EXHIBIT 1.2
EXECUTION COPY
$150,000,000
Cybernet Internet Services International, Inc.
150,000 Units Consisting of 14% Senior Notes due 2009
and Warrants to Purchase 4,534,604 shares of Common Stock
PURCHASE AGREEMENT
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July 1, 1999
Xxxxxx Brothers International (Europe)
One Broadgate
London EC2M 7HA
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 several initial purchasers
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listed on Schedule I hereto (the "Initial Purchasers") 150,000 Units (the
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"Units") each consisting of $1,000 aggregate principal amount of its 14% Senior
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Notes due 2009 (the "Notes") and one warrant (the "Warrants") to purchase
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30.2310693 shares of common stock of the Company, par value $0.001 per share
(the "Common Stock"). The Units are to be issued under a Unit Agreement, dated
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as of July 8, 1999 (the "Unit Agreement"), among the Company, The Bank of New
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York, as Unit Agent (in such capacity, the "Unit Agent"), the Trustee referred
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to below and the Warrant Agent referred to below. The Notes are to be issued
under an Indenture, dated as of July 8, 1999 (the "Indenture"), between the
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Company and The Bank of New York, as Trustee (in such capacity, the "Trustee").
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The Warrants are to be issued under a Warrant Agreement, dated as of July 8,
1999 (the "Warrant Agreement"), between the Company and The Bank of New York, as
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Warrant Agent (in such capacity, the "Warrant Agent"). The shares of Common
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Stock issuable upon exercise of the Warrants are herein referred to as the
"Warrant Shares." The Units, the Notes, the Warrants and the Warrant Shares are
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collectively referred to herein as the "Securities."
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The Units will be offered and sold to the Initial Purchasers without being
registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions therefrom. The Company has
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prepared a preliminary offering memorandum dated June 12, 1999 (the "Preliminary
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Offering Memorandum") and has prepared an offering memorandum dated the date
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hereof (the "Offering Memorandum") setting forth information concerning the
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Company, its subsidiaries and the Securities. Copies of the Preliminary
Offering Memorandum have been, and copies of the Offering Memorandum will be,
delivered by the Company to the Initial Purchasers pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed
to include all amendments and supplements thereto, unless otherwise noted. The
Company hereby confirms that it has authorized the use of the Preliminary
Offering Memorandum and the Offering Memorandum in connection with the offering
and resale of the Units by the Initial Purchasers in accordance with Section 2.
Holders of the Notes (including the Initial Purchasers and their 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 which the Company will agree to
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file with the U.S. Securities and Exchange Commission (the "Commission") (i) a
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registration statement under the Securities Act (the "Exchange Offer
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Registration Statement") registering senior notes of the Company (the "Exchange
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Notes") which are identical in all material respects to the Notes (except that
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the Exchange Notes will not contain terms with respect to transfer restrictions)
and (ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
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This Agreement, the Unit Agreement, the Indenture, the Warrant Agreement,
the Registration Rights Agreement and the escrow agreement, to be entered into
and to be dated as of July 8, 1999 in favor of holders of each of the Notes (the
"Escrow Agreement"), among the Company, the Trustee and The Bank of New York, as
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escrow agent (in such capacity, the "Escrow Agent"), are referred to herein
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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) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective 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 Preliminary Offering Memorandum or the Offering Memorandum in reliance
upon and in conformity with the written information furnished to the
Company by the Initial Purchasers specifically for inclusion therein and
described in Section 7(e).
(b) Assuming the accuracy of the representations and warranties
of the Initial Purchasers contained in Section 3 and their compliance with
the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Units to the Initial Purchasers and the offer,
resale and delivery of the Units by the Initial Purchasers 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
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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, shareholders' 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 14 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 adverse effect on the financial position, shareholders' 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 Offering Memorandum under the heading
"Capitalization," except for (i) 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"), and of shares of Series B Preferred Stock, par value
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$0.001 per share (the "Series B Preferred Stock"), occurring after June 9,
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1999, for Common Stock and (ii) the issuance of 25,000 shares of Common
Stock in connection with the acquisition of Sunweb Internet Services SIS AG
("Sunweb AG"); all outstanding shares of capital stock of the Company have
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been duly authorized and are validly issued and fully paid and
nonassessable; the Warrant Shares have been duly authorized and, when the
Warrant Shares are issued in accordance with the terms and conditions
contained in the Warrant Agreement upon exercise of the Warrants, such
Warrant Shares will be validly issued and fully paid and nonassessable and
holders of the Warrant Shares will have no liability for any debt or other
obligation of the Company towards third parties in their capacity as
holders of the Warrant Shares; and the shareholders of the Company have no
preemptive rights with respect to the Warrant 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 Warrant Shares and no depositary receipts
have been issued with respect to the Warrant Shares offered by the Company;
the Warrant Shares have been duly reserved for issuance in accordance with
the terms of the Warrants and the Warrant Agreements.
(f) The Company has no Indebtedness (as defined in the Offering
Memorandum) other than (i) as set forth on the March 31, 1999 Consolidated
Balance Sheets of the Company set forth in the Offering Memorandum, (ii) in
connection with the Interim Loan Agreement, dated June 30, 1999, among the
Company, the several banks and other financial institutions or entities
from time to time parties thereto, Xxxxxx Brothers Inc. and Xxxxxx Xxxxxxx
Senior Funding,
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Inc., as arrangers, and Xxxxxx Commercial Paper Inc., as documentation and
administrative agent (the "Interim Loan Agreement"), in an aggregate amount
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not exceeding C 21,860,554.46 and (iii) in connection with Indebtedness in
an aggregate amount not exceeding $2,000,000 assumed in connection with the
acquisition of Flashnet S.p.A. ("Flashnet").
