,
should the Notes be priced after 4:00 p.m., New York City time) following the
date of this Agreement. Payment and delivery in respect of the Firm Notes may
occur at such time on such other date, not later than 10 business days after the
date of this Agreement, as shall be agreed upon by the Company and the
Underwriters (such time and date of delivery and payment are called the "Firm
Notes Closing Date").
In the event the option with respect to the Additional Notes
is exercised, delivery by the Company of the Additional Notes to the
Underwriters and payment of the purchase price by certified or official bank
check or checks payable in New York Clearing House (same day) funds to the
Company shall take place at the offices of CIBC Xxxxxxxxxxx Corp. specified
above at the time and on the date (which may be the same date as, but in no
event shall be earlier than, the Firm Notes Closing Date) specified in the
notice referred to in Section 1(b) (such time and date of delivery and payment
are called the "Additional Notes Closing Date"). The Firm Notes Closing Date and
the Additional Notes Closing Date are called, individually, a "Closing Date"
and, together, the "Closing Dates."
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Notes issued in book-entry form will be issued to Cede & Co.
as nominee of The Depository Trust Company ("DTC") pursuant to a letter
agreement (the "DTC Agreement") among the Company, the Trustee and DTC.
Certificates evidencing the Notes shall be registered in the name of Cede & Co.
pursuant to the DTC Agreement and shall be made available to the Underwriters
for examination, at such place as is designated by the Underwriters, at least
one full business day before the Firm Notes Closing Date (or the Additional
Notes Closing Date in the case of the Additional Notes).
3. Registration Statement and Prospectus; Public Offering. The
Company has prepared in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-41923), including a preliminary prospectus relating to the Securities, and
has filed with the Commission the registration statement and such amendments
thereto as may have been required to the date of this Agreement. Copies of such
Registration Statement (including all amendments thereto) and of the related
preliminary prospectus have heretofore been delivered by the Company to you. The
term "Registration Statement" means the Registration Statement as amended at the
time and on the date it becomes effective (the "Effective Date"), including all
exhibits and information, if any, deemed to be part of the Registration
Statement pursuant to Rule 424(a), Rule 430A and Rule 462(b) of the Rules. The
term "preliminary prospectus" means any preliminary prospectus (as described in
Rule 430 of the Rules) included at any time as a part of the Registration
Statement that omits information with respect to the Notes permitted pursuant to
paragraph (a) of Rule 430A of the Rules to be omitted from the form of
Prospectus included in the Registration Statement at the time it is declared
effective by the Commission. The term "Prospectus" means the prospectus in the
form first used to confirm sales of the Notes (whether such prospectus was
included in the Registration Statement at the time of effectiveness or was
subsequently filed with the Commission pursuant to Rule 424(b) of the Rules) or
the preliminary prospectus forming part of the Registration Statement at the
time it was declared effective together with the term sheet permitted under Rule
434(b) and filed with the Commission pursuant to Rule 424(b), as applicable. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the documents incorporated by reference
thereto pursuant to Item 12 of Form S-3 under the Securities Act as of the date
of the Registration Statement, preliminary prospectus or Prospectus as well as
the copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX"). Any reference to any amendment or
supplement to the Registration Statement, any preliminary 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 (the "Exchange
Act") which, upon filing, are incorporated by reference therein, as required by
paragraph (b) of Item 12 of Form S-3.
The Company understands that the Underwriters propose to make
a public offering of the Notes, as set forth in and pursuant to the Prospectus,
as soon after the Effective Date and the date of this Agreement and the
qualification of the Indenture under the Trust Indenture Act of 1939,
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as amended (the "TIA") as the Underwriters deem advisable. The Company hereby
confirms that the Underwriters and dealers have been authorized to distribute or
cause to be distributed each preliminary prospectus and are authorized to
distribute the Prospectus (as from time to time amended or supplemented if the
Company furnishes amendments or supplements thereto to the Underwriters) during
any period in which a preliminary prospectus or Prospectus is required by law to
be distributed.
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date the Registration Statement complied,
and on the date of the Prospectus, on the date any post-effective
amendment to the Registration Statement or any related registration
statement filed with the Commission pursuant to Rule 462(b) of the
Rules shall become effective, on the date any supplement or amendment
to the Prospectus is filed with the Commission and on each Closing
Date, the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply in all material respects
with the applicable provisions of the Securities Act and the Rules and
the Exchange Act and the rules and regulations of the Commission
thereunder; the Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and on the other dates
referred to above neither the Registration Statement nor the
Prospectus, nor any amendment thereof or supplement thereto, will
contain any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein not misleading. When any related
preliminary prospectus was first filed with the Commission (whether
filed as part of the Registration Statement or any amendment thereto or
pursuant to Rule 424(a) of the Rules) and when any amendment thereof or
supplement thereto was first filed with the Commission, such
preliminary prospectus as amended or supplemented complied in all
material respects with the applicable provisions of the Securities Act
and the Rules and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
The Company makes no representation or warranty as to any information
in the Registration Statement, the preliminary prospectus, the
Prospectus or any amendment or supplement thereto contained in or
omitted from (i) the paragraphs with respect to stabilization or
affiliate transactions on the inside front cover page of the Prospectus
and (ii) the statements contained under the caption "Underwriting" in
the preliminary prospectus and the Prospectus. The Company acknowledges
that such statements constitute the only information furnished in
writing by the Underwriters specifically for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus.
