EXHIBIT 1.4
CONFORMED COPY
$35,000,000
Cybernet Internet Services International, Inc.
13.0% Convertible Senior Subordinated Discount Notes
due 2009
PURCHASE AGREEMENT
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August 19, 1999
Xxxxxx Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Ladies and Gentlemen:
Cybernet Internet Services International, Inc., a Delaware corporation,
(the "Company") proposes to issue and sell to the initial purchaser listed on
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Schedule I hereto (the "Initial Purchaser") $35,000,000 aggregate initial
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accreted value of 13.0% Convertible Senior Subordinated Discount Notes due 2009.
The Notes are to be issued under an Indenture, dated as of August 26, 1999 (the
"Indenture"), between the Company and The Bank of New York, as Trustee (in such
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capacity, the "Trustee"). The shares of Common Stock issuable upon exercise of
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the right to convert the Notes pursuant to the provisions of Article X of the
Indenture (the "Conversion Right") are herein referred to as the "Conversion
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Shares." The Notes and the Conversion Shares are collectively referred to
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herein as the "Securities."
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The Notes will be offered and sold to the Initial Purchaser without being
registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions therefrom. The Company has
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prepared a preliminary offering memorandum, dated August 13, 1999, and a
supplement to the preliminary offering memorandum, dated August 13, 1999
(collectively, the "Preliminary Offering Memorandum"), and an offering
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memorandum dated the date hereof and a supplement (the "Supplement") to the
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offering memorandum, dated the date hereof (collectively, the "Offering
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Memorandum"), setting forth information concerning the Company, its subsidiaries
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and the Securities. Copies of the Preliminary Offering Memorandum and the
Offering Memorandum will be delivered by the Company to the Initial Purchaser
pursuant to the terms of this Agreement. Any references herein to the
Preliminary Offering Memorandum and to the Offering Memorandum shall be deemed
to include all amendments and supplements thereto (including, in the case of the
Offering Memorandum, whether specifically referenced in any particular paragraph
herein or not, the Supplement) unless otherwise noted. The Company hereby
confirms that it has authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale of the
Notes by the Initial Purchaser in accordance with Section 2.
Holders of the Notes and Conversion Shares, as the case may be (including
the Initial Purchaser and its direct and indirect transferees), will be entitled
to the benefits of a Registration Rights Agreement, substantially in the form
attached hereto as Annex A (the "Registration Rights Agreement"), pursuant to
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which the Company will agree to file with the U.S. Securities
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and Exchange Commission (the "Commission") a resale shelf registration statement
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pursuant to Rule 415 under the Securities Act (the "Resale Shelf Registration
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Statement") with respect to resales of the Notes (which Resale Shelf
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Registration Statement shall also register the sale of the underlying Common
Stock issuable upon conversion thereof). The Company will further agree pursuant
to the Registration Rights Agreement that it will file with the Commission a
shelf registration statement (the "Conversion Shelf Registration Statement")
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registering the issuance or resale of Conversion Shares on or prior to the one-
year anniversary of the Closing Date.
This Agreement, the Indenture and the Registration Rights Agreement are
referred to herein collectively as the "Operative Documents."
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1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum, as of their respective dates, did not, and the Offering
Memorandum, as of the Closing Date (as defined in Section 2 hereof),
will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided
that the Company does not make any representation or warranty as to
information contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum in reliance upon and in
conformity with the written information furnished to the Company by
the Initial Purchaser specifically for inclusion therein and described
in Section 7(e).
(b) Assuming the accuracy of the representations and
warranties of the Initial Purchaser contained in Section 3 and its
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Notes to the Initial
Purchaser and the offer, resale and delivery of the Notes by the
Initial Purchaser in the manner contemplated by this Agreement and the
Offering Memorandum, to register the Securities under the Securities
Act or to qualify the Indenture under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act").
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(c) The Company has been duly incorporated, is validly
existing and in good standing under Delaware law; the Company is
solvent, is not in bankruptcy, liquidation or receivership and is duly
qualified to do business in each jurisdiction in which its ownership
or lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify would not
reasonably be expected to have, singularly or in the aggregate, a
material adverse effect on the financial position, stockholders'
equity, results of operations, business or prospects of the Company
and its subsidiaries; and the Company has all power and authority
necessary to own or hold its respective property and to conduct the
business in which it is engaged.
(d) Each of the subsidiaries (as defined in Section 13
hereof) of the Company has been duly organized, is validly existing
and in good standing under
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the laws of its jurisdiction of organization or incorporation, is
solvent, is not in bankruptcy, liquidation or receivership and is duly
qualified to do business in each jurisdiction in which its ownership
or lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify would not
reasonably be expected to have, singularly or in the aggregate, a
material adverse effect on the financial position, stockholders'
equity, results of operations, business or prospects of the Company
and its subsidiaries; and each has all power and authority necessary
to own or hold its respective property and to conduct the business in
which it is engaged.
(e) The Company has an authorized and issued share capital
and capitalization as set forth in the Supplement under the heading
"Capitalization," except for the one-for-one conversion of shares of
Series A Preferred Stock, par value $0.001 per share (the "Series A
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Preferred Stock"), occurring after June 30, 1999 for Common Stock; all
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outstanding shares of capital stock of the Company have been duly
authorized and are validly issued and fully paid and nonassessable;
the Conversion Shares have been duly authorized and, when the
Conversion Shares are issued in accordance with the terms and
conditions contained in the Indenture upon exercise of the Conversion
Right, such Conversion Shares will be validly issued and fully paid
and nonassessable and holders of the Conversion Shares will have no
liability for any debt or other obligation of the Company towards
third parties in their capacity as holders of the Conversion Shares;
and the stockholders of the Company have no preemptive rights with
respect to the Conversion Shares which have not been validly excluded
prior to the date hereof, and there is no other conflicting right,
contingent or otherwise, of any person to purchase or be offered for
purchase any of the Conversion Shares and no depositary receipts have
been issued with respect to the Conversion Shares offered by the
Company; the Conversion Shares have been duly reserved for issuance in
accordance with the terms of the Notes and the Indenture.
(f) The Company has no Indebtedness (as defined in the
Offering Memorandum) other than (i) as set forth on the June 30, 1999
Consolidated Balance Sheet of the Company set forth in the Supplement
and (ii) the Company's 14% Senior Notes due 2009 (the "Senior Notes").
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(g) The execution, delivery and performance of the
Operative Documents by the Company and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement, shareholders agreement or other material agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to
which any of the properties or assets of the Company or any of its
subsidiaries are subject, nor will such actions result in any
violation of the provisions of the Certificate of Incorporation or By-
laws or equivalent constitutive documents of the Company or any of its
subsidiaries or any statute, license, legislation, authorization, or
any order, rule or regulation of any court or governmental
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agency or body (including, without limitation, any statutes, rules,
orders or regulations promulgated by the Federal Communications
Commission or the Commission of the European Community) having
jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets subject, other than with respect to
violations of the provisions of the Certificate of Incorporation or
By-laws or equivalent constitutive documents of the Company or any of
its subsidiaries, to such exceptions as, individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries.
No consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body
(including, without limitation, any statutes, rules, orders or
regulations promulgated by the Federal Communications Commission or
the Commission of the European Community) is required for the
execution, delivery and performance of the Operative Documents by the
Company and the consummation of the transactions contemplated hereby
and thereby except (A) as have been obtained or made, (B) with respect
to the transactions contemplated by the Registration Rights Agreement,
as may be required under the Securities Act, the Trust Indenture Act
and the rules and regulations of the Commission thereunder and (C) as
required by state or foreign securities or "Blue Sky" laws.
(h) The Company has full power and authority to enter into
this Agreement; this Agreement has been duly authorized, executed and
delivered by the Company and, when duly authorized, executed and
delivered by the Initial Purchaser, will constitute a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be
subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing, and except, with
respect to the rights of indemnification and contribution thereunder,
where enforcement thereof may be limited by public policy.
(i) The Company has full power and authority to enter into
the Indenture; the Indenture has been duly authorized by the Company
and upon effectiveness of a Shelf Registration Statement will be
qualified under the Trust Indenture Act; and, on the Closing Date (as
defined below), the Indenture will have been duly executed and
delivered by the Company and will conform, in all material respects,
to the description thereof contained in the Offering Memorandum and,
assuming due authorization, execution and delivery of the Indenture by
the Trustee, the Indenture will constitute a valid and legally binding
obligation of the Company, enforceable in accordance with its terms,
except that the enforcement thereof may be subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.
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(j) The Company has full power and authority to offer and
sell the Notes; the Notes have been duly authorized by the Company;
and, when the Notes are delivered to and paid for by the Initial
Purchaser pursuant to this Agreement on the Closing Date, such Notes
will have been duly executed, authenticated, issued and delivered
(assuming due authentication of the Notes by the Trustee) and will
conform, in all material respects, to the description thereof
contained in the Offering Memorandum and, assuming due authentication
of the Notes by the Trustee, such Notes will constitute valid and
legally binding obligations of the Company, entitled to the benefits
of the Indenture and enforceable in accordance with their terms,
except that the enforcement thereof may be subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.
(k) The Company has full power and authority to enter into
the Registration Rights Agreement; the Registration Rights Agreement
has been duly authorized by the Company and will conform, in all
material respects, to the description thereof contained in the
Offering Memorandum; and when executed and delivered by the Company
(assuming due authorization, execution and delivery by the Initial
Purchaser) will have been duly executed and delivered and will be a
valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that the
enforcement thereof may be subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing, and
except, with respect to the rights of indemnification and contribution
thereunder, where enforcement thereof may be limited by public policy.
(l) No stamp or other issuance taxes or duties are payable
by or on behalf of the Initial Purchaser as a consequence of the issue
of the Securities, the sale of the Notes to the Initial Purchaser
and/or the initial resale of the Securities to investors.
(m) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included in the Offering Memorandum, any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree; and, since such date,
there has not been any change in the share capital (except for the
one-for-one conversion of shares of Series A Preferred Stock occurring
after August 2, 1999) or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity,
results of operations or prospects of the
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Company and its subsidiaries, otherwise than as set forth in the
Offering Memorandum.
(n) The consolidated financial statements of the Company
(and the related notes) set forth in the Offering Memorandum
(including the consolidated financial statements of the Company (and
the related notes) set forth in the Supplement) comply in all material
respects with the requirements that would be applicable to a
registration statement on Form S-1 under the Securities Act and were
prepared in accordance with generally accepted accounting principles
in the United States ("U.S. GAAP") consistently applied throughout the
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periods involved and present fairly the financial condition and
results of operations of the entities purported to be shown thereby,
at the dates and for the periods indicated (subject in the case of
interim statements to normal year-end audit adjustments). The
financial information contained in the Offering Memorandum (including
that contained within the Supplement) under the headings "Summary --
Summary Consolidated Financial and Operating Data", "Capitalization",
"Selected Consolidated Financial and Operating Information",
"Unaudited Pro Forma Consolidated Financial Statements" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" are derived from the accounting records of the
Company and its subsidiaries and fairly present the information
purported to be shown thereby. The summary financial and other data
and selected financial and other data included in the Offering
Memorandum have been accurately extracted from the financial
statements of the Company. The pro forma financial information
contained in the Offering Memorandum has been prepared on a basis
consistent with the historical financial statements contained in the
Offering Memorandum (except for the pro forma adjustments specified in
the Offering Memorandum), includes all material adjustments to the
historical financial information required by Rule 11-02 of Regulation
S-X under the Securities Act and the Securities Exchange Act of 1934
(the "Exchange Act") to reflect the transactions described in the
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Offering Memorandum, gives effect to assumptions made on a reasonable
basis and fairly presents the historical and proposed transactions
contemplated by the Offering Memorandum and by the Operative
Documents. The other historical financial and statistical information
and data included in the Offering Memorandum (including that contained
within the Supplement) are, in all material respects, fairly
presented.
(o) Xxxxxxx Ernst & Young, AG and Xxxxx Xxxxxxxx S.p.A.,
who have audited the consolidated financial statements of the Company
and Flashnet, respectively, whose reports appear in the Offering
Memorandum and who will deliver the initial letters referred to in
Section 4(p) hereof are each independent public accountants with
respect to the Company and Flashnet, respectively, within the meaning
of the Securities Act and the rules and regulations promulgated
thereunder.
(p) The Company and each of its subsidiaries has good and
marketable title to all personal property owned by them, subject to
such exceptions that, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the
financial position, results of operations, business
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or prospects of the Company and its subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as do not
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries. Neither the Company nor any of
its subsidiaries owns any title to real property or buildings, and all
real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
(q) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the
Company has reasonably concluded is sufficient based upon experience
and industry practice and is adequate for the conduct of their
respective businesses and the value of their respective properties.
(r) The Company and each of its subsidiaries own or possess
adequate rights to use all material intellectual property, including
without limitation, patents, inventions, processes, technology and
know-how, trade mark registrations, service mark registrations,
copyrights and works of authorship in any media, including computer
hardware, software, systems, databases, documentation, files and
Internet site content, trademarks, service marks, trade names, domain
names, URLs, e-mail addresses, logos, slogans and trade dress, trade
secrets and all confidential or proprietary information and materials,
and all related registrations, applications, recordings and licenses
("Intellectual Property") necessary for the conduct of their
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respective businesses except for such Intellectual Property the lack
of possession of which could not reasonably be expected to have a
material adverse effect on the financial position, results of
operations, business or prospects of the Company and its subsidiaries.
The Company has no reason to believe that its Intellectual Property
infringes, misappropriates or impairs ("Infringes"), or is being so
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Infringed by, the Intellectual Property of any third party, and has
not received any notice alleging such Infringement by any third party.
No legal or government proceeding is pending, and no law, ordinance,
rule, regulation, order, judgment or decree is pending that limits or
challenges the ownership, use, validity or enforceability of any
Intellectual Property owned or used by the Company or any of its
subsidiaries, and the Company has no knowledge of a valid basis for
any of the foregoing. The Company and each of its subsidiaries take
all reasonable steps to protect and maintain their Intellectual
Property (including any confidential Intellectual Property), and have
taken all necessary actions, made all necessary filings and paid all
necessary fees in connection with the foregoing. Any licenses,
sublicenses, royalty or other agreements concerning Intellectual
Property to which the Company or any of its subsidiaries is a party
are valid and in full force and effect, no party thereto is, or is
alleged to be in default thereunder, and no event exists that, with
notice or lapse of time or both, would constitute an event of default
thereunder or result in a right to accelerate, or loss of rights
thereunder, except for licences, sublicense, royalty or other
agreements the lack of validity
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or enforceability of which or the default under which could not
reasonably be expected to have a material adverse effect on the
financial position, results of operations, business or prospects of
the Company and its subsidiaries.
(s) There are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which
any property or asset of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any of its
subsidiaries, might reasonably be expected to have a material adverse
effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries;
and to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others.
(t) Except as otherwise disclosed in the Offering
Memorandum, there are no business relationships or other related-party
transactions of the nature described in Item 404 of Regulation S-K of
the Commission ("Item 404") involving the Company or any other party
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referred to in Item 404, except for transactions that would be
considered immaterial under Item 404.
(u) No transaction or relationship exists which would have
been required to be described in the Offering Memorandum by the
Securities Act and the rules and regulations thereunder if such
Offering Memorandum were a prospectus included in a registration
statement on Form S-1 under the Securities Act, which is not so
described.
(v) Except as disclosed in the Offering Memorandum, the
Company and its subsidiaries have duly filed with the appropriate
taxing authorities all tax returns, reports and other information
required to be filed through the date hereof and have paid all taxes
due thereon, except where (i) (A) extensions have been properly
obtained or are being contested in good faith and for which adequate
reserves have been provided for in accordance with U.S. GAAP and (B)
such extensions referred to in clause (i)(A) are disclosed in the
Offering Memorandum and (ii) the failure to so file or pay could not
reasonably be expected to have a material adverse effect on the
financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries; each such
tax return, report or other information was, when filed, accurate and
complete in all material respects; the Company has no knowledge of any
tax deficiency which, if determined adversely to the Company or any of
its subsidiaries, might reasonably be expected to have a material
adverse effect on the financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries.
(w) All interest payments payable on the Notes may be paid
by the Company in U.S. dollars and all dividends and other
distributions declared and payable on the Conversion Shares may be
paid by the Company in U.S. dollars and all such payments will not be
subject to income, withholding or other taxes under the laws and
regulations of the United States or Germany or any political
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subdivision or taxing authority thereof or therein and will otherwise
be free and clear of any other tax, duty, withholding or deduction in
the United States or Germany or any political subdivision or taxing
authority thereof or therein and without the necessity of obtaining
any governmental authorization in the United States or Germany or any
political subdivision or taxing authority thereof or therein.
(x) Since the date as of which information is given in the
Offering Memorandum through the Closing Date (except for the one-for-
one conversion of shares of Series A Preferred Stock occurring after
August 2, 1999 for Common Stock), and except as may otherwise be
disclosed in the Offering Memorandum, the Company has not (i) issued
or granted any securities, including, without limitation, any options
or warrants, (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction
not in the ordinary course of business or (iv) declared or paid any
dividend on its issued share capital.
(y) There are no contracts or agreements between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities to be registered pursuant to the Registration Rights
Agreement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act,
other than the Registration Rights Agreement among the Company, Xxxxxx
Brothers International (Europe) ("Lehman") and the Initial Purchaser
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dated July 8, 1999 with respect to the Company's Senior Notes.
(z) Neither the Company nor any of its subsidiaries is (i)
in violation of its respective Certificate of Incorporation or By-laws
or equivalent constitutive documents, (ii) in default, and no event
has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which it
is a party or by which it is bound or to which any of its properties
or assets is subject, other than such defaults which could not
reasonably be expected to have a material adverse effect on the
financial condition, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries or (iii) in
violation in any respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its properties or assets may
be subject or has failed to obtain any license, permit, certificate,
franchise or other governmental authorization or permit necessary to
the ownership of its properties or assets or to the conduct of its
business, other than such violations or failures which could not
reasonably be expected to have a material adverse effect on the
financial condition, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries.
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(aa) The Company (i) makes and keeps books and records which
are accurate and complete in all material respects and (ii) maintains
internal accounting controls which provide reasonable assurance that
transactions are executed in accordance with management's
authorization, transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability
for its assets, access to its assets is permitted only in accordance
with management's authorization and the reported accountability for
its assets is compared with existing assets at reasonable intervals.
(bb) Neither the Company nor any of its subsidiaries, nor
any director, officer, agent, employee or, to the Company's knowledge,
other person associated with or acting on behalf of the Company or any
of its subsidiaries, has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating
to political activity, (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee
from corporate funds, (iii) violated or is in violation of any
provision of the United States Foreign Corrupt Practices Act of 1977,
as amended, or (iv) made any bribe, rebate (other than legal price
concessions to customers in the ordinary course of business), payoff,
influence payment, kickback or other unlawful payment to any foreign
or domestic government official or employee.
(cc) The Company is not in violation in any respect of any
applicable environmental law, ordinance, rule, regulation, order,
judgment, decree or permit in any jurisdiction with respect to the
properties of the Company or any of its subsidiaries, other than such
violations which could not reasonably be expected, singularly or in
the aggregate, to have a material adverse effect on the financial
condition, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries.
(dd) Except as described in the Offering Memorandum, there
are no material acquisitions of businesses or assets by the Company or
any of its subsidiaries pending or currently being negotiated.
(ee) No labor disturbance by employees of the Company or any
of its subsidiaries exists or, to the knowledge of the Company, is
imminent which might reasonably be expected to have a material adverse
effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company or its subsidiaries.
(ff) All computer hardware, software, databases, automated
systems and other computer and telecommunications equipment owned or
licensed by the Company or any of its subsidiaries can be used prior
to, during and after the calendar year 2000 and will operate during
each such time period and at least as effectively during each such
time period without material error relating to the processing,
calculating, comparing, sequencing or other use of date-related data
function (the foregoing ability, "Year 2000 Compliant"). The Company
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reasonably believes, after due inquiry, that suppliers, vendors,
customers or other material third parties used or served by the
Company and its subsidiaries are or
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will be Year 2000 Compliant in a timely manner, except as would not
have a material adverse effect on the financial position,
stockholders' equity, results of operations, business prospects or
operations of the Company and its subsidiaries. The Company has no
reason to believe, and does not believe, that there are any issues
related to the Company's ability to be Year 2000 Compliant that are of
a character required to be described or referred to in the Offering
Memorandum.
(gg) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States
Investment Company Act of 1940, as amended (the "Investment Company
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Act"), nor is it a closed-end investment company required to be
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registered, but not registered, thereunder; and the Company is not
and, after giving effect to the offering and sale of the Notes and the
application of the proceeds thereof as described in the Offering
Memorandum, will not be an "investment company" as defined in the
Investment Company Act and the rules and regulations of the Commission
thereunder.
(hh) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act including, without
limitation, the requirement that Notes have an "effective conversion
premium" (as such term is defined in Rule 144A) of ten percent or
greater.
(ii) Neither the Company nor any subsidiary has incurred any
liability for a fee, commission, or other compensation on account of
the employment of a broker or finder in connection with the
transactions contemplated by this Agreement.
(jj) Neither the Company nor any subsidiary has taken,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably have been expected to cause or
result in stabilization or manipulation of the price of any security
of the Company or which would otherwise be prohibited by Regulation M
under the Exchange Act in connection with the offering of the
Securities.
(kk) Neither the Company nor any of its affiliates, nor any
agent acting on its or their behalf has offered or sold or will offer
or sell any of the Securities (A) in the United States by means of any
form of general solicitation or general advertising within the meaning
of Rule 502(c) under the Securities Act, or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act or (B) with respect to any such Securities sold in reliance on
Rule 903 of Regulation S under the Securities Act, by means of any
directed selling efforts within the meaning of Rule 902(b) of
Regulation S. The Company, its affiliates and any agent acting on its
behalf will comply with any offering restrictions and other
requirements of Regulation S applicable to the transactions
contemplated hereby including those applicable to any exercise of the
Conversion Right. The Company has not entered, and will not enter,
into any contractual arrangement with respect to the distribution of
the Securities except for this Agreement and the agreements
contemplated hereby.
12
(ll) Neither the Company nor any of its Affiliates (as
defined in Rule 501(b) of Regulation D promulgated under the
Securities Act) has directly, or through any agent, sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of,
any "security" (as defined in the Securities Act) which is or will be
integrated with the sale of Securities in a manner that would require
the registration under the Securities Act of the Securities.
(mm) The Company owns no capital stock of, or other equity
interests in, any Person (as defined in the Indenture), other than all
of the issued and outstanding share capital of Cybernet Internet-
Dienstleistungen AG ("Cybernet AG"), Flashnet S.p.A. ("Flashnet"),
----------- --------
Vianet Telekommunikations AG ("Vianet"), Cybernet E-Commerce GmbH
------
("Cybernet E-Commerce") and Carolin Verwaltungsgesellschaft mBH
-------------------
("Carolin") and 51% of the issued and outstanding share capital of
-------
Sunweb AG; none of Cybernet AG, Flashnet, Vianet, Cybernet E-Commerce,
Carolin and Sunweb AG owns any capital stock of, or other equity
interests in, any Person, except that (i) Cybernet AG owns all the
issued and outstanding share capital of Open:Net Internet Solutions
GmbH ("Open:Net") and of Cybernet Internet Beteiligungs GmbH
--------
("Cybernet GmbH") and 66% of the issued and outstanding share capital
-------------
of Eclipse s.r.l. ("Eclipse") and (ii) Sunweb AG owns all the issued
-------
and outstanding share capital of Sunweb Internet Services GmbH
("Sunweb GmbH"). Open:Net, Cybernet GmbH, Eclipse and Sunweb GmbH do
-----------
not own any capital stock of, or other equity interests in, any
Person.
(nn) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
-----
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and
-----
each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(oo) The Company and its subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state
or foreign regulatory agencies or bodies which are necessary or
desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the Offering
Memorandum, except where the failure to possess or make the same would
not, singularly or in the aggregate, have a material adverse effect on
the financial position, stockholders' equity, results of operations,
business prospects
13
or operations of the Company and its subsidiaries, and neither the
Company nor any subsidiary has received notification of any revocation
or modification of any such license, certificate, authorization or
permit or has any reason to believe that any such license,
certificate, authorization or permit will not be renewed in the
ordinary course.
(pp) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any
governmental agency or body which prevents the issuance of the
Securities or suspends the sale of the Securities in any jurisdiction;
no injunction, restraining order or order of any nature by any foreign
or U.S. federal or state court of competent jurisdiction has been
issued with respect to the Company which would prevent or suspend the
issuance or sale of the Securities or the use of the Preliminary
Offering Memorandum or the Offering Memorandum in any jurisdiction; no
action, suit or proceeding is pending against or, to the best
knowledge of the Company, threatened against or affecting the Company
before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Securities or
in any manner draw into question the validity or enforceability of any
of the Operative Documents or any action taken or to be taken pursuant
thereto; and the Company has complied with any and all requests by any
securities authority in any jurisdiction for additional information to
be included in the Preliminary Offering Memorandum or the Offering
Memorandum.
(qq) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Offering
Memorandum (including forward looking statements in the Supplement)
has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(rr) The Company has filed on a timely basis with the
Commission, to the extent required, (i) all annual and quarterly
financial statements and other information required to be contained in
a filing with the Commission on Forms 10-K and 10-Q and (ii) all
current reports required to be filed with the Commission on Form 8-K.
2. Purchase, Sale and Delivery of Securities. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell to the Initial
Purchaser, and the Initial Purchaser agrees to purchase from the Company, the
number of Notes set forth opposite the Initial Purchaser's name on Schedule I
hereto at a purchase price of $534.78 per Note, plus accrued interest, if any,
from August 26, 2004, to the Closing Date.
The Company will deliver, against payment of the purchase price, Notes
in the form of one or more certificates in global or definitive form. If the
Notes are offered in global form, beneficial interests in the Notes will be
shown on, and transfers thereof will be effected only through, records
maintained in book-entry form by The Depository Trust Company ("DTC") and its
---
participants, including, as applicable, Xxxxxx Guaranty Trust Company of New
14
York, Brussels office, as operator of the Euroclear System, and Cedelbank,
societe anonyme. Payment for the Notes shall be made by or on behalf of the
Initial Purchaser in same day funds by wire transfer to an account previously
designated to the Initial Purchaser by the Company at a bank reasonably
acceptable to the Initial Purchaser at 4:00 p.m. (London time), on August 26,
1999, or at such other time not later than seven full business days thereafter
as the Initial Purchaser and the Company determine, such time being herein
referred to as the "Closing Date", against delivery at the office of Xxxxxxx
------------
Thacher & Xxxxxxxx (London) at least 24 hours prior to the Closing Date to the
Trustee.
3. Representations by Initial Purchaser; Resale by Initial
Purchaser.
(a) The Initial Purchaser represents and warrants to the Company
that it is an "accredited investor" within the meaning of Regulation D
under the Securities Act.
(b) The Initial Purchaser acknowledges that the Securities have
not been registered under the Securities Act and may not be offered or
sold within the United States or to, or for the account or benefit of,
U.S. persons except in accordance with Rule 144A or Regulation S or
pursuant to another exemption from the registration requirements of
the Securities Act. The Initial Purchaser represents and agrees that
it has offered and sold the Securities and will offer and sell the
Securities (i) as part of its distribution at any time and (ii)
otherwise until 40 days after the later of the date of commencement of
the Offering and the Closing Date, only in accordance with Rule 903 or
Rule 144A under the Securities Act ("Rule 144A"). Accordingly,
---------
neither the Initial Purchaser nor its affiliates, nor any persons
acting on its behalf, have engaged or will engage in any directed
selling efforts with respect to the Securities, and the Initial
Purchaser, its affiliates and all persons acting on its behalf have
complied and will comply with the offering restrictions requirement of
Regulation S. The Initial Purchaser agrees that, at or prior to
confirmation of sale of the Notes other than a sale pursuant to Rule
144A, the Initial Purchaser will have sent to each distributor, dealer
or person receiving a selling concession, fee or other remuneration
that purchases the Securities from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the date of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used
above have the meanings given to them by Regulation S."
Terms used in this subsection (b) have the meanings given to them
by Regulation S.
15
(c) The Initial Purchaser agrees that it and each of its
affiliates have not entered and will not enter into any contractual
arrangement with respect to the distribution of the Securities except
with the prior written consent of the Company.
(d) The Initial Purchaser and each of its affiliates has not
solicited offers for nor offered or sold and each agrees that it will
not solicit offers for nor offer or sell the Securities in the United
States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities
Act, including, but not limited to, (i) any advertising, article,
notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio or (ii) any
seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. The Initial Purchaser agrees,
with respect to initial resales made in reliance on Rule 144A of any
of the Securities, to deliver either with the confirmation of such
initial resale or otherwise prior to settlement of such initial resale
a notice (which may be included in the Offering Memorandum) to the
effect that the initial resale of such Securities has been made in
reliance upon the exemption from the registration requirements of the
Securities Act provided by Rule 144A.
(e) The Initial Purchaser represents and agrees that it (i) has
not solicited, and will not solicit, offers to purchase any of the
Securities from, (ii) has not sold, and will not sell, any of the
Securities to, and (iii) has not distributed, and will not distribute,
the Offering Memorandum to any person or entity in any jurisdiction
outside of the United States except, to the best of the Initial
Purchaser's knowledge and belief, in compliance in all material
respects with all applicable laws. For the purpose of this Agreement,
"United States" means the United States of America, its territories,
-------------
its possessions and other areas subject to its jurisdiction.
4. Further Agreements of the Company. The Company agrees as follows:
(a) The Company will advise the Initial Purchaser promptly of
any proposal to amend or supplement the Offering Memorandum and will
not effect such amendment or supplement to which the Initial Purchaser
shall reasonably object after being given notice thereof and
reasonable time for review. If, at any time prior to completion of the
resale of the Notes by the Initial Purchaser, any event shall occur or
condition exist as a result of which it is necessary, in the opinion
of counsel for the Initial Purchaser or counsel for the Company, to
amend or supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Offering Memorandum to comply
with applicable law, to promptly prepare such amendment or supplement
as may be necessary to correct such untrue statement or omission or so
that the Offering Memorandum, as so amended or supplemented, will
comply with applicable law. Neither the Initial Purchaser's
16
consent to, nor its delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(b) The Company will furnish to the Initial Purchaser copies of
the Offering Memorandum (and all amendments and supplements thereto)
as soon as available and in such quantities as the Initial Purchaser
shall reasonably request for internal use and for distribution to
prospective purchasers, and the Company will furnish to the Initial
Purchaser as soon as practicable four copies of the Offering
Memorandum (including four copies of the Supplement) , each signed by
a duly authorized officer of the Company, one of which will include
the independent accountants' reports therein manually signed by such
independent accountants. For so long as any of the Securities are
outstanding, if the Company is ever not subject to Section 13 or 15(d)
of the Exchange Act and is not exempt from reporting pursuant to Rule
12g3-2(b) under the Exchange Act, the Company will promptly furnish or
cause to be furnished to the Initial Purchaser and the holders of the
Securities, and, upon request of prospective purchasers of the
Securities, to such purchasers, copies of the information required to
be delivered to holders and prospective purchasers of the Securities
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto) in order to permit compliance with Rule 144A in
connection with resales by such holders of the Securities. The Company
will pay the expenses of printing and distributing to the Initial
Purchaser all such documents.
(c) The Company will file on a timely basis with the Commission,
to the extent such filings are accepted by the Commission and whether
or not the Company has a class of securities registered under the
Exchange Act, (i) all annual and quarterly financial statements and
other financial information required to be contained in a filing with
the Commission on Forms 10-K and 10-Q (which financial statements
shall be prepared in accordance with U.S. GAAP), including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual financial
information, a report thereon by the Company's certified independent
accountants and (ii) all current reports required to be filed with the
Commission on Form 8-K. Such quarterly financial information shall be
filed with the Commission within 45 days following the end of each
fiscal quarter of the Company, and such annual financial information
shall be furnished within 90 days following the end of each fiscal
year of the Company. Such annual financial information shall include
the geographic segment financial information required to be disclosed
by the Company under Item 101(d) of Regulation S-K under the
Securities Act. The Company will also be required (a) to file with the
Trustee, and provide to each holder, without cost to such holder,
copies of such reports and documents within 15 days after the date on
which the Company files such reports and documents with the Commission
or the date on which the Company would be required to file such
reports and documents if the Company were so required, and (b) if
filing such reports and documents with the Commission is not accepted
by the Commission or is prohibited under the
17
Exchange Act, to supply at the Company's cost copies of such reports
and documents to any prospective holder promptly upon request.
(d) The Company will promptly from time to time exercise best
efforts to take such action as the Initial Purchaser may reasonably
request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as the Initial Purchaser may
request and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as may
be necessary to complete the resale of the Notes; provided, however,
that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to take any action that would
subject it to general consent to service of process in any
jurisdiction (other than pursuant to an Operative Document) in which
it is not now so subject or otherwise subject itself to taxation in
any jurisdiction in which it is not otherwise so qualified or subject.
(e) Until the second anniversary of the Closing Date, the
Company will, upon request, furnish to the Initial Purchaser and any
holder of Securities, a copy of the restrictions on transfer which the
Company believes are applicable to the Securities; provided, however,
that nothing contained herein shall obligate the Company to track or
trace particular Securities held by anyone other than the Company or
any of its affiliates (as defined in Rule 144 under the Securities
Act).
(f) In connection with the offering, until the Initial Purchaser
shall have notified the Company of the completion of the resale of the
Notes, neither the Company nor any of its affiliates have bid for or
purchased or will bid for or purchase, either alone or with one or
more other persons, for any account in which they or any of their
affiliates have a beneficial interest any Notes nor have they
attempted or will they attempt to induce any person to purchase any
Notes; and neither they nor any of their affiliates will make bids or
purchases for the purpose of creating actual, or apparent, active
trading in, or of raising the price of, the Notes.
(g) For a period of 90 days after the date hereof, neither the
Company nor any of its direct or indirect subsidiaries will (i) offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any debt securities issued or guaranteed by the Company or
any such subsidiary and having a maturity of more than one year from
the date of issue other than pursuant to obligations under
registration rights agreements or (ii) directly or indirectly, offer
for sale, sell or otherwise dispose of (or enter into any transaction
or device which is designed to, or could be expected to, result in the
disposition or purchase by any person at any time in the future of)
any shares of Common Stock (other than shares issued through private
placements in connection with the acquisition of the capital stock or
assets of another company, shares issued pursuant to employee benefit
plans, qualified stock option plans or other employee compensation
plans existing on the date hereof or pursuant to currently outstanding
options, warrants or rights), or sell or grant options, rights or
warrants with respect to any shares of Common Stock (other than the
grant of options pursuant to option plans
18
existing on the date hereof), in each case, without the prior written
consent of the Initial Purchaser. Neither the Company nor any of its
direct or indirect subsidiaries will at any time offer, sell, contract
to sell, pledge or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, pledge,
contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act or the safe harbor of Regulation S
thereunder to cease to be applicable to the offer and sale of the
Securities.
(h) The Company will indemnify and hold harmless the Initial
Purchaser against any documentary, stamp or similar issuance tax,
including any interest and penalties, on the creation, issuance and
sale of the Securities and on the initial resale thereof by the
Initial Purchaser and on the execution and delivery of this Agreement.
All payments to be made by the Company hereunder shall be made without
withholding or deduction for or on account of any present or future
taxes, duties or governmental charges whatsoever unless the Company is
compelled by law to deduct or withhold such taxes, duties or charges.
In that event, the Company shall pay such additional amounts as may be
necessary in order that the net amounts received after such
withholding or deduction shall equal the amounts that would have been
received if no withholding or deduction had been made.
(i) The Company will apply the net proceeds from the sale of the
Notes as set forth in the Offering Memorandum under the caption "Use
of Proceeds."
(j) Between the date hereof and the Closing Date (both dates
inclusive), the Company will notify and consult with the Initial
Purchaser, and cause its subsidiaries and all other parties acting on
its or their behalf to notify and consult with the Initial Purchaser,
prior to issuing any announcement which could be material in the
context of the distribution of the Securities.
(k) The Company will promptly inform the Initial Purchaser of
any communications received by it from any governmental or regulatory
agency or authority, including, without limitation, any German or
Italian regulatory authority, any relevant stock exchange or trading
market (including the Freiverkehr of the Frankfurt Stock Exchange), or
the Commission, relating to the offering of the Securities and to
furnish the Initial Purchaser with copies thereof.
(l) The Company will take such steps as shall be necessary to
ensure that neither the Company nor any subsidiary shall become an
"investment company" within the meaning of such term under the
Investment Company Act and the rules and regulations of the Commission
thereunder.
(m) The Company will not take, directly or indirectly, any
action which is designed to stabilize or manipulate, or which
constitutes or which might reasonably be expected to cause or result
in stabilization or manipulation, of the price of any security of the
Company in connection with the offering of the Securities.
19
(n) Upon request by the Initial Purchaser, the Company will
apply to list the Notes or have them admitted for trading on an
internationally recognized stock exchange or over-the-counter trading
market and will use its best efforts to ensure that such application
is accepted.
(o) The Company will use its best efforts to cause the Notes to
be eligible for inclusion in the Private Offerings, Resale and Trading
through Automated Linkages Market of The Nasdaq Stock Market, Inc.
(the "PORTAL Market").
-------------
(p) The Company will cause each of Xxxxxxx Ernst & Young, AG and
Xxxxx Xxxxxxxx S.p.A. to deliver an initial comfort letter, dated the
date hereof, to the Initial Purchaser in form and substance reasonably
satisfactory to the Initial Purchaser at or prior to the time copies
of the Offering Memorandum (including the Supplement) are furnished to
the Initial Purchaser.
(q) The Company will prepare the Offering Memorandum (including
the Supplement) on or prior to the Closing Date in form and substance
reasonably satisfactory to the Initial Purchaser. The Supplement shall
contain Consolidated Statements of Loss and Comprehensive Loss and
Consolidated Statements of Cash Flows, each as of and for the six
months ended June 30, 1998 and 1999, Consolidated Balance Sheets as of
the year ended December 31, 1998 and the six months ended June 30,
1999, a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" comparing the six months ended June 30,
1999 with the six months ended June 30, 1998 and pro forma
consolidated financial information for the Company as of and for the
six months ended June 30, 1999 reflecting, among other transactions,
the acquisition of Flashnet.
5. Expenses. The Company agrees, to pay: (a) the costs incident to
the authorization, issuance, registration (as set forth in the Registration
Rights Agreement), sale and delivery of the Securities and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and
distributing of the Preliminary Offering Memorandum and the Offering Memorandum
and any amendment or supplement thereto, all as provided in this Agreement; (c)
any fees charged by investment rating agencies for the rating of the Securities;
(d) the fees and expenses of qualifying the Securities under the securities laws
of the several jurisdictions as provided in Section 4(d) and of preparing,
printing and distributing a Blue Sky Memorandum (including reasonable related
fees and expenses of counsel to the Initial Purchaser); (e) the costs of
preparing certificates evidencing the Securities; (f) all expenses and fees in
connection with the application for inclusion of the Securities in the PORTAL
Market, and the obtaining of any approval from any relevant authority in Germany
or any other country in which the securities are listed or admitted for trading
on a stock exchange or over-the-counter trading market; (g) the fees and
expenses (including fees and disbursements of counsel) of the Trustee; (h) the
fees and expenses of any Authorized Agent (as defined in Section 15 hereof); (i)
the cost and charges of any transfer agent or registrar; (j) all stamp or other
issuance or transfer taxes or governmental duties, if any, payable by the
Initial Purchaser in connection with the offer and sale of the Notes to the
Initial Purchaser; and (k) all other costs and expenses incident to the
performance of the obligations of the Company under this Agreement not otherwise
specifically provided for in this Section, including, without limitation, the
fees and expenses of Xxxxxxx Ernst & Young, AG, the
20
Company's independent accountants, and Xxxxx Xxxxxxxx S.p.A., Xxxxxxxx's
independent accountants, and the fees and expenses of Xxxxxx, Xxxxxxxxx, Xxxxxx
& Xxxxxx LLP, U.S. counsel to the Company, Xxxxxx Xxxxxxxx Xxxxx, German counsel
to the Company, Avv. Xxxxxx X'Xxxxxxxx, Italian counsel to the Company, and Xx.
Xxxxxx Xxxxxx, Austrian counsel to the Company, provided that, except as
provided in this Section 5 and in Section 9, the Initial Purchaser shall pay its
own costs and expenses and any transfer taxes on the Securities which it may
sell.
6. Conditions of the Initial Purchaser's Obligations. The several
obligations of the Initial Purchaser hereunder are subject to the accuracy, when
made and on the Closing Date, of the representations and warranties of the
Company contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Initial Purchaser shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto (including
the Supplement) contains any untrue statement of a fact which, in the
opinion of counsel to the Initial Purchaser, is material or omits to
state any fact which, in the opinion of such counsel, is material and
is required to be stated therein or is necessary to make the
statements therein not misleading.
(b) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the
Indenture, the Registration Rights Agreement, the Offering Memorandum
or any amendment or supplement thereto (including the Supplement), and
all other legal matters relating to this Agreement, the Indenture, the
Registration Rights Agreement and the transactions contemplated hereby
and thereby shall be reasonably satisfactory in all material respects
to counsel to the Initial Purchaser, and the Company, shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(c) Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP shall have furnished
to the Initial Purchaser its written opinion, as U.S. counsel to the
Company, addressed to the Initial Purchaser and dated the Closing
Date, in form and substance satisfactory to the Initial Purchaser, to
the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, is duly qualified to do business and is in
good standing as a foreign corporation in each U.S. jurisdiction
in which its ownership or lease of property or the conduct of its
businesses requires such qualification, and has all power and
authority necessary to own or hold its properties and conduct the
businesses in which it is engaged;
(ii) The Company has an authorized capitalization as set
forth in the Supplement and all of the issued shares of capital
stock of the Company have been duly and validly authorized and
issued, are fully
21
paid and nonassessable and conform to the description thereof
contained in the Offering Memorandum;
(iii) To the best of such counsel's knowledge there are no
legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, might have a material adverse effect on the
financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries; and,
to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others;
(iv) The Company has full right, power and authority to
execute and deliver each of the Operative Documents and to
perform its obligations thereunder; and all corporate action
required to be taken for the due and proper authorization,
execution and delivery of each of the Operative Documents and the
consummation of the transactions contemplated thereby has been
duly and validly taken;
(v) Each of the Operative Documents is in proper legal
form for the enforcement thereof against the Company without
further action on the part of the Initial Purchaser, the holders
of the Securities, or the Trustee;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization,
execution and delivery by the Initial Purchaser, constitutes a
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that the
enforcement thereof may be subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing, and except, with respect to the rights of
indemnification and contribution thereunder, where enforcement
thereof may be limited by public policy;
(vii) The Indenture has been duly authorized, executed
and delivered by the Company and, assuming due authorization,
execution and delivery of the Indenture by the Trustee,
constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally, general
equitable principles (whether considered in a
22
proceeding in equity or at law) or an implied covenant of good
faith and fair dealing;
(viii) The Indenture conforms in all material respects
with the requirements of the Trust Indenture Act and the rules
and regulations of the Commission applicable to an indenture
eligible to be qualified thereunder;
(ix) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and, assuming
due authorization, execution and delivery of the Registration
Rights Agreement by the Initial Purchaser, constitutes a valid
and legally binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) or an implied covenant of good faith and fair
dealing, and except, with respect to the rights of
indemnification and contribution thereunder, where enforcement
thereof may be limited by public policy;
(x) The certificates used to evidence the Notes are in
due and proper form and comply with all applicable statutory
requirements of U.S. federal, Delaware and New York law;
(xi) The Notes have been duly authorized, executed and
delivered by the Company and, assuming due authentication thereof
by the Trustee, upon payment and delivery in accordance with this
Agreement and the Indenture, will be duly and validly issued and
outstanding and will constitute valid and legally binding
obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with
their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent, conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles
(whether in a proceeding in equity or at law) or an implied
covenant of good faith and fair dealing;
(xii) The Conversion Shares have been duly authorized
and, when issued in accordance with the terms and conditions
contained in the Indenture upon conversion of the Notes into
Common Stock, will be validly issued in accordance with the laws
of the State of Delaware and the provisions of the Certificate of
Incorporation and By-laws of the Company and will be fully paid
and nonassessable and holders of such Conversion Shares will have
no other liability for any debt or other obligation of the
Company towards third parties in their capacity as holders of
such Conversion Shares; such Conversion Shares, when
23
issued, will not be subject to any preemptive or similar rights
and will be free and clear of all liens, encumbrances, equities
and claims or restrictions on transferability;
(xiii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the voting
or transfer of, any shares of the Common Stock or pursuant to the
Company's Certificate of Incorporation or By-Laws or any
agreement or other instrument known to such counsel;
(xiv) 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 Securities Act with respect to any securities
of the Company owned or to be owned by such person or to require
the Company to include such securities in the securities to be
registered pursuant to the Registration Rights Agreement or in
any securities being registered pursuant to any other
registration statement filed by the Company under the Securities
Act other than the Registration Rights Agreement among the
Company, Lehman and the Initial Purchaser dated July 8, 1999 with
respect to the Company's Senior Notes.
(xv) The execution, delivery and performance of the
Operative Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby, do
not and will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, any material indenture,
mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company or any of its
subsidiaries is subject, nor will such actions result in any
violation of (A) the provisions of the Certificate of
Incorporation or By-laws or equivalent constitutive documents of
the Company or any of its subsidiaries, (B) any existing
applicable law, rule or regulation of any court or governmental
agency or body of the United States or the State of New York or
any Delaware governmental agency or body acting pursuant to the
Delaware General Corporation Law (other than state securities or
Blue Sky laws as to which we have not been requested to express
any opinion) or (C) any order, known to such counsel, of any
government, governmental instrumentality or court of the United
States or the State of New York having jurisdiction over the
Company or any of its properties or assets or any Delaware
governmental agency or body acting pursuant to the Delaware
General Corporation Law;
(xvi) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of the United States or the State of
New York or any Delaware governmental
24
agency or body acting pursuant to the Delaware General
Corporation Law is required for the consummation of the
transactions contemplated by the Operative Documents in
connection with the issuance or sale of the Notes by the Company
(assuming compliance with the terms of the Operative Documents by
the parties thereto), except, with respect to the transactions
contemplated by the Registration Rights Agreement, as may be
required under the Securities Act, the Trust Indenture Act and
the rules and regulations of the Commission thereunder, and
otherwise except as may be required by state or foreign
securities or Blue Sky laws (as to which such counsel expresses
no opinion);
(xvii) The descriptions in the Offering Memorandum of
statutes, legal and governmental proceedings and contracts and
other documents are accurate in all material respects to the
extent the foregoing concern the federal laws of the United
States, the laws of the State of New York and the Delaware
General Corporation Law; the statements set forth in the Offering
Memorandum under the caption "Description of the Notes," insofar
as such statements purport to constitute a summary of the terms
of the Indenture and the Registration Rights Agreement, fairly
summarize such terms, agreements and other documents in all
material respects; and the statements set forth in the Offering
Memorandum under the caption "Certain United States Federal
Income Tax Consequences" insofar as they purport to constitute
summaries of matters of U.S. federal income tax law and legal
conclusions with respect thereto constitute accurate summaries of
the matters described therein all material respects;
(xviii) The Company is not an open-end investment company,
unit investment trust or face-amount certificate company that is
or is required to be registered under Section 8 of the Investment
Company Act, nor is it a closed-end investment company required
to be registered, but not registered, thereunder; and the Company
is not and, after giving effect to the offering and sale of the
Notes and the application of the proceeds thereof as described in
the Offering Memorandum, will not be an "investment company" as
defined in the Investment Company Act and the rules and
regulations of the Commission thereunder;
(xix) No New York State or any New York City stamp or
documentary taxes payable by or on behalf of the Initial
Purchaser or the Company are required to be paid with respect to
the execution of the Indenture and the authorization, issuance,
sale and delivery of the Securities to the Initial Purchaser in
the manner contemplated by this Agreement;
(xx) The Company can sue and be sued in its own name;
(xxi) The Company has, pursuant to Section 15 of this
Agreement, legally, validly and irrevocably submitted to the
personal jurisdiction of any state or federal court located in
the Borough of
25
Manhattan, The City of New York, New York in any action arising
out of or relating to this Agreement or the transactions
contemplated thereby, and has legally, validly and effectively
appointed the Authorized Agent as its authorized agent for the
purposes described in Section 15 of this Agreement;
(xxii) The Securities satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act;
(xxiii) Neither the Company nor any of its Affiliates (as
defined in Rule 501(b) of Regulation D promulgated under the
Securities Act) has directly, or through any agent, sold, offered
for sale, solicited offers to buy or otherwise negotiated in
respect of, any "security" (as defined in the Securities Act)
which is or will be integrated with the sale of Securities in a
manner that would require the registration under the Securities
Act of the Securities; and
(xxiv) No registration of the Securities under the
Securities Act, and no qualification of an indenture under the
Trust Indenture Act, is required in connection with the offer and
sale of the Notes by the Company to the Initial Purchaser or in
connection with the initial resale of the Notes by the Initial
Purchaser in the manner contemplated in this Agreement and the
Offering Memorandum.
Such counsel shall also have furnished to the Initial Purchaser a
written statement, addressed to the Initial Purchaser and dated the
Closing Date, in form and substance satisfactory to the Initial
Purchaser, to the effect that (i) the Offering Memorandum (including
the Supplement) conforms in all material respects to the requirements
of, and contains all information that would be required to be
presented by, the Securities Act and the rules and regulations
promulgated thereunder that would have been applicable thereto if such
Offering Memorandum were a prospectus included in a registration
statement on Form S-1 under the Securities Act, however, had the
Company submitted the Offering Memorandum to the staff of the
Commission, there may have been comments from the staff requiring
amendments before the offer document was declared effective, and (ii)
(x) such counsel has acted as counsel to the Company in connection
with the preparation of the Offering Memorandum (including the
Supplement) and (y) based on the foregoing, no facts have come to the
attention of such counsel which gave it reason to believe that the
Offering Memorandum (including the Supplement) (other than the
financial statements, statistical and other financial data contained
therein or omitted therefrom, as to which such counsel has not been
requested to comment), as of its date or the Closing Date, contained
or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in
light of circumstances under which they were made, not misleading.
The foregoing opinion and statement may be qualified by a statement to
the effect that such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in
the Offering Memorandum except for the
26
statements made in the Offering Memorandum under the captions
"Description of the Notes" and "Certain United States Federal Income
Tax Consequences" insofar as such statements relate to the provisions
of the Securities, this Agreement, the Indenture, and the Registration
Rights Agreement or concern legal matters.
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the federal laws of the
United States of America, the laws of the State of New York and the
General Corporation Law of the State of Delaware (and may contain such
assumptions and qualifications as are satisfactory in form and
substance to the Initial Purchaser) and (ii) rely (to the extent such
counsel deems proper and specifies in its opinion) as to matters
involving the application of the laws of Germany, Italy and Austria
upon the opinions of Xxxxxx Xxxxxxxx Xxxxx, Avv. Xxxxxx X'Xxxxxxxx and
Xx. Xxxxxx Xxxxxx, respectively, referred to in Sections 6(d)(1), (2)
and (3) below.
(d) (1) Besner Xxxxxxxx Xxxxx shall have furnished to the
Initial Purchaser its written opinion, as German counsel to the
Company, addressed to the Initial Purchaser and dated the Closing
Date, in form and substance satisfactory to the Initial Purchaser, to
the effect that:
(i) Each of Cybernet AG, Cybernet GmbH, Cybernet E-
Commerce, Carolin and Open:Net (the "German Subsidiaries") has
-------------------
been duly incorporated and is validly existing as a corporation
(and, in the case of Cybernet E-Commerce, is a limited
partnership validly existing as a limited partnership) in good
standing under the laws of Germany, is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification and has all
power and authority necessary to own or hold its properties and
conduct the businesses in which it is engaged;
(ii) All of the issued shares of capital stock of the
German Subsidiaries have been duly and validly authorized and
issued and are fully paid, nonassessable and are owned directly
or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(iii) To the best of such counsel's knowledge and other than
as set forth in the Offering Memorandum there are no legal or
governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or asset of
the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries
might have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries; and,
to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others;
27
(iv) The execution, delivery and performance of the
Operative Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby, do
not and will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, any material indenture,
mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company or any of its
subsidiaries is subject, nor will such actions result in any
violation of (A) the provisions of the Articles of Association or
bylaws or equivalent constitutive documents of any of the German
Subsidiaries, (B) any existing applicable law, rule or regulation
of any court or governmental agency or body of Germany or (C) any
order, known to such counsel, of any government, governmental
instrumentality or court of Germany having jurisdiction over the
Company or any of its properties or assets;
(v) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of Germany or any political
subdivision thereof is required for the consummation of the
transactions contemplated by the Operative Documents in
connection with the issuance or sale of the Notes by the Company
(assuming compliance with the terms of the Operative Documents by
the parties thereto), except, with respect to the transactions
contemplated by the Registration Rights Agreement;
(vi) Under German law, the Company would be deemed to have
had sufficient contacts with the United States and would be
recognized as a validly existing Delaware corporation and as the
holding company and owner of all the issued shares of capital
stock of Cybernet AG and the other German Subsidiaries.
(vii) The descriptions in the Offering Memorandum of
statutes, legal and governmental proceedings and contracts and
other documents are accurate in all material respects to the
extent the foregoing concern the laws of Germany; the statements
set forth in the Offering Memorandum under the captions "Risk
Factors --There May be Questions about our Status Under German
Law," "Risk Factors -- We Are Subject to Regulation" and
"Business -- Regulation," to the extent that they constitute
summaries of matters of German law or regulation or legal
conclusions, fairly summarize the matters described therein in
all material respects;
(viii) Any judgment obtained in a United States federal or
state court of competent jurisdiction sitting in New York City
arising out of or in relation to the obligations of the Company
under the Operative Documents would be enforced against the
Company in the courts of
28
Germany without substantive reexamination or relitigation on the
merits of the subject matter thereof;
(ix) The Initial Purchaser would be permitted to commence
proceedings against the Company in German courts based on this
Agreement, and the holders of Notes and Conversion Shares (or the
Trustee acting on their behalf) (the "Holders") would be
-------
permitted to commence proceedings against the Company in German
courts based on the Operative Documents (to the extent that such
Initial Purchaser and Holders have direct contractual rights
against the Company under such Operative Documents, Notes, or
Conversion Shares, as appropriate, which arise as a result of
valid and binding obligations of the Company under such documents
in accordance with the laws of the State of New York), and such
German courts would recognize the choice of law provisions of the
Operative Documents;
(x) Under German law, the agreement of the Company that
Operative Documents shall be governed by the laws of the State of
New York will, if it constitutes a binding agreement under the
laws of the State of New York, be recognized by the courts of
Germany;
(xi) The indemnification and contribution provisions set
forth in Section 7 herein do not contravene the public policy or
laws of Germany;
(xii) Under German law, the submission by the Company to
the jurisdiction of the United States federal or New York state
courts sitting in New York City set forth in each of the
Operative Documents, is enforceable against the Company, and
service of process effected in the manner set forth in the
Operative Documents, assuming validity under the laws of the
State of New York, will be effective, insofar as German law is
concerned;
(xiii) All real property and buildings held under lease by
the Company and the German Subsidiaries are held by them under
valid subsisting and enforceable leases; and
(xiv) No stamp, registration or other similar taxes or
duties are payable in Germany by or on behalf of the Initial
Purchaser upon or in connection with the sale and delivery to or
by the Initial Purchaser of the Notes as contemplated by the
Offering Memorandum, and it is not necessary, prior to the
Initial Purchaser seeking enforcement of any of the Operative
Documents in Germany, that any stamp or similar tax be paid.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by German law (and may contain
such assumptions and qualifications as are satisfactory in form and
substance to the Initial Purchaser) and shall state that each of
Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP
29
and Xxxxxxx Xxxxxxx & Xxxxxxxx may rely upon its opinion with respect
to matters of German law.
(2) Avv. Xxxxxx X'Xxxxxxxx, Italian counsel to the Company,
shall have furnished to the Initial Purchaser its written opinion,
addressed to the Initial Purchaser and dated the Closing Date, in form
and substance satisfactory to the Initial Purchaser, to the effect
that:
(i) Flashnet and Eclipse (the "Italian Subsidiaries") have
--------------------
been duly incorporated and are validly existing as corporations
in good standing under the laws of Italy, are duly qualified to
do business and are in good standing as foreign corporations in
each jurisdiction in which their ownership or lease of property
or the conduct of their businesses requires such qualification
and have all power and authority necessary to own or hold their
properties and conduct the businesses in which they are engaged;
and
(ii) All of the issued shares of capital stock of the
Italian Subsidiaries have been duly and validly authorized and
issued and are fully paid and nonassessable; and all of the
issued shares of capital stock of Flashnet and 66% of the issued
shares of capital stock of Eclipse are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by Italian law (and may
contain such assumptions and qualifications as are satisfactory in
form and substance to the Initial Purchaser) and shall state that each
of Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP and Xxxxxxx Xxxxxxx &
Xxxxxxxx may rely upon its opinion with respect to matters of Italian
law.
(3) Xx. Xxxxxx Xxxxxx, Austrian counsel to the Company, shall
have furnished to the Initial Purchaser its written opinion addressed
to the Initial Purchaser and dated the Closing Date, in form and
substance satisfactory to the Initial Purchaser, to the effect that:
(i) Vianet has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
Austria, is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its businesses
requires such qualification and has all power and authority
necessary to own or hold its properties and conduct the
businesses in which it is engaged; and
(ii) All of the issued shares of capital stock of Vianet
have been duly and validly authorized and issued and are fully
paid and nonassessable and are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities
or claims.
30
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by Austrian law (and may
contain such assumptions and qualifications as are satisfactory in
form and substance to the Initial Purchaser) and shall state that each
of Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP and Xxxxxxx Xxxxxxx &
Xxxxxxxx may rely upon its opinion with respect to matters of Austrian
law.
(e) The Trustee shall have furnished to the Initial Purchaser an
officer's certificate, dated the Closing Date, in form and substance
satisfactory to the Initial Purchaser to the effect that (i) the
Indenture has been duly authorized, executed and delivered by the
Trustee, (ii) each person who, on behalf of the Trustee, executed and
delivered the Indenture was at the date thereof and is now duly
elected, appointed or authorized, qualified and acting as an officer
or authorized signatory of the Trustee and duly authorized to perform
such acts at the respective times of such acts and the signatures of
such persons appearing on such document are their genuine signatures
and (iii) such other matters reasonably requested by the Initial
Purchaser to be included in such officer's certificate. Attached to
such officer's certificate shall be an extract of the bylaws of the
Trustee, duly adopted by its Board of Directors, respecting the
signing authority of the persons mentioned in clause (ii) above and a
letter from an officer of the Trustee authorizing, pursuant to such
bylaws, such signing authority, which bylaws and letter at the Closing
Date are in full force and effect.
(f) With respect to the letter of Xxxxxxx Ernst & Young, AG
delivered to the Initial Purchaser and dated the date hereof referred
to in Section 4(p) (as used in this paragraph, the "initial letter"),
--------------
the Company shall have furnished to the Initial Purchaser a letter (as
used in this paragraph, the "bring-down letter") of such accountants,
-----------------
addressed to the Initial Purchaser and dated the Closing Date (i)
confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as
of the date of such bring-down letter (or, with respect to matters
involving changes or developments since the date as of which specified
financial information is given in the Offering Memorandum, as of a
date not more than five days prior to the date of each such bring-down
letter), the conclusions and findings of such firm with respect to the
financial information and other matters covered by its initial letter
and (iii) confirming in all material respects the conclusions and
findings set forth in its initial letter.
(g) The Company shall have furnished to the Initial Purchaser a
certificate, dated the Closing Date, of Xxxxxxx Xxxx, Chairman,
President and Chief Executive Officer, and Xxxxxx Xxxxxx, Chief
Financial Officer and Treasurer, stating, on behalf of the Company,
that:
(1) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of the Closing Date;
and the Company has complied with all its agreements contained
herein; and
31
(2) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial
statements included in the Offering Memorandum (A) any loss or
interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth in the Offering Memorandum or (B) any
change in the share capital (except for the one-for-one
conversion of shares of Series A Preferred Stock occurring after
August 2, 1999 for Common Stock) or long-term debt of the Company
or any of its subsidiaries or any change in or generally
affecting the affairs, management, financial position,
stockholders' equity or results of operations of the Company and
its subsidiaries, otherwise than as set forth in the Offering
Memorandum; and
(3) They have carefully examined the Offering Memorandum
(including the Supplement) and, in their opinion (A) the Offering
Memorandum (including the Supplement), as of its date, did not
include any untrue statement of a material fact and did not omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (B)
since such date no event has occurred which should have been set
forth in an amendment to the Offering Memorandum so that the
Offering Memorandum, as so amended or supplemented, would not
include any untrue statement of a material fact and would not
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances in which they were made, not misleading.
(h) (1) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Offering Memorandum any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth in the Offering Memorandum and (2) since such date
there shall not have been any change in the share capital (except for
the one-for-one conversion of shares of Series A Preferred Stock
occurring after August 2, 1999 for Common Stock) or long-term debt of
the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries,
otherwise than as set forth in the Offering Memorandum, the effect of
which, in any such case described in clause (1) or (2), is, in the
judgment of the Initial Purchaser, so material and adverse as to make
it impracticable or inadvisable to proceed with the offering of the
Securities on the terms and in the manner contemplated in the Offering
Memorandum.
(i) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (1) trading in
securities generally on the New York Stock Exchange, Inc. or the
Nasdaq National Market System,
32
or trading in any securities of the Company on any exchange, shall
have been suspended or minimum prices shall have been established on
any such exchange or such market by the Commission, by such exchange
or by any other regulatory body or governmental authority having
jurisdiction, (2) a banking moratorium shall have been declared by New
York State or U.S. federal authorities or by authorities in Germany or
European Union authorities, (3) the United States or Germany shall
have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or Germany or
there shall have been a declaration of a national emergency or war by
the United States or Germany or (iv) there shall have occurred such a
material adverse change in general, United States, or German economic,
political or financial conditions or in currency exchange rates,
taxation, exchange controls or foreign investment regulations (or the
effect of international conditions on the financial markets in the
United States or Germany shall be such) as to make it, in the judgment
of the Initial Purchaser, impracticable or inadvisable to proceed with
completion of the offering or sale of and payment for the Securities.
(j) The Initial Purchaser shall have received on the Closing
Date a counterpart of the Registration Rights Agreement which shall
have been executed and delivered by the duly authorized officers of
the Company.
(k) The Indenture (in form and substance satisfactory to the
Initial Purchaser) shall have been duly executed and delivered by the
Company and the Trustee on the Closing Date and shall be in full force
and effect on such date and the Notes shall have been duly executed
and delivered by the Company and duly authenticated by the Trustees on
the Closing Date.
(l) The NASD shall have accepted the Securities for trading in
the PORTAL Market.
(m) The Notes shall have been duly authorized, executed and
delivered by the Company.
(n) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the judgment of the Initial
Purchaser would materially impair the ability of the Initial Purchaser
to purchase, hold or effect resales of the Securities as contemplated
hereby.
(o) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Notes; and no injunction,
restraining order or order of any other nature by any court of
competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance or sale of the Notes.
33
(p) The Company shall have furnished to the Initial Purchaser
such further information, certificates and documents as the Initial
Purchaser may reasonably request.
(q) The Initial Purchaser shall have received and be reasonably
satisfied with the content of the Offering Memorandum (including the
Supplement) on or prior to the Closing Date. The Supplement shall
contain Consolidated Statements of Loss and Comprehensive Loss and
Consolidated Statements of Cash Flows, each as of and for the six
months ended June 30, 1998 and 1999, Consolidated Balance Sheets as of
the year ended December 31, 1998 and the six months ended June 30,
1999, a "Management's Discussion and Analysis of Financial Condition
and the Results of Operations" comparing the six months ended June 30,
1999 with the six months ended June 30, 1998 and pro forma
consolidated financial information for the Company as of and for the
six months ended June 30, 1999 reflecting, among other transactions,
the acquisition of Flashnet.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
to the Initial Purchaser.
7. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each of the
Initial Purchaser, its officers and employees and each person, if any,
who controls each of the Initial Purchaser within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, but not
limited to, any loss, claim, damage, liability or action relating to
purchases and sales of the Securities), to which each of the Initial
Purchaser, its officers, employees or controlling persons may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum, the Offering
Memorandum, or in any amendment or supplement thereto (including the
Supplement), (ii) the omission or alleged omission to state in the
Preliminary Offering Memorandum, the Offering Memorandum or in any
amendment or supplement thereto (including the Supplement) any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading or (iii) any act or failure to act, or any
alleged act or failure to act, by the Initial Purchaser in connection
with, or relating in any manner to, the Securities or the offering
contemplated hereby, and which is included as part of or referred to
in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (provided that
the Company shall not be liable in the case of any matter covered by
this clause (iii) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such act or
failure to act undertaken or omitted to be taken by the Initial
34
Purchaser through its gross negligence or wilful misconduct), and
shall reimburse each of the Initial Purchaser and such officer,
employee and controlling person promptly upon demand for any legal or
other expenses reasonably incurred by the Initial Purchaser, officer,
employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in the Offering Memorandum, or in
any such amendment or supplement, in reliance upon and in conformity
with the written information furnished to the Company by the Initial
Purchaser specifically for inclusion therein and described in Section
7(e). The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to the Initial
Purchaser or to any officer, employee or controlling person of the
Initial Purchaser.
(b) The Initial Purchaser shall indemnify and hold harmless the
Company, its officers and employees, each of its directors and each
person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the
Company or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum, the Offering
Memorandum or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state in the Offering Memorandum or in
any amendment or supplement thereto any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with the written information furnished
to the Company by or on behalf of the Initial Purchaser specifically
for inclusion therein and described in Section 7(e), and shall
reimburse the Company and any such director, officer or controlling
person for any legal or other expenses reasonably incurred by the
Company, as the case may be, or any such director, officer or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing indemnity
agreement is in addition to any liability which the Initial Purchaser
may otherwise have to the Company or any such director, officer or
controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 7, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have
35
under this Section 7 except to the extent it has been materially
prejudiced by such failure and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this
Section 7. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and,
to the extent that it wishes, jointly with any other similarly
notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, any indemnified party shall have the
right to employ separate counsel in any such action and to participate
in the defense thereof but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment
thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such
counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it
is advisable for such indemnified party to employ separate counsel or
(iii) the indemnifying party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action on
behalf of such indemnified party, it being understood, however, that
the indemnifying party shall not, in connection with any one such
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 reasonable fees and expenses of more
than one separate firm of attorneys (in addition to one separate firm
of attorneys as local counsel, if appropriate under the circumstances)
at any time for all such indemnified parties, which firm shall be
designated in writing by the Initial Purchaser, if the indemnified
parties under this Section 7 consist of the Initial Purchaser or any
of its officers, employees or controlling persons, or by the Company,
if the indemnified parties under this Section consist of the Company
or any of its directors, officers, employees or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 7(a) and 7(b), shall use its reasonable efforts
to cooperate with the indemnifying party in the defense of any such
action or claim. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld) settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such
settlement, compromise or consent (a) includes an unconditional
release of each indemnified party from all
36
liability arising out of such claim, action, suit or proceeding and
(b) 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, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if
there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss of liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 7 shall
for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a) or 7(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, in such proportion
as shall be appropriate to reflect the relative benefits received by
the Company on the one hand and the Initial Purchaser on the other
from the offering of the Securities or if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Company on the one hand and the Initial Purchaser on the other with
respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchaser on
the other with respect to such offering shall be deemed to be in the
same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses
but after deducting discounts and commissions) received by the Company
on the one hand, and the total discounts and commissions received by
the Initial Purchaser with respect to the Securities purchased under
this Agreement, on the other hand, bear to the total gross proceeds
from the offering of the Securities under this Agreement, in each case
as set forth in the table on the cover page of the Offering
Memorandum. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand, or the Initial
Purchaser on the other hand, the intent of the parties and their
relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and the Initial
Purchaser agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by
pro rata allocation or by any other method of allocation which does
not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 7(d) shall be deemed to include, for
purposes of this Section 7(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 7(d), the Initial
37
Purchaser shall not be required to contribute any amount in excess of
the amount by which the total price at which the Securities purchased
by it were resold exceeds the amount of any damages which the Initial
Purchaser has otherwise paid or become liable to pay by reason of any
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 Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
(e) The Initial Purchaser confirms that the statements with
respect to the offering of the Notes set forth in the first and ninth
paragraphs under the caption "Plan of Distribution" in the Offering
Memorandum are correct and constitute the only information furnished
in writing to the Company by or on behalf of the Initial Purchaser
specifically for inclusion in the Offering Memorandum.
8. Termination. The obligations of the Initial Purchaser hereunder
may be terminated by the Initial Purchaser by notice given to and received by
the Company prior to delivery of and payment for the Securities if, prior to
that time, any of the events described in Sections 6(h) or 6(i) shall have
occurred or if the Initial Purchaser shall decline to purchase the Securities
for any reason permitted under this Agreement.
9. Reimbursement of Initial Purchaser's Expenses. If this Agreement
shall be terminated by the Initial Purchaser because of any failure or refusal
on the part of the Company to comply with the terms or to fulfil any of the
conditions of Section 6 (other than Subsections 6(h), (i) and (o)) of this
Agreement, the Company shall reimburse the Initial Purchaser for fees and
expenses of its counsel and for such other out-of-pocket expenses as shall have
been reasonably incurred by it in connection with this Agreement and the
proposed purchase of the Securities, and upon demand the Company shall pay the
full amount thereof to the Initial Purchaser.
10. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by
mail, telex or facsimile transmission to: Xxxxxx Xxxxxxx & Co.
Incorporated, 0000 Xxxxxxxx, Xxx Xxxx, XX 00000, Attention: Syndicate
Department (Fax: x0-000-000-0000);
With a copy to Xxxxxxx Xxxxxxx & Xxxxxxxx, 00 Xxxxxxxxxxx, 00/xx/
Xxxxx, Xxxxxx, XX0X 0XX, Attention: Xxxxxxx X. Xxxxxxxxx, Esq. (Fax:
x00-000-000-0000);
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to Cybernet Internet Services International
Inc., Xxxxxx-Xxxxxx-Ring 19-23, 81929 Munich, Germany, Attention:
Xxxxxx Xxxxxx, Chief Financial Officer and Treasurer (Fax: +49-89-993-
15199);
38
With a copy to Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP, 0000
Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx X.X. 00000, Attention: Xxxxxx
X. Xxxx, Esq. (Fax: x0-000-000-0000).
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchaser, the Company,
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the officers and
employees of the Initial Purchaser and the person or persons, if any, who
control the Initial Purchaser within the meaning of Section 15 of the Securities
Act and the indemnity agreement of the Initial Purchaser contained in Section
7(b) of this Agreement shall be deemed to be for the benefit of directors,
officers and employees of the Company and any person controlling the Company
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 11, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
12. Survival. The respective indemnities, representations, warranties
and agreements of the Company and the Initial Purchaser contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Securities and
shall remain in full force and effect regardless of any investigation made by or
on behalf of any of them or any person controlling any of them.
13. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, the term "business day" means any day on which the
------------
Nasdaq National Market System is open for trading and the term "subsidiary" has
----------
the meaning set forth in Rule 405 under the Securities Act.
14. Governing Law. This Agreement and the rights and duties of the
parties hereunder shall be governed by and construed in accordance with the laws
of the State of New York.
15. Submission to Jurisdiction; Appointment of Agent for Service;
Waiver; Currency Indemnity. To the fullest extent permitted by applicable law,
the Company irrevocably submits to the non-exclusive jurisdiction of any federal
or state court in the Borough of Manhattan in the City of New York, County and
State of New York, United States of America, in any suit or proceeding based on
or arising under this Agreement, and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in any such court. The
Company, to the fullest extent permitted by applicable law, irrevocably and
fully waives the defense of an inconvenient forum to the maintenance of such
suit or proceeding and hereby irrevocably designates and appoints CSC, at New
York, New York (the "Authorized Agent"), for a period of ten years from the date
----------------
hereof or until such time as no Notes are outstanding, as its authorized agent
upon whom process may be served in any such suit or proceeding. The Company
represents that it has notified the Authorized Agent of such designation and
appointment and that the Authorized Agent has accepted the same in writing. The
Company hereby irrevocably authorizes and directs its Authorized Agent to accept
such service. The Company further agrees that service of process upon its
Authorized Agent and written notice of
39
said service to the Company mailed by first class mail or delivered to its
Authorized Agent shall be deemed in every respect effective service of process
upon the Company in any such suit or proceeding. Nothing herein shall affect the
right of any person to serve process in any other manner permitted by law. The
Company agrees that a final action in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other lawful manner. Notwithstanding the foregoing, any action against
the Company arising out of or based on this Agreement or the transactions
contemplated hereby may also be instituted by the Initial Purchaser, its
respective officers and employees or any person who controls the Initial
Purchaser within the meaning of the Securities Act in any competent court in
Germany and the Company expressly accepts the jurisdiction of any such court in
any such action.
The Company hereby irrevocably waives, to the extent permitted by law,
any immunity to jurisdiction to which it may otherwise be entitled (including,
without limitation, immunity to pre-judgment attachment, post-judgment
attachment and execution) in any legal suit, action or proceeding against it
arising out of or based on this Agreement or the transactions contemplated
hereby.
The provisions of this Section 15(a) are intended to be effective upon
the execution of this Agreement without any further action by the Company or the
Initial Purchaser and the introduction of a true copy of this Agreement into
evidence shall be conclusive and final evidence as to such matters.
(a) The Company shall indemnify the Initial Purchaser against
any loss incurred by it as a result of any judgment or order being
given or made and expressed and paid in a currency (the "Judgment
--------
Currency") other than U.S. dollars and as a result of any variation as
--------
between (i) the rate of exchange at which the U.S. dollar amount is
converted into the Judgment Currency for the purpose of such judgment
or order and (ii) the spot rate of exchange in New York, New York at
which the Initial Purchaser on the date of payment of such judgment or
order is able to purchase U.S. dollars with the amount of the Judgment
Currency actually received by the Initial Purchaser. If the U.S.
dollars so purchased are greater than the amount originally due to the
Initial Purchaser hereunder, the Initial Purchaser agrees to pay the
Company an amount equal to the excess of the U.S. dollars so purchased
over the amount originally due to the Initial Purchaser hereunder. The
foregoing shall constitute a separate and independent obligation of
the Company and the Initial Purchaser, as the case may be, and shall
continue in full force and effect notwithstanding any such judgment or
order as aforesaid. The term "spot rate of exchange" shall include any
premiums and costs of exchange payable in connection with the purchase
of, or conversion into, U.S. dollars.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
40
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement among the Company
and the Initial Purchaser, please indicate your acceptance in the space provided
for that purpose below.
Very truly yours,
Cybernet Internet Services International, Inc.
By: /s/ Xxxxxxx Xxxx
---------------------------------
Name: Xxxxxxx Xxxx
Title: President and Chief Executive Officer
Accepted:
Xxxxxx Xxxxxxx & Co. International Limited
By: /s/ Xxxx Xxxxxxx
---------------------------------
Authorized Representative
SCHEDULE I
Aggregate
Initial
Accreted Value
Initial Purchaser of Notes
----------------- ---------------
Xxxxxx Xxxxxxx & Co. International Limited.. $ 35,000,000
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Total....................................... $ 35,000,000
============