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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, and the deposit by the Company of the
Pledged Securities (as defined in the Escrow Agreement) in the Escrow
Account (as defined in the Escrow Agreement) for the benefit of the Trustee
and the holders of the Units and/or Notes, as the case may be, 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 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, shareholders' 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 Purchasers, 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
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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
Unit Agreement; the Unit 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 Unit
Agent, the Trustee and the Warrant Agent), the Unit Agreement 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.
(j) The Company has full power and authority to offer and sell
the Units; the Units have been duly authorized by the Company for issuance,
and when executed by the Company and countersigned by the Unit Agent, the
Trustee and the Warrant Agent in accordance with the provisions of the Unit
Agreement, and delivered to and paid for by the Initial Purchasers in
accordance with the terms hereof, will have been duly executed, issued and
delivered and will be entitled to the benefits of the Unit Agreement, the
Indenture and the Warrant Agreement and will constitute valid and binding
obligations of the Company, enforceable against the Company 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
Indenture; the Indenture has been duly authorized by the Company and upon
effectiveness of the Exchange Offer Registration Statement and the Shelf
Registration Statement (if applicable) will be qualified under the Trust
Indenture Act; and, on the Closing Date (as defined below), the Indenture
will have been duly executed and delivered by the Company and will conform,
in all material respects, to the description thereof contained in the
Offering Memorandum and, assuming due authorization, execution and delivery
of the Indenture by the Trustee, the Indenture will constitute a valid and
legally binding obligation of the Company, enforceable in accordance with
its terms, except that the enforcement thereof may be subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and fair
dealing.
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(l) 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 Purchasers pursuant
to this Agreement on the Closing Date, such Notes will have been duly
executed, authenticated, issued and delivered (assuming due authentication
of the Notes by the Trustee) and will conform, in all material respects, to
the description thereof contained in the Offering Memorandum and, assuming
due authentication of the Notes by the Trustee, such Notes will constitute
valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable in accordance with their terms,
except that the enforcement thereof may be subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
(m) The Company has full power and authority to enter into the
Warrant Agreement; the Warrant 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 Warrant Agent), the Warrant Agreement 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.
(n) The Company has full power and authority to offer and sell
the Warrants; the Warrants have been duly authorized by the Company for
issuance, and when executed by the Company and countersigned by the Warrant
Agent in accordance with the provisions of the Warrant Agreement, and
delivered to and paid for by the Initial Purchasers in accordance with the
terms hereof, will have been duly executed, issued and delivered and will
conform, in all material respects, to the description thereof contained in
the Offering Memorandum, will be entitled to the benefits of the Warrant
Agreement and will constitute valid and binding obligations of the Company
enforceable against the Company 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.
(o) 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 Purchasers) will have been duly
executed and delivered and
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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.
(p) The Company has full power and authority to enter into the
Escrow Agreement; the Escrow 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 Escrow Agent and the Trustee), 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; the Trustee
will have a first priority perfected security interest in the Pledged
Securities in the Escrow Account.
(q) No stamp or other issuance taxes or duties are payable by or
on behalf of the Initial Purchasers as a consequence of the issue of the
Securities, the sale of the Units to the Initial Purchasers and/or the
initial resale of the Securities to investors.
(r) 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 and of shares of Series B Preferred
Stock, occuring after June 9, 1999, for Common Stock and the issuance of
25,000 shares of Common Stock in connection with the acquisition of Sunweb
AG) 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, shareholders' equity, results of operations or
prospects of the Company and its subsidiaries, otherwise than as set forth
in the Offering Memorandum.
(s) The consolidated financial statements of the Company
(including the related notes) included in the Offering Memorandum 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")
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consistently 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 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 therein), 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")
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to reflect the transactions 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 the Operative Documents. The other historical financial and
statistical information and data included in the Offering Memorandum are,
in all material respects, fairly presented.
(t) 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(q) hereof
dated the date of the Offering Memorandum, 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.
(u) 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 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.
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(v) 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.
(w) 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 registration, 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
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Property") necessary for the conduct of their respective businesses except
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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"),
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or is being so 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.
(x) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property or asset of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its subsidiaries,
might reasonably be expected to have a material adverse effect on the
financial position, shareholders' 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.
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(y) 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
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404") involving the Company or any other party referred to in Item 404,
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except for transactions that would be considered immaterial under Item 404.
(z) 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.
(aa) 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, shareholders' 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, shareholders' equity, results of
operations, business or prospects of the Company and its subsidiaries.
(ab) 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 Warrant 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.
(ac) 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 and of shares of Series B
Preferred Stock, occuring after June 9, 1999, for Common Stock and the
issuance of 25,000 shares of Common Stock in connection with the
acquisition of Sunweb AG), 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
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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.
(ad) 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.
(ae) 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, shareholders' 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, shareholders' equity, results of operations, business or
prospects of the Company and its subsidiaries.
(af) The Company (i) makes and keeps books and records which are
accurate and complete in all material respects and (ii) maintains internal
accounting controls which provide reasonable assurance that transactions
are executed in accordance with management's authorization, transactions
are recorded as necessary to permit preparation of its financial statements
and to maintain accountability for its assets, access to its assets is
permitted only in accordance with management's authorization and the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(ag) 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)
11
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.