(b) All contracts and other documents required to be filed as
exhibits to the Registration Statement or the documents incorporated by
reference therein have been filed
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with the Commission as exhibits to the Registration Statement or the
documents incorporated by reference therein.
(c) When the Registration Statement became effective, the
Indenture was, and at all times thereafter has been and will be, duly
qualified under the TIA, and conformed and at all times thereafter will
conform, to the requirements of the TIA.
(d) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, when each
was filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed) with the Commission, complied and
will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder, as applicable, and, when read together with the other
information in the Prospectus, at the time the Registration Statement
became effective, at the time the Prospectus was issued and on the
Closing Date (and, if any Additional Notes are purchased, at the
Additional Notes Closing Date), did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(e) The financial statements and schedules of the Company
(including all notes thereto) included in the Registration Statement
and Prospectus fairly present the financial position, the results of
operations, stockholders' equity and cash flows and the other
information purported to be shown therein of the Company at the
respective dates and for the respective periods to which they apply;
and such financial statements have been prepared in conformity with
generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a
fair presentation of the results for such periods have been made. No
other financial statements or schedules of the Company are required by
the Securities Act or the Rules to be included in the Registration
Statement. There are no schedules required to be included in the
Registration Statement in order to present fairly in all material
respects the information required to be stated therein; and the
historical financial information and statistical data set forth in the
Prospectus under the captions "Summary Consolidated Financial
Information," "Capitalization" and "Selected Financial Data" are fairly
stated in all material respects in relation to the financial statements
from which they have been derived. The pro forma financial data
included in the Registration Statement and the Prospectus present
fairly the information shown therein, comply in all material respects
with the requirements of the Securities Act and the Rules and
Regulations with respect to pro forma financial statements, have been
properly compiled on the pro forma basis described therein and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
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(f) To the knowledge of the Company, Ernst & Young LLP, whose
separate reports have been filed with the Commission as a part of the
Registration Statement, is and, during the periods covered by its
reports, was an independent public accountant with respect to the
Company as required by the Securities Act and the Rules.
(g) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware. The Company's subsidiaries which are or would be required
to be listed pursuant to Item 601 of Regulation S-K and Rule 1-02(w) of
Regulation S-X under the Securities Act ("Rule 1-02(w)") on the
Company's Annual Report on Form 10-K (the "Subsidiaries"), are set
forth on Schedule II hereto. Each other subsidiary of the Company is
not a "significant subsidiary" as defined in Rule 1-02(w). Each
Subsidiary of the Company has been duly incorporated or formed and is
an existing corporation in good standing under the laws of the
jurisdiction of its incorporation or organization. Each of the Company
and its Subsidiaries is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character or
location of its assets or properties (owned, leased or licensed) or the
nature of its business makes such qualification necessary, except for
such jurisdictions where the failure to so qualify individually or in
the aggregate would not have a material adverse effect on the assets or
properties, business, results of operations or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, and
the Company has not received any claim or notice from any official
authority in any jurisdiction that it is required to be qualified or
licensed to do business in any such jurisdiction in which it is not so
qualified or licensed. The Company and its Subsidiaries do not own,
lease or license any material asset or property or, other than through
independent sales agents, conduct any business outside the United
States of America. Each of the Company and its Subsidiaries has all
requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, franchises,
certificates and permits of and from all governmental or regulatory
bodies or any other person or entity, to own, lease and operate its
assets and properties and conduct its businesses as now being conducted
and as described in the Registration Statement and the Prospectus,
except for such authorizations, approvals, consents, orders, licenses,
franchises, certificates and permits which, if not obtained, would not
have a material adverse effect on the assets or properties, business,
results of operations or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole; no such authorization,
approval, consent, order, license, certificate or permit contains a
materially burdensome restriction other than as disclosed in the
Registration Statement and the Prospectus; and the Company has all such
corporate power and authority, and such authorizations, approvals,
consents, orders, licenses, franchises, certificates and permits
necessary to enter into, deliver and perform this Agreement and the
Indenture and to issue, execute, deliver and sell the Notes and to
issue the Conversion Shares in accordance with the Indenture (except as
may be required under the Securities Act, the Exchange Act and state
and foreign Blue Sky laws and the TIA).
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(h) The Company owns or possesses adequate and enforceable
rights to use all (to the extent any of them exist) patents, patent
applications, trademarks, trademark applications, service marks,
copyrights, copyright applications, licenses and other similar rights
(collectively, the "Intangibles") necessary for the conduct of its
business as now being conducted and as described in the Registration
Statement and the Prospectus. The Company has not infringed, is not
infringing, and has not received any notice of infringement of, any
Intangible of any other person and the Company does not know of any
basis therefor except for such infringements which individually or in
the aggregate would not have a material adverse effect on the assets or
properties, business, results of operations or financial condition of
the Company and its Subsidiaries, taken as a whole. The Company has not
received any notice of infringement of any of its Intangibles and the
Company does not know of any basis therefor.
