EXHIBIT 1.5
CONFORMED COPY
$15,002,183
Cybernet Internet Services International, Inc.
13.0% Convertible Senior Subordinated Discount Notes
due 2009
PURCHASE AGREEMENT
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August 23, 1999
Xxxxxx Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Ladies and Gentlemen:
Cybernet Internet Services International, Inc., a Delaware corporation,
(the "Company") proposes to issue and sell to the initial purchaser listed on
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Schedule I hereto (the "Initial Purchaser") $15,002,183 aggregate initial
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accreted value of 13.0% Convertible Senior Subordinated Discount Notes due 2009.
The Notes are to be issued under an Indenture, dated as of August 26, 1999 (the
"Indenture"), between the Company and The Bank of New York, as Trustee (in such
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capacity, the "Trustee"). The shares of Common Stock issuable upon exercise of
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the right to convert the Notes pursuant to the provisions of Article X of the
Indenture (the "Conversion Right") are herein referred to as the "Conversion
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Shares." The Notes and the Conversion Shares are collectively referred to
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herein as the "Securities."
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The Notes will be offered and sold to the Initial Purchaser without being
registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions therefrom. The Company has
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prepared an offering memorandum dated the date hereof and a supplement (the
"Supplement") to the offering memorandum, dated the date hereof (collectively,
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the "Offering Memorandum"), setting forth information concerning the Company,
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its subsidiaries and the Securities. Copies of the Offering Memorandum will be
delivered by the Company to the Initial Purchaser pursuant to the terms of this
Agreement. Any references herein to the Offering Memorandum shall be deemed to
include all amendments and supplements thereto (including whether specifically
referenced in any particular paragraph herein or not, the Supplement) unless
otherwise noted. The Company hereby confirms that it has authorized the use of
the Offering Memorandum in connection with the offering and resale of the Notes
by the Initial Purchaser in accordance with Section 2.
Holders of the Notes and Conversion Shares, as the case may be (including
the Initial Purchaser and its direct and indirect transferees), will be entitled
to the benefits of a Registration Rights Agreement, substantially in the form
attached hereto as Annex A (the "Registration Rights Agreement"), pursuant to
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which the Company will agree to file with the U.S. Securities and Exchange
Commission (the "Commission") a resale shelf registration statement pursuant to
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Rule 415 under the Securities Act (the "Resale Shelf Registration Statement")
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with respect to resales of the Notes (which Resale Shelf Registration Statement
shall also register the sale of the underlying Common Stock issuable upon
conversion thereof). The Company will further
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agree pursuant to the Registration Rights Agreement that it will file with the
Commission a shelf registration statement (the "Conversion Shelf Registration
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Statement") registering the issuance or resale of Conversion Shares on or prior
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to the one-year anniversary of the Closing Date.
This Agreement, the Indenture and the Registration Rights Agreement are
referred to herein collectively as the "Operative Documents."
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1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) The Offering Memorandum, as of its date, did not, and the
Offering Memorandum, as of the Closing Date (as defined in Section 2
hereof), will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided
that the Company does not make any representation or warranty as to
information contained in or omitted from the Offering Memorandum in
reliance upon and in conformity with the written information furnished
to the Company by the Initial Purchaser specifically for inclusion
therein and described in Section 7(e).
(b) Assuming the accuracy of the representations and warranties
of the Initial Purchaser contained in Section 3 and its compliance
with the agreements set forth therein, it is not necessary, in
connection with the issuance and sale of the Notes to the Initial
Purchaser and the offer, resale and delivery of the Notes by the
Initial Purchaser in the manner contemplated by this Agreement and the
Offering Memorandum, to register the Securities under the Securities
Act or to qualify the Indenture under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act").
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(c) The Company has been duly incorporated, is validly existing
and in good standing under Delaware law; the Company is solvent, is
not in bankruptcy, liquidation or receivership and is duly qualified
to do business in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification,
except where the failure to so qualify would not reasonably be
expected to have, singularly or in the aggregate, a material adverse
effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries;
and the Company has all power and authority necessary to own or hold
its respective property and to conduct the business in which it is
engaged.
(d) Each of the subsidiaries (as defined in Section 13 hereof)
of the Company has been duly organized, is validly existing and in
good standing under the laws of its jurisdiction of organization or
incorporation, is solvent, is not in bankruptcy, liquidation or
receivership and is duly qualified to do business in each jurisdiction
in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to so
qualify would not reasonably be expected to have, singularly or in the
aggregate, a material
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adverse effect on the financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries; and each has all power and authority necessary to own or
hold its respective property and to conduct the business in which it
is engaged.
(e) The Company has an authorized and issued share capital and
capitalization as set forth in the Supplement under the heading
"Capitalization," except for the one-for-one conversion of shares of
Series A Preferred Stock, par value $0.001 per share (the "Series A
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Preferred Stock"), occurring after June 30, 1999 for Common Stock; all
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outstanding shares of capital stock of the Company have been duly
authorized and are validly issued and fully paid and nonassessable;
the Conversion Shares have been duly authorized and, when the
Conversion Shares are issued in accordance with the terms and
conditions contained in the Indenture upon exercise of the Conversion
Right, such Conversion Shares will be validly issued and fully paid
and nonassessable and holders of the Conversion Shares will have no
liability for any debt or other obligation of the Company towards
third parties in their capacity as holders of the Conversion Shares;
and the stockholders of the Company have no preemptive rights with
respect to the Conversion Shares which have not been validly excluded
prior to the date hereof, and there is no other conflicting right,
contingent or otherwise, of any person to purchase or be offered for
purchase any of the Conversion Shares and no depositary receipts have
been issued with respect to the Conversion Shares offered by the
Company; the Conversion Shares have been duly reserved for issuance in
accordance with the terms of the Notes and the Indenture.
(f) The Company has no Indebtedness (as defined in the Offering
Memorandum) other than (i) as set forth on the June 30, 1999
Consolidated Balance Sheet of the Company set forth in the Supplement
and (ii) the Company's 14% Senior Notes due 2009 (the "Senior Notes").
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(g) The execution, delivery and performance of the Operative
Documents by the Company and the consummation of the transactions
contemplated hereby and thereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement, shareholders agreement or other material agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to
which any of the properties or assets of the Company or any of its
subsidiaries are subject, nor will such actions result in any
violation of the provisions of the Certificate of Incorporation or By-
laws or equivalent constitutive documents of the Company or any of its
subsidiaries or any statute, license, legislation, authorization, or
any order, rule or regulation of any court or governmental agency or
body (including, without limitation, any statutes, rules, orders or
regulations promulgated by the Federal Communications Commission or
the Commission of the European Community) having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets subject, other than with respect to violations of the
provisions of the Certificate of Incorporation or
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By-laws or equivalent constitutive documents of the Company or any of
its subsidiaries, to such exceptions as, individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries.
No consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body
(including, without limitation, any statutes, rules, orders or
regulations promulgated by the Federal Communications Commission or
the Commission of the European Community) is required for the
execution, delivery and performance of the Operative Documents by the
Company and the consummation of the transactions contemplated hereby
and thereby except (A) as have been obtained or made, (B) with respect
to the transactions contemplated by the Registration Rights Agreement,
as may be required under the Securities Act, the Trust Indenture Act
and the rules and regulations of the Commission thereunder and (C) as
required by state or foreign securities or "Blue Sky" laws.
(h) The Company has full power and authority to enter into this
Agreement; this Agreement has been duly authorized, executed and
delivered by the Company and, when duly authorized, executed and
delivered by the Initial Purchaser, will constitute a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be
subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing, and except, with
respect to the rights of indemnification and contribution thereunder,
where enforcement thereof may be limited by public policy.
(i) The Company has full power and authority to enter into the
Indenture; the Indenture has been duly authorized by the Company and
upon effectiveness of a Shelf Registration Statement will be qualified
under the Trust Indenture Act; and, on the Closing Date (as defined
below), the Indenture will have been duly executed and delivered by
the Company and will conform, in all material respects, to the
description thereof contained in the Offering Memorandum and, assuming
due authorization, execution and delivery of the Indenture by the
Trustee, the Indenture will constitute a valid and legally binding
obligation of the Company, enforceable in accordance with its terms,
except that the enforcement thereof may be subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.
(j) The Company has full power and authority to offer and sell
the Notes; the Notes have been duly authorized by the Company; and,
when the Notes are delivered to and paid for by the Initial Purchaser
pursuant to this Agreement on the Closing Date, such Notes will have
been duly executed, authenticated, issued
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and delivered (assuming due authentication of the Notes by the
Trustee) and will conform, in all material respects, to the
description thereof contained in the Offering Memorandum and, assuming
due authentication of the Notes by the Trustee, such Notes will
constitute valid and legally binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except that the enforcement thereof may
be subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(k) The Company has full power and authority to enter into the
Registration Rights Agreement; the Registration Rights Agreement has
been duly authorized by the Company and will conform, in all material
respects, to the description thereof contained in the Offering
Memorandum; and when executed and delivered by the Company (assuming
due authorization, execution and delivery by the Initial Purchaser)
will have been duly executed and delivered and will be a valid and
legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that the enforcement
thereof may be subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing, and except,
with respect to the rights of indemnification and contribution
thereunder, where enforcement thereof may be limited by public policy.
(l) No stamp or other issuance taxes or duties are payable by or
on behalf of the Initial Purchaser as a consequence of the issue of
the Securities, the sale of the Notes to the Initial Purchaser and/or
the initial resale of the Securities to investors.