(ah) 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, shareholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries.
(ai) 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.
(aj) 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.
(ak) 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 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, shareholders' 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.
(al) 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 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 Units 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.
12
(am) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act including, without limitation, the
requirement that Warrants have an "effective exercise premium" (as such
term is defined in Rule 144A) of ten percent or greater.
(an) 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.
(ao) 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.
(ap) 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 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. 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.
(aq) 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.
(ar) The Company owns no capital stock of, or other equity
interests in, any Person (as defined in each Indenture), other than all of
the issued and outstanding share capital of Cybernet Internet-
Dienstleistungen AG ("Cybernet AG"), Flashnet, Vianet Telekommunications
-----------
AG ("Vianet") and Cybernet E-Commerce GmbH ("Cybernet E-Commerce") and 51%
------ -------------------
of the issued and outstanding share capital of Sunweb AG; none of Cybernet
AG, Flashnet, Vianet, Cybernet E-Commerce 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.
13
(as) 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.
(at) 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,
shareholders' 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.
(au) No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Securities or suspends the sale of
the Securities in any jurisdiction; no injunction, restraining order or
order of any nature by any foreign or U.S. federal or state court of
competent jurisdiction has been issued with respect to the Company which
would prevent or suspend the issuance or sale of the Securities or the use
of the Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to the
best knowledge of the Company, threatened against or affecting the Company
before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expect ed to
interfere with or adversely affect the issuance of the Securities or in any
manner draw into question the validity or enforceability of any of the
Operative Documents or any action taken or to be taken pursuant thereto;
and the Company has complied with any and all requests by any securities
authority in any jurisdiction for additional information to be included in
the Preliminary Offering Memorandum and the Offering Memorandum.
(av) No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) contained in
the
14
Preliminary Offering Memorandum or the Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed other than in
good faith.
(aw) 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.
(ax) The Company has full power and authority to enter into the
Interim Loan Agreement; the Interim Loan 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 the Interim
Loan Agreement was duly executed and delivered and is 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. The Company has taken all necessary corporate or other action
to authorize the borrowings thereunder on the terms and conditions of the
Interim Loan Agreement.
(ay) The Company acquired all of the issued and outstanding
ordinary shares of Flashnet, free and clear of all liens, encumbrances and
defects, pursuant to the Acquisition Documentation (as defined in the
Interim Loan Agreement) and without waiver of any of the terms thereof.
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
Purchasers, and each Initial Purchaser, severally but not jointly, agrees to
purchase from the Company, the number of Units set forth opposite such Initial
Purchaser's name on Schedule I hereto at a purchase price of $970 per Unit (of
which $626.88 is attributable to the Notes and $343.12 is attributable to the
Warrants), plus accrued interest, if any, from July 8, 1999, to the Closing
Date.
The Company will deliver, against payment of the purchase price, Units
in the form of one or more certificates in global or definitive form. If the
Units are offered in global form, beneficial interests in the Units 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 Cedel Bank,
societe anonyme. Payment for the Units shall be made by or on behalf of the
Initial Purchasers in same day funds by wire transfer to an account previously
designated to the Initial Purchasers by the Company at a bank reasonably
acceptable to the Initial Purchasers at 4:00 p.m. (London time), on July 8,
1999, or at such other time not later than seven full business days thereafter
as the Initial Purchasers and the Company determine, such time being herein
referred to as the "Closing Date", against
------------
15
delivery at the office of Xxxxxxx Xxxxxxx & Xxxxxxxx (London) at least 24 hours
prior to the Closing Date to the Unit Agent.
3. Representations by Initial Purchasers; Resale by Initial
Purchasers.
(a) Each of the Initial Purchasers 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 Purchasers acknowledge 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 pursuant to an exemption from the registration requirements
of the Securities Act. Each of the Initial Purchasers represents and
agrees that it has offered and sold the Securities and will offer and sell
the Securities as part of its distribution at any time only in accordance
with Rule 144A under the Securities Act ("Rule 144A").
---------
(c) Each of the Initial Purchasers 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) Each of the Initial Purchasers and each of its affiliates
has not solicited offers for nor offered or sold and each agrees that it
will not solicit offers for nor offer or sell the Securities in the United
States by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act, including, but
not limited to, (i) any advertising, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or (ii) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising. Each of
the Initial Purchasers 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) Each of the Initial Purchasers 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:
16
(a) The Company will advise the Initial Purchasers promptly of
any proposal to amend or supplement the Offering Memorandum and will not
effect such amendment or supplement to which the Initial Purchasers 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 Units by
the Initial Purchasers, any event shall occur or condition exist as a
result of which it is necessary, in the opinion of counsel for the Initial
Purchasers 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 Purchasers' consent to, nor their
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 Purchasers copies of
the Offering Memorandum (and all amendments and supplements thereto) as
soon as available and in such quantities as the Initial Purchasers shall
reasonably request for internal use and for distribution to prospective
purchasers, and the Company will furnish to the Initial Purchasers as soon
as practicable four copies of the Offering Memorandum 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 Purchasers 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 Purchasers 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
17
required to be filed with the Commission on Form 8-K, whether or not the
Company has such a class of securities registered under the Exchange Act.
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 Purchasers may reasonably
request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as the Initial Purchasers may request
and to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the resale of the Units; 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 Purchasers 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
Purchasers shall have notified the Company of the completion of the resale
of the Units, 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 Units nor have they attempted or will they
attempt to induce any person to purchase any Units; 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 Units.
(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
18
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 Purchasers. Neither the
Company nor any of its direct or indirect subsidiaries will at any time
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
pledge, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act or the safe harbor of Regulation S
thereunder to cease to be applicable to the offer and sale of the
Securities.
(h) The Company will indemnify and hold harmless the Initial
Purchasers 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 Purchasers
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
Units as set forth in the Offering Memorandum under the caption "Use of
Proceeds."
(j) The Company will enter into the Escrow Agreement pursuant to
which it shall pledge to the Trustee for the benefit of the holders of the
Units and the Notes and deposit in the escrow account (the "Escrow
------
Account") held by the Escrow Agent, for the benefit of the Trustee and the
-------
holders of the Units and the Notes, U.S. dollar denominated government
securities in such amount as shall be sufficient upon scheduled interest
and principal payments of such U.S. government securities to provide for
the payment in full of the first six scheduled interest payments on the
Units and/or the Notes, as applicable (excluding any Additional Amounts and
any Liquidated Damages (each as defined in the Indenture)).
(k) Between the date hereof and the Closing Date (both dates
inclusive), the Company will notify and consult with the Initial
Purchasers, and cause its
19
subsidiaries and all other parties acting on its or their behalf to notify
and consult with the Initial Purchasers, prior to issuing any announcement
which could be material in the context of the distribution of the
Securities.
(l) The Company will promptly inform the Initial Purchasers of
any communications received by it from any governmental or regulatory
agency or authority, including, without limitation, any German or Italian
regulatory authority, the Luxembourg Stock Exchange, or the Commission,
relating to the offering of the Securities and to furnish the Initial
Purchasers with copies thereof.
(m) 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.
(n) 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.
(o) The Company will use its best efforts to have the Units
admitted to trading on the Luxembourg Stock Exchange as promptly as
practicable after the date hereof; the Company will use its best efforts to
have the Notes admitted to trading on the Luxembourg Stock Exchange as
promptly as practicable after the Separation Date (as defined in the
Offering Memorandum); the Company will use its best efforts to maintain the
listing of Units and, following the Separation Date, of Notes on the
Luxembourg Stock Exchange. If the Units or, following the Separation Date,
the Notes ceases to be listed on the Luxembourg Stock Exchange, the Company
shall endeavor promptly to list such Units or Notes, as the case may be, on
a stock exchange to be agreed between the Company and the Initial
Purchasers.
(p) The Company will use its best efforts to cause the Units,
Notes and Warrants 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").
-------------
(q) 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 Purchasers in form and substance reasonably
satisfactory to the Initial Purchasers at or prior to the time copies of
the Offering Memorandum are furnished to the Initial Purchasers.
5. Expenses. The Company agrees, to pay: (a) the costs incident to
the authorization, issuance, sale and delivery of the Securities and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and distributing of the Preliminary Offering Memorandum and the Offering
Memorandum and any amendment or supplement thereto, all as provided in this
Agreement; (c) any fees charged by investment rating agencies for
20
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
Purchasers); (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
other relevant authority in Germany or Luxembourg; (g) the fees and expenses
(including fees and disbursements of counsel) of the Trustee; (h) the fees and
expenses (including fees and disbursements of counsel) of the Warrant Agent
appointed under the Warrant Agreement; (i) the fees and expenses (including fees
and disbursements of counsel) of the Escrow Agent appointed under the Escrow
Agreement; (j) the fees and expenses of any Authorized Agent (as defined in
Section 16 hereof); (k) the cost and charges of any transfer agent or registrar;
(l) all stamp or other issuance or transfer taxes or governmental duties, if
any, payable by the Initial Purchasers in connection with the offer and sale of
the Units to the Initial Purchasers; and (m) 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, Xxxxxx Xxxxxxxx Xxxxx, German counsel
to the Company, and Italian counsel and Austrian counsel to the Company as
described under Sections 6(d)(2) and 6(d)(3); provided that, except as provided
in this Section 5 and in Section 10, the Initial Purchasers shall pay their own
costs and expenses and any transfer taxes on the Securities which they may sell.
6. Conditions of the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers 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 Purchasers 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 contains any untrue
statement of a fact which, in the opinion of counsel to the Initial
Purchasers, 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 Unit
Agreement, the Indenture, the Warrant Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Offering Memorandum or any amendment
or supplement thereto, and all other legal matters relating to this
Agreement, the Unit Agreement, the Indenture, the Warrant Agreement, the
Registration Rights Agreement and the Escrow Agreement, and the
transactions contemplated hereby and thereby shall be reasonably
satisfactory in all material respects to counsel to the Initial Purchasers,
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.