(i) Each of the Company and its Subsidiaries has good and
valid title in fee simple to each of the items of personal property
which are reflected in the financial statements referred to in Section
4(e) or are referred to in the Registration Statement and the
Prospectus as being owned by it and valid and enforceable leasehold
interests in each of the items of real and personal property which are
referred to in the Registration Statement and the Prospectus as being
leased by it, in each case free and clear of all liens, encumbrances,
claims, security interests and defects, other than those described in
the Registration Statement and the Prospectus and other than those that
could not materially affect the value thereof or materially interfere
with the use made or presently contemplated to be made by them.
(j) Except as disclosed in the Registration Statement and the
Prospectus, there is no material litigation or governmental or other
proceeding or investigation before any court or before or by any public
body or board pending or, to the best of the Company's knowledge,
threatened (and the Company does not know of any basis therefor)
against, or involving the assets, properties or businesses of, the
Company or any of its Subsidiaries which, if determined adversely to
the Company or any of its Subsidiaries, would materially adversely
affect the value or the operation of any such assets or properties or
the business, results of operations or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, or
would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement.
(k) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described therein, there has not been any material adverse change in
the assets or properties, business, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as
a whole, whether or not arising from transactions in the ordinary
course of business; each of the Company and its Subsidiaries has not
entered into any transaction, other than in the ordinary course of
business, that is material to the Company and its Subsidiaries, taken
as a whole; each of the Company and its Subsidiaries has not sustained
any material loss
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or interference with its assets, businesses or properties from fire,
explosion, earthquake, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree. Since the date of the
latest balance sheet included in the Registration Statement and the
Prospectus, except as reflected in the Registration Statement and the
Prospectus, each of the Company and its Subsidiaries has not undertaken
any material liability or obligation, direct or contingent, except for
liabilities or obligations undertaken in the ordinary course of
business consistent with past practice.
(l) Each agreement listed in the Exhibits to the Registration
Statement is in full force and effect and is valid and enforceable by
the Company or one of its Subsidiaries in accordance with its terms
(subject to bankruptcy, insolvency, fraudulent transfer, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and to general equitable
principles, whether considered in proceedings in equity or at law),
except where the failure of any such agreement to be in full force and
effect and valid and enforceable by the Company or one of its
Subsidiaries in accordance with its terms would not have a material
adverse effect on the assets or properties, business, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, assuming the due authorization,
execution and delivery thereof by each of the other parties thereto.
Neither the Company, nor to the best of the Company's knowledge, any
other party is in default in the observance or performance of any term
or obligation to be performed by it under any such agreement, and no
event has occurred which with notice or lapse of time or both would
constitute such a default which default or event would have a material
adverse effect on the assets or properties, business, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole. No default exists, and no event has
occurred which with notice or lapse of time or both would constitute a
default, in the due performance and observance of any term, covenant or
condition, by the Company of any other indenture, mortgage, deed of
trust, note or any other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which any of them or their
properties or businesses is bound or affected which default or event
would have a material adverse effect on the assets or properties,
business, results of operations or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole.
(m) Each of the Company and its Subsidiaries is not in
violation of any term or provision of its charter or by-laws or
partnership or joint venture agreement or of any judgment, decree,
order, statute, rule or regulation, where the consequences of such
violation would have a material adverse effect on the assets or
properties, business, results of operations or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole.
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(n) Neither the execution, delivery and performance of this
Agreement or the Indenture by the Company nor the consummation of any
of the transactions contemplated hereby or thereby (including, without
limitation, the issuance and sale by the Company of the Notes and the
issuance of the Conversion Shares in accordance with the Indenture)
will (i) give rise to a right to terminate or accelerate the due date
of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or any event which
with notice or lapse of time or both would constitute a default) under,
or require any consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or any of its Subsidiaries pursuant to the terms
of, any indenture, mortgage, deed of trust, note or other agreement or
instrument to which the Company or any of its Subsidiaries is a party
or by which any of them or their properties or businesses is bound, or
any franchise, license, permit, judgment, decree, order, statute, rule
or regulation applicable to the Company or any of its Subsidiaries,
except for such terminations, accelerations, conflicts, breaches,
defaults and events which would not, individually or in the aggregate,
result in a material adverse effect on the assets or properties,
business, results of operations or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole, or (ii) violate
any provision of the charter or by-laws or partnership or joint venture
agreement of the Company or any of its Subsidiaries.
(o) As of September 30, 1997, the Company had an authorized
and outstanding capitalization as set forth under the caption
"Capitalization" in the Registration Statement and the Prospectus. All
of the outstanding shares of Common Stock have been duly and validly
authorized and have been duly and validly issued and are fully paid and
nonassessable and none of them was issued in violation of any
preemptive or other similar right. The Conversion Shares have been duly
and validly authorized and reserved for issuance and, when delivered
upon conversion of the Notes, will be duly and validly issued, fully
paid and non-assessable and none of them will be issued in violation of
any preemptive or similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and no
commitment, plan or agreement to issue, any share of stock of the
Company or any security convertible into, or exercisable or
exchangeable for, stock of the Company.