(m) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included in the Offering Memorandum, any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree; and, since such date,
there has not been any change in the share capital (except for the
one-for-one conversion of shares of Series A Preferred Stock occurring
after August 2, 1999) or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity,
results of operations or prospects of the Company and its
subsidiaries, otherwise than as set forth in the Offering Memorandum.
(n) The consolidated financial statements of the Company (and
the related notes) set forth in the Offering Memorandum (including the
consolidated financial statements of the Company (and the related
notes) set forth in the
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Supplement) comply in all material respects with the requirements that
would be applicable to a registration statement on Form S-1 under the
Securities Act and were prepared in accordance with generally accepted
accounting principles in the United States ("U.S. GAAP") consistently
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applied throughout the periods involved and present fairly the
financial condition and results of operations of the entities
purported to be shown thereby, at the dates and for the periods
indicated (subject in the case of interim statements to normal year-
end audit adjustments). The financial information contained in the
Offering Memorandum (including that contained within the Supplement)
under the headings "Summary -- Summary Consolidated Financial and
Operating Data", "Capitalization", "Selected Consolidated Financial
and Operating Information", "Unaudited Pro Forma Consolidated
Financial Statements" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" are derived from the
accounting records of the Company and its subsidiaries and fairly
present the information purported to be shown thereby. The summary
financial and other data and selected financial and other data
included in the Offering Memorandum have been accurately extracted
from the financial statements of the Company. The pro forma financial
information contained in the Offering Memorandum has been prepared on
a basis consistent with the historical financial statements contained
in the Offering Memorandum (except for the pro forma adjustments
specified in the Offering Memorandum), includes all material
adjustments to the historical financial information required by Rule
11-02 of Regulation S-X under the Securities Act and the Securities
Exchange Act of 1934 (the "Exchange Act") to reflect the transactions
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described in the Offering Memorandum, gives effect to assumptions made
on a reasonable basis and fairly presents the historical and proposed
transactions contemplated by the Offering Memorandum and by the
Operative Documents. The other historical financial and statistical
information and data included in the Offering Memorandum (including
that contained within the Supplement) are, in all material respects,
fairly presented.
(o) Xxxxxxx Ernst & Young, AG and Xxxxx Xxxxxxxx S.p.A., who
have audited the consolidated financial statements of the Company and
Flashnet, respectively, whose reports appear in the Offering
Memorandum and who will deliver the initial letters referred to in
Section 4(p) hereof are each independent public accountants with
respect to the Company and Flashnet, respectively, within the meaning
of the Securities Act and the rules and regulations promulgated
thereunder.
(p) The Company and each of its subsidiaries has good and
marketable title to all personal property owned by them, subject to
such exceptions that, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the
financial position, results of operations, business or prospects of
the Company and its subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as do not materially
affect the value of such property and do not materially interfere with
the use made and proposed to be made of such property by the Company
and its subsidiaries. Neither the Company nor any of its subsidiaries
owns any title to real property or buildings, and all real property
and buildings held under lease by the Company
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and its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.
(q) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the
Company has reasonably concluded is sufficient based upon experience
and industry practice and is adequate for the conduct of their
respective businesses and the value of their respective properties.
(r) The Company and each of its subsidiaries own or possess
adequate rights to use all material intellectual property, including
without limitation, patents, inventions, processes, technology and
know-how, trade mark registrations, service mark registrations,
copyrights and works of authorship in any media, including computer
hardware, software, systems, databases, documentation, files and
Internet site content, trademarks, service marks, trade names, domain
names, URLs, e-mail addresses, logos, slogans and trade dress, trade
secrets and all confidential or proprietary information and materials,
and all related registrations, applications, recordings and licenses
("Intellectual Property") necessary for the conduct of their
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respective businesses except for such Intellectual Property the lack
of possession of which could not reasonably be expected to have a
material adverse effect on the financial position, results of
operations, business or prospects of the Company and its subsidiaries.
The Company has no reason to believe that its Intellectual Property
infringes, misappropriates or impairs ("Infringes"), or is being so
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Infringed by, the Intellectual Property of any third party, and has
not received any notice alleging such Infringement by any third party.
No legal or government proceeding is pending, and no law, ordinance,
rule, regulation, order, judgment or decree is pending that limits or
challenges the ownership, use, validity or enforceability of any
Intellectual Property owned or used by the Company or any of its
subsidiaries, and the Company has no knowledge of a valid basis for
any of the foregoing. The Company and each of its subsidiaries take
all reasonable steps to protect and maintain their Intellectual
Property (including any confidential Intellectual Property), and have
taken all necessary actions, made all necessary filings and paid all
necessary fees in connection with the foregoing. Any licenses,
sublicenses, royalty or other agreements concerning Intellectual
Property to which the Company or any of its subsidiaries is a party
are valid and in full force and effect, no party thereto is, or is
alleged to be in default thereunder, and no event exists that, with
notice or lapse of time or both, would constitute an event of default
thereunder or result in a right to accelerate, or loss of rights
thereunder, except for licences, sublicense, royalty or other
agreements the lack of validity or enforceability of which or the
default under which could not reasonably be expected to have a
material adverse effect on the financial position, results of
operations, business or prospects of the Company and its subsidiaries.
(s) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which
any property or asset
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of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, might
reasonably be expected to have a material adverse effect on the
financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries; and to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(t) Except as otherwise disclosed in the Offering Memorandum,
there are no business relationships or other related-party
transactions of the nature described in Item 404 of Regulation S-K of
the Commission ("Item 404") involving the Company or any other party
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referred to in Item 404, except for transactions that would be
considered immaterial under Item 404.
(u) No transaction or relationship exists which would have been
required to be described in the Offering Memorandum by the Securities
Act and the rules and regulations thereunder if such Offering
Memorandum were a prospectus included in a registration statement on
Form S-1 under the Securities Act, which is not so described.
(v) Except as disclosed in the Offering Memorandum, the Company
and its subsidiaries have duly filed with the appropriate taxing
authorities all tax returns, reports and other information required to
be filed through the date hereof and have paid all taxes due thereon,
except where (i) (A) extensions have been properly obtained or are
being contested in good faith and for which adequate reserves have
been provided for in accordance with U.S. GAAP and (B) such extensions
referred to in clause (i)(A) are disclosed in the Offering Memorandum
and (ii) the failure to so file or pay could not reasonably be
expected to have a material adverse effect on the financial position,
stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries; each such tax return, report or
other information was, when filed, accurate and complete in all
material respects; the Company has no knowledge of any tax deficiency
which, if determined adversely to the Company or any of its
subsidiaries, might reasonably be expected to have a material adverse
effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries.
(w) All interest payments payable on the Notes may be paid by
the Company in U.S. dollars and all dividends and other distributions
declared and payable on the Conversion Shares may be paid by the
Company in U.S. dollars and all such payments will not be subject to
income, withholding or other taxes under the laws and regulations of
the United States or Germany or any political subdivision or taxing
authority thereof or therein and will otherwise be free and clear of
any other tax, duty, withholding or deduction in the United States or
Germany or any political subdivision or taxing authority thereof or
therein and without the necessity of obtaining any governmental
authorization in the United States or Germany or any political
subdivision or taxing authority thereof or therein.
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(x) Since the date as of which information is given in the
Offering Memorandum through the Closing Date (except for the one-for-
one conversion of shares of Series A Preferred Stock occurring after
August 2, 1999 for Common Stock), and except as may otherwise be
disclosed in the Offering Memorandum, the Company has not (i) issued
or granted any securities, including, without limitation, any options
or warrants, (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction
not in the ordinary course of business or (iv) declared or paid any
dividend on its issued share capital.
(y) There are no contracts or agreements between the Company and
any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to
any securities of the Company owned or to be owned by such person or
to require the Company to include such securities in the securities to
be registered pursuant to the Registration Rights Agreement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act, other than
the Registration Rights Agreement among the Company, Xxxxxx Brothers
International (Europe) ("Lehman") and the Initial Purchaser dated July
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8, 1999 with respect to the Compa ny's Senior Notes.
(z) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective Certificate of Incorporation or By-laws or
equivalent constitutive documents, (ii) in default, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is
a party or by which it is bound or to which any of its properties or
assets is subject, other than such defaults which could not reasonably
be expected to have a material adverse effect on the financial
condition, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries or (iii) in violation in
any respect of any law, ordinance, governmental rule, regulation or
court decree to which it or its properties or assets may be subject or
has failed to obtain any license, permit, certificate, franchise or
other governmental authorization or permit necessary to the ownership
of its properties or assets or to the conduct of its business, other
than such violations or failures which could not reasonably be
expected to have a material adverse effect on the financial condition,
stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries.
(aa) The Company (i) makes and keeps books and records which are
accurate and complete in all material respects and (ii) maintains
internal accounting controls which provide reasonable assurance that
transactions are executed in accordance with management's
authorization, transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability
for its assets, access to its assets is permitted only in
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accordance with management's authorization and the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(bb) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or, to the Company's knowledge,
other person associated with or acting on behalf of the Company or any
of its subsidiaries, has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating
to political activity, (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee
from corporate funds, (iii) violated or is in violation of any
provision of the United States Foreign Corrupt Practices Act of 1977,
as amended, or (iv) made any bribe, rebate (other than legal price
concessions to customers in the ordinary course of business), payoff,
influence payment, kickback or other unlawful payment to any foreign
or domestic government official or employee.
(cc) The Company is not in violation in any respect of any
applicable environmental law, ordinance, rule, regulation, order,
judgment, decree or permit in any jurisdiction with respect to the
properties of the Company or any of its subsidiaries, other than such
violations which could not reasonably be expected, singularly or in
the aggregate, to have a material adverse effect on the financial
condition, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries.