21
(c) Xxxxxx, Xxxxxxxxx Xxxxxx & Xxxxxx LLP shall have furnished
to the Initial Purchasers its written opinion, as U.S. counsel to the
Company, addressed to the Initial Purchasers and dated the Closing Date, in
form and substance satisfactory to the Initial Purchasers, 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 Offering Memorandum 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 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 Purchasers, the holders of the Securities,
the Unit Agent, the Trustee or the Warrant Agent;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution
and delivery by the Initial Purchasers, 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
22
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 Unit Agreement has been duly authorized, executed
and delivered by the Company and, assuming due authorization,
execution and delivery of the Unit Agreement by the Unit Agent, the
Warrant Agent and 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 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;
(viii) 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;
(ix) 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;
(x) The Warrant Agreement has been duly authorized,
executed and delivered by the Company and, assuming due authorization,
execution and delivery of the Warrant Agreement by the Warrant Agent,
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;
(xi) 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 Purchasers, 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,
23
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;
(xii) The Escrow Agreement has been duly authorized,
executed and delivered by the Company and, assuming due execution and
delivery of the Escrow Agreement by the Escrow Agent and 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 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;
(xiii) The certificates used to evidence the Units, the
Notes and the Warrants are in due and proper form and comply with all
applicable statutory requirements of U.S. federal, Delaware and New
York law;
(xiv) The Units have been duly authorized, executed and
delivered by the Company and, assuming due authentication thereof by
the Unit Agent, the Warrant Agent and the Trustee, upon payment and
delivery in accordance with this Agreement and the Unit Agreement,
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 Unit Agreement, the Indenture and the Warrant
Agreement 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 considered in a
proceeding in equity or at law) or an implied covenant of good faith
and fair dealing;
(xv) 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;
24
(xvi) The Warrants have been duly authorized, executed and
delivered by the Company and, assuming due execution thereof by the
Warrant Agent in accordance with the provisions of the Warrant
Agreement, upon payment and delivery in accordance with this Agreement
and the Warrant Agreement, 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 Warrant Agreement 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 considered in a proceeding in equity or
at law) or an implied covenant of good faith and fair dealing;
(xvii) The Warrant Shares issuable upon exercise of the
Warrants have been duly authorized and, when issued in accordance with
the terms and conditions contained in the Warrant Agreement upon
exercise of the Warrants, 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 Warrant 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
Warrant Shares; such Warrant 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;
(xviii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the voting or
transfer of, any shares of the Common Stock or pursuant to the
Company's Certificate of Incorporation or By-Laws or any agreement or
other instrument known to such counsel;
(xix) 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.
(xx) 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
25
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;
(xxi) 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 Units by the Company and the deposit
by the Company of the Pledged Securities in the Escrow Account
(assuming compliance with the terms of the Operative Documents by the
parties thereto), except, with respect to the transactions
contemplated by the Registration Rights Agreement, as may be required
under the Securities Act, the Trust Indenture Act and the rules and
regulations of the Commission thereunder, and otherwise except as may
be required by state or foreign securities or "Blue Sky" laws (as to
which such counsel expresses no opinion);
(xxii) 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 captions
"Description of the Units," "Description of the Notes" and
"Description of the Warrants" insofar as such statements purport to
constitute a summary of the terms of the Unit Agreement, the
Indenture, the Warrant Agreement, the Registration Rights Agreement
and the Escrow 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;
26
(xxiii) 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 Units 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;
(xxiv) No New York State or any New York City stamp or
documentary taxes payable by or on behalf of the Initial Purchasers or
the Company are required to be paid with respect to the execution of
the Indenture and the Warrant Agreement and the authorization,
issuance, sale and delivery of the Securities to the Initial
Purchasers in the manner contemplated by this Agreement;
(xxv) The Company can sue and be sued in its own name.
(xxvi) The Company has, pursuant to Section 16 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 16 of this Agreement;
(xxvii) The Securities satisfy the eligibility requirements
of Rule 144A(d)(3) under the Securities Act;
(xxviii) 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
(xxix) 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 Units by the Company to the Initial Purchasers or in connection
with the initial resale of the Units by the Initial Purchasers in the
manner contemplated in this Agreement and the Offering Memorandum.
Such counsel shall also have furnished to the Initial Purchasers
a written statement, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance satisfactory to the Initial Purchasers,
to the effect that (i) the
27
Offering Memorandum conforms in all material respects to the requirements
of, and contained 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 it was declared effective, and (ii) (x) such
counsel has acted as counsel to the Company in connection with the
preparation of the Offering Memorandum 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 (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 that statement therein, in the 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
Units," "Description of the Notes," "Description of the Warrants" and
"Certain United States Federal Income Tax Consequences" insofar as such
statements relate to the provisions of the Securities, this Agreement, the
Unit Agreement, the Indenture, the Warrant Agreement, the Registration
Rights Agreement and the Escrow Agreement, or concern legal matters.
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the federal laws of the United
States of America, the laws of the State of New York and the General
Corporation Law of the State of Delaware (and may contain such assumptions
and qualifications as are satisfactory in form and substance to the Initial
Purchasers) 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, Italian counsel to the Company and Austrian counsel to the Company,
respectively, referred to in Sections 6(d)(1), (2) and (3) below.
(d) (1) Besner Xxxxxxxx Xxxxx shall have furnished to the
Initial Purchasers its written opinion, as German counsel to the Company,
addressed to the Initial Purchasers and dated the Closing Date, in form and
substance satisfactory to the Initial Purchasers, to the effect that:
(i) Each of Cybernet AG, Cybernet GmbH, Cybernet E-Commerce
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
28
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 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 Units by the
Company and the deposit by the Company of the Pledged Securities in
the Escrow Account (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;
29
(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 Purchasers would be permitted to commence
proceedings against the Company in German courts based on this
Agreement, and the holders of Units, Notes, Warrants and Warrant
Shares (or the Unit Agent, Trustee or Warrant Agent acting on their
behalf) (collectively, 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 Purchasers and
Holders have direct contractual rights against the Company under such
Operative Documents, Units, Notes, Warrants or Warrant 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
30
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
Purchasers upon or in connection with the sale and delivery to or by
the Initial Purchasers of the Units as contemplated by the Offering
Memorandum, and it is not necessary, prior to the Initial Purchasers
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 Purchasers) 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) Italian counsel to the Company, satisfactory to the Initial
Purchasers, shall have furnished to the Initial Purchasers its written
opinion, addressed to the Initial Purchasers and dated the Closing Date, in
form and substance satisfactory to the Initial Purchasers, 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 Purchasers) and shall state that each of Xxxxxx, Xxxxxxxxx,
Xxxxxx & Xxxxxx LLP
31
and Xxxxxxx Xxxxxxx & Xxxxxxxx may rely upon its opinion with respect to
matters of Italian law.
(3) Austrian counsel to the Company satisfactory to the Initial
Purchasers shall have furnished to the Initial Purchasers its written
opinion addressed to the Initial Purchasers and dated the Closing Date, in
form and substance satisfactory to the Initial Purchasers, 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 Purchasers) and shall state that each of Xxxxxx,
Xxxxxxxxx, Xxxxxx & Xxxxxx LLP and Xxxxxxx Xxxxxxx & Xxxxxxxx may rely upon
its opinion with respect to matters of Austrian law.
(e) The Unit Agent shall have furnished to the Initial
Purchasers an officer's certificate, dated the Closing Date, in form and
substance satisfactory to the Initial Purchasers to the effect that (i) the
Unit Agreement has been duly authorized, executed and delivered by the Unit
Agent, (ii) each person who, on behalf of the Unit Agent, executed and
delivered the Unit Agreement was at the date thereof and is now duly
elected, appointed or authorized, qualified and acting as an officer or
authorized signatory of the Unit Agent 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 Purchasers to be
included in such officer's certificate. Attached to such officer's
certificate shall be an extract of the bylaws of the Unit Agent, 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
Unit Agent authorizing, pursuant to such bylaws, such signing authority,
which bylaws and letter at the Closing Date are in full force and effect.
(f) The Trustee shall have furnished to the Initial Purchasers
an officer's certificate, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers to the effect that (i) the
Indenture, the Escrow Agreement and the Unit Agreement have been duly
authorized, executed and delivered by the Trustee, (ii)
32
each person who, on behalf of the Trustee, executed and delivered the
Indenture and the Escrow Agreement 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 Purchasers 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.
(g) The Warrant Agent shall have furnished to the Initial
Purchasers an officer's certificate, dated the Closing Date, in form and
substance satisfactory to the Initial Purchasers to the effect that (i) the
Warrant Agreement has been duly authorized, executed and delivered by the
Warrant Agent, (ii) each person who, on behalf of the Warrant Agent,
executed and delivered the Warrant Agreement was at the date thereof and is
now duly elected, appointed or authorized, qualified and acting as an
officer or authorized signatory of the Warrant Agent 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 Purchasers to
be included in such officer's certificate. Attached to such officer's
certificate shall be an extract of the bylaws of the Warrant Agent, 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
Warrant Agent authorizing, pursuant to such bylaws, such signing authority,
which bylaws and letter at the Closing Date are in full force and effect.
(h) The Escrow Agent shall have furnished to the Initial
Purchasers an officer's certificate, dated the Closing Date, in form and
substance satisfactory to the Initial Purchasers to the effect that (i) the
Escrow Agreement has been duly authorized, executed and delivered by the
Escrow Agent, (ii) each person who, on behalf of the Escrow Agent, executed
and delivered the Escrow Agreement was at the date thereof and is now duly
elected, appointed or authorized, qualified and acting as an officer or
authorized signatory of the Escrow Agent 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 Purchasers to be
included in such officer's certificate. Attached to each officer's
certificate shall be an extract of the bylaws of the Escrow Agent, 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
Escrow Agent authorizing, pursuant to such bylaws, such signing authority,
which bylaws and letter at the Closing Date are in full force and effect.
(i) With respect to each of the letters of Schitag Ernst &
Young, AG and Xxxxx Xxxxxxxx S.p.A. delivered to the Initial Purchasers and
dated the date
33
hereof referred to in Section 4(q) (as used in this paragraph, the "initial
-------
letters"), the Company shall have furnished to the Initial Purchasers
-------
letters (as used in this paragraph, the "bring-down letters") of such
------------------
accountants, addressed to the Initial Purchasers 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 each
such bring-down letter (or, with respect to matters involving changes or
developments since the respective dates 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 each 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.
(j) The Company shall have furnished to the Initial Purchasers 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:
(i) 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
(ii) (A) 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 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 nor (B) since such date has there been any
change in the share capital (except for the one-for-one conversion of
shares of Series A Preferred Stock and of shares of Series B Preferred
Stock occuring after June 9, 1999, for Common Stock and the issuance
of 25,000 shares of Common Stock in connection with the acquisition of
Sunweb AG) or long-term debt of the Company or any of its subsidiaries
or any change in or generally affecting the affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth in the
Offering Memorandum; and
(ii) They have carefully examined the Offering Memorandum
and, in their opinion (A) the Offering Memorandum, 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 a supplement
or 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
34
stated therein or necessary in order to make the statements therein,
in the light of the circumstances in which they were made, not
misleading.
(k) (i) 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 or (ii) 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 and of shares of Series B Preferred Stock,
occuring after June 9, 1999, for Common Stock and the issuance of 25,000
shares of Common Stock in connection with the acquisition of Sunweb AG) 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, shareholders' 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 (i) or (ii), is, in the judgment of the Initial Purchasers, 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.
(l) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) 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, (ii) a banking moratorium shall have been declared by New
York State or U.S. federal authorities or by authorities in Germany or
European Union authorities, (iii) the United States or Germany shall have
become engaged in hostilities (other than currently existing hostilities in
Kosovo), 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 (including the
currently existing hostilities in Kosovo) 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 Purchasers, impracticable or inadvisable to proceed with completion
of the offering or sale of and payment for the Securities.
(m) The Initial Purchasers 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.
(n) The Indenture (in form and substance satisfactory to the
Initial Purchasers) shall have been duly executed and delivered by the
Company and the
35
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 Trustee on the Closing Date.
(o) The Unit Agreement (in form and substance satisfactory to
the Initial Purchasers) shall have been duly executed and delivered by the
Company, the Unit Agent, the Trustee and the Warrant Agent on the Closing
Date and shall be in full force and effect on such date and the Units shall
have been duly executed and delivered by the Company and duly authenticated
by the Unit Agent, the Trustee and the Warrant Agent on the Closing Date.
(p) The NASD shall have accepted the Securities for trading in
the PORTAL Market.
(q) [Reserved.]
(r) The Company and the Warrant Agent shall have executed and
delivered the Warrant Agreement (in form and substance satisfactory to the
Initial Purchasers) and the Warrant Agreement shall be in full force and
effect on the Closing Date.
(s) The Units, Notes and Warrants shall have been duly
authorized, executed and delivered by the Company.
(t) The Company, the Escrow Agent and the Trustee shall have
executed and delivered the Escrow Agreement (in form and substance
satisfactory to the Initial Purchasers), the Escrow Agreement shall be in
full force and effect on the Closing Date, and the Trustee and the Escrow
Agent shall have received an opinion of counsel to the Company pursuant to
Section 2(d)(ii) of the Escrow Agreement.
(u) 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 Purchasers
would materially impair the ability of the Initial Purchasers to purchase,
hold or effect resales of the Securities as contemplated hereby.
(v) 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 Units; 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 Units.
(w) The Company shall have furnished to the Initial Purchasers
such further information, certificates and documents as the Initial
Purchasers may reasonably request.
36
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 Purchasers.
7. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each of the
Initial Purchasers, its officers and employees and each person, if any, who
controls each of the Initial Purchasers 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
Purchasers, its officers, employees or controlling persons may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained
in the Preliminary Offering Memorandum or the Offering Memorandum, or in
any amendment or supplement thereto, (ii) the omission or alleged omission
to state in the Preliminary Offering Memorandum, 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 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
Purchasers in connection with, or relating in any manner to, the Securities
or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of
or based upon matters covered by clause (i) or (ii) above (provided that
the Company shall not be liable in the case of any matter covered by this
clause (iii) to the extent that it is determined in a final judgment by a
court of competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such act or failure to act undertaken or
omitted to be taken by the Initial Purchasers through their gross
negligence or wilful misconduct), and shall reimburse each of the Initial
Purchasers and such officer, employee and controlling person promptly upon
demand for any legal or other expenses reasonably incurred by such Initial
Purchaser, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out
of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in the Offering Memorandum, or in any
such amendment or supplement, in reliance upon and in conformity with the
written information furnished to the Company by the Initial Purchasers
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 Purchasers or to any officer,
employee or controlling person of the Initial Purchasers.
37
(b) The Initial Purchasers, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each
of its directors and each person, if any, who controls the Company within
the meaning of the Securities Act, from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof, to which
the Company or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained
in the Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state in the Preliminary Offering Memorandum or 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 Purchasers 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 Purchasers 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, 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
38
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 Purchasers, if the
indemnified parties under this Section 7 consist of the Initial Purchasers
or any of their 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 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
39
Initial Purchasers 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 Purchasers 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 Purchasers 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 Purchasers 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
Purchasers 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 Purchasers 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 Purchasers 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 Purchasers have otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The Initial Purchasers confirm that the statements with
respect to the offering of the Units set forth in the first and tenth
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 Purchasers
specifically for inclusion in the Offering Memorandum.
8. Defaulting Initial Purchasers. If any Initial Purchaser defaults
in the performance of its obligations under this Agreement, the remaining non-
defaulting Initial Purchasers shall be obligated to purchase the aggregate
number of Units which the defaulting
40
Initial Purchaser agreed but failed to purchase in the respective proportions
which the total aggregate number of Units set opposite the name of each
remaining non-defaulting Initial Purchaser in Schedule I hereto bears to the
total aggregate number of Units set opposite the names of all the remaining non-
defaulting Initial Purchasers in Schedule I hereto; provided, however, that the
remaining non-defaulting Initial Purchasers shall not be obligated to purchase
any Units if the total aggregate number of Units which the defaulting Initial
Purchasers agreed but failed to purchase on such date exceeds 9.09% of the total
number of Units to be purchased, and any remaining non-defaulting Initial
Purchaser shall not be obligated to purchase more than 110% of the number of
Units which it agreed to purchase pursuant to the terms of Section 2. If the
foregoing maximums are exceeded, the remaining non-defaulting Initial
Purchasers, or those other initial purchasers satisfactory to the remaining non-
defaulting Initial Purchasers who so agree, shall have the right, but shall not
be obligated, to purchase, in such proportion as may be agreed upon among them,
the total number of Units to be purchased. If the remaining Initial Purchasers
or other initial purchasers satisfactory to the remaining non-defaulting Initial
Purchasers do not elect to purchase the number of Units which the defaulting
Initial Purchaser agreed but failed to purchase, this Agreement shall terminate
without liability on the part of any non-defaulting Initial Purchasers or the
Company, except that the Company will continue to be liable for the payment of
expenses to the extent set forth in Sections 5 and 10. As used in this
Agreement, the term "Initial Purchaser" includes, for all purposes of this
-----------------
Agreement unless the context requires otherwise, any party not listed in
Schedule I hereto who, pursuant to this Section 8, purchases Units which a
defaulting Initial Purchaser agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Company for damages caused by its default.
If other Initial Purchasers are obligated or agree to purchase the Units of a
defaulting or withdrawing Initial Purchaser, either the remaining non-defaulting
Initial Purchasers or the Company may postpone the Closing Date for up to seven
full business days in order to effect any changes that in the opinion of counsel
to the Company or counsel to the Initial Purchasers may be necessary in the
Offering Memorandum or in any other document or arrangement.
9. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers 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(k) or 6(l) shall have
occurred or if the Initial Purchasers shall decline to purchase the Securities
for any reason permitted under this Agreement.
10. Reimbursement of Initial Purchaser's Expenses. If this Agreement
shall be terminated by the Initial Purchasers 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(k), (l) and (t)) of this
Agreement, the Company shall reimburse the Initial Purchasers 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 Purchasers.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
41
(a) if to the Initial Purchasers, shall be delivered or sent by
mail, telex or facsimile transmission to: (i) Xxxxxx Brothers Inc., Three
World Financial Center, New York, NY 10285, Attention: Syndicate
Department (Fax: 0-000-000-0000) and (ii) Xxxxxx Xxxxxxx & Co.
Incorporated, 0000 Xxxxxxxx, Xxx Xxxx, XX 00000, Attention: Syndicate
Department (Fax: 0-000-000-0000);
With a copy to Xxxxxxx Xxxxxxx & Xxxxxxxx, 00 Xxxxxxxxxxx, 00/xx/ Xxxxx,
Xxxxxx, XX0X 0XX, Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
(Fax: x00-000-000-0000);
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to Cybernet Internet Services International Inc.,
Xxxxxx-Xxxxxx-Ring 19-23, 81929 Munich, Germany, Attention: Xxxxxx Xxxxxx,
Chief Financial Officer and Treasurer (Fax: 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: 0-000-000-0000).
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the officers and
employees of the Initial Purchasers and the person or persons, if any, who
control the Initial Purchasers within the meaning of Section 15 of the
Securities Act and the indemnity agreement of the Initial Purchasers 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 12, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
13. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Initial Purchasers 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.
14. 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.
15. 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.
16. Submission to Jurisdiction; Appointment of Agent for Service;
Waiver; Currency Indemnity. To the fullest extent permitted by applicable law,
the Company irrevocably
42
submits to the non-exclusive jurisdiction of any federal or state court in the
Borough of Manhattan in the City of New York, County and State of New York,
United States of America, in any suit or proceeding based on or arising under
this Agreement, and irrevocably agrees that all claims in respect of such suit
or proceeding may be determined in any such court. The Company, to the fullest
extent permitted by applicable law, irrevocably and fully waives the defense of
an inconvenient forum to the maintenance of such suit or proceeding and hereby
irrevocably designates and appoints CSC, at New York, New York (the "Authorized
----------
Agent"), for a period of ten years from the date hereof or until such time as no
-----
Units, Notes or Warrants 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 against the Company arising out of or
based on this Agreement or the transactions contemplated hereby may also be
instituted by the Initial Purchasers, their respective officers and employees or
any person who controls each of the Initial Purchasers 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 16(a) are intended to be effective upon
the execution of this Agreement without any further action by the Company or the
Initial Purchasers 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 Purchasers against
any loss incurred by them 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 such Initial
Purchasers on the date of payment of such judgment or order are able to
purchase U.S. dollars with the amount of the Judgment Currency actually
received by such Initial Purchasers. If the U.S. dollars so purchased are
greater than the amount originally due to such Initial Purchasers
hereunder, such Initial Purchasers agree to pay the Company an amount equal
to the excess of the U.S. dollars so purchased over the amount originally
due to such Initial Purchasers hereunder. The foregoing shall constitute
43
a separate and independent obligation of the Company and the Initial
Purchasers, 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.
17. 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.
18. 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.
44
If the foregoing correctly sets forth the agreement among the Company
and the Initial Purchasers, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
Cybernet Internet Services International, Inc.
By: /s/ Authorized Signatory
---------------------------------
45
Accepted:
Xxxxxx Brothers International (Europe)
By: /s/ Authorized Signatory
------------------------------------
Accepted:
Xxxxxx Xxxxxxx & Co. International Limited
By: /s/ Authorized Signatory
------------------------------------
SCHEDULE I
Initial Purchasers Number of Units
------------------ ----------------
Xxxxxx Brothers International (Europe)................ 91500
Xxxxxx Xxxxxxx & Co. International Limited............ 58500
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Total................................................. 150000
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