(p) The Notes have been duly authorized and, when executed by
the Company and authenticated by the Trustee in accordance with the
Indenture and delivered to the Underwriters against payment therefor
pursuant to this Agreement, will be duly and validly issued and will
constitute valid and binding obligations of the Company entitled to the
benefit of the Indenture and enforceable in accordance with its terms,
except as the enforceability thereof may be limited by applicable
bankruptcy, reorganization, insolvency, fraudulent conveyance,
moratorium and other similar laws affecting creditors' rights or
remedies generally and general equitable principles.
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(q) The Common Stock, the Notes and the Indenture conform to
all statements in relation thereto contained in the Registration
Statement and the Prospectus. No shares of Preferred Stock are issued
and outstanding.
(r) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described or referred to therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money, (ii) entered into any material
transaction not in the ordinary course of business consistent with past
practice or (iii) declared or paid any dividend or made any
distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire
any shares of its stock.
(s) No holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security of
the Company because of the filing of the Registration Statement or the
consummation of the transactions contemplated hereby, other than the
right of Hilcoast Development Corp. ("Hilcoast") which is subject to
the Company's right to defer such registration as set forth in the
Registration Rights Agreement dated as of October 3, 1997 between the
Company and Hilcoast. The Company has obtained from all officers and
directors of the Company and from Odyssey Partners, L.P., their
enforceable written agreement that for a period of at least 180 days
from the date of this Agreement they will not, without the prior
written consent of CIBC Xxxxxxxxxxx Corp., sell, offer to sell,
distribute, pledge, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, or encumber, or exercise any
registration rights with respect to, any shares of Common Stock, any
options or warrants to purchase any shares of Common Stock, or any
securities convertible into or exchangeable for shares of Common Stock
(including, without limitation, the Notes) now owned by them or
hereafter acquired or with respect to which they have or hereafter
acquire the power of disposition.
(t) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Notes.
This Agreement has been duly and validly executed and delivered by the
Company and constitutes and will constitute the legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except (A) as the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent transfer, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles (whether considered in proceedings in equity or at law) and
(B) with respect to this Agreement, to the extent that rights to
indemnity or contribution under this Agreement may be limited by
federal, state or foreign securities laws or the public policy
underlying such laws.
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(u) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance by the Company of the Indenture and the Notes. The
Indenture and the Notes, when executed by the Company and authenticated
by the Trustee in accordance with the terms of the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the
Trustee) and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, constitute and will
constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except
(A) as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent transfer, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(whether considered in proceedings in equity or at law), (B) with
respect to the Indenture to the extent that rights to indemnity or
contribution may be limited by federal, state or foreign securities
laws or the public policy underlying such laws and (C) that in the case
of the Notes such enforcement may be subject to the discretion of the
court before which any proceedings therefor may be brought as to
whether the Notes will be entitled to the benefits provided by the
Indenture.
(v) Each of the Company and its Subsidiaries is conducting its
business in compliance with all applicable laws, rules and regulations
of the jurisdictions in which it is conducting business, including,
without limitation, all applicable local, state and federal
environmental laws and regulations, except where the failure to be so
in compliance would not have a material adverse effect on the assets or
properties, business, results of operations or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole.
(w) Neither the Company nor any of its Subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company, is
any such dispute threatened, which dispute would have a material
adverse effect on the assets or properties, business, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
(x) No transaction has occurred between or among the Company
and its Subsidiaries and any of its or their officers or directors or
any affiliate or affiliates of any such officer or director that is
required to be described in and is not described in the Registration
Statement and the Prospectus.
(y) Each of the Company and its Subsidiaries has not taken,
nor will it take, directly or indirectly, any action designed to or
which might reasonably be expected to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Stock or the
Notes to facilitate the sale or resale of any of the Notes.
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(z) The Company and its Subsidiaries have timely filed all
federal, state, local and foreign tax returns which are required to be
filed, other than those filings being contested in good faith and as to
which adequate reserves have been provided, through the date hereof,
which returns are complete and correct in all material respects and, to
the Company's best knowledge, not the subject of any audit proceedings
other than those set forth on Schedule III hereto, or have received
extensions thereof. The audits set forth on Schedule III hereto,
individually or in the aggregate, would not have a material adverse
effect on the assets or properties, business, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries,
taken as a whole. The Company and its Subsidiaries have paid all taxes
shown on such returns and all assessments received by them, except
where the failure to file, extend the due date of or pay the same,
individually or in the aggregate would not have a material adverse
effect on the assets or properties, business, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries,
taken as a whole.
(aa) Subject only to notice of issuance, the Notes have been
qualified for inclusion on the Nasdaq SmallCap Market.
(bb) The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's authorizations and are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles in the United States; (ii) access to
assets is permitted only in accordance with management's authorization;
and (iii) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(cc) The Company has not distributed and, prior to the later
of (i) the Closing Date and (ii) the completion of the distribution of
the Notes, will not distribute any offering material in connection with
the offering and sale of the Notes other than the Registration
Statement or any amendment thereto, any preliminary prospectus or the
Prospectus or any amendment or supplement thereto, or other materials,
if any, permitted by the Securities Act.
(dd) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus and the Registration
Statement will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended.
(ee) The present and fair salable value of the assets of the
Company exceeds the amount that will be required to be paid or in
respect of the existing debts and other liabilities (including
contingent liabilities) of the Company as they become absolute and
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mature, and, following the issuance of the Notes, the present fair and
salable value of the assets of the Company will exceed the amount that
will be required to be paid on or in respect of the existing debts and
other liabilities (including contingent liabilities) of the Company as
they become absolute and mature. The assets of the Company do not
constitute unreasonably small capital to carry out its business as
presently conducted (and will not constitute unreasonably small capital
to carry out its business as proposed to be conducted) including the
capital needs of the Company, taking into account the projected capital
requirements and capital availability of the Company.
5. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Notes are subject
to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(A)(a).
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in
effect, and no order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the Commission, and any requests for
additional information on the part of the Commission (to be included in
the Registration Statement or the Prospectus or otherwise) shall have
been complied with to the satisfaction of the Underwriters.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered pursuant
to Section 5(d) and 5(k) shall be true and correct in all respects (as
to representations qualified by materiality) and in all material
respects (as to representations not so qualified) when made and on and
as of each Closing Date as if made on such date, except for
representations and warranties that speak as of a specific date other
than the Closing Date (which need only be true and correct as of such
date) and the Company shall have performed all covenants and agreements
and satisfied all the conditions contained in this Agreement required
to be performed or satisfied by it at or before such Closing Date.
(d) The Underwriters shall have received on each Closing Date
a certificate, addressed to the Underwriters and dated such Closing
Date, of the chief executive or chief operating officer and the chief
financial officer or chief accounting officer of the Company, to the
effect that the signers of such certificate have carefully examined the
Registration Statement, the Prospectus, this Agreement and the
Indenture and that the representations and warranties of the Company in
this Agreement are true and correct in all respects (as to
representations qualified by materiality) and in all material respects
(as to representations not so qualified) on and as of such Closing Date
with the same effect as if made on such Closing Date, except for
representations and warranties that speak as
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of a specific date other than the date hereof (which need only be true
and correct as of such date) and the Company has performed all
covenants and agreements and satisfied all conditions contained in this
Agreement and the Indenture required to be performed or satisfied by it
at or prior to such Closing Date.
(e) The Indenture shall have been duly executed and delivered
by the parties thereto.
(f) The Underwriters shall have received at the time this
Agreement is executed and on each Closing Date, a letter or letters
signed by Xxxxx & Young LLP, addressed to the Underwriters and dated,
respectively, the date of this Agreement and each such Closing Date, in
form and substance satisfactory to the Underwriters, confirming that
they are independent accountants within the meaning of the Securities
Act and the Rules, that the response to Item 10 of the Registration
Statement is correct insofar as it relates to them and containing
statements and information of the type ordinarily included in
accountant's "comfort letters" to Underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus. References to the
Registration Statement and the Prospectus in this paragraph (f) are to
such documents as amended and supplemented at the date of the letter.
(g) The Underwriters shall have received on each Closing Date
from Xxxx, Gotshal & Xxxxxx LLP, counsel for the Company, an opinion,
addressed to the Underwriters and dated such Closing Date,
substantially to the effect of Exhibit A attached hereto.
(h) The Underwriters shall have received on each Closing Date
from Xxxxxx Xxxxxx, Esq., general counsel of the Company, an opinion,
addressed to the Underwriters and dated such Closing Date,
substantially to the effect of Exhibit B attached hereto.
(i) The Underwriters shall have received on each Closing Date
from Cravath, Xxxxxx & Xxxxx, counsel to the Trustee, an opinion,
addressed to the Underwriters and dated such Closing Date, and stating
in effect that:
(i) The Trustee has been duly incorporated and is
validly existing as a banking corporation in good standing
under the laws of the State of New York.
(ii) The Trustee has the corporate trust power and
authority to execute, deliver and perform its duties under the
Indenture, has duly executed and delivered the Indenture and,
insofar as the laws governing the trust powers of the Trustee
are concerned and assuming due authorization, execution and
delivery thereof by the Company, the Indenture constitutes a
legal, valid and binding agreement of the Trustee, enforceable
against the Trustee in accordance with its
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terms, subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other laws
affecting creditors' rights generally from time to time in
effect and to general principles of equity (including, without
limitation, concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a
proceeding in equity or at law;
(iii) The Notes have been duly authenticated and
delivered by the Trustee.
(iv) The execution, delivery and performance by the
Trustee of the Indenture do not conflict with or constitute a
breach of the charter or by-laws of the Trustee.
(v) No approval, authorization or other action by, or
filing with, any governmental authority of the United States
of America or the State of New York having jurisdiction over
the trust powers of the Trustee is required in connection with
the execution and delivery by the Trustee of the Indenture or
the performance by the Trustee of its duties thereunder,
except such as have been obtained, taken or made.
(j) All proceedings taken in connection with the sale of the
Firm Notes and the Additional Notes as herein contemplated shall be
reasonably satisfactory in form and substance to the Underwriters and
their counsel and the Underwriters shall have received from Xxxxxx,
Xxxxx & Xxxxxxx LLP a favorable opinion, addressed to the Underwriters
and dated such Closing Date, with respect to the Notes, the
Registration Statement and the Prospectus, and such other related
matters, as the Underwriters may reasonably request. The Company shall
have furnished to Xxxxxx, Xxxxx & Xxxxxxx LLP such documents as they
may reasonably request for the purpose of enabling them to pass upon
such matters.
(k) The Underwriters shall have received on each Closing Date
a certificate, including exhibits thereto, addressed to the
Underwriters and dated such Closing Date, of the secretary or an
assistant secretary of the Company, signed in such officer's capacity
as such officer, as to the (i) certificate of incorporation and bylaws
of the Company, (ii) resolutions authorizing the execution and delivery
of the Registration Statement, this Agreement, the Indenture, the Notes
and the performance of the transactions contemplated by this Agreement,
the Indenture, the Registration Statement, the Prospectus and the
offering of the Notes, and (iii) incumbency of the person or persons
authorized to execute and deliver the Registration Statement, this
Agreement, the Indenture and any other documents contemplated by the
offering of the Notes.
(l) The Underwriters shall have received on each Closing Date
certificates of the Secretaries of State of each State where the
Company or any of its Subsidiaries is incorporated and doing business
as to the good standing of the Company or such
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Subsidiary, listing all charter documents on file, if applicable,
qualification of the Company or such Subsidiary to do business as a
foreign corporation, if applicable, payment of taxes and filing of
annual reports. In addition, the Underwriters shall have received
copies of all charter documents of the Company certified by the
Secretary of State of the State of such corporation's incorporation.
6. Covenants of the Company. (A) The Company covenants and
agrees as follows:
(a) The Company shall prepare the Prospectus in a form
approved by the Underwriters and file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than the Commission's close
of business on the second business day following the execution and
delivery of this Agreement, or, if such second business day would be
more than fifteen business days after the Effective Date of the
Registration Statement or any post-effective amendment thereto, such
earlier date as would permit such Prospectus to be filed without filing
a post- effective amendment as set forth in Rule 430A(a)(3) under the
Securities Act and shall promptly advise the Underwriters (i) when the
Registration Statement shall have become effective, (ii) when any
amendment thereof or any related registration statement filed with the
Commission pursuant to Rule 462(b) of the Rules shall have become
effective, (iii) of any request by the Commission for any amendment of
the Registration Statement or the Prospectus or for any additional
information, (iv) of the prevention or suspension of the use of any
preliminary prospectus or the Prospectus or of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Notes for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or amendment or supplement to
the Prospectus unless the Company has furnished the Underwriters a copy
for its review prior to filing and shall not file any such proposed
amendment or supplement to which the Underwriters reasonably object. 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, if requested by
you, use every reasonable effort to obtain the withdrawal or lifting of
such order at the earliest possible time.
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Securities Act and the Rules, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act
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or the Rules, the Company promptly shall prepare and file with the
Commission, subject to the third sentence of paragraph (a) of this
Section 6(A), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such
compliance.
(c) The Company shall make generally available to its security
holders and to the Underwriters as soon as practicable, but not later
than 45 days after the end of the 12-month period beginning at the end
of the fiscal quarter of the Company during which the Effective Date
occurs (or 90 days if such 12-month period coincides with the Company's
fiscal year), a consolidated earnings statement (which need not be
audited) of the Company, covering such 12-month period, which shall
satisfy the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
(d) The Company shall furnish to each Underwriter and counsel
for the Underwriters, without charge, at least one (1) signed copy of
the Registration Statement (including all exhibits filed therewith or
incorporated by reference therein and amendments thereof and documents
incorporated or deemed to be incorporated by reference therein) and to
each other Underwriter a copy of the Registration Statement (without
exhibits thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the
Securities Act or the Rules, as many copies of any preliminary
prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Underwriters may reasonably request.
(e) The Company shall cooperate with the Underwriters and
their counsel in endeavoring to qualify the Notes for offer and sale
under the laws of such jurisdictions as the Underwriters may designate
and shall maintain such qualifications in effect so long as required
for the distribution of the Notes; provided, however, that the Company
shall not be required in connection therewith, as a condition thereof,
to qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction or subject itself to taxation as
doing business in any jurisdiction.
(f) For a period of five years after the date of this
Agreement, the Company shall supply to the Underwriters who may so
request in writing, copies of such financial statements and other
periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock
and to furnish to the Underwriters a copy of each annual or other
report it shall be required to file with the Commission.