(dd) Except as described in the Offering Memorandum, there are no
material acquisitions of businesses or assets by the Company or any of
its subsidiaries pending or currently being negotiated.
(ee) No labor disturbance by employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is
imminent which might reasonably be expected to have a material adverse
effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company or its subsidiaries.
(ff) All computer hardware, software, databases, automated
systems and other computer and telecommunications equipment owned or
licensed by the Company or any of its subsidiaries can be used prior
to, during and after the calendar year 2000 and will operate during
each such time period and at least as effectively during each such
time period without material error relating to the processing,
calculating, comparing, sequencing or other use of date-related data
function (the foregoing ability, "Year 2000 Compliant"). The Company
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reasonably believes, after due inquiry, that suppliers, vendors,
customers or other material third parties used or served by the
Company and its subsidiaries are or will be Year 2000 Compliant in a
timely manner, except as would not have a material adverse effect on
the financial position, stockholders' equity, results of operations,
business prospects or operations of the Company and its subsidiaries.
The Company has no reason to believe, and does not believe, that there
are any issues related to the Company's ability to be Year 2000
Compliant that are of a character required to be described or referred
to in the Offering Memorandum.
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(gg) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States
Investment Company Act of 1940, as amended (the "Investment Company
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Act"), nor is it a closed-end investment company required to be
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registered, but not registered, thereunder; and the Company is not
and, after giving effect to the offering and sale of the Notes and the
application of the proceeds thereof as described in the Offering
Memorandum, will not be an "investment company" as defined in the
Investment Company Act and the rules and regulations of the Commission
thereunder.
(hh) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act including, without limitation, the
requirement that Notes have an "effective conversion premium" (as such
term is defined in Rule 144A) of ten percent or greater.
(ii) Neither the Company nor any subsidiary has incurred any
liability for a fee, commission, or other compensation on account of
the employment of a broker or finder in connection with the
transactions contemplated by this Agreement.
(jj) Neither the Company nor any subsidiary has taken, directly
or indirectly, any action which is designed to or which has
constituted or which might reasonably have been expected to cause or
result in stabilization or manipulation of the price of any security
of the Company or which would otherwise be prohibited by Regulation M
under the Exchange Act in connection with the offering of the
Securities.
(kk) Neither the Company nor any of its affiliates, nor any agent
acting on its or their behalf has offered or sold or will offer or
sell any of the Securities (A) in the United States by means of any
form of general solicitation or general advertising within the meaning
of Rule 502(c) under the Securities Act, or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act or (B) with respect to any such Securities sold in reliance on
Rule 903 of Regulation S under the Securities Act, by means of any
directed selling efforts within the meaning of Rule 902(b) of
Regulation S. The Company, its affiliates and any agent acting on its
behalf will comply with any offering restrictions and other
requirements of Regulation S applicable to the transactions
contemplated hereby including those applicable to any exercise of the
Conversion Right. The Company has not entered, and will not enter,
into any contractual arrangement with respect to the distribution of
the Securities except for this Agreement and the agreements
contemplated hereby.
(ll) Neither the Company nor any of its Affiliates (as defined in
Rule 501(b) of Regulation D promulgated under the Securities Act) has
directly, or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any "security"
(as defined in the Securities Act) which
12
is or will be integrated with the sale of Securities in a manner that
would require the registration under the Securities Act of the
Securities.
(mm) The Company owns no capital stock of, or other equity
interests in, any Person (as defined in the Indenture), other than all
of the issued and outstanding share capital of Cybernet Internet-
Dienstleistungen AG ("Cybernet AG"), Flashnet S.p.A. ("Flashnet"),
----------- --------
Vianet Telekommunikations AG ("Vianet"), Cybernet E-Commerce GmbH
------
("Cybernet E-Commerce") and Carolin Verwaltungsgesellschaft mBH
-------------------
("Carolin") and 51% of the issued and outstanding share capital of
-------
Sunweb AG; none of Cybernet AG, Flashnet, Vianet, Cybernet E-Commerce,
Carolin and Sunweb AG owns any capital stock of, or other equity
interests in, any Person, except that (i) Cybernet AG owns all the
issued and outstanding share capital of Open:Net Internet Solutions
GmbH ("Open:Net") and of Cybernet Internet Beteiligungs GmbH
--------
("Cybernet GmbH") and 66% of the issued and outstanding share capital
-------------
of Eclipse s.r.l. ("Eclipse") and (ii) Sunweb AG owns all the issued
-------
and outstanding share capital of Sunweb Internet Services GmbH
("Sunweb GmbH"). Open:Net, Cybernet GmbH, Eclipse
-----------
and Sunweb GmbH do not own any capital stock of, or other equity
interests in, any Person.
(nn) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
-----
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and
----
each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(oo) The Company and its subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state
or foreign regulatory agencies or bodies which are necessary or
desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the Offering
Memorandum, except where the failure to possess or make the same would
not, singularly or in the aggregate, have a material adverse effect on
the financial position, stockholders' equity, results of operations,
business prospects or operations of the Company and its subsidiaries,
and neither the Company nor any subsidiary has received notification
of any revocation or modification of any such license, certificate,
authorization or permit or has any reason to believe that any such
license, certificate, authorization or permit will not be renewed in
the ordinary course.
13
(pp) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency
or body which prevents the issuance of the Securities or suspends the
sale of the Securities in any jurisdiction; no injunction, restraining
order or order of any nature by any foreign or U.S. federal or state
court of competent jurisdiction has been issued with respect to the
Company which would prevent or suspend the issuance or sale of the
Securities or the use of the Offering Memorandum in any jurisdiction;
no action, suit or proceeding is pending against or, to the best
knowledge of the Company, threatened against or affecting the Company
before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Securities or
in any manner draw into question the validity or enforceability of any
of the Operative Documents or any action taken or to be taken pursuant
thereto; and the Company has complied with any and all requests by any
securities authority in any jurisdiction for additional information to
be included in the Offering Memorandum.
(qq) No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Offering Memorandum (including forward looking
statements in the Supplement) has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.
(rr) The Company has filed on a timely basis with the Commission,
to the extent required, (i) all annual and quarterly financial
statements and other information required to be contained in a filing
with the Commission on Forms 10-K and 10-Q and (ii) all current
reports required to be filed with the Commission on Form 8-K.
2. Purchase, Sale and Delivery of Securities. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell to the Initial
Purchaser, and the Initial Purchaser agrees to purchase from the Company, the
number of Notes set forth opposite the Initial Purchaser's name on Schedule I
hereto at a purchase price of $534.78 per Note, plus accrued interest, if any,
from August 26, 2004, to the Closing Date.
The Company will deliver, against payment of the purchase price, Notes
in the form of one or more certificates in global or definitive form. If the
Notes are offered in global form, beneficial interests in the Notes will be
shown on, and transfers thereof will be effected only through, records
maintained in book-entry form by The Depository Trust Company ("DTC") and its
---
participants, including, as applicable, Xxxxxx Guaranty Trust Company of New
York, Brussels office, as operator of the Euroclear System, and Cedelbank,
societe anonyme. Payment for the Notes shall be made by or on behalf of the
Initial Purchaser in same day funds by wire transfer to an account previously
designated to the Initial Purchaser by the Company at a bank reasonably
acceptable to the Initial Purchaser at 4:00 p.m. (London time), on August 26,
1999, or at such other time not later than seven full business days thereafter
as the Initial Purchaser and the Company determine, such time being herein
referred to as the "Closing Date",
------------
14
against delivery at the office of Xxxxxxx Xxxxxxx & Xxxxxxxx (London) at least
24 hours prior to the Closing Date to the Trustee.
3. Representations by Initial Purchaser; Resale by Initial
Purchaser.
(a) The Initial Purchaser represents and warrants to the
Company that it is an "accredited investor" within the meaning of
Regulation D under the Securities Act.
(b) The Initial Purchaser acknowledges that the Securities
have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except in accordance with Rule 144A or
Regulation S or pursuant to another exemption from the registration
requirements of the Securities Act. The Initial Purchaser represents
and agrees that it has offered and sold the Securities and will offer
and sell the Securities (i) as part of its distribution at any time
and (ii) otherwise until 40 days after the later of the date of
commencement of the Offering and the Closing Date, only in accordance
with Rule 903 or Rule 144A under the Securities Act ("Rule 144A").
---------
Accordingly, neither the Initial Purchaser nor its affiliates, nor any
persons acting on its behalf, have engaged or will engage in any
directed selling efforts with respect to the Securities, and the
Initial Purchaser, its affiliates and all persons acting on its behalf
have complied and will comply with the offering restrictions
requirement of Regulation S. The Initial Purchaser agrees that, at or
prior to confirmation of sale of the Notes other than a sale pursuant
to Rule 144A, the Initial Purchaser will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases the Securities from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the date of the
commencement of the offering and the closing date, except in
either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have
the meanings given to them by Regulation S."
Terms used in this subsection (b) have the meanings given to
them by Regulation S.
(c) The Initial Purchaser agrees that it and each of its
affiliates have not entered and will not enter into any contractual
arrangement with respect to the distribution of the Securities except
with the prior written consent of the Company.
(d) The Initial Purchaser and each of its affiliates has
not solicited offers for nor offered or sold and each agrees that it
will not solicit offers for nor offer
15
or sell the Securities in the United States by means of any form of
general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act, including, but not limited to, (i)
any advertising, article, notice or other communication published in
any newspaper, magazine or similar media or broadcast over television
or radio or (ii) any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising. The
Initial Purchaser agrees, with respect to initial resales made in
reliance on Rule 144A of any of the Securities, to deliver either with
the confirmation of such initial resale or otherwise prior to
settlement of such initial resale a notice (which may be included in
the Offering Memorandum) to the effect that the initial resale of such
Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
(e) The Initial Purchaser represents and agrees that it (i)
has not solicited, and will not solicit, offers to purchase any of the
Securities from, (ii) has not sold, and will not sell, any of the
Securities to, and (iii) has not distributed, and will not distribute,
the Offering Memorandum to any person or entity in any jurisdiction
outside of the United States except, to the best of the Initial
Purchaser's knowledge and belief, in compliance in all material
respects with all applicable laws. For the purpose of this Agreement,
"United States" means the United States of America, its territories,
-------------
its possessions and other areas subject to its jurisdiction.
4. Further Agreements of the Company. The Company agrees as follows:
(a) The Company will advise the Initial Purchaser promptly
of any proposal to amend or supplement the Offering Memorandum and
will not effect such amendment or supplement to which the Initial
Purchaser shall reasonably object after being given notice thereof and
reasonable time for review. If, at any time prior to completion of the
resale of the Notes by the Initial Purchaser, any event shall occur or
condition exist as a result of which it is necessary, in the opinion
of counsel for the Initial Purchaser or counsel for the Company, to
amend or supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Offering Memorandum to comply
with applicable law, to promptly prepare such amendment or supplement
as may be necessary to correct such untrue statement or omission or so
that the Offering Memorandum, as so amended or supplemented, will
comply with applicable law. Neither the Initial Purchaser's consent
to, nor its delivery to offerees or investors of, any such amendment
or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(b) The Company will furnish to the Initial Purchaser
copies of the Offering Memorandum (and all amendments and supplements
thereto) as soon as available and in such quantities as the Initial
Purchaser shall reasonably
16
request for internal use and for distribution to prospective
purchasers, and the Company will furnish to the Initial Purchaser as
soon as practicable four copies of the Offering Memorandum (including
four copies of the Supplement), each signed by a duly authorized
officer of the Company, one of which will include the independent
accountants' reports therein manually signed by such independent
accountants. For so long as any of the Securities are outstanding, if
the Company is ever not subject to Section 13 or 15(d) of the Exchange
Act and is not exempt from reporting pursuant to Rule 12g3-2(b) under
the Exchange Act, the Company will promptly furnish or cause to be
furnished to the Initial Purchaser and the holders of the Securities,
and, upon request of prospective purchasers of the Securities, to such
purchasers, copies of the information required to be delivered to
holders and prospective purchasers of the Securities pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision
thereto) in order to permit compliance with Rule 144A in connection
with resales by such holders of the Securities. The Company will pay
the expenses of printing and distributing to the Initial Purchaser all
such documents.
(c) The Company will file on a timely basis with the
Commission, to the extent such filings are accepted by the Commission
and whether or not the Company has a class of securities registered
under the Exchange Act, (i) all annual and quarterly financial
statements and other financial information required to be contained in
a filing with the Commission on Forms 10-K and 10-Q (which financial
statements shall be prepared in accordance with U.S. GAAP), including
a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual financial
information, a report thereon by the Company's certified independent
accountants and (ii) all current reports required to be filed with the
Commission on Form 8-K. Such quarterly financial information shall be
filed with the Commission within 45 days following the end of each
fiscal quarter of the Company, and such annual financial information
shall be furnished within 90 days following the end of each fiscal
year of the Company. Such annual financial information shall include
the geographic segment financial information required to be disclosed
by the Company under Item 101(d) of Regulation S-K under the
Securities Act. The Company will also be required (a) to file with the
Trustee, and provide to each holder, without cost to such holder,
copies of such reports and documents within 15 days after the date on
which the Company files such reports and documents with the Commission
or the date on which the Company would be required to file such
reports and documents if the Company were so required, and (b) if
filing such reports and documents with the Commission is not accepted
by the Commission or is prohibited under the Exchange Act, to supply
at the Company's cost copies of such reports and documents to any
prospective holder promptly upon request.
(d) The Company will promptly from time to time exercise
best efforts to take such action as the Initial Purchaser may
reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as the Initial
Purchaser may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as
long as
17
may be necessary to complete the resale of the Notes; provided,
however, that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to take any action
that would subject it to general consent to service of process in any
jurisdiction (other than pursuant to an Operative Document) in which
it is not now so subject or otherwise subject itself to taxation in
any jurisdiction in which it is not otherwise so qualified or subject.
(e) Until the second anniversary of the Closing Date, the
Company will, upon request, furnish to the Initial Purchaser and any
holder of Securities, a copy of the restrictions on transfer which the
Company believes are applicable to the Securities; provided, however,
that nothing contained herein shall obligate the Company to track or
trace particular Securities held by anyone other than the Company or
any of its affiliates (as defined in Rule 144 under the Securities
Act).
(f) In connection with the offering, until the Initial
Purchaser shall have notified the Company of the completion of the
resale of the Notes, neither the Company nor any of its affiliates
have bid for or purchased or will bid for or purchase, either alone or
with one or more other persons, for any account in which they or any
of their affiliates have a beneficial interest any Notes nor have they
attempted or will they attempt to induce any person to purchase any
Notes; and neither they nor any of their affiliates will make bids or
purchases for the purpose of creating actual, or apparent, active
trading in, or of raising the price of, the Notes.
(g) For a period of 90 days after the date hereof, neither
the Company nor any of its direct or indirect subsidiaries will (i)
offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any debt securities issued or guaranteed by
the Company or any such subsidiary and having a maturity of more than
one year from the date of issue other than pursuant to obligations
under registration rights agreements or (ii) directly or indirectly,
offer for sale, sell or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to,
result in the disposition or purchase by any person at any time in the
future of) any shares of Common Stock (other than shares issued
through private placements in connection with the acquisition of the
capital stock or assets of another company, shares issued pursuant to
employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or pursuant to
currently outstanding options, warrants or rights), or sell or grant
options, rights or warrants with respect to any shares of Common Stock
(other than the grant of options pursuant to option plans existing on
the date hereof), in each case, without the prior written consent of
the Initial Purchaser. Neither the Company nor any of its direct or
indirect subsidiaries will at any time offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any securities
under circumstances where such offer, sale, pledge, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act or the safe harbor of Regulation S thereunder to cease
to be applicable to the offer and sale of the Securities.
18
(h) The Company will indemnify and hold harmless the
Initial Purchaser against any documentary, stamp or similar issuance
tax, including any interest and penalties, on the creation, issuance
and sale of the Securities and on the initial resale thereof by the
Initial Purchaser and on the execution and delivery of this Agreement.
All payments to be made by the Company hereunder shall be made without
withholding or deduction for or on account of any present or future
taxes, duties or governmental charges whatsoever unless the Company is
compelled by law to deduct or withhold such taxes, duties or charges.
In that event, the Company shall pay such additional amounts as may be
necessary in order that the net amounts received after such
withholding or deduction shall equal the amounts that would have been
received if no withholding or deduction had been made.
(i) The Company will apply the net proceeds from the sale
of the Notes as set forth in the Offering Memorandum under the caption
"Use of Proceeds."
(j) Between the date hereof and the Closing Date (both
dates inclusive), the Company will notify and consult with the Initial
Purchaser, and cause its subsidiaries and all other parties acting on
its or their behalf to notify and consult with the Initial Purchaser,
prior to issuing any announcement which could be material in the
context of the distribution of the Securities.
(k) The Company will promptly inform the Initial Purchaser
of any communications received by it from any governmental or
regulatory agency or authority, including, without limitation, any
German or Italian regulatory authority, any relevant stock exchange or
trading market (including the Freiverkehr of the Frankfurt Stock
Exchange), or the Commission, relating to the offering of the
Securities and to furnish the Initial Purchaser with copies thereof.
(l) The Company will take such steps as shall be necessary
to ensure that neither the Company nor any subsidiary shall become an
"investment company" within the meaning of such term under the
Investment Company Act and the rules and regulations of the Commission
thereunder.
(m) The Company will not take, directly or indirectly, any
action which is designed to stabilize or manipulate, or which
constitutes or which might reasonably be expected to cause or result
in stabilization or manipulation, of the price of any security of the
Company in connection with the offering of the Securities.
(n) Upon request by the Initial Purchaser, the Company will
apply to list the Notes or have them admitted for trading on an
internationally recognized stock exchange or over-the-counter trading
market and will use its best efforts to ensure that such application
is accepted.
(o) The Company will use its best efforts to cause the
Notes to be eligible for inclusion in the Private Offerings, Resale
and Trading through Automated Linkages Market of The Nasdaq Stock
Market, Inc. (the "PORTAL Market").
-------------
19
(p) The Company will cause each of Xxxxxxx Ernst & Young,
AG and Xxxxx Xxxxxxxx S.p.A. to deliver an initial comfort letter,
dated the date hereof, to the Initial Purchaser in form and substance
reasonably satisfactory to the Initial Purchaser at or prior to the
time copies of the Offering Memorandum (including the Supplement) are
furnished to the Initial Purchaser.
(q) The Company will prepare the Offering Memorandum
(including the Supplement) on or prior to the Closing Date in form and
substance reasonably satisfactory to the Initial Purchaser. The
Supplement shall contain Consolidated Statements of Loss and
Comprehensive Loss and Consolidated Statements of Cash Flows, each as
of and for the six months ended June 30, 1998 and 1999, Consolidated
Balance Sheets as of the year ended December 31, 1998 and the six
months ended June 30, 1999, a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" comparing the six
months ended June 30, 1999 with the six months ended June 30, 1998 and
pro forma consolidated financial information for the Company as of and
for the six months ended June 30, 1999 reflecting, among other
transactions, the acquisition of Flashnet.
