5,400,000 Shares
HOTEL RESERVATIONS NETWORK, INC.
Common Stock
UNDERWRITING AGREEMENT
February 25, 2000
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
XXXXX & COMPANY INCORPORATED
BEAR, XXXXXXX & CO., INC.
XXXXXX XXXXXX PARTNERS LLC
DLJdirect INC.
As representatives of the several Underwriters
named in Schedule I hereto
c/x Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Hotel Reservations Network, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell 5,400,000 shares of its class A common
stock, par value $.01 per share (the "Firm Shares") to the several underwriters
named in Schedule I hereto (the "Underwriters"). The Company also proposes to
issue and sell to the several Underwriters not more than an additional 810,000
shares of its class A common stock, par value $.01 per share (the "Additional
Shares"), if requested by the Underwriters as provided in Section 2 hereof. The
Firm Shares and the Additional Shares are hereinafter referred to collectively
as the "Shares". The shares of class A common stock of the Company to be
outstanding after giving effect to the sales contemplated hereby are hereinafter
referred to as the "Class A Common Stock".
SECTION 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-1, including a
prospectus, relating to the Shares. The registration statement, as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430A under the Act, is hereinafter referred to as the "Registration Statement";
and the prospectus in the form first used to confirm sales of Shares is
hereinafter referred to as the "Prospectus". If the Company has filed or is
required pursuant to the terms hereof to file a registration statement pursuant
to Rule 462(b) under the Act registering additional shares of Class A Common
Stock (a "Rule 462(b) Registration Statement"), then, unless otherwise
specified, any reference herein to the term "Registration Statement" shall be
deemed to include such Rule 462(b) Registration Statement.
SECTION 2. Agreements to Sell and Purchase and Lock-Up Agreements. On
the basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to issue and sell, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
at a price per Share of $14.88 (the "Purchase Price") the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have the right to
purchase, severally and not jointly, up to 810,000 Additional Shares from the
Company at the Purchase Price. Additional Shares may be purchased solely for the
purpose of covering over-allotments made in connection with the offering of the
Firm Shares. The Underwriters may exercise their right to purchase Additional
Shares in whole or in part from time to time by giving written notice thereof to
the Company within 30 days after the date of this Agreement. You shall give any
such notice on behalf of the Underwriters and such notice shall specify the
aggregate number of Additional Shares to be purchased pursuant to such exercise
and the date for payment and delivery thereof, which date shall be a business
day (i) no earlier than two business days after such notice has been given (and,
in any event, no earlier than the Closing Date (as hereinafter defined)) and
(ii) no later than ten business days after such notice has been given. If any
Additional Shares are to be purchased, each Underwriter, severally and not
jointly, agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) which bears the same proportion to the total number of Additional
Shares to be purchased from the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number of
Firm Shares.
The Company and USA Networks, Inc. hereby agree not to (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or
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otherwise transfer or dispose of, directly or indirectly, any shares of Class A
Common Stock or any securities convertible into or exercisable or exchangeable
for Class A Common Stock or (ii) enter into any swap or other arrangement that
transfers all or a portion of the economic consequences associated with the
ownership of any Class A Common Stock (regardless of whether any of the
transactions described in clause (i) or (ii) is to be settled by the delivery of
Class A Common Stock, or such other securities, in cash or otherwise), except to
the Underwriters pursuant to this Agreement, for a period of 180 days after the
date of the Prospectus without the prior written consent of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation. Notwithstanding the foregoing, during such
period (i) the Company may grant stock options pursuant to the stock option
plans described in the Prospectus and (ii) the Company may issue shares of Class
A Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof or to be issued on the date hereof as
described in the Prospectus or to be issued on the date hereof as described in
the Prospectus; (iii) the Company may issue shares of Class A Common Stock or
securities convertible into, or exercisable for Class A Common Stock, as
consideration in the acquisition of businesses (whether by merger,
consolidation, purchase or otherwise), including the shares to be issued to the
Company's predecessor business (and its liquidating trust) as described in the
Prospectus; (iv) the Company may issue shares of Class A Common Stock or
securities convertible into, or exercisable for, Class A Common Stock in
connection with agreements entered into with persons that operate websites
providing links to the Company's website and with any celebrity spokesperson,
provided that, in the case of transfer pursuant to clauses (iii) and (iv) of
this sentence, the transferee shall have agreed to be bound by the restrictions
on transfer contained in this paragraph, and such transfer is not effective
until the agreement to be bound by the restrictions on transfer is executed by
the transferee and a copy of such agreement is received by DLJ and Xxxxx Xxxx &
Xxxxxxxx. The Company also agrees not to file any registration statement with
respect to any shares of Class A Common Stock or any securities convertible into
or exercisable or exchangeable for Class A Common Stock for a period of 180 days
after the date of the Prospectus without the prior written consent of Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation, except for a registration statement on