(g) Without the prior written consent of CIBC Xxxxxxxxxxx
Corp., for a period of 180 days after the date of this Agreement, the
Company shall not issue, sell or register with the Commission, or
otherwise encumber or dispose of, directly or indirectly, any equity
securities of the Company (or any securities convertible into or
exercisable or exchangeable for equity securities of the Company),
except for (i) the issuance of the
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Notes pursuant to the Registration Statement, and (ii) the issuance of
Conversion Shares and the issuance of shares pursuant to the exercise
of outstanding options not otherwise the subject of lockup agreements
pursuant to Section 4(s) hereof under the Company's existing stock
option plans.
(h) On or before completion of this offering, the Company
shall cause the Notes to be included for trading on the Nasdaq SmallCap
Market and any shares of Common Stock issuable upon conversion of the
Notes to be included for trading on the Nasdaq Stock Market National
Market.
(B) The Company agrees to pay, or reimburse if paid by the
Underwriters, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses of the
Company incident to the public offering of the Notes and the performance of the
obligations of the Company under this Agreement including those relating to (i)
the preparation, printing, filing and distribution of the Registration Statement
including all exhibits thereto, each preliminary prospectus, the Prospectus, all
amendments and supplements to the Registration Statement and the Prospectus, and
the printing, duplicating, filing and distribution of this Agreement; (ii) the
preparation and delivery of certificates for the Notes to the Underwriters;
(iii) the registration or qualification of the Notes for offer and sale under
the securities or Blue Sky laws of the various jurisdictions referred to in
Section 6(A)(e), including the fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Underwriters of copies of each preliminary
prospectus, the Prospectus and all amendments or supplements to the Prospectus,
and of the several documents required by this Section to be so furnished, as may
be reasonably requested for use in connection with the offering and sale of the
Notes by the Underwriters or by dealers to whom Notes may be sold; (v) the
filing fees of the National Association of Securities Dealers, Inc. in
connection with its review of the terms of the public offering; (vi) the
furnishing (including costs of shipping and mailing) to the Underwriters of
copies of all reports and information required by Section 6(A)(f); and (vii)
inclusion of the Notes for quotation on the Nasdaq SmallCap Market.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement
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of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arise out of or are based upon any misrepresentation or breach of any
representation or warranty by the Company contained in this Agreement;
provided, however, that such indemnity shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) on
account of any losses, claims, damages or liabilities arising from the
sale of the Notes to any person by such Underwriter (i) if such untrue
statement or omission or alleged untrue statement or omission was made
in such preliminary prospectus, the Registration Statement or the
Prospectus, or such amendment or supplement, in reliance upon and in
conformity with information furnished in writing to the Company by any
Underwriter specifically for use therein or, (ii) as to any preliminary
prospectus, with respect to any Underwriter, to the extent that any
such loss, claim, damage or liability of such Underwriter results from
an untrue statement of a material fact contained in, or the omission of
a material fact from, such preliminary prospectus, which untrue
statement or omission was corrected in the Prospectus, if such
Underwriter sold Notes to the person alleging such loss, claim, damage
or liability without sending or giving, at or prior to the written
confirmation of such sale, a copy of the Prospectus, unless such
failure resulted from the failure of the Company to deliver copies of
the Prospectus to such Underwriter on a timely basis to permit such
sending or giving. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each person, if any, who
controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, each director of the Company,
and each officer of the Company who signs the Registration Statement,
to the same extent as the foregoing indemnity from the Company to each
Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, the Registration Statement or the Prospectus,
or any amendment thereof or supplement thereto, contained in the last
paragraph of the cover page of the Prospectus, in the paragraph
relating to stabilization and the statements with respect to the public
offering of the Notes under the caption "Underwriting" in the
Prospectus provided, however, that the obligation of each Underwriter
to indemnify the Company (including any controlling person, director or
officer thereof) shall be limited to the net proceeds received by the
Company from such Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of
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the commencement of such action, suit or proceeding, enclosing a copy
of all papers served. No indemnification provided for in Section 7(a)
or 7(b) shall be available to any party who shall fail to give notice
as provided in this Section 7(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have
related and was prejudiced by the failure to give such notice but the
omission so to notify such indemnifying party of any such action, suit
or proceeding shall not relieve it from any liability that it may have
to any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and
the approval by the indemnified party of such counsel, the indemnifying
party shall not be liable to such indemnified party for any legal or
other expenses, except as provided below and except for the reasonable
costs of investigation subsequently incurred by such indemnified party
in connection with the defense thereof. The indemnified party shall
have the right to employ its counsel in any such action, but the fees
and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded
that there may be a conflict of interest between the indemnifying
parties and the indemnified party in the conduct of the defense of such
action (in which case the indemnifying parties shall not have the right
to direct the defense of such action on behalf of the indemnified
party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the
fees and expenses of counsel shall be at the expense of the
indemnifying parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without
its written consent; provided, however, that such consent shall not be
unreasonably withheld.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Sections 7(a) and 7(b) is due in accordance with its terms but for any reason is
held to be unavailable from the Company or the Underwriters, as the case may be,
the Company and the Underwriters shall contribute to the aggregate losses,
claims, damages and liabilities (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) to which the
Company and one or more of the Underwriters may be subject in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Notes or, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having
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received notice as provided in Section 7 hereof, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Underwriters shall be deemed to be in the same proportion as