5. Expenses. The Company agrees, to pay: (a) the costs incident to
the authorization, issuance, registration (as set forth in the Registration
Rights Agreement), sale and delivery of the Securities and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and
distributing of the Offering Memorandum and any amendment or supplement thereto,
all as provided in this Agreement; (c) any fees charged by investment rating
agencies for the rating of the Securities; (d) the fees and expenses of
qualifying the Securities under the securities laws of the several jurisdictions
as provided in Section 4(d) and of preparing, printing and distributing a Blue
Sky Memorandum (including reasonable related fees and expenses of counsel to the
Initial Purchaser); (e) the costs of preparing certificates evidencing the
Securities; (f) all expenses and fees in connection with the application for
inclusion of the Securities in the PORTAL Market, and the obtaining of any
approval from any relevant authority in Germany or any other country in which
the securities are listed or admitted for trading on a stock exchange or over-
the-counter trading market; (g) the fees and expenses (including fees and
disbursements of counsel) of the Trustee; (h) the fees and expenses of any
Authorized Agent (as defined in Section 15 hereof); (i) the cost and charges of
any transfer agent or registrar; (j) all stamp or other issuance or transfer
taxes or governmental duties, if any, payable by the Initial Purchaser in
connection with the offer and sale of the Notes to the Initial Purchaser; and
(k) all other costs and expenses incident to the performance of the obligations
of the Company under this Agreement not otherwise specifically provided for in
this Section, including, without limitation, the fees and expenses of Schitag
Ernst & Young, AG, the Company's independent accountants, and Xxxxx Xxxxxxxx
S.p.A., Flashnet's independent accountants, and the fees and expenses of Xxxxxx,
Xxxxxxxxx, Xxxxxx & Xxxxxx LLP, U.S. counsel to the Company, Besner Xxxxxxxx
Xxxxx, German counsel to the Company, Avv. Xxxxxx X'Xxxxxxxx, Italian counsel to
the Company, and Xx. Xxxxxx Xxxxxx, Austrian counsel to the Company, provided
that, except as provided in this Section 5 and in Section 9, the Initial
Purchaser shall pay its own costs and expenses and any transfer taxes on the
Securities which it may sell.
20
6. Conditions of the Initial Purchaser's Obligations. The several
obligations of the Initial Purchaser hereunder are subject to the accuracy, when
made and on the Closing Date, of the representations and warranties of the
Company contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Initial Purchaser shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto (including
the Supplement) contains any untrue statement of a fact which, in the
opinion of counsel to the Initial Purchaser, is material or omits to
state any fact which, in the opinion of such counsel, is material and
is required to be stated therein or is necessary to make the
statements therein not misleading.
(b) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement,
the Indenture, the Registration Rights Agreement, the Offering
Memorandum or any amendment or supplement thereto (including the
Supplement), and all other legal matters relating to this Agreement,
the Indenture, the Registration Rights Agreement and the transactions
contemplated hereby and thereby shall be reasonably satisfactory in
all material respects to counsel to the Initial Purchaser, and the
Company, shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass
upon such matters.
(c) Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP shall have
furnished to the Initial Purchaser its written opinion, as U.S.
counsel to the Company, addressed to the Initial Purchaser and dated
the Closing Date, in form and substance satisfactory to the Initial
Purchaser, to the effect that:
(i) The Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the State of Delaware, is duly qualified to do
business and is in good standing as a foreign corporation in
each U.S. jurisdiction in which its ownership or lease of
property or the conduct of its businesses requires such
qualification, and has all power and authority necessary to
own or hold its properties and conduct the businesses in
which it is engaged;
(ii) The Company has an authorized capitalization
as set forth in the Supplement and all of the issued shares
of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and nonassessable and
conform to the description thereof contained in the Offering
Memorandum;
(iii) To the best of such counsel's knowledge
there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or
of which any property or assets of the Company or any of its
subsidiaries is the subject which, if determined adversely
to the Company or any of its subsidiaries, might have a
21
material adverse effect on the financial position,
stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries; and, to the
best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others;
(iv) The Company has full right, power and
authority to execute and deliver each of the Operative
Documents and to perform its obligations thereunder; and all
corporate action required to be taken for the due and proper
authorization, execution and delivery of each of the
Operative Documents and the consummation of the transactions
contemplated thereby has been duly and validly taken;
(v) Each of the Operative Documents is in
proper legal form for the enforcement thereof against the
Company without further action on the part of the Initial
Purchaser, the holders of the Securities, or the Trustee;
(vi) This Agreement has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Initial
Purchaser, constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement
thereof may be subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of
good faith and fair dealing, and except, with respect to the
rights of indemnification and contribution thereunder, where
enforcement thereof may be limited by public policy;
(vii) The Indenture has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery of the Indenture by
the Trustee, constitutes a valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting
creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) or
an implied covenant of good faith and fair dealing;
(viii) The Indenture conforms in all material
respects with the requirements of the Trust Indenture Act
and the rules and regulations of the Commission applicable
to an indenture eligible to be qualified thereunder;
22
(ix) The Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery of the
Registration Rights Agreement by the Initial Purchaser,
constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with
its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) or an implied covenant of good faith and
fair dealing, and except, with respect to the rights of
indemnification and contribution thereunder, where
enforcement thereof may be limited by public policy;
(x) The certificates used to evidence the
Notes are in due and proper form and comply with all
applicable statutory requirements of U.S. federal, Delaware
and New York law;
(xi) The Notes have been duly authorized,
executed and delivered by the Company and, assuming due
authentication thereof by the Trustee, upon payment and
delivery in accordance with this Agreement and the
Indenture, will be duly and validly issued and outstanding
and will constitute valid and legally binding obligations of
the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their
terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent, conveyance,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general
equitable principles (whether in a proceeding in equity or
at law) or an implied covenant of good faith and fair
dealing;
(xii) The Conversion Shares have been duly
authorized and, when issued in accordance with the terms and
conditions contained in the Indenture upon conversion of the
Notes into Common Stock, will be validly issued in
accordance with the laws of the State of Delaware and the
provisions of the Certificate of Incorporation and By-laws
of the Company and will be fully paid and nonassessable and
holders of such Conversion Shares will have no other
liability for any debt or other obligation of the Company
towards third parties in their capacity as holders of such
Conversion Shares; such Conversion Shares, when issued, will
not be subject to any preemptive or similar rights and will
be free and clear of all liens, encumbrances, equities and
claims or restrictions on transferability;
(xiii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Common Stock or
pursuant to the Company's Certificate of
23
Incorporation or By-Laws or any agreement or other
instrument known to such counsel;
(xiv) There are no contracts, agreements or
understandings between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by
such person or to require the Company to include such
securities in the securities to be registered pursuant to
the Registration Rights Agreement or in any securities being
registered pursuant to any other registration statement
filed by the Company under the Securities Act other than the
Registration Rights Agreement among the Company, Lehman and
the Initial Purchaser dated July 8, 1999 with respect to the
Company's Senior Notes.
(xv) The execution, delivery and performance of
the Operative Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and
thereby, do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries
pursuant to, any material indenture, mortgage, deed of
trust, loan agreement or other material agreement or
instrument to which the Company or any of its subsidiaries
is subject, nor will such actions result in any violation of
(A) the provisions of the Certificate of Incorporation or
By-laws or equivalent constitutive documents of the Company
or any of its subsidiaries, (B) any existing applicable law,
rule or regulation of any court or governmental agency or
body of the United States or the State of New York or any
Delaware governmental agency or body acting pursuant to the
Delaware General Corporation Law (other than state
securities or Blue Sky laws as to which we have not been
requested to express any opinion) or (C) any order, known to
such counsel, of any government, governmental
instrumentality or court of the United States or the State
of New York having jurisdiction over the Company or any of
its properties or assets or any Delaware governmental agency
or body acting pursuant to the Delaware General Corporation
Law;
(xvi) No consent, approval, authorization,
order, registration or qualification of or with any court or
governmental agency or body of the United States or the
State of New York or any Delaware governmental agency or
body acting pursuant to the Delaware General Corporation Law
is required for the consummation of the transactions
contemplated by the Operative Documents in connection with
the issuance or sale of the Notes by the Company (assuming
compliance with the terms of the Operative Documents by the
parties thereto), except, with respect to the transactions
contemplated by the Registration Rights Agreement, as may be
required under the Securities Act, the Trust Indenture Act
and the
24
rules and regulations of the Commission thereunder, and
otherwise except as may be required by state or foreign
securities or Blue Sky laws (as to which such counsel
expresses no opinion);
(xvii) The descriptions in the Offering
Memorandum of statutes, legal and governmental proceedings
and contracts and other documents are accurate in all
material respects to the extent the foregoing concern the
federal laws of the United States, the laws of the State of
New York and the Delaware General Corporation Law; the
statements set forth in the Offering Memorandum under the
caption "Description of the Notes," insofar as such
statements purport to constitute a summary of the terms of
the Indenture and the Registration Rights Agreement, fairly
summarize such terms, agreements and other documents in all
material respects; and the statements set forth in the
Offering Memorandum under the caption "Certain United States
Federal Income Tax Consequences" insofar as they purport to
constitute summaries of matters of U.S. federal income tax
law and legal conclusions with respect thereto constitute
accurate summaries of the matters described therein all
material respects;
(xviii) The Company is not an open-end investment
company, unit investment trust or face-amount certificate
company that is or is required to be registered under
Section 8 of the Investment Company Act, nor is it a closed-
end investment company required to be registered, but not
registered, thereunder; and the Company is not and, after
giving effect to the offering and sale of the Notes and the
application of the proceeds thereof as described in the
Offering Memorandum, will not be an "investment company" as
defined in the Investment Company Act and the rules and
regulations of the Commission thereunder;
(xix) No New York State or any New York City
stamp or documentary taxes payable by or on behalf of the
Initial Purchaser or the Company are required to be paid
with respect to the execution of the Indenture and the
authorization, issuance, sale and delivery of the Securities
to the Initial Purchaser in the manner contemplated by this
Agreement;
(xx) The Company can sue and be sued in its own
name;
(xxi) The Company has, pursuant to Section 15 of
this Agreement, legally, validly and irrevocably submitted
to the personal jurisdiction of any state or federal court
located in the Borough of Manhattan, The City of New York,
New York in any action arising out of or relating to this
Agreement or the transactions contemplated thereby, and has
legally, validly and effectively appointed the Authorized
Agent as its authorized agent for the purposes described in
Section 15 of this Agreement;
25
(xxii) The Securities satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act;
(xxiii) Neither the Company nor any of its
Affiliates (as defined in Rule 501(b) of Regulation D
promulgated under the Securities Act) has directly, or
through any agent, sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any "security"
(as defined in the Securities Act) which is or will be
integrated with the sale of Securities in a manner that
would require the registration under the Securities Act of
the Securities; and
(xxiv) No registration of the Securities under
the Securities Act, and no qualification of an indenture
under the Trust Indenture Act, is required in connection
with the offer and sale of the Notes by the Company to the
Initial Purchaser or in connection with the initial resale
of the Notes by the Initial Purchaser in the manner
contemplated in this Agreement and the Offering Memorandum.
Such counsel shall also have furnished to the Initial
Purchaser a written statement, addressed to the Initial Purchaser and
dated the Closing Date, in form and substance satisfactory to the
Initial Purchaser, to the effect that (i) the Offering Memorandum
(including the Supplement) conforms in all material respects to the
requirements of, and contains all information that would be required
to be presented by, the Securities Act and the rules and regulations
promulgated thereunder that would have been applicable thereto if such
Offering Memorandum were a prospectus included in a registration
statement on Form S-1 under the Securities Act, however, had the
Company submitted the Offering Memorandum to the staff of the
Commission, there may have been comments from the staff requiring
amendments before the offer document was declared effective, and (ii)
(x) such counsel has acted as counsel to the Company in connection
with the preparation of the Offering Memorandum (including the
Supplement) and (y) based on the foregoing, no facts have come to the
attention of such counsel which gave it reason to believe that the
Offering Memorandum (including the Supplement) (other than the
financial statements, statistical and other financial data contained
therein or omitted therefrom, as to which such counsel has not been
requested to comment), as of its date or the Closing Date, contained
or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in
light of circumstances under which they were made, not misleading. The
foregoing opinion and statement may be qualified by a statement to the
effect that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Offering Memorandum except for the statements made in the Offering
Memorandum under the captions "Description of the Notes" and "Certain
United States Federal Income Tax Consequences" insofar as such
statements relate to the provisions of the Securities, this Agreement,
the Indenture, and the Registration Rights Agreement or concern legal
matters.
26
In rendering such opinion, such counsel may (i) state that
its opinion is limited to matters governed by the federal laws of the
United States of America, the laws of the State of New York and the
General Corporation Law of the State of Delaware (and may contain such
assumptions and qualifications as are satisfactory in form and
substance to the Initial Purchaser) and (ii) rely (to the extent such
counsel deems proper and specifies in its opinion) as to matters
involving the application of the laws of Germany, Italy and Austria
upon the opinions of Xxxxxx Xxxxxxxx Xxxxx, Avv. Xxxxxx X'Xxxxxxxx and
Xx. Xxxxxx Xxxxxx, respectively, referred to in Sections 6(d)(1), (2)
and (3) below.
(d) (1) Besner Xxxxxxxx Xxxxx shall have furnished to the
Initial Purchaser its written opinion, as German counsel to the
Company, addressed to the Initial Purchaser and dated the Closing
Date, in form and substance satisfactory to the Initial Purchaser, to
the effect that:
(i) Each of Cybernet AG, Cybernet GmbH, Cybernet
E-Commerce, Carolin and Open:Net (the "German Subsidiaries")
-------------------
has been duly incorporated and is validly existing as a
corporation (and, in the case of Cybernet E-Commerce, is a
limited partnership validly existing as a limited
partnership) in good standing under the laws of Germany, is
duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its
business requires such qualification and has all power and
authority necessary to own or hold its properties and
conduct the businesses in which it is engaged;
(ii) All of the issued shares of capital stock of
the German Subsidiaries have been duly and validly
authorized and issued and are fully paid, nonassessable and
are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(iii) To the best of such counsel's knowledge and
other than as set forth in the Offering Memorandum there are
no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which
any property or asset of the Company or any of its
subsidiaries is the subject which, if determined adversely
to the Company or any of its subsidiaries might have a
material adverse effect on the consolidated financial
position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries;
and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(iv) The execution, delivery and performance of
the Operative Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and
thereby, do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or
27
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries
pursuant to, any material indenture, mortgage, deed of
trust, loan agreement or other material agreement or
instrument to which the Company or any of its subsidiaries
is subject, nor will such actions result in any violation of
(A) the provisions of the Articles of Association or bylaws
or equivalent constitutive documents of any of the German
Subsidiaries, (B) any existing applicable law, rule or
regulation of any court or governmental agency or body of
Germany or (C) any order, known to such counsel, of any
government, governmental instrumentality or court of Germany
having jurisdiction over the Company or any of its
properties or assets;
(v) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of Germany or any political
subdivision thereof is required for the consummation of the
transactions contemplated by the Operative Documents in
connection with the issuance or sale of the Notes by the
Company (assuming compliance with the terms of the Operative
Documents by the parties thereto), except, with respect to
the transactions contemplated by the Registration Rights
Agreement;
(vi) Under German law, the Company would be deemed to
have had sufficient contacts with the United States and
would be recognized as a validly existing Delaware
corporation and as the holding company and owner of all the
issued shares of capital stock of Cybernet AG and the other
German Subsidiaries.
(vii) The descriptions in the Offering Memorandum of
statutes, legal and governmental proceedings and contracts
and other documents are accurate in all material respects to
the extent the foregoing concern the laws of Germany; the
statements set forth in the Offering Memorandum under the
captions "Risk Factors -- There May be Questions about our
Status Under German Law," "Risk Factors -- We Are Subject to
Regulation" and "Business -- Regulation," to the extent that
they constitute summaries of matters of German law or
regulation or legal conclusions, fairly summarize the
matters described therein in all material respects;
(viii) Any judgment obtained in a United States federal
or state court of competent jurisdiction sitting in New York
City arising out of or in relation to the obligations of the
Company under the Operative Documents would be enforced
against the Company in the courts of Germany without
substantive reexamination or relitigation on the merits of
the subject matter thereof;
(ix) The Initial Purchaser would be permitted to
commence proceedings against the Company in German courts
based on this Agreement, and the holders of Notes and
Conversion Shares (or the
28
Trustee acting on their behalf) (the "Holders") would be
-------
permitted to commence proceedings against the Company in
German courts based on the Operative Documents (to the
extent that such Initial Purchaser and Holders have direct
contractual rights against the Company under such Operative
Documents, Notes, or Conversion Shares, as appropriate,
which arise as a result of valid and binding obligations of
the Company under such documents in accordance with the laws
of the State of New York), and such German courts would
recognize the choice of law provisions of the Operative
Documents;
(x) Under German law, the agreement of the Company
that Operative Documents shall be governed by the laws of
the State of New York will, if it constitutes a binding
agreement under the laws of the State of New York, be
recognized by the courts of Germany;
(xi) The indemnification and contribution provisions
set forth in Section 7 herein do not contravene the public
policy or laws of Germany;
(xii) Under German law, the submission by the Company
to the jurisdiction of the United States federal or New York
state courts sitting in New York City set forth in each of
the Operative Documents, is enforceable against the Company,
and service of process effected in the manner set forth in
the Operative Documents, assuming validity under the laws of
the State of New York, will be effective, insofar as German
law is concerned;
(xiii) All real property and buildings held under lease
by the Company and the German Subsidiaries are held by them
under valid subsisting and enforceable leases; and
(xiv) No stamp, registration or other similar taxes or
duties are payable in Germany by or on behalf of the Initial
Purchaser upon or in connection with the sale and delivery
to or by the Initial Purchaser of the Notes as contemplated
by the Offering Memorandum, and it is not necessary, prior
to the Initial Purchaser seeking enforcement of any of the
Operative Documents in Germany, that any stamp or similar
tax be paid.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by German law (and may contain
such assumptions and qualifications as are satisfactory in form and
substance to the Initial Purchaser) and shall state that each of
Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP and Xxxxxxx Xxxxxxx & Xxxxxxxx
may rely upon its opinion with respect to matters of German law.
(2) Avv. Xxxxxx X'Xxxxxxxx, Italian counsel to the Company,
shall have furnished to the Initial Purchaser its written opinion,
addressed to the Initial
29
Purchaser and dated the Closing Date, in form and substance
satisfactory to the Initial Purchaser, to the effect that:
(i) Flashnet and Eclipse (the "Italian Subsidiaries")
--------------------
have been duly incorporated and are validly existing as
corporations in good standing under the laws of Italy, are
duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their
ownership or lease of property or the conduct of their
businesses requires such qualification and have all power
and authority necessary to own or hold their properties and
conduct the businesses in which they are engaged; and
(ii) All of the issued shares of capital stock of the
Italian Subsidiaries have been duly and validly authorized
and issued and are fully paid and nonassessable; and all of
the issued shares of capital stock of Flashnet and 66% of
the issued shares of capital stock of Eclipse are owned
directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by Italian law (and may contain
such assumptions and qualifications as are satisfactory in form and
substance to the Initial Purchaser) and shall state that each of
Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP and Xxxxxxx Xxxxxxx & Xxxxxxxx
may rely upon its opinion with respect to matters of Italian law.
(3) Xx. Xxxxxx Xxxxxx, Austrian counsel to the Company,
shall have furnished to the Initial Purchaser its written opinion
addressed to the Initial Purchaser and dated the Closing Date, in form
and substance satisfactory to the Initial Purchaser, to the effect
that:
(i) Vianet has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
Austria, is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of
its businesses requires such qualification and has all power
and authority necessary to own or hold its properties and
conduct the businesses in which it is engaged; and
(ii) All of the issued shares of capital stock of
Vianet have been duly and validly authorized and issued and
are fully paid and nonassessable and are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by Austrian law (and may
contain such assumptions and qualifications as are satisfactory in
form and substance to the Initial Purchaser) and shall state that each
of Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP
30
and Xxxxxxx Xxxxxxx & Xxxxxxxx may rely upon its opinion with respect to
matters of Austrian law.
(e) The Trustee shall have furnished to the Initial Purchaser an
officer's certificate, dated the Closing Date, in form and substance
satisfactory to the Initial Purchaser to the effect that (i) the Indenture
has been duly authorized, executed and delivered by the Trustee, (ii) each
person who, on behalf of the Trustee, executed and delivered the Indenture
was at the date thereof and is now duly elected, appointed or authorized,
qualified and acting as an officer or authorized signatory of the Trustee
and duly authorized to perform such acts at the respective times of such
acts and the signatures of such persons appearing on such document are
their genuine signatures and (iii) such other matters reasonably requested
by the Initial Purchaser to be included in such officer's certificate.
Attached to such officer's certificate shall be an extract of the bylaws of
the Trustee, duly adopted by its Board of Directors, respecting the signing
authority of the persons mentioned in clause (ii) above and a letter from
an officer of the Trustee authorizing, pursuant to such bylaws, such
signing authority, which bylaws and letter at the Closing Date are in full
force and effect.
(f) With respect to the letter of Xxxxxxx Ernst & Young, AG delivered
to the Initial Purchaser and dated the date hereof referred to in Section
4(p) (as used in this paragraph, the "initial letter"), the Company shall
--------------
have furnished to the Initial Purchaser a letter (as used in this
paragraph, the "bring-down letter") of such accountants, addressed to the
-----------------
Initial Purchaser and dated the Closing Date (i) confirming that they are
independent public accountants within the meaning of the Securities Act and
are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of such bring-down letter (or,
with respect to matters involving changes or developments since the date as
of which specified financial information is given in the Offering
Memorandum, as of a date not more than five days prior to the date of each
such bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by its
initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in its initial letter.
(g) The Company shall have furnished to the Initial Purchaser a
certificate, dated the Closing Date, of Xxxxxxx Xxxx, Chairman, President
and Chief Executive Officer, and Xxxxxx Xxxxxx, Chief Financial Officer and
Treasurer, stating, on behalf of the Company, that:
(1) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of the Closing Date; and
the Company has complied with all its agreements contained herein;
and
(2) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Offering Memorandum (A) any loss or interference with
its business from fire, explosion, flood or other calamity, whether
or not covered by
31
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth in the Offering
Memorandum or (B) any change in the share capital (except for the
one-for-one conversion of shares of Series A Preferred Stock
occurring after August 2, 1999 for Common Stock) or long-term debt of
the Company or any of its subsidiaries or any change in or generally
affecting the affairs, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries,
otherwise than as set forth in the Offering Memorandum; and
(3) They have carefully examined the Offering Memorandum
(including the Supplement) and, in their opinion (A) the Offering
Memorandum (including the Supplement), as of its date, did not
include any untrue statement of a material fact and did not omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since such date
no event has occurred which should have been set forth in an
amendment to the Offering Memorandum so that the Offering Memorandum,
as so amended or supplemented, would not include any untrue statement
of a material fact and would not omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances in which they
were made, not misleading.
(h) (1) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Offering Memorandum any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the Offering
Memorandum and (2) since such date there shall not have been any change in
the share capital (except for the one-for-one conversion of shares of
Series A Preferred Stock occurring after August 2, 1999 for Common Stock)
or long-term debt of the Company or any of its subsidiaries or any change,
or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise than
as set forth in the Offering Memorandum, the effect of which, in any such
case described in clause (1) or (2), is, in the judgment of the Initial
Purchaser, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering of the Securities on the terms and
in the manner contemplated in the Offering Memorandum.
(i) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (1) trading in securities
generally on the New York Stock Exchange, Inc. or the Nasdaq National
Market System, or trading in any securities of the Company on any exchange,
shall have been suspended or minimum prices shall have been established on
any such exchange or such market by the Commission, by such exchange or by
any other regulatory body or governmental authority having jurisdiction,
(2) a banking moratorium
32
shall have been declared by New York State or U.S. federal authorities or
by authorities in Germany or European Union authorities, (3) the United
States or Germany shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States or
Germany or there shall have been a declaration of a national emergency or
war by the United States or Germany or (iv) there shall have occurred such
a material adverse change in general, United States, or German economic,
political or financial conditions or in currency exchange rates, taxation,
exchange controls or foreign investment regulations (or the effect of
international conditions on the financial markets in the United States or
Germany shall be such) as to make it, in the judgment of the Initial
Purchaser, impracticable or inadvisable to proceed with completion of the
offering or sale of and payment for the Securities.
(j) The Initial Purchaser shall have received on the Closing Date a
counterpart of the Registration Rights Agreement which shall have been
executed and delivered by the duly authorized officers of the Company.
(k) The Indenture (in form and substance satisfactory to the Initial
Purchaser) shall have been duly executed and delivered by the Company and
the Trustee on the Closing Date and shall be in full force and effect on
such date and the Notes shall have been duly executed and delivered by the
Company and duly authenticated by the Trustees on the Closing Date.
(l) The NASD shall have accepted the Securities for trading in the
PORTAL Market.
(m) The Notes shall have been duly authorized, executed and
delivered by the Company.
(n) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the judgment of the Initial Purchaser
would materially impair the ability of the Initial Purchaser to purchase,
hold or effect resales of the Securities as contemplated hereby.
(o) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance or
sale of the Notes; and no injunction, restraining order or order of any
other nature by any court of competent jurisdiction shall have been issued
as of the Closing Date which would prevent the issuance or sale of the
Notes.
(p) The Company shall have furnished to the Initial Purchaser such
further information, certificates and documents as the Initial Purchaser
may reasonably request.
33
(q) The Initial Purchaser shall have received and be reasonably
satisfied with the content of the Offering Memorandum (including the
Supplement) on or prior to the Closing Date. The Supplement shall contain
Consolidated Statements of Loss and Comprehensive Loss and Consolidated
Statements of Cash Flows, each as of and for the six months ended June 30,
1998 and 1999, Consolidated Balance Sheets as of the year ended December
31, 1998 and the six months ended June 30, 1999, a "Management's Discussion
and Analysis of Financial Condition and the Results of Operations"
comparing the six months ended June 30, 1999 with the six months ended June
30, 1998 and pro forma consolidated financial information for the Company
as of and for the six months ended June 30, 1999 reflecting, among other
transactions, the acquisition of Flashnet.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
to the Initial Purchaser.
7. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each of the
Initial Purchaser, its officers and employees and each person, if any, who
controls each of the Initial Purchaser within the meaning of the Securities
Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to,
any loss, claim, damage, liability or action relating to purchases and
sales of the Securities), to which each of the Initial Purchaser, its
officers, employees or controlling persons may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Memorandum or in any amendment or supplement thereto (including the
Supplement), (ii) the omission or alleged omission to state in the Offering
Memorandum or in any amendment or supplement thereto (including the
Supplement) any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading or (iii) any act or failure to act, or any
alleged act or failure to act, by the Initial Purchaser in connection with,
or relating in any manner to, t he Securities or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters covered by
clause (i) or (ii) above (provided that the Company shall not be liable in
the case of any matter covered by this clause (iii) to the extent that it
is determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted directly from any
such act or failure to act undertaken or omitted to be taken by the Initial
Purchaser through its gross negligence or wilful misconduct), and shall
reimburse each of the Initial Purchaser and such officer, employee and
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by the Initial Purchaser, officer, employee or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim,
34
damage, liability or action as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out
of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in the Offering Memorandum, or in any
such amendment or supplement, in reliance upon and in conformity with the
written information furnished to the Company by the Initial Purchaser
specifically for inclusion therein and described in Section 7(e). The
foregoing indemnity agreement is in addition to any liability which the
Company may otherwise have to the Initial Purchaser or to any officer,
employee or controlling person of the Initial Purchaser.
(b) The Initial Purchaser shall indemnify and hold harmless the
Company, its officers and employees, each of its directors and each person,
if any, who controls the Company within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or
any action in respect thereof, to which the Company or any such director,
officer or controlling person may become subject, under the Securities Act
or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Offering Memorandum or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state in the Offering Memorandum or in any amendment or supplement thereto
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with the written information
furnished to the Company by or on behalf of the Initial Purchaser
specifically for inclusion therein and described in Section 7(e), and shall
reimburse the Company and any such director, officer or controlling person
for any legal or other expenses reasonably incurred by the Company, as the
case may be, or any such director, officer or controlling person in
connection with investigating or defending or preparing to defend against
any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which the Initial Purchaser may otherwise have to the Company or any such
director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 7 except to the extent it has been materially prejudiced by such
failure and, provided, further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 7. If any such claim or
action shall be brought against an indemnified party, and it shall notify
the indemnifying party thereof,
35
the indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel satisfactory
to the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 7 for any legal or other expenses subsequently incurred
by the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, any indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying
party in writing, (ii) such indemnified party shall have been advised by
such counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel or (iii)
the indemnifying party has failed to assume the defense of such action and
employ counsel reasonably satisfactory to the indemnified party, in which
case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to one
separate firm of attorneys as local counsel, if appropriate under the
circumstances) at any time for all such indemnified parties, which firm
shall be designated in writing by the Initial Purchaser, if the indemnified
parties under this Section 7 consist of the Initial Purchaser or any of its
officers, employees or controlling persons, or by the Company, if the
indemnified parties under this Section consist of the Company or any of its
directors, officers, employees or controlling persons. Each indemnified
party, as a condition of the indemnity agreements contained in Sections
7(a) and 7(b), shall use its reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld)
settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent (a) includes
an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding and (b) does not
include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of the indemnified party, or (ii) be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a
36
final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and
against any loss of liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 7 shall
for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a) or 7(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and
the Initial Purchaser on the other from the offering of the Securities or
if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Initial Purchaser on the other
with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Initial Purchaser on the other with
respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Securities purchased under
this Agreement (before deducting expenses but after deducting discounts and
commissions) received by the Company on the one hand, and the total
discounts and commissions received by the Initial Purchaser with respect to
the Securities purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the Securities under this
Agreement, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand, or the Initial
Purchaser on the other hand, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Initial Purchaser agree that it
would not be just and equitable if contributions pursuant to this Section
7(d) were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7(d) shall be deemed to include,
for purposes of this Section 7(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7(d), the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total price at which the
Securities purchased by it were resold exceeds the amount of any damages
which the Initial Purchaser has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent
37
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(e) The Initial Purchaser confirms that the statements with
respect to the offering of the Notes set forth in the first and ninth
paragraphs under the caption "Plan of Distribution" in the Offering
Memorandum are correct and constitute the only information furnished in
writing to the Company by or on behalf of the Initial Purchaser
specifically for inclusion in the Offering Memorandum.
8. Termination. The obligations of the Initial Purchaser hereunder
may be terminated by the Initial Purchaser by notice given to and received by
the Company prior to delivery of and payment for the Securities if, prior to
that time, any of the events described in Sections 6(h) or 6(i) shall have
occurred or if the Initial Purchaser shall decline to purchase the Securities
for any reason permitted under this Agreement.
9. Reimbursement of Initial Purchaser's Expenses. If this Agreement
shall be terminated by the Initial Purchaser because of any failure or refusal
on the part of the Company to comply with the terms or to fulfil any of the
conditions of Section 6 (other than Subsections 6(h), (i) and (o)) of this
Agreement, the Company shall reimburse the Initial Purchaser for fees and
expenses of its counsel and for such other out-of-pocket expenses as shall have
been reasonably incurred by it in connection with this Agreement and the
proposed purchase of the Securities, and upon demand the Company shall pay the
full amount thereof to the Initial Purchaser.
10. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by
mail, telex or facsimile transmission to: Xxxxxx Xxxxxxx & Co.
Incorporated, 0000 Xxxxxxxx, Xxx Xxxx, XX 00000, Attention: Syndicate
Department (Fax: x0-000-000-0000);
With a copy to Xxxxxxx Xxxxxxx & Xxxxxxxx, 00 Xxxxxxxxxxx, 00/xx/ Xxxxx,
Xxxxxx, XX0X 0XX, Attention: Xxxxxxx X. Xxxxxxxxx, Esq. (Fax: +44-171-422-
4022);
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to Cybernet Internet Services International Inc.,
Xxxxxx-Xxxxxx-Ring 19-23, 81929 Munich, Germany, Attention: Xxxxxx Xxxxxx,
Chief Financial Officer and Treasurer (Fax: x00-00-000-00000);
With a copy to Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP, 0000 Xxxxxxxxxxxx
Xxxxxx, X.X., Xxxxxxxxxx X.X. 00000, Attention: Xxxxxx X. Xxxx, Esq. (Fax:
x0-000-000-0000).
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the Initial Purchaser, the Company, and
their respective
38
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall also
be deemed to be for the benefit of the officers and employees of the Initial
Purchaser and the person or persons, if any, who control the Initial Purchaser
within the meaning of Section 15 of the Securities Act and the indemnity
agreement of the Initial Purchaser contained in Section 7(b) of this Agreement
shall be deemed to be for the benefit of directors, officers and employees of
the Company and any person controlling the Company within the meaning of Section
15 of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
11, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
12. Survival. The respective indemnities, representations, warranties
and agreements of the Company and the Initial Purchaser contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Securities and
shall remain in full force and effect regardless of any investigation made by or
on behalf of any of them or any person controlling any of them.
13. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, the term "business day" means any day on which the
----------
Nasdaq National Market System is open for trading and the term "subsidiary" has
----------
the meaning set forth in Rule 405 under the Securities Act.
14. Governing Law. This Agreement and the rights and duties of the
parties hereunder shall be governed by and construed in accordance with the laws
of the State of New York.
15. Submission to Jurisdiction; Appointment of Agent for Service;
Waiver; Currency Indemnity. To the fullest extent permitted by applicable law,
the Company irrevocably submits to the non-exclusive jurisdiction of any federal
or state court in the Borough of Manhattan in the City of New York, County and
State of New York, United States of America, in any suit or proceeding based on
or arising under this Agreement, and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in any such court. The
Company, to the fullest extent permitted by applicable law, irrevocably and
fully waives the defense of an inconvenient forum to the maintenance of such
suit or proceeding and hereby irrevocably designates and appoints Corporation
Services Company, at New York, New York (the "Authorized Agent"), for a period
----------------
of ten years from the date hereof or until such time as no Notes are
outstanding, as its authorized agent upon whom process may be served in any such
suit or proceeding. The Company represents that it has notified the Authorized
Agent of such designation and appointment and that the Authorized Agent has
accepted the same in writing. The Company hereby irrevocably authorizes and
directs its Authorized Agent to accept such service. The Company further agrees
that service of process upon its Authorized Agent and written notice of said
service to the Company mailed by first class mail or delivered to its Authorized
Agent shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. Nothing herein shall affect the right of
any person to serve process in any other manner permitted by law. The Company
agrees that a final action in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other lawful manner. Notwithstanding the foregoing, any action
39
against the Company arising out of or based on this Agreement or the
transactions contemplated hereby may also be instituted by the Initial
Purchaser, its respective officers and employees or any person who controls the
Initial Purchaser within the meaning of the Securities Act in any competent
court in Germany and the Company expressly accepts the jurisdiction of any such
court in any such action.
The Company hereby irrevocably waives, to the extent permitted by law,
any immunity to jurisdiction to which it may otherwise be entitled (including,
without limitation, immunity to pre-judgment attachment, post-judgment
attachment and execution) in any legal suit, action or proceeding against it
arising out of or based on this Agreement or the transactions contemplated
hereby.
The provisions of this Section 15(a) are intended to be effective upon
the execution of this Agreement without any further action by the Company or the
Initial Purchaser and the introduction of a true copy of this Agreement into
evidence shall be conclusive and final evidence as to such matters.
(a) The Company shall indemnify the Initial Purchaser against
any loss incurred by it as a result of any judgment or order being
given or made and expressed and paid in a currency (the "Judgment
--------
Currency") other than U.S. dollars and as a result of any variation as
--------
between (i) the rate of exchange at which the U.S. dollar amount is
converted into the Judgment Currency for the purpose of such judgment
or order and (ii) the spot rate of exchange in New York, New York at
which the Initial Purchaser on the date of payment of such judgment or
order is able to purchase U.S. dollars with the amount of the Judgment
Currency actually received by the Initial Purchaser. If the U.S.
dollars so purchased are greater than the amount originally due to the
Initial Purchaser hereunder, the Initial Purchaser agrees to pay the
Company an amount equal to the excess of the U.S. dollars so purchased
over the amount originally due to the Initial Purchaser hereunder. The
foregoing shall constitute a separate and independent obligation of
the Company and the Initial Purchaser, as the case may be, and shall
continue in full force and effect notwithstanding any such judgment or
order as aforesaid. The term "spot rate of exchange" shall include any
premiums and costs of exchange payable in connection with the purchase
of, or conversion into, U.S. dollars.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement among the Company
and the Initial Purchaser, please indicate your acceptance in the space provided
for that purpose below.
Very truly yours,
Cybernet Internet Services International, Inc.
By: /s/ Xxxxxxx Xxxx
--------------------------------------
Name: Xxxxxxx Xxxx
Title: President and Chief Executive Officer
Accepted:
Xxxxxx Xxxxxxx & Co. International Limited
By: /s/ Xxxx Xxxxxxx
----------------------------------
Authorized Representative
SCHEDULE I
Aggregate Initial
Accreted Value
Initial Purchaser of Notes
----------------- -------------------
Xxxxxx Xxxxxxx & Co. International Limited.. $15,002,183
-------------------
Total....................................... $15,002,183
===================