Form S-8. The Company shall, prior to or concurrently with the execution of this
Agreement, deliver an agreement executed by (i) each of the directors and
officers of the Company and (ii) each stockholder listed on Annex I hereto to
the effect that such person will not, during the period commencing on the date
such person signs such agreement and ending 180 days after the date of the
Prospectus, without the prior written consent of Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation, (A) engage in any of the transactions described in the
first sentence of this paragraph or (B) make any demand for, or exercise any
right with respect to, the registration of any shares of Class A Common Stock or
any securities convertible into or exercisable or exchangeable for Class A
Common Stock, except that such agreement shall provide that such
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individuals may nonetheless (i) transfer shares by way of testate or intestate
succession or by operation of law, (ii) transfer shares to members of the
individual's immediate family or to a trust, partnership, limited liability
company or other entity, all of the beneficial interests of which are held by
such individual, and (iii) transfer shares to charitable organizations; provided
that, in the case of transfers pursuant to clauses (i), (ii) and (iii) of this
sentence, the transferee shall have agreed to be bound by the restrictions on
transfer contained in this paragraph and such transfer is not effective until
the agreement to be bound by the restrictions on transfer is executed by the
transferee and a copy of such agreement is received by DLJ and Xxxxx Xxxx &
Xxxxxxxx.
SECTION 3. Terms of Public Offering. The Company is advised by you
that the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
SECTION 4. Delivery and Payment. The Shares shall be represented by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
shall request not later than two full business days prior to the Closing Date or
the applicable Option Closing Date (as defined below), as the case may be. The
Company shall deliver the Shares, with any transfer taxes thereon duly paid by
the Company, to Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation through the
facilities of The Depository Trust Company ("DTC"), for the respective accounts
of the several Underwriters, against payment to the Company of the Purchase
Price therefor by wire transfer of Federal or other funds immediately available
in New York City. The certificates representing the Shares shall be made
available for inspection not later than 9:30 A.M., New York City time, on the
business day prior to the Closing Date or the applicable Option Closing Date, as
the case may be, at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of delivery and payment for the Firm
Shares shall be 9:00 A.M., New York City time, on March 1, 2000 or such other
time on the same or such other date as Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation and the Company shall agree in writing. The time and date of
delivery and payment for the Firm Shares are hereinafter referred to as the
"Closing Date." The time and date of delivery and payment for any Additional
Shares to be purchased by the Underwriters shall be 9:00 A.M., New York City
time, on the date specified in the applicable exercise notice given by you
pursuant to Section 2 or such other time on the same or such other date as
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation and the Company shall agree
in writing. The time and date of delivery and payment for any Additional Shares
are hereinafter referred to as an "Option Closing Date."
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The documents to be delivered on the Closing Date or any Option
Closing Date on behalf of the parties hereto pursuant to Section 8 of this
Agreement shall be delivered at the offices of Xxxxx Xxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and the Shares shall be delivered at
the Designated Office, all on the Closing Date or such Option Closing Date, as
the case may be.
SECTION 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly, (i) of any request by the Commission
for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information, (ii) 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 Shares for offering or sale in any jurisdiction,
or the initiation of any proceeding for such purposes, (iii) when any
amendment to the Registration Statement becomes effective, (iv) if the
Company is required to file a Rule 462(b) Registration Statement after
the effectiveness of this Agreement, when the Rule 462(b) Registration
Statement has become effective and (v) of the happening of any event
during the period referred to in Section 5(d) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires any additions to or changes in the
Registration Statement or the Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, the Company will use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) To furnish to you four signed copies of the Registration
Statement as first filed with the Commission and of each amendment to
it, including all exhibits, and to furnish to you and each Underwriter
designated by you 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.
(c) To prepare the Prospectus, the form and substance of which
shall be satisfactory to you, and to file the Prospectus in such form
with the Commission within the applicable period specified in Rule
424(b) under the Act; during the period specified in Section 5(d)
below, not to file any further amendment to the Registration Statement
and not to make any amendment or supplement to the Prospectus of which
you shall not previously have been advised or to which you shall
reasonably object after being so advised; and, during such period, to
prepare and file with the Commission, promptly upon your reasonable
request, any amendment to
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the Registration Statement or amendment or supplement to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to
cause any such amendment to the Registration Statement to become
promptly effective.
(d) Prior to 10:00 A.M., New York City time, on the first
business day after the date of this Agreement and from time to time
thereafter for such period as in the opinion of counsel for the
Underwriters a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, to furnish in New
York City to each Underwriter and any dealer as many copies of the
Prospectus (and of any amendment or supplement to the Prospectus) as
such Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event
shall occur or condition shall exist as a result of which, in the
opinion of counsel for the Underwriters, it becomes necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to
a purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare and 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 when it is so delivered, be
misleading, or so that the Prospectus will comply with applicable law,
and to furnish to each Underwriter and to any dealer as many copies
thereof as such Underwriter or dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with
you and counsel for the Underwriters in connection with the
registration or qualification of the Shares for offer and sale by the
several Underwriters and by dealers under the state securities or Blue
Sky laws of such jurisdictions as you may request (or obtain
exemptions from the application thereof), to continue such
registration or qualification in effect so long as required for
distribution of the Shares and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; provided, however, that the Company
shall not be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or
to take any action that would subject it to general consent to service
of process or taxation other than as to matters and transactions
relating to the Prospectus, the Registration Statement, any
preliminary prospectus or the
6
offering or sale of the Shares, in any jurisdiction in which it is not
now so subject.
(g) To make generally available to its stockholders as soon as
practicable an earnings statement (which need not be audited) covering
the twelve-month period ending March 31, 2001 that shall satisfy the
provisions of Section 11(a) of the Act, and to advise you in writing
when such statement has been so made available.
(h) During the period of three years after the date of this
Agreement, to furnish to you as soon as practicable copies of all
reports or other communications furnished generally to the record
holders of Class A Common Stock or furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed.
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Shares under the Act and all other fees and expenses in connection
with the preparation, printing, filing and distribution of the
Registration Statement (including financial statements and exhibits),
any preliminary prospectus, the Prospectus and all amendments and
supplements to any of the foregoing, including the mailing and
delivering of copies thereof to the Underwriters and dealers in the
quantities specified herein, (ii) all costs and expenses related to
the transfer and delivery of the Shares to the Underwriters, including
any transfer or other taxes payable thereon, (iii) all expenses in
connection with the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the several
states and all costs of printing or producing any Preliminary and
Supplemental Blue Sky Memoranda in connection therewith (including the
filing fees and fees and disbursements of counsel for the Underwriters
in connection with such registration or qualification and memoranda
relating thereto), (iv) the filing fees and reasonable disbursements
of counsel for the Underwriters in connection with the review and
clearance of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) all fees and expenses in connection with
the preparation and filing of the registration statement on Form 8-A
relating to the Class A Common Stock and all costs and expenses
incident to the listing of the Shares on the Nasdaq National Market,
(vi) the cost of printing certificates representing the Shares, (vii)
the costs and charges of any transfer agent, registrar and/or
7
depositary, (viii) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection
with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of
the Company, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and 50% of the cost
of any aircraft chartered in connection with the road show, and (ix)
all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not
otherwise made in this Section 5(i). Except as provided in this
Section 5, the Underwriters shall pay their own costs and expenses,
including the fees and disbursements of their counsel.
(j) To use its best efforts to list for quotation the Shares on
the Nasdaq National Market and to use reasonable best efforts to
maintain the listing of the Shares on the Nasdaq National Market for a
period of three years after the date of this Agreement.
(k) To use its best efforts to do and perform all things required
or necessary to be done and performed under this Agreement by the
Company prior to the Closing Date or an Option Closing Date, as the
case may be, and to satisfy all conditions precedent to the delivery
of the Shares.
(l) If the Registration Statement at the time of the
effectiveness of this Agreement does not cover all of the Shares, to
file a Rule 462(b) Registration Statement with the Commission
registering the Shares not so covered in compliance with Rule 462(b)
by 10:00 P.M., New York City time, on the date of this Agreement and
to pay to the Commission the filing fee for such Rule 462(b)
Registration Statement at the time of the filing thereof or to give
irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the Act.
SECTION 6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other than
any Rule 462(b) Registration Statement to be filed by the Company
after the effectiveness of this Agreement); any Rule 462(b)
Registration Statement filed after the effectiveness of this Agreement
will become effective no later than 10:00 P.M., New York City time, on
the date of this Agreement; and no stop order suspending the
effectiveness of the
8
Registration Statement is in effect, and no proceedings for such
purpose are pending before or threatened by the Commission.
(b) (i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the
effectiveness of this Agreement), when it became effective, did not
contain and, as amended, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (ii) the Registration Statement (other than any Rule
462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus when filed,
complied and, as amended or supplemented, if applicable, will comply
in all material respects with the Act, (iii) if the Company is
required to file a Rule 462(b) Registration Statement after the
effectiveness of this Agreement, such Rule 462(b) Registration
Statement and any amendments thereto, when they become effective (A)
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (B) will comply in all
material respects with the Act and (iv) the Prospectus as of its date
does not contain and, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in the Registration
Statement, the Prospectus, the Rule 462(b) Registration Statement, or
any amendments or supplements to any of the foregoing based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter expressly for use therein.
(c) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Act, complied when so filed in
all material respects with the Act, and did 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, in
the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth
in this paragraph do not apply to statements or omissions in any
preliminary prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter
expressly for use therein.
(d) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of its jurisdiction
of
9
incorporation and has the corporate power and authority to carry on
its business as described in the Prospectus and to own, lease and
operate its properties, and 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 would not have a material adverse effect on
the business, prospects, financial condition or results of operations
of the Company.
(e) As of the date hereof, there are no subsidiaries of the
Company in existence.
(f) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
granted or issued by the Company relating to or entitling any person
to purchase or otherwise to acquire any shares of the capital stock of
the Company, except as otherwise disclosed in the Registration
Statement or otherwise disclosed to the Underwriters.
(g) All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights;
and the Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor as provided by
this Agreement, will be validly issued, fully paid and non-assessable,
and the issuance of such Shares will not be subject to any preemptive
or similar rights.
(h) The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof
contained in the Prospectus.
(i) The Company is not in violation of its charter or by-laws or
in default in the performance of any obligation, agreement, covenant
or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which the Company is a party
or by which the Company's property is bound except for such defaults
as would not have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company
(a "Material Adverse Effect").
(j) The execution, delivery and performance of this Agreement by
the Company, the compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated hereby
will not (i) require any consent, approval, authorization or other
order of, or
10
qualification with, any court or governmental body or agency (except
such as have been obtained or made by the Company or such as may be
required under the securities or Blue Sky laws of the various states
or the NASD), except for such as would not have a Material Adverse
Effect, (ii) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the charter or by-laws of the
Company or any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company, to which the
Company is a party or by which the Company or any of its property is
bound, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over the Company, or property,
except for such as would not have a Material Adverse Effect, or (iv)
result in the suspension, termination or revocation of any
Authorization (as defined below) of the Company or any other
impairment of the rights of the holder of any such Authorization
except for such as would not have a Material Adverse Effect.
(k) There are no legal or governmental proceedings pending or, to
the best of the Company's knowledge, threatened to which the Company
is or could be a party or to which any of its property is or could be
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described; nor are there
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not so described or filed as required.
(l) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand,
which is acquired by the Act to be described in the Registration
Statement or the Prospectus which is not so described.
(m) The Company owns or possesses, or can acquire on reasonable
terms, all licenses, inventions, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), ("intellectual property")
currently employed by it in connection with the business now operated
by it except where the failure to own or possess or otherwise be able
to acquire such intellectual property would not, singly or in the
aggregate, have a Material Adverse Effect; and the Company has not
received any written notice of infringement of or conflict with
asserted rights of others with respect to any of such intellectual
property which, singly or in the aggregate, which could reasonably be
expected to have a Material Adverse Effect.
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(n) All material tax returns required to be filed by the Company
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
pursuant to such returns or pursuant to any assessment received by the
Company have been paid, other than those being contested in good faith
and for which adequate reserves have been provided, if required by
GAAP.
(o) The Company has not violated any foreign, federal, state or
local law or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws") or any provisions of
the Employee Retirement Income Security Act of 1974, as amended, or
the Foreign Corrupt Practices Act or the rules and regulations
promulgated thereunder, except for such violations which, singly or in
the aggregate, would not have a Material Adverse Effect.
(p) The Company has such permits, licenses, consents, exemptions,
franchises, authorizations and other approvals (each, an
"Authorization") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including, without
limitation, under any applicable Environmental Laws, as are necessary
to own, lease, license and operate its respective properties and to
conduct its business, except where the failure to have any such
Authorization or to make any such filing or notice would not, singly
or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and the Company is
in compliance with all the terms and conditions thereof and with the
rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and the Company is not aware that
any event has occurred (including, without limitation, the receipt of
any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation,
suspension or termination of any such Authorization or results or,
after notice or lapse of time or both, would result in any other
impairment of the rights of the holder of any such Authorization;
except where such failure to be valid and in full force and effect or
to be in compliance, the occurrence of any such event or the presence
of any such restriction would not, singly or in the aggregate, have a
Material Adverse Effect.
(q) To the best of the Company's knowledge, there are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws
or any
12
Authorization, any related constraints on operating activities and any
potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(r) This Agreement has been duly authorized, executed and
delivered by the Company.
(s) Ernst & Young LLP and Xxxxx Xxxxxxxx LLP are each independent
certified public accountants with respect to the Company as required
by the Act.
(t) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(u) The combined financial statements included in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), together with related schedules and notes,
present fairly in all material respects the combined financial
position, results of operations and changes in financial position of
the Company on the basis stated therein at the respective dates or for
the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; the
supporting schedules, if any, included in the Registration Statement
present fairly in all material respects in accordance with generally
accepted accounting principles the information required to be stated
therein; and the other financial and statistical information and data
produced by the Company set forth in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) present
fairly in all material respects the information set forth therein and
are prepared on a basis consistent with such financial statements and
the books and records of the Company.
(v) The Company is not, and after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus will not be, required to register as an
13
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(w) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement.
(x) Since the respective dates as of which information is given
in the Prospectus other than as set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there has not occurred any material adverse
change or any development involving a prospective material adverse
change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company, (ii) there has not
been any material adverse change or any development involving a
prospective material adverse change in the capital stock or in the
long-term debt of the Company and (iii) the Company has not incurred
any material liability or obligation, direct or contingent.
(y) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
SECTION 7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter, its directors, its officers and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any legal or other expenses incurred
in connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus, or caused by 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, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Underwriter furnished in writing to the Company by such Underwriter
through you expressly
14
for use therein; provided that, with respect to any preliminary prospectus, the
foregoing indemnity shall not inure to the benefit of any Underwriter from whom
the person asserting any loss, claim, damage, liability or expense purchased
Shares, or the directors, officers and any person controlling such Underwriter,
if a copy of the Prospectus was not sent or given by or on behalf of such
Underwriter to such person, if required by law to have been so delivered, at or
prior to the written confirmation of such sale and if the Prospectus would have
cured the defect giving rise to such loss, claim, damage, liability or expense,
unless such failure is a result of noncompliance by the Company of Section 5(e)
hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to such Underwriter but
only with reference to information relating to such Underwriter furnished in
writing to the Company by such Underwriter expressly for use in the Registration
Statement (or any amendment thereto), the Prospectus (or any amendment or
supplement thereto) or any preliminary prospectus.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all reasonable fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 7(a) and 7(b), the Underwriter shall not be
required to assume the defense of such action pursuant to this Section 7(c), but
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of such Underwriter). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party except the reasonable fees and expenses of such counsel will be the
expenses of the indemnifying party if (i) the employment of such counsel shall
have been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party within a
reasonable time after it has received notice of commencement of the action or
(iii) the named parties to any such action (including any impleaded parties)
include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to
15
it which are different from or additional to those available to the indemnifying
party (in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of the indemnified party). In any such
case, the indemnifying party shall not, in connection with any one action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all indemnified parties and all such fees and expenses
shall be reimbursed as they are incurred. Such firm shall be designated in
writing by Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, in the case of
parties indemnified pursuant to Section 7(a), and by the Company, in the case of
parties indemnified pursuant to Section 7(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with the indemnifying party's written consent or (ii)
effected without the indemnifying party's written consent if the settlement is
entered into more than twenty business days after the indemnifying party shall
have received a request from the indemnified party for reimbursement for the
fees and expenses of counsel (in any case where such fees and expenses are at
the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request unless the indemnifying party is disputing in good faith
the reasonableness of such fees and expenses. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this Section 7
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (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 Shares or (ii) if the allocation provided by clause 7(d)(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 7(d)(i) above but also the
relative fault of the Company on the one hand
16
and the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, 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 hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (after deducting underwriting discounts and
commissions but before deducting expenses) received by the Company, and the
total underwriting discounts and commissions received by the Underwriters, bear
to the total price to the public of the Shares, 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 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 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. 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 at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which 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(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
(e) The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
17
SECTION 8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the
Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New
York City time, on the date of this Agreement; and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
commenced or shall be pending before or contemplated by the
Commission.
(c) You shall have received on the Closing Date a certificate
dated the Closing Date, signed by Xxxxxx Xxxxxx and Xxxxx Xxxxxx, in
their capacities as the President and Chief Executive Officer,
respectively, of the Company, confirming the matters set forth in
Sections 6(x), 8(a) and 8(b) and that the Company has complied in all
material respects with all of the agreements and satisfied in all
material respects all of the conditions herein contained and required
to be complied with or satisfied by the Company on or prior to the
Closing Date.
(d) Since the respective dates as of which information is given
in the Prospectus other than as set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial
or otherwise, or the earnings, business, management or operations of
the Company, (ii) there shall not have been any change or any
development involving a prospective change in the capital stock or in
the long-term debt of the Company and (iii) the Company shall not have
incurred any liability or obligation, direct or contingent, the effect
of which, in any such case described in clause 8(d)(i), 8(d)(ii) or
8(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and
in the manner contemplated in the Prospectus.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx counsel for
the Company, to the effect that:
18
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Prospectus
and to own and hold its properties;
(ii) based solely on certificates of public officials in the
respective jurisdictions delivered to you by the Company, the
Company is duly qualified and is in good standing as a foreign
corporation authorized to do business in the states of Texas and
Florida;
(iii) all the issued and outstanding shares of capital stock
of the Company have been duly authorized and are validly issued
and outstanding and are fully paid and non-assessable;
(iv) the Shares have been duly authorized and, when issued
and delivered to the Underwriters against payment therefor as
provided by this Agreement, will be validly issued, fully paid
and non-assessable;
(v) except as described in the Prospectus, there are no
preemptive or other similar rights to subscribe for or to
purchase shares of common stock in the Company's certificate of
incorporation or by-laws or in any agreement or other outstanding
instrument known to such counsel to which the Company is a party
or under the General Corporation Law of the State of Delaware;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the authorized capital stock of the Company conforms
as to legal matters in all material respects to the description
thereof contained in the Prospectus under the caption
"Description of Capital Stock";
(viii) the Commission has advised such counsel that the
Registration Statement has become effective under the Act, no
stop order suspending its effectiveness has been issued and no
proceedings for that purpose are, to the best of such counsel's
knowledge after due inquiry, pending before or are overtly
threatened by the Commission;
19
(ix) the statements under the captions "Risk Factors -
Changing government regulations and legal uncertainties may
impair our future growth and harm our business", "Business -
Government Regulations", "Certain Transactions" and "Description
of Capital Stock" in the Prospectus, insofar as such statements
constitute a summary of the United States federal or New York
State statutes, rules and regulations or the Delaware General
Corporation Law, or portions thereof, are accurate in all
material respects. The statements in the Prospectus under the
heading "Risk Factors - There is uncertainty regarding how new or
existing tax laws may affect our business and our industry and
any changes to these laws may adversely affect our business," to
the extent that they constitute summaries of United States
federal law or regulation or legal conclusions, have been
reviewed by us and fairly summarize the matters described under
that heading in all material respects.
(x) the issuance and sale of the Shares by the Company, the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions contemplated
thereby will not (i) result in a violation of the Company's
certificate of incorporation, (ii) breach or result in a default
under any agreement, indenture or instrument listed as an exhibit
to the Registration Statement or otherwise referred to in the
Registration Statement to which the Company is a party or is
bound or to which any of the properties or assets of the Company
is subject or (iii) violate Applicable Law or any judgment, order
or decree of any court or arbitrator known to us, except where
the breach or violation would not have a Material Adverse Effect.
For purposes of this opinion, the term "Applicable Law" means the
General Corporation Law of the State of Delaware, the laws, rules
and regulations of the State of New York and those laws, rules
and regulations of the United States of America, in each case
which in such counsel's experience are normally applicable to the
transactions of the type contemplated by the Underwriting
Agreement;
(xi) no consent, approval, authorization or order of, or
filing, registration or qualification with, any Governmental
Authority, which as not been obtained, taken or made (other than
as required by any state securities laws, as to which we express
no opinion) is required under Applicable Law for the issuance or
sale of the Shares or the performance by the company of it
obligations under this Agreement. For purposes of this opinion,
the term
20
"Governmental Authority" means any executive, legislative,
judicial, administrative or regulatory body of the State of
Delaware or the United States of America.;
(xii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or overtly threatened
against the Company or to which any of its property is subject
which would reasonable be expected to have a Material Adverse
Effect or would reasonably be expected to materially impair the
Company's ability to perform its obligations under this
Agreement, or of any contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration
Statement that are not so described or filed as required;
(xiii) the Company is not, and after giving effect to the
offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus will not be,
required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xiv) except as described in the Registration Statement, to
the best of such counsel's knowledge after due inquiry, there are
no contracts, agreements or understandings between the Company
and any person granting such person the right to require the
Company to file a registration statement under the Act with
respect to any securities of the Company or to require the
Company to include such securities with the Shares registered
pursuant to the Registration Statement; and
(xv) (A) each of the Registration Statement and the
Prospectus and any supplement or amendment thereto (except for
the financial statements, financial statement schedules and other
financial and statistical data included therein or omitted
therefrom as to which no opinion need be expressed) appears on
its face to be appropriately responsive in all material respects
to the requirements of the Securities Act and the rules and
regulations of the Commission under the Securities Act; (B) such
counsel has no reason to believe that at the time the
Registration Statement became effective or on the date of this
Agreement, the Registration Statement and the prospectus included
therein (except for the financial statements, financial statement
schedules and other financial and statistical data as to which
such counsel need not express any belief) contained any untrue
statement of a material
21
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading; and (C) such counsel has no reason to believe that
the Prospectus, as amended or supplemented, if applicable (except
for the financial statements, financial statement schedules and
other financial and statistical data, as aforesaid) contains any
untrue statement of a material fact or omits 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. For purposes of this opinion, such counsel may assume
that the statements made in the Registration Statement and the
Prospectus are complete and correct, except for such counsel's
opinion with respect to legal matters in section 8(e) (ix)
hereof.
The opinion of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx described in
Section 8(e) above shall be rendered to you at the request of the Company and
shall so state therein.
(f) You shall have received on the Closing Date an opinion, dated
the Closing Date, of Xxxxx Xxxx & Xxxxxxxx, counsel for the
Underwriters, as to the matters referred to in Sections 8(e)(iv),
8(e)(vi), 8(e)(ix) (but only with respect to the statements under the
caption "Description of Capital Stock" and "Underwriting") and
8(e)(xv).
In giving such opinions with respect to the matters covered by
Section 8(e)(xv), Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx and Xxxxx
Xxxx & Xxxxxxxx may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto and review
and discussion of the contents thereof, but are without independent
check or verification except as specified.
(g) You shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as
the case may be, in form and substance satisfactory to you, from Ernst
& Young LLP and Xxxxx Xxxxxxxx LLP, independent certified public
accountants, containing the information and statements of the type
ordinarily included in accountants' "comfort letters" to Underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the
Prospectus.
(h) The Company shall have delivered to you the agreements
specified in Section 2 hereof which agreements shall be in full force
and effect on the Closing Date.
22
(i) The Shares shall have been duly listed for quotation on the
Nasdaq National Market.
(j) The Company shall not have failed on or prior to the Closing
Date to perform or comply in any material respect with any of the
agreements herein contained and required to be performed or complied
with by the Company on or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of such Additional
Shares and other matters related to the issuance of such Additional Shares.
SECTION 9. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by you by written notice to the Company if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm
23
Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the total number of Firm Shares or Additional Shares, as the
case may be, to be purchased on such date by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion which
the number of Firm Shares set forth opposite its name in Schedule I bears to the
total number of Firm Shares which all the non-defaulting Underwriters have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Firm Shares or Additional
Shares, as the case may be, which any Underwriter has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased by all Underwriters and arrangements satisfactory to you
and the Company for purchase of such Firm Shares are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter and the Company. In any such case which does
not result in termination of this Agreement, either 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. If, on an Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased on such
date, the non-defaulting Underwriters shall have the option to (i) terminate
their obligation hereunder to purchase such Additional Shares or (ii) purchase
not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase on such date in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.
SECTION 10. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to Hotel
Reservations Network, Inc., 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 and
to USA Networks, Inc. 000 Xxxx 00xx Xxxxxx, 00xx xxxxx, Xxx Xxxx, XX 00000 and
(ii) if to any Underwriter or to you, to you c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx
24
Securities Corporation, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Syndicate Department, or in any case to such other address as the person to be
notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the several Underwriters set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or directors of any
Underwriter, any person controlling any Underwriter, the Company, the officers
or directors of the Company or any person controlling the Company, (ii)
acceptance of the Shares and payment for them hereunder and (iii) termination of
this Agreement.
If for any reason the Shares are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 9), the Company agrees to reimburse the several
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) incurred by them in connection with the proposed
offering. Notwithstanding any termination of this Agreement, the Company shall
be liable for all expenses which it has agreed to pay pursuant to Section 5(i)
hereof. agrees to reimburse the several Underwriters, their directors and
officers and any persons controlling any of the Underwriters for any and all
fees and expenses (including, without limitation, the reasonable fees
disbursements of counsel) incurred by them in connection with enforcing their
rights hereunder (including, without limitation, pursuant to Section 7 hereof).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, the Underwriters' directors and officers, any controlling persons
referred to herein, the Company's directors and the Company's officers who sign
the Registration Statement and their respective successors and assigns, all as
and to the extent provided in this Agreement, 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 a purchaser of any of the Shares from any of the
several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
25
The invalidity or unenforceability of any section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof.
26
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
HOTEL RESERVATIONS NETWORK, INC.
By: /s/ Xxxxxx X. Xxxx
----------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
27
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXX & COMPANY
BEAR, XXXXXXX & CO., INC.
XXXXXX XXXXXX PARTNERS LLC
DLJdirect INC.
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I
hereto
By: XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
By: /s/ Xxxxxxxxxxx Xxxxxx
--------------------------
Name: Xxxxxxxxxxx Xxxxxx
Title: Managing Director
28
SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
------------ ---------------------
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation 1,452,502
Xxxxx & Company Incorporated 899,166
Bear, Xxxxxxx & Co. Inc. 899,166
Xxxxxx Xxxxxx Partners LLC 899,166
DLJdirect, Inc. 100,000
Chase H&Q 50,000
Credit Suisse First Boston Corporation 50,000
X.X. Xxxxxxx & Sons, Inc. 50,000
Xxxxxxx, Sachs & Co. 50,000
ING Barings LLC 50,000
Lazard Freres & Co. LLC 50,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated 50,000
PaineWebber Incorporated 50,000
Prudential Securities Incorporated 50,000
Xxxxxxx Xxxxx Barney Inc. 50,000
XX Xxxxx Securities Corporation 50,000
Xxxxx, Xxxxxxxx & Xxxx, Inc. 25,000
Xxxxxx X. Xxxx & Company 25,000
Xxxxxxx Xxxxx & Company, L.L.C. 25,000
X.X. Xxxxxxxx & Co. 25,000
The Xxxxxxx Company 25,000
Xxxx Xxxxxxxx Xxxxxxx 25,000
Xxxxxxxxxx & Co. Inc. 25,000
First Albany Corporation 25,000
First Southwest Company 25,000
Gabelli & Co. Inc. 25,000
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. 25,000
Xxxxxx Xxxxxxxxxx Xxxxx LLC 25,000
Xxxxxxxx, Lemon & Co. Incorporated 25,000
Xxxxxx Xxxxxx & Company, Inc. 25,000
Xxxxxxx & Co. Inc. 25,000
Xxxxxx/Xxxxxx Incorporated 25,000
U.S. Bancorp Xxxxx Xxxxxxx Inc. 25,000
Xxxxxxx Xxxxx & Associates Inc. 25,000
Xxxx, Xxxx & Co., Inc. 25,000
Xxxxxxx Xxxxxx Xxxxxx 25,000
Sands Brothers & Co. Ltd. 25,000
Xxxxxxxx Inc. 25,000
Sutro & Co. Incorporated 25,000
Xxxxxx Xxxxxxx Xxxxxx Gull 25,000
------------
Total 5,400,000
2
ANNEX I
USA Networks, Inc.
Travelocity
Xxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxx X. Xxxxxxx
Xxxx Xxxxxxxxxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxxx
CROSS-REFERENCE TARGET LIST
NOTE: Due to the number of targets some target names
may not appear in the target pull-down list.
(This list is for the use of the wordprocessor only,
is not a part of this document and may be discarded.)
ARTICLE/SECTION TARGET NAME
=======================================
1.........................reg.stmt.pros
2....................gt.sell.purch.lock
3..........................xxxx.xxx.xxx
4...............................xxx.xxx
5................................co.agt
5(d).......................co.furn.pros
5(i)q........................co.pay.exp
6............................xxx.xxx.xx
6(x).....................no.mat.adv.chg
7.................................indem
7(a)...........................co.indem
7(b)..........................und.indem
7(c)............................xxx.xxx
7(d)......................indem.unavail
7(d)(i)..........................propor
7(e)...............................reme
8........................cond.und.oblig
8(a)....................co.rep.war.true
8(b)...........................rule462b
8(d)(i).....................no.chg.cond
8(d)(ii).................no.chg.cap.stk
8(d)(iii).......................no.liab
8(e).......................xxxx.xxxx.xx
8(e)(iv)....................shares.auth
8(e)(vi).......................agt.auth
8(e)(ix)...................fair.present
8(e)(xv)................reg.pros.comply
9..........................eff.agt.term
10.................................misc