(x) the total proceeds from the offering (net of underwriting discounts but
before deducting expenses) received by the Company, as set forth in the table on
the cover page of the Prospectus, bear to (y) the underwriting discounts
received by the Underwriters, as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement or omission or alleged omission of a material fact related to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above. Notwithstanding
the provisions of this Section 8, (i) in no case shall any Underwriter (except
as may be provided in the Agreement Among Underwriters) be liable or responsible
for any amount in excess of the underwriting discount applicable to the Notes
purchased by such Underwriter hereunder, and (ii) the Company shall be liable
and responsible for any amount in excess of such underwriting discount;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as such Underwriter, and each person, if any, who controls the Company within
the meaning of the Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 8,
notify such party or parties from whom contribution may be sought, but the
failure so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The Underwriter's
obligations to contribute pursuant to this Section 8 are several in proportion
to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect
to the Notes to be purchased on a Closing Date by the Underwriters by notifying
the Company at any time
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(a.) in the absolute discretion of the Underwriters at or
before any Closing Date: (i) if, subsequent to the date the
Registration Statement is declared effective by the Commission or the
date of this Agreement, there has been any material adverse change in
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company, whether or not arising in the
ordinary course of business; (ii) if on or prior to such date, any
domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Underwriters will in the future
materially disrupt, the securities markets; (iii) if there has occurred
any new outbreak or material escalation of hostilities or other
calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in the judgment of the
Underwriters, inadvisable to proceed with the offering; (iv) if there
shall be such a material adverse change in general financial, political
or economic conditions or the effect of international conditions on the
financial markets in the United States is such as to make it, in the
judgment of the Underwriters, inadvisable or impracticable to market
the Notes; (v) if trading in the Notes has been suspended by the
Commission or trading generally on the New York Stock Exchange, Inc. or
on the American Stock Exchange, Inc. has been suspended or limited, or
minimum or maximum ranges for prices for securities shall have been
fixed, or maximum ranges for prices for securities have been required,
by said exchanges or by order of the Commission, the National
Association of Securities Dealers, Inc., or any other governmental or
regulatory authority; or (vi) if a banking moratorium has been declared
by any state or federal authority, or
(b.) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any Underwriter, and
no Underwriter shall be under any liability to the Company, except that (x) if
this Agreement is terminated by the Underwriters because of any failure, refusal
or inability on the part of the Company to comply with the terms or to fulfill
any of the conditions of this Agreement, the Company will, upon their request,
reimburse the Underwriters for all out-of-pocket expenses (including the fees
and disbursements of their counsel) incurred by them in connection with the
proposed purchase and sale of the Notes or in contemplation of performing their
obligations hereunder and (y) no Underwriter who shall have failed or refused to
purchase the Notes agreed to be purchased by it under this Agreement, without
some reason sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the Company
or to the other Underwriters for damages occasioned by its failure or refusal.
10. Substitution of Underwriters. If one of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Notes agreed to be purchased by it on such Closing Date, the nondefaulting
Underwriter may find one or more substitute underwriters to purchase such Notes
or make such other arrangements as such nondefaulting Underwriter may deem
advisable or the
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remaining Underwriter may agree to purchase a portion of such Notes, in each
case upon the terms set forth in this Agreement. If no such arrangements have
been made by the close of business on the business day following such Closing
Date,
(a) if the number of Notes to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Notes
that all the Underwriters are obligated to purchase on such Closing
Date, then the nondefaulting Underwriters shall be obligated to
purchase such Notes on the terms herein set forth in proportion to
their respective obligations hereunder; provided, that in no event
shall the maximum principal amount of Notes that any Underwriter has
agreed to purchase pursuant to Section 1 be increased pursuant to this
Section 10 by more than one-ninth of such principal amount of Notes
without the written consent of such Underwriter, or
(b) if the number of Notes to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Notes that
the Underwriters are obligated to purchase on such Closing Date, then
the Company shall be entitled to an additional business day within
which it may, but is not obligated to, find one or more substitute
underwriters reasonably satisfactory to the nondefaulting Underwriter
to purchase such Notes upon the terms set forth in this Agreement.
In any such case, either the Underwriters or the Company shall
have the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration Statement
or Prospectus) may be effected by the Underwriters and the Company. If the
number of Notes to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Notes that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Notes that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Notes to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(B),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Notes. The provisions of Sections 6(B), 7, 8 and
9 shall survive the termination or cancellation of this Agreement.
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This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters or the Company and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Notes from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the Underwriters, c/o CIBC Xxxxxxxxxxx Corp., CIBC
Xxxxxxxxxxx Tower, World Financial Center, New York, New York 10281, Attention:
Xxxxxxx X. Xxxxx, with copies to Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxx, Esq. and (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement, with copies to Weil, Gotshal & Xxxxxx LLP,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxx Xxxx, Esq.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
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Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
AVATAR HOLDINGS INC.
By
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Name:
Title:
Confirmed:
CIBC XXXXXXXXXXX CORP.
By
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Name:
Title:
SBC WARBURG DILLON READ INC.
By
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Name:
Title:
