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Exhibit 1
Dated as of 19th November, 1999
EUROWEB INTERNATIONAL CORP.
KPN TELECOM B.V.
and
CERTAIN DIRECTORS OF EUROWEB INTERNATIONAL CORP.
__________________________________________
AMENDED AND RESTATED
SHARE SUBSCRIPTION AGREEMENT
_________________________________________
Signed on 19th November, 1999
and amended and restated on 13th December, 1999
XXXXX & XXXXX
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CONTENTS
CLAUSE PAGE
1. Interpretation 1
2. issue of Shares and Terms of Payment 3
3. Conditions Precedent 4
4. Warranties 4
5. Covenants up to Closing 6
6. Rescission 8
7. The Closing 8
8. Securities Act; Legends 9
9. Registration Rights 10
10. Confidentiality 18
11. Announcements 19
12. consents and filings 19
13. FURTHER ASSURANCES 19
14. Costs 19
15. Notices 20
16. General 20
17. Whole Agreement 21
18. Governing Law and Jurisdiction 21
SCHEDULES
1. Particulars of the Subsidiaries 23
2. Warranties of the Company 28
Schedule 4 38
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Exhibit 1
SHARE SUBSCRIPTION AGREEMENT
THIS AMENDED AND RESTATED SHARE SUBSCRIPTION AGREEMENT is dated as of 19th
November, 1999 BETWEEN:
(1) EUROWEB INTERNATIONAL CORP., a Delaware corporation whose principal place
of business is at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 (the
"COMPANY");
(2) KPN TELECOM B.V., a Netherlands limited liability company incorporated in
the Netherlands whose registered office is at Xxxxxxxxx 0, Xxx Xxxxx, Xxx
Xxxxxxxxxxx (the "SUBSCRIBER"); and
(3) XXXXX XXXXX and XXXXX XXXX, both being directors of the Company (the
"DIRECTORS").
WHEREAS:
(A) The Company is a Delaware corporation having an authorised share capital
of 20,000,000 ordinary shares with par value of $.001 of which 9,883,340
have been issued fully paid or credited as fully paid. Further details of
the Company are set out in Schedule 1.
(B) The Company is the beneficial owner of the majority of the issued share
capital of each of those companies short details of which are set out in
Schedule 2.
(C) The Subscriber proposes to subscribe for such number of ordinary shares
as will result in the Subscriber holding 51 per cent. of the issued and
outstanding share capital of the Company and, under a separate agreement,
to be issued such number of share options as will entitle it, if it so
exercises such options to remain as a 51 per cent. shareholder in the
Company.
(D) The Directors agree to procure (so far as they are able to do so) that
the Company complies with certain covenants prior to the Closing.
(E) The parties have amended and restated the subscription agreement executed
by the parties on 19th November, 1999 to correct certain inaccuracies in
Schedule 4 thereto. This amended and restated agreement, including the
correct Schedule 4, sets out the agreement between the parties as of 19th
November, 1999.
IT IS AGREED as follows:
1. INTERPRETATION
(1) In this Agreement:
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations promulgated under the Exchange Act;
"AGREED FORM" means, in relation to any document, the form of that
document which has been initialled for the purpose of identification by
the Subscriber and the Company;
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks generally are open in New York for normal business;
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"COMPANIES" means the Company and the Subsidiaries and "COMPANY" means
any of them;
"CLOSING" means the implementation of the matters described in clause 7;
"DISCLOSURE LETTER" means the letter of the same date as this Agreement
from the Company to the Subscriber;
"EFFECTIVE DATE" means the date on which the Closing actually occurs;
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended;
"EXISTING SHARES" means the existing shares of the Company as described
in Recital A;
"FURTHER SUBSCRIPTION" means the subscription for Shares, representing
such further number of Shares equal to the number of third party options
and warrants exercised between 26th October, 1999 and the date of
Closing;
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended;
"INITIAL SUBSCRIPTION" means the subscription for 10,286,742 Shares,
representing 51 per cent. of the Company's capital if such Shares had
been issued on 26th October, 1999;
"INTELLECTUAL PROPERTY RIGHTS" means trade marks, service marks, trade
and business names, rights in designs, patents, copyright, database
rights, moral rights and rights in know-how and other intellectual
property rights in each case whether registered or unregistered and
including applications for the grant of any of the foregoing and all
rights or forms of protection having equivalent or similar effect to any
of the foregoing which may subsist anywhere in the world;
"OPTION AGREEMENT" means the option agreement to be entered into by the
parties on the date of this Agreement under which the Company grants the
Subscriber an option to subscribe for Shares in the Company to allow the
Subscriber to maintain a 51 per cent. interest in the Company on an
ongoing basis;
"RESOLUTION" means a shareholders' resolution of the Company approving
the matters contemplated by this agreement, authorising the Board of
Directors of the Company to issue the Shares and, if necessary,
increasing the Company's authorised share capital such that the Company
may issue the Shares under this Agreement;
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended;
"SEC" means the United States Securities and Exchange Commission
"SHARES" means the new shares to be issued to the Subscriber as described
in clause 2(1);
"SUBSCRIPTION PRICE" means the consideration to be paid by the
Subscriber for the Shares as defined in clause 2(2);
"SUBSIDIARY", when used in reference to any other person, means any
corporation of which outstanding securities having ordinary voting power
to elect a majority of the board of directors of such corporation are
owned directly or indirectly by such other person;
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"SUBSIDIARIES" means all the companies mentioned in Schedule 2 and
"SUBSIDIARY" means any of them; and
"WARRANTIES" means the representations and warranties on the part of the
Company contained in clause 4(1) and Schedule 3.
(2) Any reference, express or implied, to an enactment includes references
to:
(a) that enactment as re-enacted, amended, extended or applied by
or under any other enactment (before or after the signature of this
Agreement);
(b) any enactment which that enactment re-enacts (with or without
modification);
(c) any subordinate legislation made (before or after the
signature of this Agreement) under that enactment, as re-enacted,
amended, extended or applied as described in paragraph (a) above, or
under any enactment referred to in paragraph (b) above
and "enactment" includes any legislation in any jurisdiction.
(3) Where any statement is qualified by the expression "so far as the Company
is aware" or "to the best of the Company's' knowledge, information and
belief" or any similar expression that statement shall be deemed to
include an additional statement that it has been made after due and
careful enquiry.
(4) The term "person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organisation and
a governmental entity or any department or agency thereof.
(5) Words denoting persons shall include bodies corporate and unincorporated
associations of persons and, unless otherwise stated, shall include
successors or assigns of such persons.
(6) References to parties, Schedules or clauses are references to parties and
Schedules to, and clauses of, this Agreement.
(7) Mentioning anything after "include", "includes" or "including" does not
limit what else might be included.
(8) Subclauses (1) to (7) apply unless the contrary intention appears.
(9) The headings in this Agreement do not affect its interpretation.
2. ISSUE OF SHARES AND TERMS OF PAYMENT
(1) Upon the terms and subject to the conditions contained in this Agreement,
on the Effective Date the Company will issue to the Subscriber, and the
Subscriber will subscribe for, 10,286,742 shares of common stock, par
value $.001 per share, of the Company plus the Further Subscription (the
"SHARES").
(2) In reliance upon the representations, warranties and agreements of the
Company contained in this Agreement, and in consideration of the issue of
the Shares, the Subscriber will pay or cause to be paid to the Company an
amount (the "SUBSCRIPTION PRICE"), which is equal to:
(a) $1.58 per Share in respect of the Initial Subscription; and
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(b) $1.38 per Share in respect of the Further Subscription.
(3) At the Closing, the Subscriber will pay the Subscription Price to the
Company by delivery of immediately available funds equal in amount to the
Subscription Price to the Company.
3. CONDITIONS PRECEDENT
(1) Without prejudice to clause 6 the subscription and allotment of the
Shares is conditional on:
(a) the Resolution being duly passed by the shareholders of the
Company;
(b) the Company, the Subscriber and any other "PERSON" (as
defined in the HSR Act) so required by the HSR Act, having filed a
Notification and Report Form for Certain Mergers and Acquisitions
with the Department of Justice and the Federal Trade Commission
pursuant to (and as those terms are defined in) the HSR Act in
connection with the transactions contemplated hereby, and all
applicable waiting periods with respect to each such filing
(including any extensions thereof) shall have expired or been
terminated; and
(c) the entry by the parties into the Option Agreement.
(2) The parties shall use all reasonable endeavours to procure that the
conditions in subclause (1) are fulfilled on or before 31st March, 2000.
(3) If all the conditions in subclause (1) are not fulfilled or waived on or
before the date specified in subclause (2) no party shall have any rights
or obligations under this Agreement (except in respect of a prior breach).
4. WARRANTIES
(1) The Company represents and warrants to the Subscriber that:
(a) except as fully and fairly disclosed in the Disclosure
Letter, each of the statements set out in Schedule 3 is true and
accurate; and
(b) all information contained or referred to in the Disclosure
Letter is true and accurate and fairly presented and nothing has
been omitted from the Disclosure Letter which renders any of that
information incomplete or misleading.
(2) Each of the Warranties set out in the several paragraphs of Schedule 3 is
separate and independent and except as expressly provided to the contrary
in this Agreement is not limited:
(a) by reference to any other paragraph of Schedule 3; or
(b) by anything in the Disclosure Letter which is not expressly
referenced to the Warranty concerned;
and none of the Warranties shall be treated as qualified by any actual or
constructive knowledge on the part of the Subscriber or any of its
agents.
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(3) In the absence of fraud, dishonesty or wilful concealment on the part of
the Company or its agents or advisers, the liability of the Company in
respect of the Warranties:
(a) shall not (i) arise unless the amount of all claims against
the Company made in respect of the Warranties (or which would have
been made but for the operation of this paragraph exceeds $50,000 or
(ii) exceed the sum of $15,000,000; and
(b) shall terminate:
(i) on the seventh anniversary of Closing in respect
of those matters set out in Part 26 (Taxation) of Schedule 3
and any other matters so far as they relate to taxation; and
(ii) on the second anniversary of Closing in respect
of all other matters contained in Schedule 3,
except in respect of any claim of which notice in writing is given
to the Company before that date,
but in relation to those Warranties set out in paragraphs 4 (share
capital), 10 (assets), 11 (financial statements) and the
limitations set out in paragraphs (a) and (b) above shall not
apply; and nothing in the Disclosure Letter shall qualify or limit
their scope.
(4) The Subscriber represents and warrants to the Company that:
(a) it is a corporation validly existing under the laws of the
state of its incorporation with requisite power and authority to
enter into and perform, and has taken all necessary corporate action
(which shall include resolutions of its shareholders, if applicable)
to authorise the execution and performance of its obligations under
this Agreement;
(b) this Agreement will, when executed, constitute its valid and
binding obligation enforceable against it in accordance with its
terms; and
(c) other than as contemplated by this Agreement, no
announcements, consultations, notices, reports or filings are
required to be made by it in connection with the transactions
contemplated by this Agreement nor are any consents, approvals,
registrations, authorisations or permits required to be obtained by
it in connection with the execution and performance of this
Agreement the failure to make or obtain any of which would:
(i) prevent or delay completion of this Agreement; or
(ii) subject the Company to any liability.
(d) In the absence of fraud, dishonesty or wilful concealment on
the part of the Subscriber or its agents or advisers the liability
of the Subscriber in respect of the warranties given by it in this
subclause shall terminate on the second anniversary of Closing
except in respect of any claim of which notice in writing is given
to it before that date.
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5. COVENANTS UP TO CLOSING
(1) The Company shall procure that without the written consent of the
Subscriber no Company shall before Closing:
(a) declare, make or pay any dividend or other distribution or do
or allow to be done anything which renders its financial position
less favourable than at the date of this Agreement; or
(b) create, issue, purchase or redeem any shares, grant any
option or rights over or in respect of any shares or new shares or
enter into or create any obligations convertible into shares, or
issue or create any loan capital; or
(c) dispose of any interest in any shares in any of the Companies
or grant or create any liens, charges or encumbrances over or in
respect of any shares in any of the Companies; or
(d) agree, conditionally or otherwise, to do any of the
foregoing; or
(e) in any other way depart from the ordinary course of its
day-to-day trading.
(2) The Company shall further procure that before Closing without the written
consent of the Subscriber:
(a) no resolution (other than the Resolution) is passed in
general meeting;
(b) no Company will:
(i) incur any capital expenditure exceeding in the
individual case $10,000, or in the aggregate $50,000 or make
any disposal of assets, exceeding in the individual case
$10,000, or in the aggregate $50,000;
(ii) incur any indebtedness (excluding, for the
avoidance of doubt, trade liabilities in the ordinary course
of business);
(iii) enter into any contract or commitment outside of
the ordinary course of business;
(iv) mortgage, pledge or encumber any part of its
assets (except for liens arising in the normal course of
business by operation of law);
(v) materially amend, or terminate or allow to lapse
without renewal any contract which is material for the
operation of its business;
(vi) make any material changes in the terms and
conditions of employment of any of its management level
employees or employ, or terminate (except for good cause and
in accordance with applicable law) the employment, of any such
person;
(vii) permit any of its insurances to lapse or
knowingly do anything which would make any policy of insurance
void or voidable or materially increase the cost and level of
cover provided under such insurance policies;
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(viii) give any guarantee or indemnity other than in the ordinary
course of business;
(ix) acquire any shares of any other company or
participate in any partnership or joint venture or agree to do
so;
(x) permit the appointment of any person as a
director or other management level employee of the Company; or
(xi) do or omit to do or cause or allow to be done or
omitted to be done any act or thing which would result in a
breach of the obligations under this clause 5 or under any of
the Warranties if the Warranties were repeated at Completion.
(3) Insofar as it is within its power and the Company's reasonable commercial
interests to do so, the Company will:
(i) preserve its business organisation intact; and
(ii) preserve its business relations with suppliers and customers.
(4) The Directors shall each procure so far as it is within his power that
the Company complies with its obligations under this clause.
(5) Until Closing the Company shall give the Subscriber, its agents and
representatives full access to the Properties and to the books and records
of the Companies and shall provide such information regarding the
businesses and affairs of the Companies as the Subscriber may require.
(6) The Company and each Director shall immediately notify the Subscriber in
writing of any matter or thing which arises or becomes known to him before
Closing which:
(a) constitutes (or would after the lapse of time constitute) a
misrepresentation or a breach of any of the Warranties or the
undertakings or other provisions set out in this Agreement; or
(b) which has, or would be likely to have after Closing, a
material adverse effect on the business of any Company (as presently
carried on).
(7) The Company will furnish the Subscriber with copies of all reports
required to be filed after the date hereof by the Company and its
subsidiaries with the SEC pursuant to the Securities Act or the Exchange
Act and the rules and regulations of the SEC under each of them. All of
such reports will comply as to form in all material respects with such
Acts and the rules and regulations of the SEC thereunder, and all
financial statements contained therein will be prepared in conformity with
generally accepted accounting principles applied on a basis consistent
with the financial statements of the Company referred to in Schedule 2,
paragraph 11. None of such documents will at the time it is filed 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
contained therein, in light of the circumstances under which they were
made, not misleading.
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6. RESCISSION
(1) If before Completion:
(a) any material breach of the Warranties comes to the notice of
the Subscriber; or
(b) the Company is in material breach of any obligation on its or
his part under this Agreement or any related agreement and, where
that breach is capable of remedy, it is not remedied to the
Subscriber's satisfaction; or
(c) anything occurs which, had it occurred on or before the date
of this Agreement, would have constituted a material breach of the
Warranties; or
(d) anything occurs (except something arising from an act or
omission of the Subscriber) which has, or would be likely to have
after Completion, a material adverse effect on the business of any
Company (as presently carried on) including but not limited to any
of the following:
(i) a strike, lock-out or other significant
industrial dispute arising or being threatened;
(ii) any litigation or arbitration proceedings or any
order, decree or injunction of a court of competent
jurisdiction being instituted or threatened by or against a
Company; or
(iii) any significant fixed asset of the Company being
destroyed or damaged;
then, but without prejudice to any other rights or remedies available to
the Subscriber, the Subscriber may without any liability to the Company
elect not to complete the subscription of the Shares by giving notice in
writing to the Company.
(2) If the Subscriber elects not to complete the subscription of the Shares
in any of the circumstances mentioned in paragraphs (a), (b) and (c) of
subclause (1), or if the Subscriber rescinds this Agreement under the
general law, then (but without prejudice to any other rights or remedies
available to the Subscriber) the Company shall indemnify the Subscriber
against all costs, charges and expenses incurred by it in connection with
the negotiation, preparation and rescission of this Agreement.
7. THE CLOSING
(1) The Closing will take place at the offices of the Company in New York, at
10.00 a.m. (New York time) on the first Business Day following the date on
which the conditions precedent to each party's obligations under this
Agreement have been satisfied, or at such other place or time as the
parties may agree.
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(2) At the Closing, the Company and the Directors shall procure that a board
meeting of the Company is held at which it is resolved that subject only
to receipt of the subscription monies for the Shares the Company shall
allot and issue the Shares to the Subscriber for the Subscription Price
and shall enter the Subscriber in the register of members of the Company
as the holder of the Shares.
(3) At the Closing, the Company will deliver (or cause to be delivered) the
following to the Subscriber:
(a) stock certificates representing the Shares, and any other
documents that are necessary to transfer to the Subscriber good
title to the Shares;
(b) resignations of the members of the Board of Directors of the
Company as agreed between the parties;
(c) statements from each of the current members of the Board of
Directors of the Company, including those to resign pursuant to
paragraph (b) above, that they have no claims against the Company
whether for loss of office or otherwise; and
(d) all other documents, instruments and writings required to be
delivered by the Company on or before the Effective Date under or
otherwise required in connection with this Agreement.
(4) At the Closing, the Subscriber will deliver the following to the Company
or its designee:
(a) the Subscription Price by (i) interbank transfer of
immediately available funds) to such bank account as the Company
shall notify to the Subscriber prior to Closing:
(b) all other documents, instruments and writings required to be
delivered by the Subscriber on or before the Effective Date under or
otherwise required in connection with this Agreement.
(5) If for any reason the provisions of subclause (3) are not fully complied
with the Subscriber may elect (in addition and without prejudice to all
other rights or remedies available to it) to rescind this Agreement or to
fix a new date for Completion.
8. SECURITIES ACT; LEGENDS
(1) GENERAL RESTRICTION.
The Subscriber may sell or otherwise transfer any of the Shares or any
interest therein, provided that such sale or other transfer is in
compliance with the Securities Act.
(2) LEGENDS ON CERTIFICATES.
(a) The Subscriber shall hold in certificate form all of the
Shares. Each certificate evidencing the Shares issued to or
beneficially owned by the Subscriber shall bear the following
legend:
"The securities evidenced by this certificate are subject to
certain restrictions on transfer as set forth in a Share
Subscription Agreement, dated as of 19th November, 1999, as it may
be amended from time to time, a copy of which is on file at the
principal executive offices of the issuer. No registration of
transfer of such securities
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will be made on the books of the issuer unless and until such
restrictions shall have been complied with. In addition, the
securities evidenced by this certificate have not been registered
under the Securities Act. No registration of transfer of such
securities will be made on the books of the issuer unless such
transfer is made in connection with an effective registration
statement under such Act or pursuant to an exemption from the
registration requirements of such Act."
(b) In the event that the Subscriber requests that the legend in
clause 8(2)(a) be removed, the Company shall, upon the written
request of the Subscriber, issue to the Subscriber a new certificate
evidencing such Shares without the legend required by clause 8(2)(a)
endorsed thereon; provided; however, that the Subscriber shall
furnish the Company or its transfer agent such certificates, legal
opinions or other information as the Company or its transfer agent
may reasonably require to confirm that the legend is not required on
such certificate.
(c) In the event that any of the Shares shall cease to be subject
to the restrictions on transfer set forth in this Agreement, the
Company shall, upon the written request of the holder thereof, issue
to the Subscriber a new certificate evidencing such Shares without
the legend required by clause 8(2)(a).
9. REGISTRATION RIGHTS
(1) "PIGGY-BACK" REGISTRATION
(a) If the Company at any time proposes to register any of its
securities under the Securities Act for sale to the public, whether
for its own account or for the account of other security holders or
both (except with respect to registration statements on Forms X-0,
X-0 or another form not available for registering Shares for sale to
the public), each such time it will give written notice to the
Subscriber of its intention so to do.
(b) Upon the written request of the Subscriber, received by the
Company within 20 days after the giving of any such notice by the
Company, to register any of the Shares, the Company will, subject as
provided below, cause the Shares as to which registration shall have
been so requested to be included in the securities to be covered by
the registration statement proposed to be filed by the Company, all
to the extent requisite to permit the sale or other disposition by
the holder of such Shares so registered.
(c) In the event that any registration pursuant to this clause
9(1) shall be, in whole or in part, an underwritten public offering
of common stock, the number of Shares to be included in such an
underwriting may be reduced (pro rata among the requesting holders
based upon the number of Shares owned by such holders) if and to the
extent that the managing underwriter shall be of the opinion that
such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein; provided, however,
that such number of Shares shall not be reduced if any shares are
to be included in such underwriting for the account of any person
other than the Company or requesting holders of Shares.
(d) Notwithstanding the foregoing provisions, the Company may
withdraw any registration statement referred to in this clause 9(1)
without thereby incurring any liability to the holders of Shares.
There shall be no limit to the number of registrations of Shares
which may be effected under this clause 9(1).
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(2) DEMAND REGISTRATION
(a) The Subscriber may at any time request the Company to
register under the Securities Act all or portion of the Shares held
by it for sale in the manner and pursuant to the Form specified in
such notice; provided, that:
(i) the reasonably anticipated aggregate net proceeds
to the sellers from such public offering would exceed
$5,000,000;
(ii) such request covers at least 25% of the voting
securities of the Company then outstanding; and
(iii) no such request may be made by the Subscriber
more than once every nine months.
Notwithstanding anything to the contrary contained herein, no
request may be made under this clause 9(2) within 90 days after the
effective date of a registration statement filed by the Company
covering a firm commitment underwritten public offering in which
the Subscriber shall have been entitled to join pursuant to clause
9(1) or 9.3 and in which there shall have been effectively
registered all of the Shares as to which registration shall have
been requested.
(b) Following receipt of any notice under this clause 9.2, the
Company shall immediately notify the Subscriber and shall use its
best efforts to register under the Securities Act, for public sale
in accordance with the method of disposition specified in such
notice from requesting holders, the number of Shares specified in
such notice (and in all notices received by the Company from other
holders within 20 days after the giving of such notice by the
Company). If such method of disposition shall be an underwritten
public offering, the Subscriber may designate the managing
underwriter of such offering, subject to the approval of the
Company, which approval shall not be unreasonably withheld or
delayed. The Company shall be obliged to register Shares pursuant
to clause 9.2(a) on three occasions only, provided, however, that
such obligations shall be deemed satisfied only when a registration
statement covering all of the Shares specified in notices received
as aforesaid, for sale in accordance with the method of disposition
specified by the requesting holders, shall have become effective
and, if such method of disposition is a firm commitment underwritten
public offering, all such shares shall have been sold pursuant
thereto unless:
(i) any such registration statement does not become
effective due to the withdrawal thereof by or on the request
of the Subscriber; or
(ii) the reason all of the Shares specified in notices
pursuant to this clause 9.2 are not registered is due to a
limitation on the registration of shares by the managing
underwriter (which limitation shall be applied pro rata) and
no more than 50 per cent. of the Shares so specified are not
registered as a result of the limitation imposed by such
managing underwriter or the voluntary withdrawal of any such
shares from registration by the holder thereof.
(c) the Company shall be entitled to include in any registration
statement referred to in this clause 9.2, for sale in accordance
with the method of disposition specified by the requesting holders,
shares of its common stock to be sold by the Company for its own
account, except as and to the extent that, in the opinion of the
managing underwriter (if such method of disposition shall be an
underwritten public offering), such
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inclusion would adversely affect the marketing of the Shares to be
sold. Except for registration statements on Forms X-0, X-0 or any
successor thereto, the Company will not file with the Commission
any other registration statement with respect to its common stock,
whether for its own account or that of other stockholders, from the
date of receipt of a notice from requesting holders pursuant to
this clause 9(2) 90 days after the commencement of the public
offering of the Shares covered by the registration statement
requested pursuant to this clause 9(2).
(3) REGISTRATION ON FORM S-3
If at any time:
(a) the Subscriber requests that the Company file a registration
statement on Form S-3 or any successor thereto for a public offering
of all or any portion of the Shares held by the Subscriber, the
reasonably anticipated aggregate price to the public of which would
exceed $5,000,000; and
(b) the Company is a registrant entitled to use Form S-3 or any
successor thereto to register such shares,
then the Company shall use its best efforts to register under the
Securities Act on Form S-3 or any successor thereto, for public sale in
accordance with the method of disposition specified in such notice, the
number of Shares specified in such notice. Whenever the Company is
required by this clause 9(3) to use its best efforts to effect the
registration of Shares, each of the procedures and requirements of clause
9(2) and 9(4) shall apply to such required to effect more than seven
registrations on Form S-3 which may be requested and obtained under this
clause 9(3).
(4) REGISTRATION PROCEDURES
If and whenever the Company is required by the provisions of clause 9(1),
9(2) or 9(3) to use its best efforts to effect the registration of any
Shares under the Securities Act, the Company will, as expeditiously as
possible:
(a) prepare and file with the Commission a registration statement
with respect to such securities;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective for the period specified in
paragraph (i) below and comply with the provisions of the Securities
Act with respect to the disposition of all Shares covered by such
registration statement in accordance with the Subscriber's intended
method of disposition set forth in such registration statement for
such period;
(c) furnish to the Subscriber and to each underwriter such number
of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons
reasonably may request in order to facilitate the public sale or
other disposition of the Shares covered by such registration
statement;
(d) use its best efforts to register or qualify the Shares
covered by such registration statement under the securities or "blue
sky" laws of such jurisdictions as the Subscriber or, in the case of
an underwritten public offering, the managing
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underwriter reasonably shall request; provided, however, that the
Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general
service of process in any such jurisdiction;
(e) use its best efforts to list the Shares covered by such
registration statement with any securities exchange or market on
which the common stock of the Company, if applicable, is then listed
or quoted;
(f) immediately notify the Subscriber and each underwriter under
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(g) at the request of the Subscriber, use its best efforts to
furnish on the date that Shares are delivered to the underwriters
for sale pursuant to such registration:
(i) an opinion dated such date of counsel
representing the Company for the purposes of such
registration, addressed to the underwriters and to the
Subscriber, stating that such registration statement has
become effective under the Securities Act and that:
(A) to the best knowledge of such
counsel, no stop order suspending the effectiveness
thereof has been issued and no proceedings for that
purpose have been instituted or are pending or
contemplated under the Securities Act;
(B) the registration statement, the
related prospectus and each amendment or supplement
thereof comply as to form in all material respects with
the requirements of the Securities Act (except that such
counsel need not express any opinion as to financial
statements contained therein); and
(C) to such other effect as reasonably
may be requested by counsel for the underwriters or by
the Subscriber or its counsel; and
(ii) a letter dated such date from the independent
public accountants retained by the Company, addressed to the
underwriters and to the Subscriber, stating that they are
independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants,
the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or
supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other
financial matters (including information as to the period
ending no more than five business days prior to the date of
such letter) with respect to such registration as such
underwriters reasonably may request;
(h) (i) make available for inspection by the Subscriber, any
underwriter participating in any distribution pursuant to such
registration statement, and
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any attorney, accountant or other agent retained by the
Subscriber or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company;
(ii) cause the Company's officers, Directors and
employees to supply all information reasonably requested by
the Subscriber, underwriter, attorney, accountant or agent in
connection with such registration statement; and
(iii) provide the Subscriber and its counsel with the
opportunity to participate in the preparation of such
registration statement;
(i) with respect to any registration statement pursuant to which
Shares are to be sold pursuant to clause 9(1), 9(2) or 9(3), the
Company shall use its best efforts to cause such registration
statement to become and remain effective for 180 days; and
(j) enter into such agreements and take such other actions as the
Subscriber and the underwriters reasonably requested in order to
expedite or facilitate the disposition of such Shares including
preparing for and participating in, such number of "road shows" and
all such other customary selling efforts as the underwriters
reasonably request in order to expedite or facilitate such
disposition.
In connection with each registration hereunder, the Subscriber will
furnish to the Company in writing such information with respect to itself
and the proposed distribution by it as shall be reasonably necessary in
order to assure compliance with Federal and applicable state securities
laws.
In connection with each registration pursuant to clause 9(1), 9(2) or
9(3) covering an underwritten public offering, the Company and the
Subscriber agree to enter into a written agreement with the managing
underwriter selected in the manner herein provided in such form and
containing such provisions as are customary in the securities business
for such an arrangement between such underwriter and companies of the
Company's size and investment stature (it being understood that the
Company will not require the Subscriber to make any representation,
warranty or agreement in such agreement other than with respect to the
Subscriber, the ownership of the Subscriber's securities being registered
and the Subscriber's intended method of disposition). The
representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of the underwriters in such
written agreement with the underwriters shall also be made to and for the
benefit of the Subscriber. In the event that any condition to the
obligations under any such written agreement with the underwriters are
not met or waived, and such failure to be met or waived is not
attributable to the fault of the Subscriber requesting a demand
registration pursuant to clause 9(2) and 9(3), such request for
registration shall not be deemed exercised for purposes of determining
whether such registration has been effected for purposes of clause 9(2)
or 9(3).
(5) EXPENSES
All expenses incurred by the Company in complying with clause 9(1), 9(2)
or 9(3), including all registration and filing fees, printing expenses,
fees and disbursements of counsel and independent public accountants for
the Company, fees and expenses (including counsel fees) incurred in
connection with complying with state securities or "blue sky" laws, fees
of the National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, costs of insurance and fees and
disbursements of one counsel for the Subscriber, but excluding any
Selling Expenses, are called "Registration Expenses". All underwriting
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discounts and selling commissions applicable to the sale of Shares are
called "Selling Expenses".
The Company will pay all Registration Expenses in connection with each
registration statement under clause 9(1), 9(2) or 9(3). All Selling
Expenses in connection with each registration statement under clauses
9(1), 9(2) or 9(3) shall be borne by the Subscriber in proportion to the
number of shares sold by it, or by the Subscriber and the Company (except
to the extent the Company shall be a seller) as the parties may agree.
(6) INDEMNIFICATION AND CONTRIBUTION
(a) In the event of a registration of any of the Shares under the
Securities Act pursuant to clause 9(1), 9(2) or 9(3), the Company
will indemnify and hold harmless the Subscriber, each underwriter of
such Shares thereunder and each other person, if any, who controls
the Subscriber or underwriter within the meaning of the Securities
Act, against any losses, claims, damage or liabilities, joint or
several, to which the Subscriber, underwriter or controlling person
may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
registration statement under which such Shares were registered under
the Securities Act pursuant to clause 9(1), 9(2) or 9(3), any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Subscriber, each such
underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability
or action; provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished in writing by the Subscriber,
such underwriter or such controlling person specifically for use in
such registration statement or prospectus.
(b) In the event of the registration of any of the Shares under
the Securities Act pursuant to clauses 9(1), 9(2) or 9(3), the
Subscriber will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs the
registration statement, each Director of the Company, each
underwriter and each person who controls any underwriter within the
meaning of the Securities Act, against all losses, claims, damages
or liabilities, joint or several, to which the Company or such
officer, Director, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement under which such Shares were registered under
the Securities Act pursuant to clauses 9(1), 9(2), or 9(3), any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and each such
officer, Director, underwriter and controlling person for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability
or action; provided, however, that
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the liability of the Subscriber hereunder shall be limited to the
proportion of any such loss, claim, damage, liability or expense
which is equal to the proportion that the public offering price of
the shares sold by the Subscriber under such registration statement
bears to the total public offering price of all securities sold
thereunder, but not in any event to exceed the proceeds received by
the Subscriber from the sale of Shares covered by such registration
statement.
(c) Promptly after receipt of an indemnified party hereunder of
notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notifying the indemnifying party in
writing thereof, but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to
such indemnified party other than under this clause 9(6) and shall
only relieve it from any liability which it may have to such
indemnified party under this clause 9(6) if and to the extent the
indemnifying party is prejudiced by such omission. In case any such
action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defence thereof
with counsel satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defence thereof, the
indemnifying party shall not be liable to such indemnified party of
its election so to assume and undertake the defence thereof, the
indemnifying party shall not be liable to such indemnified party
under this clause 9(6) for any legal expenses subsequently incurred
by such indemnified party in connection with the defence thereof
other than reasonable costs of investigation and of liaison with
counsel so selected; provided, however, that, if the defendants in
any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defences available to it
which are different from or additional to those available to the
indemnifying party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall
have the right to select a separate counsel and to assume such legal
defences and otherwise to participate in the defence of such action,
with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
(d) In order to provide for such and equitable contribution to
joint liability under the Securities Act in any case which either:
(i) any indemnified party exercising rights under
this Agreement, or any controlling person of any such holder,
makes a claim for indemnification pursuant to this clause 9(6)
but it is judicially determined (by the entry of a final
judgement or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced
in such case notwithstanding the fact that this clause 9(6)
provides for indemnification in such case;
(ii) contribution under the Securities Act may be
required on the part of the Subscriber or any such controlling
person in circumstances for which indemnification is provided
under this clause 9(6); or
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(iii) the indemnification provided for by this clause 9(6) is
insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein,
then, and in each such case, the Company and the Subscriber will
contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others):
(x) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the
indemnified party on the other; or
(y) if the allocation provided by clause (x) above is not permitted
by Applicable Law, or provides a lesser sum to the indemnified
party than the amount hereinafter calculated, in such proportion
as is appropriate to reflect not only the relative fault referred
to in clause (x) above but also the relative benefits received by
the indemnifying party and the indemnified party form the
offering of the securities (taking into account the portion of
the proceeds of the offering received by each such party) as well
as the statements or omissions which resulted in such losses,
claims, damages or liabilities and any other relevant equitable
considerations.
No person will be required to contribute any amount in excess of
the proceeds received by such person in respect of all such Shares
offered and sold by it pursuant to such registration statement and
no person or entity guilty of fraudulent misrepresentations (within
the meaning of clause 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(7) CHANGES IN COMMON STOCK; SUCCESSORS
(a) If, and as often as, there is any change in the common stock
of the Company by way of stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganisation
or recapitalisation, or by any other means, appropriate adjustment
shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the common
stock as so changed.
(b) If the Company consolidates or merges into or with, another
person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or a majority of its assets to any person or group,
or any person or group consolidates with, or mergers into or with,
the Company, the Subscriber shall, as a condition to the relevant
transaction involving such person, group or successor in business,
be granted by such person, group or successor in business (each a
"SUCCESSOR"), equivalent rights to the rights granted in this
Agreement.
(8) RULE 144 REPORTING
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of
Shares to the public without registration, at all times 90 days after any
registration statement covering a public offering of securities of the
Company under the Securities Act shall have become effective, the Company
agrees to:
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(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(c) furnish to the Subscriber immediately upon request a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange
Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the
Company as the Subscriber may reasonably request in availing itself
of any rule or regulation of the Commission allowing the Subscriber
to sell any Shares without registration.
(9) SUSPENSION OF REGISTRATION OBLIGATIONS
Notwithstanding the provisions of clause 9(4)(a):
(a) the Company's obligation to file a registration statement, or
cause such registration statement to become and remain effective:
(i) may be suspended on one occasion for a period not
to exceed 180 days if there exists at the time material
non-public information relating to the Company which, in the
reasonable opinion of the Company, should not be disclosed;
and
(ii) shall not apply for the period which begins seven
days prior to and ends 90 days after the commencement of a
public offering of the common stock, so long as the Company
has fulfilled its notice obligations under clauses 9(1), 9(2)
or 9(3) with respect to such offering; and
(iii) if a public offering of the common stock has
been previously commenced, neither the Company nor any
controlling person of the Company shall commence another
public offering of the Common Stock until 90 days after the
commencement of such prior offering.
(10) OTHER REGISTRATION RIGHTS
The Company has not granted and shall not grant to any third party any
registration rights more favourable than or inconsistent with any of
those contained herein, so long as any of the registration rights under
this Agreement remains in effect.
10. CONFIDENTIALITY
(1) The Subscriber undertakes with the Company that it shall use all
reasonable endeavours to ensure that all information received by it
relating to the Companies which is not in the public domain shall be
treated as confidential and shall not be disclosed to any third party
except as required by law or by any competent regulatory authority or with
the prior written approval of the Company.
(2) The Subscriber shall not be in breach of subclause (1) by virtue of any
director of the Company appointed by it passing to it any information he
receives as a director of the
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Company or any Subsidiary, but nothing in this Agreement shall require
such disclosure where the director's fiduciary duty to the Company, or to
any Subsidiary, would be breached as a result.
11. ANNOUNCEMENTS
No party shall make or permit any person connected with it to make any
announcement concerning this Agreement or any ancillary matter before, on
or after Closing except as required by law or any competent regulatory
body or with the prior written approval of the other parties, such
approval not to be unreasonably withheld or delayed.
12. CONSENTS AND FILINGS
(1) Each of the parties will use all reasonable efforts to obtain consents of
all persons and governmental authorities necessary to the consummation of
the issue and subscription of the Shares pursuant to this Agreement.
(2) The Company and the Subscriber will file, or cause to be filed, with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice pursuant to the HSR Act all requisite documents and
notifications in connection with the issue and subscription of the Shares
pursuant to this Agreement. The Company and the Subscriber will also file,
or cause to be filed, all requisite documents and notifications with the
Slovak anti-trust authorities in connection with the issue and
subscription of the Shares pursuant to this Agreement. The Subscriber will
make or cause to be made all such other filings and submissions under laws
and regulations applicable to the Subscriber, if any, as may be required
of the Subscriber for the consummation of the subscription for the Shares
pursuant to this Agreement. the Company will make or cause to be made all
such other filings and submissions under laws and regulations applicable
to the Company, if any, as may be required of the Company for the
consummation of the issue of the Shares pursuant to this Agreement. The
parties will co-ordinate and co-operate with one another in exchanging
such information and reasonable assistance as may be requested in
connection with all of the foregoing.
13. FURTHER ASSURANCES
Subject to the terms and conditions of this Agreement, each of the
parties will use all reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the issue and subscription of the Shares pursuant to this
Agreement. From time to time after the Effective Date, without further
consideration, the Company will at its own expense, execute and deliver
such documents to the Subscriber as the Subscriber may reasonably request
in order more effectively to vest in the Subscriber good title to the
Shares. From time to time after the Effective Date, without further
consideration, the Subscriber will, at its own expense, execute and
deliver such documents to the Company as the Company may reasonably
request in order more effectively to consummate the issue and
subscription of the Shares pursuant to this Agreement.
14. COSTS
Each party shall pay the costs and expenses incurred by it in connection
with the entering into and completion of this Agreement. Costs of and
relating to filings to be made pursuant to clause 12 shall be met by the
Company.
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15. NOTICES
(1) Any notice or other document to be served under this Agreement may be
delivered or sent by facsimile process to the party to be served at its
address appearing in this Agreement or at such other address as it may
have notified to the other parties in accordance with this clause.
(2) Any notice or document shall be deemed to have been served:
(a) if delivered, at the time of delivery; or
(b) if sent by facsimile process, at the expiration of two hours
after the time of despatch, if despatched before 3.00 p.m. on any
Business Day, and in any other case at 10.00 a.m. on the Business
Day following the date of despatch.
(3) In proving service of a notice or document it shall be sufficient to
prove that delivery was made or that the facsimile message was properly
addressed and despatched as the case may be.
16. GENERAL
(1) Each of the obligations, representations, Warranties and undertakings set
out in this Agreement which is not fully performed at Closing will
continue in force after Closing.
(2) If the Shares or any of them are at any time sold or transferred by the
Subscriber, the benefit of each of the obligations, representations,
Warranties and undertakings undertaken or given by the Company may be
assigned to the purchaser or transferee of the shares who may enforce them
as if he had been named in this Agreement as the Subscriber and the
purchaser or transferee shall, as a condition of the sale or transfer,
undertake to each of the parties to this Agreement in a form satisfactory
to them to be bound by all the obligations of the seller or transferor
under this Agreement.
(3) Except as stated above, none of the rights or obligations contained in
this Agreement may be assigned or transferred without the prior written
consent of all the parties. It shall be a condition of any assignment
which may be permitted that the assignee enters into an undertaking in a
form reasonably satisfactory to the remaining parties to this Agreement to
be bound by all the obligations of the assignor under this Agreement.
(4) The provisions contained in each clause and subclause of this Agreement
shall be enforceable independently of each of the others and its validity
shall not be affected if any of the others is invalid. If any of those
provisions is void but would be valid if some part of the provision were
deleted, the provision in question shall apply with such modification as
may be necessary to make it valid.
(5) This Agreement may only be amended, modified or supplemented in writing.
(6) This agreement may be executed in any number of counterparts, all of
which taken together, shall constitute one and the same agreement, and any
party may enter into this Agreement by executing a counterpart.
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17. WHOLE AGREEMENT
(1) This agreement and the documents referred to in it contain the whole
agreement between the parties relating to the transactions contemplated by
this Agreement and supersede all previous agreements between the parties
relating to these transactions.
(2) Each party acknowledges that, in agreeing to enter into this Agreement,
it has not relied on any representation, warranty, collateral contract or
other assurance, except those set out in this Agreement (and the documents
referred to in it) and waives all rights and remedies which, but for this
subclause, might otherwise be available to him in respect of any such
representation, warranty, collateral contract or other assurance, provided
that nothing in this subclause shall limit or exclude any liability for
fraud.
18. GOVERNING LAW AND JURISDICTION
(1) This Agreement shall be governed by the laws of the State of New York
(regardless of the laws that might otherwise govern under applicable New
York principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies.
(2) The parties submit to the jurisdiction of the Courts of New York for all
purposes relating to this Agreement.
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SCHEDULE 1
PARTICULARS OF THE COMPANY
Registered office: 00 Xxxx Xxxxx Xxxxxx
Xxxxx XX
Date and place of
incorporation: 9th November, 1992, Delaware
Directors: Xxxxx Xxxxx
Xxxxx Xxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxx
Secretary: Xxxxx Xxxxx
Accounting reference date: 31st December
Auditors: BDO Xxxxxxx XX
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SCHEDULE 2
PARTICULARS OF THE SUBSIDIARIES
A. EUNET SLOVAKIA, S.R.O.
Registered number: 00 588 458
Registered office: MFF UK Xxxxxxx xxxxxx, 000 00 Xxxxxxxxxx
Date of
incorporation: 17th September, 1990
Statutory representative: Xxxx Xxxxxx
Registered capital: SKK 300,000
Issued capital: SKK 300,000
Shareholders: Euroweb International Corporation (100%)
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B. GLOBAL NETWORK SERVICES, A.S.
Registered number: 35 698 446
Date and place of
incorporation: 17th September, 1996, Bratislava
Registered office: Xxxxxxxxx 00, 000 00 Xxxxxxxxxx
Board of Directors: Mgr. Xxxxxxxxx Xxxxxxxxx
Mgr. Juraj Durov
Xxxxxx Xxxxx
Supervisory Board: Ing. Xxxxx Xxxxxxx
Ing. Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxx
Registered capital: SKK 36,500,000
Issued capital: SKK 36,500,000
Shareholders: Euroweb International Corporation (70%)
Slavia Capital, AS, OCP (26.16%)
Mgr. Xxxxxxxxx Xxxxxxxxx (0.96%)
Ing. Xxxxx Xxxxxxx (0.96%)
Xxxxxxxx Xxxxxxxxx (0.96%)
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C. DODO, S.R.O.
Registered number: 31 732 119
Date and place of
incorporation: 15th August, 1996, Kosice
Registered office: Xxxxxxxxxx 00, 000 00 Xxxxxx
Statutory Representatives: Ing. Eva Petrasova
Ing. Xxxxxxxxx Xxxx
Ing. Xxxxx Xxxxxx
Secretary: None
Accounting reference date: None
Auditors: None
Registered capital: SKK 200,000
Issued capital: SKK 200,000
Shareholders: Euroweb International Corp (70%)
INFIS, spol, S.R.O. (30%)
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X. XXXX CZECH-NET, SPOL S.R.O.
Registered number: 48 59 13 19
Date and place of
incorporation: 10th March, 1993
Registered office: Xxxxx 0, Xxxxxxxxxxx 38, PSC 170 75
Directors: Lucie Kozova
Xxxxxxx Xxxx
Authorised capital: CZK 100,000
Issued capital: CZK 100,000
Shareholders: Euroweb International Corp (100%)
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E. INET INFORMATIKAI ES KERESKEDELMI KFT
Registered number: Cg 01 09 464708
Date and place of
incorporation: 4th March, 1997
Registered office: 1036 Budapest, Jajos u. 142
Managing Director: Xxxx Xxxxxx Xxxxxxxx
Auditors: None
Registered capital: HUF 1,000,000
Issued capital:
Members: Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx
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SCHEDULE 3
WARRANTIES OF THE COMPANY
1. ACCURACY OF RECITALS AND SCHEDULES
The particulars relating to the Companies set out in the recitals and the
schedules to this agreement are true and accurate.
2. ORGANIZATION; QUALIFICATION
(1) Each Company is a corporation duly organized, validly existing and, where
relevant, in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority to own, lease and
operate its assets and to carry on its business as now being conducted.
(2) The Company has delivered to the Subscriber (or its legal advisers),
complete and correct copies of the Certificate of Incorporation and
By-laws, as currently in effect, of the Company and the relevant
constituent documents of each Subsidiary.
3. CAPACITY
(1) The Company has the requisite power and authority to enter into and
perform this Agreement and the Option Agreement.
(2) The execution and delivery by the Company of this Agreement, the Option
Agreement and the other documents and instruments to be executed and
delivered by the Company pursuant thereto, and the consummation by the
Company of the transactions contemplated thereby, have been duly and
validly authorized by all necessary corporate action of the Company,
except for the passing of the Resolution.
(3) This agreement and the Option Agreement constitute binding obligations on
the Company in accordance with their respective terms.
4. SHARE CAPITAL
(1) The Existing Shares constitute the whole of the issued and allotted share
capital of the Company and are validly issued and fully paid.
(2) Other than under the Options and Warrants set out in Schedule 4 no person
is entitled or has claimed to be entitled to require any Company to issue
any share or loan capital either now or at any future date, whether
contingently or not, and there is no subscription, option, warrant, call,
right, agreement or commitment relating to the issuance, sale, delivery or
transfer by the Company or any of its subsidiaries (including any right of
conversion or exchange under any outstanding security or other instrument)
of any Company's share capital.
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(3) The Company has good and valid title to 100% of the shares in each of the
Subsidiaries (or such lesser percentage as is indicated where relevant in
Schedule 2) and is entitled to dispose of the full legal and beneficial
ownership in such shares without the consent of any third party.
(4) There is no option, right of pre-emption, right to acquire, mortgage,
charge, pledge, lien or other form of security or encumbrance on, over or
affecting any of the Shares or any shares in the capital of a Subsidiary
nor is there any commitment to give or create any of the foregoing, and no
person has claimed to be entitled to any of the foregoing.
5. CONSEQUENCES OF SHARE ISSUE
The execution, delivery and performance by the Company of its obligations
under this Agreement and the consummation of the transactions
contemplated hereby:
(a) will not violate any provision of any law, regulation, order
or judgment applicable to any Company;
(b) will not require any consent of, or any filing with or
notification to, any governmental or regulatory authority under any
provision of applicable law or regulation except for any consents
already obtained;
(c) will not violate or constitute a breach of any provision of
the organizational and/or foundation documents of any Company; and
(d) will not require any consent under and will not result in the
breach of any agreement to which any Company is a party or by which
any Company or any of their respective material assets, are bound,
except for such consents and waivers which have been obtained.
6. REPORTS FILED WITH SEC
The Company has filed all reports required to be filed by the Company or
its subsidiaries with the SEC pursuant to the Exchange Act and the rules
and regulations of the SEC thereunder on (i) Form 10-K since 1st January,
1997 and (ii) Forms 8-K and 10-Q since 1st January, 1999, all of which
complied, as of the date of filing, as to form in all material respects
with the Exchange Act and the rules and regulations of the SEC
thereunder. None of such documents contained at the time it was filed
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
7. SUBSIDIARIES, ASSOCIATIONS AND BRANCHES
No Company:
(a) holds or beneficially owns or has agreed to acquire any
securities of any other corporation other than shares of a
Subsidiary; or
(b) is or has agreed to become a member of any partnership or
other unincorporated association, joint venture or consortium (other
than recognised trade associations); or
(c) has any branch or any permanent establishment outside the
country of incorporation..
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8. COMPLIANCE WITH LAWS; LICENCES AND CONSENTS
(1) No Company, nor (so far as the Company is aware) any of its officers,
agents or employees (during the course of their duties), has done or
omitted to do anything which is a contravention of any statute, order,
regulation or the like giving rise to any fine, penalty or other liability
or sanction on the part of that Company which is material to the operation
of that Company.
(2) Each Company has all licences and consents necessary to own and operate
its assets and to carry on its business as it does at present and the
Company is not aware of anything that might result in the revocation,
suspension or modification of any of those licences or consents or that
might prejudice their renewal.
9. CORPORATE ACTIONS; POWERS OF ATTORNEY
(1) The register of members and other statutory books and registers of each
Company have been properly kept for all material purposes and no notice or
allegation that any of them is incorrect or should be rectified has been
received.
(2) All returns and particulars, resolutions and other documents which a
Company is required by law to file with or deliver to the Court or
appropriate authority have in all material respects been correctly made up
and duly filed or delivered by each Company.
(3) No Company has granted any power of attorney or similar authority to any
person who is not currently a director of a group company and which
remains in force.
10. ASSETS
(1) Each Company owns, or otherwise has a legal right to use, all the assets
(real or personal, tangible or intangible) that are necessary and material
to the conduct of its business and operations as presently conducted.
(2) Except as provided in the Disclosure Letter one Company has good and
valid title to all assets which are referred to in the foregoing item (1),
in each case free and clear of all liens, mortgages or other encumbrances
other than liens that would not, individually or in the aggregate,
materially detract from the values of such assets or materially interfere
with the use of such assets or the conduct of the business and operations
of the Companies.
11. FINANCIAL STATEMENTS
(1) The Company has provided the Subscriber with true and correct copies of
(i) the audited balance sheets of each of the Companies dated 31st
December, 1997 and 31st December, 1998 (the "COMPANY ACCOUNTS") and the
audited consolidated balance sheet of the Company dated 31st December,
1997 and 31st December, 1998 (the "CONSOLIDATED ACCOUNTS") and in each
case the related audited statements of income for the fiscal years ending
on such dates, and all annexes and notes thereto, prepared in accordance
with generally accepted accounting principles and practices and all
applicable statutes and regulations;
(2) The Company Accounts and the Consolidated Accounts give a true and fair
view of the financial position and the results of operation and cash flows
of each Company at the relevant dates and do not fail to reflect or
reserve against any material obligations of such Company (whether accrued,
absolute, contingent or otherwise) which are customarily reflected or
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reserved against in accordance with generally accepted accounting
principles and practices and all applicable statutes and regulations.
(3) Form 10-QSB filed by the Company with the SEC for the quarterly period
ended September 30th, 1999 has been prepared on bases consistent with
those employed in preparing the Company Accounts and the Consolidated
Accounts and gives a true and fair view of the income and expenditure of
the Companies for that period.
12. POSITION SINCE 31ST DECEMBER, 1998
(1) Since 31st December 31, 1998, there has not been any:
(a) material adverse change in any Company's financial condition,
business, results of operations, properties, prospects, liabilities
(absolute, accrued, contingent or otherwise) or assets;
(b) sale, assignment or transfer of any of the assets of any
Company or any purchase of assets or other transaction, other than
in the ordinary course of business, consistent with past practices
and on an arm's length basis;
(c) amendment, cancellation, termination, waiver or release of
any contract, lease, license or other instrument which amendment,
cancellation or termination would have, individually or in the
aggregate, a material adverse effect on the financial condition,
business, results of operations, properties, prospects, liabilities
(absolute, accrued, contingent or otherwise) or assets of any
Company (a "MATERIAL ADVERSE EFFECT");
(d) damage, destruction or loss of any of the assets of any
Company (whether or not covered by insurance) which, individually or
in the aggregate, would have a Material Adverse Effect;
(e) except as set out in the Disclosure Letter, the making of any
loan, advance or capital contribution to or investment in any person
by the Company on behalf of any Company;
(f) grant of any severance or termination pay to any officer or
employee of any Company over an amount of $50,000, or any increase
in compensation, bonus or other benefits payable to officers or
employees of any Company other than in direct proportion to salary
increases in the ordinary course of business and consistent with
past practices;
(g) change in any method of accounting or accounting practice
with respect to any Company; or
(h) dividend or other distribution of profits or assets, which
has been or agreed to be declared, made or paid by any Company since
31st December, 1998.
13. INSOLVENCY
(1) No liquidator, trustee in bankruptcy or similar official has been
appointed in respect of the whole or any part of the assets or undertaking
of any Company.
(2) No order has been made and no resolution has been passed for the
bankruptcy or liquidation of any Company and no petition has been
presented for the bankruptcy or liquidation of any Company.
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(3) No Company is insolvent and no Company is unable to pay its debts as they
fall due.
14. MATERIAL CONTRACTS
(1) No Company is a party to any material contract which was entered into
otherwise than in the ordinary course. Except as referred to in the
Disclosure Letter, the Company is not a party to any contract with an
annual expenditure or receipt in excess of $50,000 ("MATERIAL CONTRACT").
There are no other contracts which are material to the business or
financial condition of any Company other than the Material Contracts.
(2) No Company has received notice that it is in default under any Material
Contract or any agreement, mortgage, charge, lien, pledge or encumbrance
which is material to the financial condition of the Company where in any
case such default is likely to have a material adverse effect on its
business. No Company is in such default under any such agreement,
mortgage, charge, lien, pledge or encumbrance.
(3) The copies of the Material Contracts made available by each Company for
inspection and referred to in the Disclosure Letter are true, complete and
up-to-date in all respects.
(4) No Company is party to a contract which is expected to result in a loss
to any Company on completion of performance of over $50,000 or cannot be
fulfilled or performed by the relevant Company on time and without undue
or unusual expenditure of money and effort.
15. INSIDER CONTRACTS
Except as disclosed in the Disclosure Letter, there are no subsisting
material contracts, or agreements or arrangements involving any of the
Companies with a value in excess of $50,000 or which are otherwise
material to the business and/or operations of the Company and in which
any director, senior employee or member has a material interest.
16. VULNERABLE ANTECEDENT TRANSACTIONS
No Company has at any relevant time been party to a transaction pursuant
to or as a result of which an asset of a value in excess of $50,000
owned, purportedly owned or otherwise held by any Company is liable to be
transferred or re-transferred to another person (whether as a result of
an insolvency or otherwise) or which gives or may give rise to a right of
compensation or other payment in favour of another person under the law
of any relevant jurisdiction or country.
17. SUPPLIERS AND CUSTOMERS
To the best of the knowledge, information and belief of the Company:
(a) no supplier of any Company has ceased or will cease supplying
it or has reduced or will reduce its supplies to any Company; and
(b) no customer of any Company has terminated or will terminate
any contract with it or withdraw or reduce its custom with it,
after Closing or as a result of the proposed issue of the Shares to the
Subscriber.
18. INTELLECTUAL PROPERTY RIGHTS
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(1) Except as referred to in the Disclosure Letter, there is no commercially
significant unregistered Intellectual Property that is legally or
beneficially owned by any Company.
(2) Except as referred to in the Disclosure Letter, there are no licences and
other agreements under which any Company uses Intellectual Property owned
by a third party (and support and maintenance agreements in relation to
the same) which are material to the business of any Company.
(3) Except as referred to in the Disclosure Letter, there are no licences and
other agreements under which any Company licenses any of its Intellectual
Property (and support and maintenance agreements in relation to the same)
to third parties.
(4) No Company is in material breach of any licence or other agreement that
is listed under paragraphs 2 and 3 above and the Company is not aware of
any such breach by any third party.
(5) Except as referred to in the Disclosure Letter, none of the activities of
any Company infringe the proprietary rights of any third party.
(6) Except as referred to in the Disclosure Letter, the Company is not aware
of any third party infringing or threatening to infringe the Company's
proprietary rights.
(7) The copyright in all the software applications used by the Companies is
legally and beneficially owned one of the Companies.
(8) Except as referred to in the Disclosure Letter, there are no licences of
software (either to or from one of the Companies).
(9) One of the Companies legally and beneficially owns all computer hardware
and peripheral that it uses.
(10) Except as referred to in the Disclosure Letter, there are no leases and
support agreements in relation to hardware and peripherals used by the
Companies with an annual revenue value of over $50,000.
(11) There are no escrow agreements in relation to source code of software
licensed to or by any of the Companies.
(12) Except as referred to in the Disclosure Letter, there are no agreements
with Internet Service Providers, Network Service Providers, telecoms
companies, newsgroup providers or similar entities which support the
business.
(13) Except as referred to in the Disclosure Letter, there are no agreements
and other arrangements for links, net advertising (including, without
limitation, management of advertising space), or other Internet-specific
relationships, including registrations with any search engines with an
annual revenue value of over $50,000.
(14) Each of the Companies has complied with all relevant Data Protection laws
and regulations and has provided a copy of its Data Protection
registration and/or notification to the Subscriber.
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(15) No proceedings have been brought against any of the Companies by any
individual or regulatory body in relation to failure to comply with
relevant Data Protection laws or regulations.
(16) All hardware, software (including firmware) and other processes used by
any of the Companies (whether or not automated) (the "SYSTEMS") are
Millennium Compliant.
For the purposes of this warranty:
"MILLENNIUM COMPLIANT" means that the Systems are able to provide all of
the following functions:
(i) accurately process all date information whether before,
during or after 1st January 2000, including but not limited to
accepting date input, providing accurate date output and performing
accurate calculations involving dates or portions of dates;
(ii) function accurately, efficiently and without interruption
before, during and after 1st January 2000 without any change in
operations, or in any input or output procedures;
(iii) accurately process date input in a way that does not create
any ambiguity as to century;
(iv) accurately store, retrieve and process date information in a
manner that does not create any ambiguity as to century;
(v) accurately present all date output information in a manner
that does not create any ambiguity as to century.
(17) Except as referred to in the Disclosure Letter, there are no internet
domain names which any of the Companies uses or hosts.
(18) The use of the internet domain names listed pursuant to paragraph (18) by
the Companies does not infringe the proprietary rights of any third party.
19. INSURANCE
All the assets and undertaking of each Company of an insurable nature are
insured in amounts representing their full replacement or reinstatement
value against fire and other risks normally insured against by persons
carrying on the same classes of business as those carried on by that
Company and the Companies are adequately covered against accident,
damage, injury, third party loss, loss of profits and other risks
normally covered by insurance.
20. BANK ACCOUNTS AND INDEBTEDNESS
The Company has no bank or deposit accounts and no loans or indebtedness
other than as referred to in the Disclosure Letter.
21. LOANS AND GUARANTEES
(1) Except as referred to in the Disclosure Letter, no Company has lent any
money which is due to be repaid and as at the date of this agreement has
not been repaid to it or owns the benefit of any debt, other than debts
accrued to it in the ordinary course of its business.
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(2) No Company is responsible for the indebtedness of any other person or
entity by way of guarantee or surety or otherwise for an amount in excess
of $10,000 in aggregate.
22. LITIGATION
(1) No Company is engaged in any litigation or arbitration proceedings except
as plaintiff for collection of debts not exceeding an aggregate of $50,000
in the case of all sums being collected by all the Companies or a sum not
exceeding $20,000 in the case of any one debt due to any one of the
Companies and there are no such proceedings pending or threatened by any
Company.
(2) The Company is not aware of anything which is likely to give rise to any
litigation or arbitration proceedings by or against any Company for a sum
exceeding in any case $50,000.
(3) No Company is the subject of any investigation, inquiry or enforcement
proceedings or process by any governmental, administrative or regulatory
body nor is the Company aware of anything which is likely to give rise to
any such investigation, inquiry, proceedings or process where it may have
in any case a material adverse effect on the Companies.
23. ENVIRONMENT
(1) No Company has received a written or unwritten notification or claim that
it or any of its facilities or properties is in violation of any law,
rule, regulation or ordinance relating to pollution or protection of the
environment (collectively the "ENVIRONMENTAL LAWS").
(2) Each Company has obtained all permits, licences and other authorizations
which are required under the Environmental Laws. There are no past,
present or future events, conditions, circumstances, activities,
practices, incidents or plans which may interfere with or prevent
compliance with the Environmental laws by any Company. No pollutant,
contaminant, chemical or industrial, toxic or hazardous substance or waste
has been buried in or stored on the properties and facilities of any
Company, or has spilled, leaked, discharged, emitted or released, on or
from any of the properties or facilities of any Company.
(3) There are no existing conditions which may lead to responsibilities or
liabilities, or an assertion thereof by any governmental entity or private
person, based on any action or inaction by any Company relating to the
management and disposal of toxic or hazardous substances and wastes. No
Company has received information indicating that any person, including any
employee, may have impaired health as the result of any exposure to
hazardous materials located on or contained in such properties.
24. EMPLOYEES
(1) There are no employees of the Companies except as referred to in the
Disclosure Letter and the Disclosure Letter makes reference to the correct
job description and remuneration payable and other principal benefits
provided to such employees, as well as their correct terms of employment.
(2) None of the directors, managing directors or principal employees (i.e.
heads of departments) of the Company has given notice to terminate his
employment.
(3) Save as disclosed pursuant to (1) above, there is not outstanding any
agreement to which the Company is a party for profit-sharing or for
payments to any of its directors or employees of bonuses or for incentive
payments.
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(4) The Company is not under an obligation to pay nor has it since 31st
December, 1998 paid or agreed to pay any compensation for loss of office
for an amount in excess of $50,000 to any of its directors or employees.
(5) (a) Each Company is in material compliance with all applicable laws
respecting employment and employment practices, terms and conditions
of employment and wages and hours, and are not engaged in any unfair
labour practice;
(b) there is no unfair labour practice complaint against any
Company pending before the National Labor Relations Board or any
equivalent regulatory authority in any other jurisdiction;
(c) there is no labor strike, dispute, slowdown, representation
campaign or work stoppage actually pending or threatened against or
affecting any;
(d) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and no claim
therefor has been asserted against the Company or any of its
subsidiaries; and
(e) neither the Company nor any of its subsidiaries has
experienced any material work stoppage.
25. PENSIONS
(1) Each Company has fulfilled its obligations under minimum funding
standards of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Internal Revenue Code of 1986, as amended (the
"CODE"), which respect to each "employee pension benefit plan" (as defined
in clause 3(2) of ERISA) which is subject in all respects to Parts 2, 3
and 4 of Subtitle B of Title I of ERISA (the "PENSION PLANS").
(2) The Pension Plans are in compliance in all material respects with the
presently applicable provisions of ERISA and the Code.
(3) No Company has incurred any liability to the Pension Benefit Guaranty
Corporation with respect to any Pension Plan.
(4) Each Pension Plan is qualified under clause 401(a) of the Code.
(5) No withdrawal liability has been incurred by or asserted against any
Company with respect to any "employer plan" (as defined in clause 3(38) of
ERISA).
(6) The Disclosure Letter makes reference to each Pension Plan and each
"employee welfare benefit plan" (as defined in clause 3(1) of ERISA) of
each Company. Each Company is in compliance with all similar pension and
benefit legislation outside the US applicable to the business, operations
or employees of the relevant Company.
26. TAXATION
(1) Each Company has duly filed all material reports and returns of Taxes (as
defined below) required to be filed by it and has duly paid or made
provision for payment of all material Taxes and other charges shown on
such reports and returns.
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(2) The reserves for Taxes reflected in the Consolidated Accounts are
adequate, and there are no material tax liens upon any property or assets
of the Company or any of its Subsidiaries, except liens for current Taxes
not yet due or delinquent or the validity of which is being contested in
good faith by appropriate proceedings.
(3) The federal income tax returns of the Company and each of its
Subsidiaries have been examined by the Internal Revenue Service or other
equivalent governmental authority for each of the last two financial
years, and, except to the extent stated in the Disclosure Letter, all
deficiencies asserted as a result of such examinations have been paid or
finally settled.
(4) There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any federal income tax return for any
period.
"TAXES" shall mean all taxes, charges, fees, levies or other assessments,
including income, excise, property, sales and franchise taxes, imposed by the
United States, or any state, county, local or foreign government or subdivision
or agency thereof, and including any interest, penalties or additions
attributable thereto.
27. REAL PROPERTY
(1) No Company owns any real property.
(2) (a) All leases pursuant to which the Company or any of its subsidiaries
leases real property are valid, binding and enforceable in accordance
with their terms, and are in full force and effect.
(b) There are no existing defaults by the Company or any of its
subsidiaries under such leases.
(c) No event has occurred which (whether with or without notice,
lapse of time or both) would constitute a default under any material
lease.
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SCHEDULE 4
DETAILS OF OPTIONS AND WARRANTS
OPTIONS OUTSTANDING
OPTION HOLDER NUMBER OF OPTIONS
Xxxxxxx Xxxx and Lucie Kozova 50,000
Xxxx X. Xxxxxx 25,000
Xxxxx Xxxxx 515,000
Xxxxxx Xxxxxx 500,000
Xxxxx Xxxx 465,000
Xxxxx Xxxxxxx 100,000
Laszlo Josa 10,000
Kriszine Holla 10,000
Xxxx X. Xxxx 5,000
Xxxxxx X. Xxxxxxxx 100,000
Radio Telephony 50,000
Xxxxxxx Xxxxxxx 100,000
TOTAL 1,930,000
----- -----------------
WARRANTS OUTSTANDING
WARRANT HOLDER NUMBER OF WARRANTS
MJJ Management Group Corp. 200,000
Xxxxx Xxxxxx 50,000
Xxxxxxx X. Xxxxxxxx 25,000
Xxxxxx X. Xxxxxx 50,000
Xxxxxx Investment Partners 25,000
Xxxxxxxx Xx Xxxxx and
Xxxxxx Xx Xxxxx 250,000
Xxxx Xxxxxx 50,000
Xxxxxx Xxxxxxx 100,000
X.X. Xxxxx Securities Inc. 206,514
Xxxxxx Xxxxxx 50,000
Xxxxxxxx Xx Xxxxx
and Xxxxxx Xx Xxxxx 114,284
Greenwood Partners LP 399,994
GMG & Associates Inc. 57,142
Xxxxxxxxx Partners LP 399,994
Xxxxxx X. Xxxxxx 257,138
The Xxxxxx Family 57,142
HRG Trust 57,142
Xxxxxx Xxxxxx 28,570
Xxxxxx Xxxxxx 57,140
Xxx Xxxxxxx 57,142
Xxxx X. Xxxxxxxxx 57,142
Xxxxx Xxxxxxx and Xxxxxxx Xxxxxxx 114,284
Xxxxxx Xxxxxxxxx 57,142
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Xxxxxxxx X. Xxxxxxx 57,140
Xxxx X. Xxxx 57,142
Xxxxxxxx X. Xxxxxx Xx. 57,142
TOTAL 2,892,194
----- ---------
TOTAL WARRANTS AND OPTIONS 4,822,194
OUTSTANDING
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IN WITNESS WHEREOF, the Company and the Subscriber have caused to be signed by
its duly authorised officers this Agreement as of the date written on the first
page.
By:________________________________
Name:
Title:
for EUROWEB INTERNATIONAL CORP.
By:________________________________
Name:
Title:
for KPN TELECOM B.V.
By:________________________________
Name: XXXXX XXXXX
Title:
By:________________________________
Name: XXXXX XXXX
Title:
