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EXHIBIT 1.1
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
President & CEO
POET Holdings Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇
The Selling Shareholders
named in Schedule 2 to this Agreement
c/o ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ as the
Selling Shareholders' Representative
November 12, 1999
Frankfurt am Main
DGBK/Ubernah12/CG
3,950,000
POET HOLDINGS, INC.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
Dear ▇▇▇▇▇▇ and Sirs:
With reference to our previous discussions, we would like to express our
pleasure with your decision to conduct the initial public offering (the
"Offering") of shares of Common Stock of POET Holdings, Inc. (the "Company")
(the "Shares") under the joint lead management of DG BANK ("DG") and Paribas
("PB" and, together with DG, the "Lead Managers").
The Company, and certain stockholders of the Company named in Schedule 1 hereto
(the "Selling Shareholders"), propose to sell an aggregate of
3,950,000 SHARES (THE "OFFER SHARES")
of the Company's Common Stock, par value $ 0.001 per share (the "Common Stock").
Of the total number of Offer Shares, 3,000,000 are being sold by the Company
after having been
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newly issued for this purpose from the Company's authorized capital (the "New
Shares") and 950,000 are being sold by the Selling Stockholders (the "Old
Shares").
The Company furthermore proposes to grant to the Lead Managers an option to
purchase up to an additional 570,000 shares of the Common Stock on the terms and
for the purposes set forth in Section 5 hereof (the "Option Shares").
In addition, certain Selling Shareholders propose to enter into an agreement
with the Lead Managers pertaining to the Lead Managers' option to borrow certain
Old Shares from such Selling Shareholders and to enter into a securities loan
upon the exercise of set option as contemplated under Section 4. hereof.
The Company and the Selling Shareholders have caused the Offer Shares, the
Option Shares and the Borrowed Stores to be registered (the "Registration") with
the United States Securities and Exchange Commission (the "SEC") under the
United States Securities Act of 1933, as amended (the "United States Securities
Act") pursuant to a registration statement on Form S-1 (the "Registration
Statement") to permit the Offering to be made in compliance with U.S. securities
laws. The Company and the Lead Managers have furthermore jointly made
application for listing of all Shares of Common Stock of the Company on the
Neuer Markt trading segment of the Frankfurt Stock Exchange ("FSE").
As of the date hereof, the amount of the Company's share capital owned by each
current shareholder (each such current shareholder hereinafter referred to as a
"Shareholder" and the entirety of such current shareholders collectively
referred to as the "Shareholders") is as set forth in the Registration
Statement currently filed with the SEC.
1. Purchase (Zeichnung) of the Offer Shares by the Lead Managers
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 the New Shares, and each Selling Shareholder hereby
agrees to sell up to the number of Old Shares set opposite its/his/her
name in Schedule 1 hereto, severally and not jointly, to the several
Lead Managers, and each of the Lead Managers, severally and not
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jointly, agrees to purchase (zeichnen) from the Company, and to
purchase from each Selling Stockholder, at the purchase price
determined as set forth below, half of the total number of Offer
Shares (i.e. 1,975,000 Offer Shares per Lead Manager).
In addition, the Company grants to the Lead Managers an option to
purchase up to 570,000 Option Shares at the same purchase price per
Share as the Offer Shares, such Option Shares to be issued from the
Company's authorized share capital (the "Option") upon exercise of
this Option by the Lead Managers. Such Option is granted for the
purpose of covering over-allotments in the sale of Offer Shares and is
exercisable as provided in Section 4 hereof. Option Shares shall be
purchased severally for the account of each Lead Manager pro rata
based on the number of Offer Shares purchasable by such Lead Manager
hereunder.
The Lead Managers shall neither be co-owners (Miteigentuemer nach
Bruchteilen) nor joint-owners (Gesamthandseigentuemer) of the Offer
Shares, or the Option Shares or the Borrowed Shares (as defined in
Section 4 hereof) purchasable by the Lead Managers pursuant to this
Agreement.
The purchase price payable by the Lead Managers to the Company and the
Selling Shareholders for the Offer Shares or the Option Shares (the
"Offer Purchase Price" or the "Option Purchase Price", as the case may
be) shall be equal to the Placement Price per share (as defined in
Section 2 hereof), multiplied by the number of Offer Shares or Option
Shares, as the case may be, to be purchased by the Lead Managers, from
which product the amount of costs and commissions payable by each of
the Company and each respective Selling Shareholder pursuant to
Section 7 hereof shall be deducted.
2. Placement Price, Pricing Date
The price at which the Offer Shares and the Borrowed Shares (as
defined in Section 4 hereof), if any, are sold to investors having
offered to purchase such Shares (the "Investors") shall hereby be
determined to be
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EURO ____________ PER SHARE (THE "PLACEMENT PRICE")
The date hereof shall henceforth be referred to as the "Pricing Date".
3. Allotments, Preferential Allotments
The Lead Managers shall be entitled to purchase 3% of the Offer Shares
for their own account.
Up to 190,000 Offer Shares shall be reserved for preferential
allotment to employees of the Company and persons having business
relationships with the Company (the "Preferential Allotment"). The
persons eligible for Preferential Allotment (the "Beneficiaries")
shall receive an allotment of shares at the Placement Price and on the
general terms and conditions of the Offering according to a list of
the Beneficiaries produced by the Company (the "Beneficiary List")
communicated to the Lead Managers on the Pricing Date.
The Lead Managers are neither obliged nor entitled to inquire as to
whether Preferential Allotments to the Beneficiaries included in the
Beneficiary List contravene any statutory or contractual rules. The
Company shall be liable for any damages incurred by the Lead Managers
as a result of a failure of Beneficiaries who do not request to have
the Offer Shares delivered to a securities account in Germany, to pay
for Offer Shares for which they have subscribed.
Under no circumstances shall the arrangement described in this Section
3 constitute a third party beneficiary contract within the meaning of
Section 328 of the German Civil Code for the benefit of any third
party, nor will any Lead Manager be liable to the Company or to any
Beneficiary for any action taken or omitted to be taken by such Lead
Manager in good faith in connection with the Preferential Allotment to
Beneficiaries.
4. Over-Allotments
The Lead Managers' Option (as set forth under Section 1 hereof) will
begin on the first day on which the Company's Shares are traded on FSE
and will expire 30
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calendar days thereafter. The Option may be exercised during such
period by the Lead Managers in whole or in part from time to time by
written notice given to the Company. Such notice shall set forth the
aggregate number of Option Shares as to which the Option is being
exercised.
In order to cover over-allotments prior to the availability of the
Option Shares to the Lead Managers and the admission of such Option
Shares to trading on the FSE, each Shareholder set forth in Schedule 2
hereby agrees to grant the Lead Managers the option to borrow up to
the number of Old Shares set directly opposite that Shareholder's name
(the "Borrowing Option"). The Borrowing Option is hereby exercised
with regard to the number of Borrowed Shares indicated in the second
column set opposite each Shareholder's name on Schedule 2 hereto. The
exercise of the Borrowing Option creates a securities loan (the
"Securities Loan") between the respective Shareholders and the Lead
Managers for the account of the Underwriters for the number of Old
Shares set forth in the second column of Schedule 2 hereof (the
"Borrowed Shares"). The Securities Loan shall be free of charge to the
Lead Managers and have the duration of the period commencing with the
sale of the Offer Shares to the Lead Managers until at the latest six
months after the admission of the Shares to trading on the Neuer Markt
of the FSE.
5. Delivery of Offer Shares and Borrowed Shares to the Lead Managers
Upon execution of this Agreement, the Company and the Selling
Shareholders shall give the Company's registrar and transfer agent
(the "Registrar and Transfer Agent") instructions to transfer the
Offer Shares and the Borrowed Shares to a custody account (the
"Custody Account") held with DG (the "Custodian") in Frankfurt am
Main, which Offer Shares and Borrowed Shares shall be received in such
Custody Account by no later than the business day following the day of
the execution of this Agreement. The Company and the Selling
Shareholders hereby authorize the Custodian to deliver the Offer
Shares, together with any Borrowed Shares which DG has informed the
appropriate Selling Shareholders that it wishes to borrow, to an own
account of DG on behalf of the Lead Managers, which delivery of Offer
Shares shall be made against release of the Offer Purchase Price
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to the respective Selling Shareholders by DG as contemplated under
Section 6 hereof. Such instruction by the Company and the Selling
Shareholders shall become effective on the Settlement Date. The
parties agree that ownership of the Offer Shares and the Borrowed
Shares shall pass to the Lead Managers on the Settlement Date in
exchange for (Zug um Zug) release of the Offer Purchase Price by DG as
contemplated under Section 6 hereof.
For the period of time between the instruction to the Registrar and
Transfer Agent to transfer the Offer Shares and the Borrowed Shares,
if any, to the Custody Account, until the Settlement Date (as defined
in Section 6 hereof), the Company and the Selling Shareholders hereby
waive their right to instruct the Custodian to transfer the Offer
Shares and the Borrowed Shares to any other person than to DG. In the
event that the Offer Purchase Price is not paid to the Company and the
Selling Shareholders on the Settlement Date as contemplated under
Section 6 hereof, the Lead Managers shall immediately return the Offer
Shares and the Borrowed Shares and shall transfer title thereto to the
Company and the Selling Shareholders, respectively.
6. Delivery of Shares to Investors
The Lead Managers undertake to deliver the Offer Shares and the
Borrowed Shares, if any, that have been allocated to Investors, to
such Investors on November 17, 1999 or such other time and date that
the Lead Managers, the Company and the Selling Shareholders may agree.
(the "Settlement Date"). However, the Settlement Date shall always be
the business day directly following the business day on which the
price for the Shares is first quoted on the FSE.
On the Settlement Date, DG shall credit a money account of the Company
with DG in Frankfurt am Main (the "Sonderkonto Kapitalerhoehung POET
Holdings Inc.") with the Offer Purchase Price in EURO allocable to the
New Shares as calculated pursuant to Section 4 hereof.
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Also on the Settlement Date, DG shall release the Offer Purchase Price
allocable to the Old Shares as calculated pursuant to Section 4 hereof
to the accounts of the Selling Shareholders listed in Schedule 1
hereto.
In the event that the Lead Managers exercise all or a portion of the
Option, the Option Shares shall be delivered to DG in the same manner
as the Offer Shares have been delivered two business days after
exercise of the Option against payment of the Option Purchase Price to
the Company's designated account (the "Second Transfer Date").
7. Costs and Commissions
The Selling Shareholders and the Company agree to pay to the Lead
Managers a fee of 5.0% of the aggregate Placement Price of the Offer
Shares and - if and to the extent the Option has been exercised - the
Borrowed Shares, if any, by way of deduction from the Placement Price
as contemplated under Section 4 hereof, (the "Placement Fee"). The
portion of the Placement Fee payable by the Selling Shareholders shall
be allocated among the Selling Shareholders pro rata based on the
number of Old Shares sold by such Selling Shareholder.
The Lead Managers agree among themselves that the Placement Fee shall
be subdivided into three individual components:
- Management Fee: 20% of the Placement Fee - to be allocated
between the Lead Managers pro rata based on the amount of
Offer Shares and Borrowed Shares purchased by each of the
Lead Managers.
- Underwriting Fee: 20% of the Placement Fee - to be allocated
between the Lead Managers pro rata based on the amount of
Offer Shares and Borrowed Shares purchased by each of the
Lead Managers.
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- Selling Fee: 60% of the Placement Fee - to be allocated
between the Lead Managers pro rata based on their respective
allotments as determined by the allotment decisions at the
end of the Book-building Period.
Notwithstanding the foregoing, DG shall receive a praecipuum of DEM
100,000 of the Placement Fee for the technical handling of the
Preferential Allotment programme. This praecipuum does not constitute
an additional fee or commission payable by the Company or the Selling
Shareholders.
The Company shall furthermore pay to the Lead Managers a listing fee
amounting to EURO 125,000 as consideration for the Lead Manager's
efforts in assisting the Company to effect the listing of the Shares
on the FSE and for the assumption of the liability arising pursuant to
the German Stock Exchange Act.
All costs associated with the Offering, the Listing and the
Registration Statement, including, but not limited to, the costs of
(i) setting, printing, distributing and translating the Offering
Documents (including financial statements and exhibits thereto); (ii)
the Offer Invitation; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Shares, including any
stamp or transfer taxes in connection with the original issuance and
sale of the Shares (iv) the printing (or reproduction) and delivery of
this Agreement and all other agreements and documents printed (or
reproduced) and delivered in connection with the Offering, the Listing
or the Registration; (v) fees relating to the Registration and the
Listing; and (vi) preparing and carrying out the roadshow, including
travel costs, and all other costs and expenses incident to the
performance by the Company and the Selling Shareholders of their
obligations hereunder, will be borne by the Company; provided,
however, that the Lead Managers will pay for their own out-of-pocket
expenses (such as travel expenses and the hotel costs of bank
employees) incurred in respect of the roadshow.
The Company will also pay the costs of the Lead Managers' outside
counsel incurred in respect of the Offering, the Listing and the
Registration as well as the Lead Managers' expenses in connection with
plausibility analysis of the
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Company's business plan by PriceWaterhouseCoopers (the "Plausibility
Check") and evaluation of the Company's software technology by VDI/VDE
Technologiezentrum Informationstechnik GmbH (the "Technology Report").
However, such costs shall be limited to a maximum of DEM 250,000 plus
43.33 per cent of the total fees (limited to DM 750,000 excluding VAT,
if any) and costs charged by the Lead Managers' legal counsel.
Excess expenses for the Plausibility Check, the Technology Report, the
legal due diligence and legal counsel not reimbursed as set forth
above will be borne by the Lead Managers pro rata based on their
respective purchasing quotas. In the event that the Offering is not
consummated or completed as contemplated in this Agreement, the
Company shall reimburse the Lead Managers for all costs incurred in
connection with the preparation of the Offering, the Listing and the
Registration Statement up to an aggregate amount of EURO 500,000.
8. Conditions Precedent
The respective obligations of the Lead Managers hereunder are subject
to the accuracy, when made and on each the Pricing Date, the
Settlement Date and the First and the Second Transfer Date, of the
representations and warranties of the Company and the Selling
Stockholders contained herein, to the performance by the Company and
the Selling Stockholders of their respective obligations hereunder,
and to each of the following additional terms and conditions:
8.1 The Company's preferred shares, par value US$ 0.001 per
share (Series A, B, C and D, hereinafter referred to as the
"Preferred Shares"), and the Series B common shares, par
value US$ 0.001 per share (Series A and B, hereinafter
referred to as the "Common Shares"), whether authorized or
outstanding, shall have been converted into one class of
series A Common Stock and shall have been re-designated as
undesignated shares of Common Stock.
8.2 Immediately after the conversion of the Company's entire
share capital into
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Shares, the Company shall deliver to DG (by registered mail
as well as immediately per fax to DG at
0-11-49-69/7447-3685) a copy of the shareholders' resolution
and the board of directors' resolution together with a
confirmation by the Secretary of the Company stating that
such copies represent the said shareholder and board
resolutions and confirming that the conversion into Shares
has occurred by virtue of such resolutions.
8.3 The Company and the Shareholders shall have taken all
necessary action, corporate or otherwise, required to
authorize the issuance of the New Shares and Option Shares
(as defined below), if any, to complete the Offering.
8.4 The Company shall have taken all necessary action, corporate
or otherwise, required to effect the issuance of the New
Shares and to authorize the issuance and sale of the Option
Shares, if any, to complete the Offering. The same
shareholders' rights shall attach to such authorized Shares
as are attached to the Company's current Shares.
8.5 The Company shall have provided the Lead Managers with a
capitalization table as of the Pricing Date displaying the
total number of Shares outstanding, the total number of
warrants and options outstanding as well as the amount of
Shares authorized.
8.6 Immediately after issuing the New Shares, the Company shall
have delivered to DG (by registered mail as well as
immediately per fax to DG at ▇-▇▇-▇▇-▇▇/▇▇▇▇-▇▇▇▇) a copy of
the board of director's resolution to issue the New Shares
together with a confirmation by the Secretary of the Company
stating that such copy represents the said board resolution
and confirming that the New Shares have been issued by
virtue of such resolution.
8.7 The Company and the Selling Shareholders shall have used
their best efforts to provide any other evidence requested
by FSE to effect listing of the Shares.
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8.8 The Company and the Selling Shareholders shall have taken
all actions necessary to have all of the Offer Shares and
any other Shares deliverable to the Lead Managers pursuant
to this Agreement certificated in one or more share
certificates (the "Certificates") and such Certificates
shall have been registered in the Company's share register
in the name of The Depository Trust Company of New York
("DTC") or a nominee of DTC.
8.9 The Offer Shares and the Borrowed Shares shall have been
accepted for deposit by DTC and shall be eligible for
clearance and settlement through the facilities of DTC.
Upon depositing the Certificates with DTC for the benefit of
Deutsche Borse Clearing AG's ("DBC") securities account
with DTC, DBC shall have been instructed to transfer the
Offer Shares in book-entry form to DG's account with DBC and
DG shall have been instructed to transfer the Offer Shares
to the Custody Account on or prior to the Pricing Date, 1999
and such transfer to the Custody Account shall have occurred
on or prior to the business day directly following the
Pricing Date.
8.10 The Selling Shareholders shall have provided DG with the
details of the accounts to which the Offer Purchase Price
shall be released on the Settlement Date. Such details
especially include the name of the account-carrying bank's
correspondence bank in Germany.
8.11 The English language preliminary and final selling
prospectus/company report as well as all amendments thereto
(collectively the "German Prospectus") shall have been filed
with the FSE by the Company and the Lead Managers and the
Registration Statement and all amendments thereto shall have
been filed with the SEC (such German Prospectus and
Registration Statement as well as their respective
amendments collectively hereinafter referred to as the
"Offering Documents"). The Offering Documents shall comply
with all applicable German and US rules and regulations,
respectively. The Company shall have assumed responsibility
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for the correctness and completeness of the Offering
Documents under the German Stock Exchange Act and the United
States Securities Act. The Company shall furthermore have
undertaken to comply with all rules and regulations of Neuer
Markt and the SEC pertaining to the admission of the Shares
to trading on Neuer Markt and the registration of the Offer
Shares with the SEC.
8.12 The Registration Statement shall have been declared
effective by the SEC and no stop order or other order issued
by a governmental agency, domestic or foreign, suspending
the effectiveness of the Registration Statement or
preventing the completion of the Listing or the Offering
shall have been issued and no proceedings for that purpose
shall have been instituted or threatened. The FSE shall have
approved the preliminary German Prospectus for publication.
8.13 The Company and the Shareholders shall have executed and
provided to DG undertakings not to dispose of Shares for a
period of six months from the date of admission of the
shares to Neuer Markt.
8.14 The Company shall have undertaken to FSE to observe the
Rules and Regulations Neuer Markt and to adhere to the
provisions of the German Take-Over Code.
8.15 The FSE shall have admitted all of the Company's Shares to
the regulated market (Geregelter Markt) with quotation in
the Neuer Markt trading segment of FSE and satisfactory
evidence of such actions shall have been provided to the
Lead Managers.
8.16 The Company shall have authorized the Lead Managers to
publish the invitation to Investors to offer to purchase
Offer Shares (the "Offer Invitation," Verkaufsangebot) on
behalf of the Company on the first day of the Book-building
Period. The Offer Invitation shall comply with Rule 134 of
the United States Securities Act and shall have been
published in at least
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one FSE-approved daily newspaper with national circulation
in Germany. The publication of the Offering Documents in
Germany shall have been effectuated either (i) by making
such Offering Documents available at the offices of
specified banks, accompanied by a notice one day prior to
the Invitation Offer in at least one FSE-approved newspaper
(Schalterpublizitaet) with national circulation in Germany
or (ii) by publication of such Offering Documents in at
least one FSE-approved newspaper with national circulation
in Germany.
8.17 On the Pricing Date, as well as on or before any other date
in which a Prospectus, preliminary or final, is dated, the
Company's auditors shall have confirmed to the Lead Managers
in a comfort letter substantially in the form attached
hereto as Appendix A that there have not been any material
adverse changes in the financial position of the Company or
any of its subsidiaries between the date of issuance of the
audit certificate in respect of the latest financial
statements and the date of such comfort letter. The auditors
of the Company shall submit to the Lead Managers a further
confirmation to the same effect on the day prior to the
Second Transfer Date.
8.18 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, U.S. counsel to the
Company, shall have delivered a legal opinion addressed to
the Lead Managers dated the Pricing Date and shall deliver a
second legal opinion dated the Settlement Date, to the
effect set forth in Appendix B attached hereto.
8.19 On the Settlement Date, there shall not have occurred (i)
since the date hereof or since the respective dates as of
which information is given in the Prospectus, any material
adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of
business, and the Lead Managers shall have received a
certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting
officer of the
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Company, dated as of the Pricing Date and again as of the
Settlement Date, to the effect that (w) there has been no
such material adverse change, (x) the representations and
warranties in Section 13 hereof are true and correct with
the same force and effect in all respects as though
expressly made on and as of the Pricing Date and the
Settlement Date respectively, (y) the Company has complied
with all agreements and satisfied all conditions of its part
to be performed or satisfied on or prior to the Pricing Date
and (z) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened, or (ii) such a change in national or
international financial, political or economic conditions or
currency exchange rates or exchange controls as to make it,
in the judgement of the Lead Managers, inadvisable to
proceed with the Offering or (iii) a general suspension or
material limitation on or by, as the case may be, the FSE.
8.20 On the Pricing Date and on the Settlement Date, the Lead
Managers shall have received a certificate of each, or on
behalf of each, Selling Shareholder, dated as of such date,
to the effect that (i) the representations and warranties of
the Selling Shareholder contained in Section 12 hereof are
true and correct in all material respects with the same
force and effect as though expressly made at and as of such
date and (ii) the Selling Shareholder has complied with all
agreements and all conditions on its part to be performed
under this Agreement at or prior to such date.
9. Further Agreements of the Company
9.1 For as long as the Lead Managers act as designated sponsors
for the Company's Shares on Neuer Markt, the Company
undertakes to keep the Lead Managers informed of issuances
of capital stock, options and warrants to receive capital
stock and capital decreases (including the repurchase of
Shares). For as long as the Lead Managers act as designated
sponsors for the Company's Shares on Neuer Markt, the
Company shall keep DG and
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Paribas informed of all events of economic and/or legal
significance in relation to the Shares on an ongoing basis.
9.2 The Company undertakes to (i) furnish to each of the Lead
Managers until the end of the distribution period for the
Offer Shares and the Borrowed Shares, if any, and for six
months thereafter, copies of the Offer Documents in such
quantities as the Lead Managers may from time to time
reasonably request and (ii) in case that at any time prior
to the completion of the initial distribution of the Offer
Shares and the Borrowed Shares, if any, or up to six months
thereafter, any event shall have occurred as a result of
which any Offer Document as then amended or supplemented
would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading, or, if for any other reason it
shall be required under applicable law during such period to
amend or supplement any Offer Document, it will notify the
Lead Managers promptly and confirm such notice in writing,
and will prepare and furnish to each of the Lead Managers,
without charge to any of the Lead Managers, as many copies
as the Lead Managers may, from time to time, reasonably
request of such amendment or supplement to such Offer
Documents, correcting in compliance with the respective laws
and regulations on prospectus liability such statement or
omission or effecting such compliance.
9.3 The Company undertakes to observe the requirements of all
applicable securities laws, including, without limitation,
U.S. federal securities laws, in connection with the
Offering.
9.4 The Company undertakes to observe and fulfill all
regulations, legal provisions and requirements of the Neuer
Markt, as well as to make available in the future all
necessary documents. In addition, the Company undertakes to
comply with all rules and regulations of the United States
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Securities Act applicable to it as a result of the
Registration. In addition, the Company undertakes:
- to comply with the German Take Over Code of the
German Federal Finance Ministry's Stock Exchange
Expert Committee;
- to complete the timely production and publication
of a Company calendar giving details of the dates
of the general shareholders' meeting;
- to carry out at least one briefing of financial
analysts per year;
- to complete the timely production and publication
of quarterly reports with details of business
trends and important financial figures in German
and English;
- to prepare the Company's financial statements
according to U.S. GAAP in German and English and
to publish such statements no later than four
months after the end of the financial year;
- to disclose annually the number of securities in
the Company held by members of the Board of
Directors.
10. Further Agreements of Selling Shareholders
10.1 In addition to any undertaking in relation to the FSE and
the Lead Managers existing as of the date hereof to the
effect not to dispose of any Shares for a period of 12
months after the admission of the Shares to the FSE,
__________ undertake, for a period of six months beginning
from the day after the expiry of such existing undertaking
not to, directly or indirectly, offer Shares, sell Shares,
make announcements with respect to such offers or sales, or
take any other measures that are economically equivalent to
such sale, without the prior written consent of the Lead
Managers. The Lead
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Managers shall be obliged to release __________ from this
undertaking provided that, in the opinion of the Lead
Managers, such parties have engaged an investment bank that
supports demand for the Shares by means of a road show and
research reports as to sufficiently stabilize the share
price despite the disposal of the Shares.
10.2 The Selling Shareholders undertake to consult the Lead
Managers in relation to the terms of, the timetable for, and
the manner of publication of, any announcement of, or other
public disclosure regarding, the sale of the Old Shares
except as required by law and any applicable rules of any
relevant stock exchange. The Selling Shareholders will not
make any such announcement or disclosure without DG's prior
written consent.
11. Further Agreements of the Lead Managers
The Lead Managers undertake to serve as Designated Sponsors within
the meaning of the Rules and Regulations of Neuer Markt. This service
shall be free of charge in the first year after the first day of
trading of the Shares and shall be subject to separate agreements with
each of the Lead Managers. The Lead Managers shall have the right to
purchase up to 3% of the Offer Shares at the Placement Price for their
own account to create a long-position in the Shares which serves to
facilitate their market-making obligations (the Shares purchased
pursuant to such right being referred to as the "Designated Sponsor
Shares"). The Designated Sponsor Shares shall be allocated to the Lead
Managers pro rata based on their respective purchasing quotas.
12. Warranties, Representations and Undertakings of the Selling
Shareholders
12.1 Each of the Selling Shareholders represents, warrants and
undertakes to the Lead Managers that:
18
12.1.1 Such Selling Shareholder, if a corporation, is
duly organized, validly existing and in good
standing under the laws of its jurisdiction of
organization, and has the power and authority to
own its properties and assets and conduct its
business as presently conducted;
12.1.2 Such Selling Shareholder has the full right, power
and authority to enter into this Agreement and to
sell, transfer and deliver the Old Shares to be
sold by such Selling Shareholder hereunder. The
execution and delivery of this Agreement and the
sale and delivery of the Old Shares to be sold by
such Selling Shareholder and the consummation of
the transactions contemplated herein and
compliance by such Selling Shareholder with its
obligations hereunder have been duly authorized by
such Selling Shareholder and do not and will not,
whether with or without the giving of notice or
passage of time or both, conflict with or
constitute a breach of, or default under, or
result in the creation or imposition of any tax,
lien, charge or encumbrance upon the Old Shares to
be sold by such Selling Shareholder or any
property or assets of such Selling Shareholder
pursuant to any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note,
license, lease or other agreement or instrument to
which such Selling Shareholder is a party or to
which such Selling Shareholder is subject, nor
will such action result in any violation of the
provisions of the charter or by-laws or other
organizational instrument of such Selling
Shareholder, if applicable, or any applicable
treaty, law, statute, rule, regulation, judgment,
order, writ or decree of any government,
government instrumentality or court, domestic or
foreign, having jurisdiction over such Selling
Shareholder or any of its properties;
12.1.3 Such Selling Shareholder has complied, and will
comply, in all respects, with the provisions of
U.S. and German law and the
19
articles of incorporation of the Company
concerning the requirements for holding or
disposing of certain percentages of the share
capital of the Company, together with all
applicable German and U.S. stock exchange and
regulatory authority rules and regulations;
12.1.4 Such Selling Shareholder has and will have good,
valid and marketable title to the Old Shares to be
sold and to the Borrowed Shares to be lent by such
Selling Shareholder hereunder (such Old Shares
being fully paid), free and clear of any security
interest, mortgage, pledge, lien, charge, claim,
equity or encumbrance of any kind, other than
pursuant to this Agreement; and upon delivery of
such Old Shares and the Borrowed Shares, assuming
each such Lead Manager has no notice of any
adverse claim, each of the Lead Managers will
receive good, valid and marketable title to the
Old Shares purchased and the Borrowed Shares
borrowed by it from such Selling Shareholder, free
and clear of any security interest, mortgage,
pledge, lien, charge, claim, equity or encumbrance
of any kind; and there is no other conflicting
right, contingent or otherwise, of any person to
purchase or be offered for purchase any of the Old
Shares to be delivered by such Selling Shareholder
in connection with this Agreement;
12.1.5 This Agreement has been duly authorized, executed
and delivered by such Selling Shareholder and
constitutes the legal, valid and binding
obligation of such Selling Shareholder enforceable
in accordance with its terms;
12.1.6 The Old Shares and the Borrowed Shares, if any,
have been transferred to DG on the Pricing Date,
together with all rights, dividends, distributions
and other benefits attaching to them on
20
such Pricing Date, with full title guarantee and
free from, and not in breach of, any charges,
liens or other encumbrances or any pre-emptive or
other rights limiting their transferability;
12.1.7 The Old Shares owned by such Selling Shareholder
are subject to the interests of the Lead Managers
hereunder; the obligations of such Selling
Shareholder hereunder shall not be terminated by
operation of law, whether in the case of a
partnership or corporation, by the dissolution of
such partnership or corporation, or by the
occurrence of any other event; and if such Selling
Shareholder should be dissolved, or if any other
such event should occur, before the delivery of
the Old Shares hereunder, the Old Shares shall be
delivered by or on behalf of such Selling
Shareholder in accordance with the terms and
conditions of this Agreement;
12.1.8 None of the Selling Shareholders, nor any of their
affiliates, nor any person acting on their behalf,
has taken or will take, directly or indirectly,
any action designed to cause or to result in, or
that has constituted or which might reasonably be
expected to cause or result in, the stabilization
in violation of applicable laws or manipulation of
the price of any security of the Company to
facilitate the sale or the resale of the Offer
Shares;
12.1.9 No filing with, or consent, approval,
authorization, order, registration, qualification
or decree of, any court or governmental
authorization or agency, domestic or foreign, is
necessary or required for the performance by such
Selling Shareholder of its obligations hereunder
or in connection with the sale, lending and
delivery of the Old Shares hereunder or the
consummation of the transactions contemplated by
this Agreement, except such as may have previously
been made or obtained;
21
12.1.10 Such Selling Shareholder has no reason to believe
that the representations and warranties of the
Company contained in Section 13 are not true and
correct.
12.2 The commitments of the Lead Managers hereunder are being
made on the basis of the representations, warranties and
undertakings set out above. The Selling Shareholders
undertake that each of them will fully indemnify each of the
Lead Managers against any and all losses, liabilities,
costs, claims, charges, actions, proceedings, damages,
expenses or demands which any of them may incur or which may
be made against a Lead Manager as a result of, or in
connection with, any breach or alleged breach by such
Selling Shareholder of any of its representations,
warranties and undertakings set out above.
12.3 The Selling Shareholders' obligations in respect of the
above representations, warranties, undertakings and
indemnity shall be several and not joint and will continue
in full force and effect after the Settlement Date
notwithstanding the performance of this Agreement, the
completion of the sale of the Offer Shares, the completion
of the Registration or any investigation of the matters to
which they relate by the Lead Managers or on the Lead
Managers' behalf.
12.4 The Selling Shareholders who, at the time of the Offering,
are represented on the board of directors of the Company as
well as such representatives who are Selling Shareholders
furthermore represent, warrant and undertake to the Lead
Managers that, on the date on which the SEC declares
effective the Registration Statement (the "Effective
Date"), such Registration Statement will conform in all
material respects to the applicable requirements of the
United States Securities Act and the rules and regulations
thereunder and will not include any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein not misleading. At the time of filing of
the Prospectus pursuant to Rule 424(b) or (if no such filing
22
is required) at the Effective Date of the Registration
Statement in which the Prospectus is included, the
Registration Statement and the Prospectus will conform in
all material respects to the requirements of the United
States Securities Act and the rules and regulations
thereunder, and none of such documents will include any
untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein not misleading; provided, however, that such Selling
Shareholders make no undertaking as to the information
contained in or omitted from the Registration Statement or
the Prospectus in reliance upon and in conformity with
information furnished herein or in writing to the Company by
or on behalf of any Lead Manager specifically for inclusion
in the Registration Statement or the Prospectus.
12.5 The Selling Shareholders who, at the time of the Offering,
are represented on the board of directors of the Company as
well as such representatives who are Selling Shareholders
furthermore represent, warrant and undertake to the Lead
Managers that, on the date on which a German Prospectus is
published, such German Prospectus will not include any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein not misleading;
provided, however, that such Selling Shareholder makes no
undertaking as to the information contained in or omitted
from the German Prospectus in reliance upon and in
conformity with information furnished herein or in writing
to the Company by or on behalf of any Lead Manager
specifically for inclusion in the German Prospectus.
The representations, undertakings and warranties set out in this
Section 12 shall be deemed to have been given on the Pricing Date and
be repeated on the Settlement Date and the Second Transfer Date, if
any.
23
13. Warranties, Representations and Undertakings of the Company
13.1 The Company represents, warrants and undertakes to the Lead
Managers that:
13.1.1 The Company has been duly organized and is validly
existing as a corporation in good standing under
the laws of the State of Delaware and has
corporate power and authority to own, lease and
operate its properties and to conduct its business
and to enter into and perform its obligations
under this Agreement; and the Company is duly
qualified as a foreign corporation to transact
business and is in good standing in each other
jurisdiction in which such qualification is
required, whether by reason of the ownership or
leasing of property or the conduct of business,
except where the failure so to qualify or to be in
good standing would not have a material adverse
effect on the condition, financial or otherwise,
or on the earnings, business affairs or business
prospects of the Company and its subsidiaries
considered as one enterprise, whether or not
arising in the ordinary course of business (a
"Material Adverse Effect");
13.1.2 Each subsidiary of the Company (each a
"Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is
validly existing as a corporation in good standing
under the laws of the jurisdiction of its
incorporation, has corporate power and authority
to own, lease and operate its properties and to
conduct its business and is duly qualified as a
foreign corporation to transact business and is in
good standing in each jurisdiction in which such
qualification is required, whether by reason of
the ownership or leasing of property or the
conduct of business, except where the failure so
to qualify or to be in good standing would not
result in a Material Adverse Effect; all of the
issued and outstanding capital stock of each such
Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is
owned by the Company, directly or through
24
subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance,
claim or equity; none of the outstanding shares of
capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of
any securityholder of such Subsidiary;
13.1.3 The shares of issued and outstanding capital stock
of the Company, including the Old Shares to be
purchased or borrowed by the Lead Managers from
the Selling Shareholders, have been duly
authorized and validly issued and are fully paid
and non-assessable; none of the outstanding
Shares, including the Old Shares to be purchased
or borrowed by the Lead Managers from the Selling
Shareholders, was issued in violation of the
preemptive or other similar rights of any
securityholder of the Company;
13.1.4 The Company has full power and authority to enter
into, and perform its obligations under, this
Agreement and such entry into, and performance of
its obligations under, this Agreement has been
duly authorized by all necessary corporate or
other action;
13.1.5 As and when required by the German Securities
Trading Act (Wertpapierhandelsgesetz), the Company
has complied, and will comply, in all respects,
with the provisions of U.S. and German law and the
articles of incorporation of the Company
concerning the requirements for holding or
disposing of certain percentages of the share
capital of the Company, together with all
applicable stock exchange and German regulatory
authority rules and regulations;
25
13.1.6 This Agreement has been duly executed and
delivered by the Company and constitutes a legal,
valid and binding obligation of the Company
enforceable against it in accordance with its
terms;
13.1.7 Except as set forth in the Prospectus, 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 United States
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 registered pursuant to the
Registration Statement or in any securities being
registered pursuant to any other registration
statement filed by the Company under the United
States Securities Act;
13.1.8 The Company will consult the Lead Managers in
relation to the terms of, the timetable for, and
the manner of publication of, any announcement of,
or other public disclosure regarding, the
Offering, the Listing and the Registration except
as required by law and any applicable rules of any
relevant stock exchange. The Company will not make
any such announcement or disclosure without DG's
prior written consent. Any public announcement of
the sale of the Offer Shares will refer to DG and
PB as the Joint Book Runners and Lead Managers;
13.1.9 The New Shares have been duly authorized for
issuance and sale to the Lead Managers pursuant to
this Agreement and, when issued and delivered by
the Company to the Custody Account, will be
validly issued and fully paid and non-assessable;
13.1.10 Neither the Company nor any of its subsidiaries is
in violation of its charter or by-laws or in
default in the performance or observance of any
obligation, agreement or condition contained
26
in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which
it or any of them may be bound, or to which any of
the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements
and Instruments") except for such defaults that
would not result in a Material Adverse Effect, and
the execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated herein (including the issuance and
sale of the New Shares and the use of the proceeds
from the sale of the New Shares) and compliance by
the Company with its obligations hereunder have
been duly authorized by all necessary corporate
action and do not and will not, whether with or
without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below)
under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property
or assets of the Company or any subsidiary
pursuant to, the Agreements and Instruments
(except for such conflicts, breaches or defaults
or liens that would not result in a Material
Adverse Effect), nor will such action result in
any violation of the provisions of the articles of
incorporation or by-laws of the Company or any
subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any
government, government instrumentality or court,
domestic or foreign, having jurisdiction over the
Company or any subsidiary or any of their assets,
properties or operations. As used herein, a
"Repayment Event" means any event or condition
which gives the holder of any note, debenture or
other evidence of indebtedness (or any person
action on such holder's behalf) the right to
require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the
Company or any subsidiary;
27
13.1.11 There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or
governmental agency or body, domestic or foreign,
now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or
any subsidiary, which is required to be disclosed
in the Prospectus and is not so disclosed, or
which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the
properties or assets thereof or the consummation
of the transactions contemplated in this Agreement
or the performance by the Company of its
obligations hereunder; the aggregate of all
pending legal or governmental proceedings to which
the Company or any subsidiary is a party or of
which any of their respective property or assets
is the subject, including ordinary routine
litigation incidental to the business, could not
reasonably be expected to result in a Material
Adverse Effect;
13.1.12 The Company and its subsidiaries own, possess, can
acquire on reasonable terms or have the benefit or
use of all material patents, licenses, trade
secrets, trademarks, trade names and other rights
to inventions, know-how, copyrights, confidential
information and other intellectual property
(collectively, "intellectual property rights")
currently employed by them in connection with the
conduct of the businesses now operated by them,
and there are no unresolved assertions that the
Company or any of its subsidiaries has infringed
the intellectual property rights of others that,
if determined adversely to the Company or any of
its subsidiaries, could, individually or in the
aggregate, have a Material Adverse Effect;
13.1.13 No filing with, or authorization, approval,
consent, license, order, registration,
qualification or decree of, any court or
governmental authority or agency, either in the
United States, Germany or
28
elsewhere, is necessary or required for the
performance by the Company of its obligations
hereunder, in connection with the Offering, the
Listing, the Registration, issuance or sale of the
Shares hereunder or the consummation of the
transactions contemplated by this Agreement,
except such as have been already obtained or will
be obtained prior to the Offering, Listing or
Registration, as the case may be;
13.1.14 The Company and its subsidiaries possess such
permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or
bodies necessary to conduct the business now
operated by them; the Company and its subsidiaries
are in compliance with the terms and conditions of
all such Governmental Licenses, except where the
failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of
the Governmental Licenses are in full force and
effect except for those Governmental Licenses the
failure of which to be in full force and effect
would not have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries
has received any notice of proceedings relating to
the revocation or modification of any such
Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a
Material Adverse Effect;
13.1.15 The Company and its subsidiaries have good and
marketable title to all real property owned by the
Company and its subsidiaries and good title to all
other properties owned by them, in each case, free
and clear of all mortgages, pledges, liens,
security interest, claims, restrictions or
encumbrances of any kind except such as do not,
singly or in the aggregate, materially affect the
value of such property and do not interfere with
the use made and
29
proposed to be made of such property by the
Company or any of its subsidiaries; and all of the
leases and subleases material to the business, the
Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of
its subsidiaries holds properties described in the
Prospectus, are in full force and effect, and
neither the Company nor any subsidiary has any
notice of any material claim of any sort that has
been asserted by anyone adverse to the rights of
the Company or any subsidiary under any of the
leases or subleases mentioned above, or affecting
or questioning the rights of the Company or such
subsidiaries to the continued possession of the
leased or subleased premises under any such lease
or sublease;
13.1.16 Deloitte & Touche LLP, who have audited or will
audit certain financial statements of the Company
and its consolidated subsidiaries, are independent
accountants as required by the United States
Securities Act and the rules and regulations
thereunder;
13.1.17 The Company makes and keeps accurate books and
records and maintains internal accounting controls
which provide reasonable assurance that (A)
transactions are executed in accordance with
management's authorization, (B) transactions are
recorded as necessary to permit preparation of its
financial statements and to maintain
accountability for its assets, (C) access to its
assets is permitted only in accordance with
management's authorization and (D) the reported
accountability for its assets is compared with
existing assets at reasonable intervals;
13.1.18 Neither the Company nor any of its subsidiaries,
nor to the knowledge of the Company or its
subsidiaries, any director, officer, agent,
employee or other person associated with or acting
on behalf of the Company or any of its
subsidiaries, has used any
30
corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense
relating to political activity; made any direct or
indirect unlawful payment to any foreign or
domestic government official or employee from
corporate funds; or violated or is in violation of
any provision of the United States Foreign Corrupt
Practices Act of 1977;
13.1.19 The Company and each of its subsidiaries carry, or
are covered by, insurance in such amounts and
covering such risks as is, in the opinion of the
Company, adequate for the conduct of their
respective businesses and the value of their
respective properties and assets, and as is
customary for companies engaged in similar
businesses in similar industries or as required by
law or pursuant to agreements to which the Company
or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound;
13.1.20 The Company is not an "investment company" under,
and as such term is defined in, the U.S.
Investment Company Act of 1940;
13.1.21 Neither the Company nor any of its affiliates (as
defined in rule 405 under the United States
Securities Act), nor any person acting on their
behalf, has taken or will take, directly or
indirectly, any action designed to cause or to
result in, or that has constituted or which might
reasonably be expected to cause or result in, the
stabilization in violation of applicable laws or
manipulation of the price of any security of the
Company to facilitate the sale or resale of the
Shares;
13.1.22 The Company has filed all foreign, federal, state
and local tax returns that are required to be
filed or has requested extensions thereof (except
in any case in which the failure to so file would
31
not have a Material Adverse Effect) and has paid
all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and
payable, except for any such assessment, fine or
penalty that is currently being contested in good
faith or as would not have a Material Adverse
Effect;
13.1.23 The Company has not included any persons in the
Beneficiary List who may have an influence on
public opinion (e.g. journalists, financial
analysts etc.) or whose participation in the
Preferential Allotment could create the appearance
of favoritism or of impropriety (e.g. public
servants);
13.1.24 The Company has reviewed its operations and that
of its subsidiaries to evaluate the extent to
which the business or operations of the Company or
any of its subsidiaries will be affected by the
Year 2000 Problem. In addition, the Company has
until the date hereof verified and continues to
verify the Year 2000 readiness of its suppliers as
well as third party service providers. As a result
of such reviews, to date the Company has no reason
to believe, and does not believe, that the Year
2000 Problem will have a material adverse change,
or any development involving a prospective
material adverse change, in or affecting the
general affairs, management, financial position,
shareholders' equity or results of operations of
the Company and its subsidiaries or result in any
material loss or interference with the Company's
business or operations. The "Year 2000 Problem" as
used herein means any risk that computer hardware
or software used in the receipt, transmission,
processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in
the operation of mechanical or electrical systems
of any kind will not, in the case of dates or time
periods occurring after December
32
31, 1999, function at least as effectively as in
the case of dates or time periods occurring prior
to January 1, 2000.
13.2 The Company has filed with the SEC a Registration Statement
on Form S-1, including a related preliminary prospectus, for
the registration under the United States Securities Act of
the Shares and will use its best efforts to cause such
Registration Statement to become effective. The Company may
be required to file one or more amendments thereto, each of
which will be furnished to the Lead Managers. The Company
will file with the SEC either (1) prior to the Effective
Date of such Registration Statement, a further amendment to
such Registration Statement (including the form of final
prospectus) or (2) after the Effective Date of such
Registration Statement, a final prospectus in accordance
with Rules 430A and 424(b). In the case of clause (2), the
Company will include in such Registration Statement, as
amended at the Effective Date, all information (other than
Rule 430A information) required by the United States
Securities Act and the rules thereunder to be included in
such Registration Statement and the Prospectus. As filed,
such amendment and form of final prospectus, or such final
prospectus, shall contain all Rule 430A information,
together with all other such required information, and,
except to the extent the Lead Managers shall agree to a
modification, shall be in all substantive respects in the
form furnished to the Lead Managers prior to the Pricing
Date or, to the extent not completed at the Pricing Date,
shall contain only such specific additional information and
other changes (beyond that contained in the latest
preliminary prospectus) as the Company has advised the Lead
Managers, prior to the Pricing Date, will be included or
made therein. "Preliminary Prospectus" means each prospectus
included in such Registration Statement, or amendments
thereof, before it becomes effective under the United States
Securities Act and any prospectus filed by the Company with
the consent of the Lead Managers pursuant to Rule 424(a) of
the rules and regulations under the United States Securities
Act, and
33
"Prospectus" means such final prospectus, with any changes
thereto made by the Company with the consent of the Lead
Managers.
On the Effective Date, the Registration Statement will
conform in all material respects to the applicable
requirements of the United States Securities Act and the
rules and regulations thereunder and will not include any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein not misleading. At the
time of filing of the Prospectus pursuant to Rule 424(b) or
(if no such filing is required) at the Effective Date of the
Registration Statement in which the Prospectus is included,
the Registration Statement and the Prospectus will conform
in all material respects to the requirements of the United
States Securities Act and the rules and regulations
thereunder, and none of such documents will include any
untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein not misleading; provided, however, that the Company
makes no undertaking as to the information contained in or
omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with information furnished
herein or in writing to the Company by or on behalf of any
Lead Manager specifically for inclusion in the Registration
Statement or the Prospectus;
13.3 The Company will comply with the requirements of Rule 430A
or Rule 424, as applicable, and will notify the Lead
Managers immediately, and confirm the notice in writing, (i)
when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the SEC, (iii) of
any request by the SEC for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus
or for additional information, and (iv) of the issuance by
the SEC of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Shares for offering
or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will
34
take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under
Rule 424(b) was received for filing by the SEC and, in the
event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the
earliest possible moment.
13.4 The Company has prepared and filed, together with the Lead
Managers, with the FSE the preliminary German prospectus to
obtain listing of the Shares on the FSE as required by
applicable German law. The Company may be required to file
one or more amendments thereto together with the Lead
Managers.
On the date on which such preliminary and final German
Prospectus and any amendment thereto have been or will be
published, such published German Prospectus and amendments
thereto have not and will not include any untrue statement
of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make
the statements therein not misleading; provided, however,
that the Company makes no undertaking as to the information
contained in or omitted from the German Prospectus and the
amendments thereto in reliance upon and in conformity with
information furnished herein or in writing to the Company by
or on behalf of any Lead Manager specifically for inclusion
in such documents.
13.5 The Company represents that the consolidated historical
financial statements and schedules of the Company and its
consolidated subsidiaries included in the Prospectus and the
Registration Statement present fairly in all material
respects the financial condition, results of operations and
cash flows of the Company as of the dates and for the
periods indicated, comply as to form with the applicable
accounting requirements of the United States Securities Act
and the Neuer Markt and are prepared in conformity with U.S.
generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as
otherwise noted therein). The
35
selected financial data set forth in the Prospectus and
Registration Statement fairly present, on the basis to be
stated in the Prospectus and the Registration Statement, the
information included therein.
13.6 As soon as practicable, but not later than the Availability
Date (as defined below), the Company will make generally
available to its Shareholders an earnings statement covering
a period of at least 12 months beginning after the Effective
Date of the Registration Statement which will satisfy the
provisions of Section 11(a) of the United States Securities
Act. For the purpose of the preceding sentence,
"Availability Date" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that
includes the Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal
year, "Availability Date" means the 90th day after the end
of such fourth fiscal quarter.
13.7 The Company will furnish to the Lead Managers and to counsel
to the Lead Managers copies of the Registration Statement
(two of which will be signed and will include all exhibits),
the Preliminary Prospectus, and, so long as delivery of a
prospectus relating to the Offer Shares is required to be
delivered under the United States Securities Act in
connection with sales by any Lead Manager or dealer, the
Prospectus, and all amendments and supplements to such
documents, in each case in such quantities as the Lead
Managers may request. The Prospectus shall be so furnished
on or prior to 3:00 P.M., German time, on the business day
following the later of the Pricing Date or the Effective
Date of the Registration Statement, or at such other time as
the Lead Managers shall consent. All other such documents
shall be so furnished as soon as available. The Company will
pay the expenses of printing and distributing to the Lead
Managers all such documents.
13.8 The Company shall use the proceeds from the Offering of New
Shares payable to it in the manner and in the priorities to
be described under the heading "Use of Proceeds" in the
Prospectus.
36
13.9 The Company undertakes that it will notify the Lead Managers
immediately of any adverse change in, or affecting, the
general affairs, management, financial position,
shareholders equity or results of operation of the Company
and its subsidiaries taken as a whole, which would be likely
to prejudice materially the sale of the Shares by the Lead
Managers.
The representations, undertakings and warranties set out in
this Section 13 shall be deemed to have been given on the
Pricing Date and be repeated on the Settlement Date and the
Second Transfer Date, if any.
13.10 The commitment of the Lead Managers hereunder is being made
on the basis of the representations, warranties and
undertakings set out above. The Company undertakes that it
will fully indemnify each of the Lead Managers against any
and all losses, liabilities, costs, claims, charges,
actions, proceedings, damages, expenses or demands which any
of the Lead Managers may incur or which may be made against
any Lead Manager as a result of, or in connection with, any
breach or alleged breach by the Company or any of its
representations, warranties and undertakings set out above;
the Company will further indemnify and hold harmless the
Lead Managers against any documentary, stamp or similar
issuance or transfer tax, including any interest and
penalties, on the creation, issuance and sale of the Shares
and on the execution and delivery of this Agreement payable
pursuant to United States law.
13.11 The Company's obligations in respect of the above
representations, warranties, undertakings and indemnity will
continue in full force and effect after the Settlement Date
notwithstanding the performance of this Agreement, the
completion of the sale of the Offer Shares, the completion
of the Registration or any investigation of the matters to
which they relate by the Lead Managers or on the Lead
Managers' behalf.
37
14. Liability
The liability of the Lead Managers under this Agreement shall be
several and not joint and shall be limited to ill intent and gross
negligence.
15. Power of Attorney
15.1 All declarations and communications of the Lead Managers
relating to this Agreement shall only be valid for and
against all other parties to this Agreement if made by DG as
representative of the Lead Managers to the Company or the
representative of the Selling Shareholders. DG is released
from the restrictions of Section 181 of the German Civil
Code.
The Lead Managers agree among themselves that DG's authority
to make such declarations and communications shall only
exist if PB has consented to such declarations and that the
Company and the Selling Shareholders may rely without
inquiry on such declarations and communications made by DG.
Further, in order for the parties to fulfill their
obligations relating to the procedures to admit the Shares
to trading on the FSE, related proceedings, and statutory
publications hereunder, DG is authorized to deliver
declarations or information in the name of the Company, the
Selling Shareholders and the Lead Managers.
15.2 In connection with the execution of this Agreement, the
Selling Shareholders have appointed ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ as
their joint representative who personally warrants to have
full power and authority to enter into this Agreement on
behalf of the Selling Shareholders.
16. Notices, Service of Process
16.1 All statements, requests, notices and agreements hereunder
shall be in writing, and:
38
16.1.1 if to the Lead managers, shall be delivered or
sent by mail, telex or facsimile transmission to
DG BANK Deutsche Genossenschaftsbank AG, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Investment Banking
Department (Fax:▇▇▇-▇▇-▇▇▇▇-▇▇▇▇), with a copy to
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Investment Banking
Department (Fax: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇);
16.1.2 if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to the
address of the Company set forth in the
Registration Statement, Attention: ▇▇. ▇▇▇▇
▇▇▇▇▇▇▇ (Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇);
16.1.3 if to any Selling Shareholder, shall be delivered
or sent by mail, telex or facsimile transmission
to _________________ at the following address:
16.2 In connection with the Offering, the Company and each of the
Selling Shareholders have appointed POET Software GmbH,
▇▇▇▇▇▇▇▇▇▇ ▇-▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ as agent for the
service of process (Zustellungsbevollmaechtigter) in Germany
for any services of process regarding contractual or other
obligations of the Company and the Selling Shareholders in
relation to the Lead Managers.
17. Indemnification and Contribution
17.1 The Company and its principal operating subsidiaries, POET
Software Corp. and POET Software GmbH (together the
"Principal Subsidiaries"), jointly and severally, shall
indemnify and hold harmless each Lead Manager, its officers
and employees and each person, if any, who controls any Lead
Manager within the meaning of the United States 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
Shares), to which that Lead Manager, officer, employee or
controlling person may become subject, under the German
Stock Exchange Act, the United States
39
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 (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or (B) in any blue sky
application or other document prepared or executed by the
Company (or based upon any written information furnished by
the Company) specifically for the purpose of qualifying any
or all of the Shares under the securities laws of any state
or other jurisdiction (any such application, document or
information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to
state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to
make the statements therein not misleading or (iii) any act
or failure to act, or any alleged act or failure to act, by
any Lead Manager in connection with, or relating in any
manner to, the Shares 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 and the Principal Subsidiaries 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
judgement 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 such Lead Manager through its gross negligence
or willful misconduct), and shall reimburse each Lead
Manager and each such officer, employee and controlling
person promptly upon demand for any reasonable legal or
other expenses reasonably incurred by that Lead Manager,
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
and the Principal Subsidiaries 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
40
statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, or in
any Blue Sky Application in reliance upon and in conformity
with the written information furnished to the Company by or
on behalf of any Lead Manager specifically for inclusion
therein and described in Section 17.6. The foregoing
indemnity agreement is in addition to any liability which
the Company and the Principal Subsidiaries may otherwise
have to any Lead Manager or to any officer, employee or
controlling person of that Lead Manager.
17.2 The Selling Shareholders, severally in proportion to the
number of Old Shares to be sold by each of them hereunder,
shall indemnify and hold harmless each Lead Manager, its
officers and employees and each person, if any, who controls
any Lead Manager within the meaning of the United States
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 Shares), to which that Lead Manager, officer, employee or
controlling person may become subject, under the German
Stock Exchange Act, the United States 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 any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or
supplement thereto, or (ii) the omission or alleged omission
to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated
therein or necessary to make the statements therein 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 written information furnished to the Company by or on
behalf of the Selling Shareholders specifically for
inclusion therein, and shall reimburse each Lead Manager,
its officers and employees and each such controlling person
for any legal or other expenses
41
reasonably incurred by that Lead Manager, its officers,
employees 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 Selling Shareholders
may otherwise have to any Lead Manager or any officer,
employee or controlling person of that Lead Manager.
17.3 Each Lead Manager, 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 United
States 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
United States 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 (A) in any
Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any amendment or supplement thereto, or
(B) in any Blue Sky Application or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein
or necessary to make the statements therein 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 that Lead Manager specifically for inclusion
therein and described in Section 17.6, and shall reimburse
the Company and any such director, officer or controlling
person for any legal or other expenses reasonably incurred
by the Company 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
42
incurred. The foregoing indemnity agreement is in addition
to any liability which any Lead Manager may otherwise have
to the Company or any such director, officer or controlling
person.
17.4 Promptly after receipt by an indemnified party under this
Section 17 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 17, 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 17 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 17. 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 reasonably
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 17 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, that the Lead Managers
shall have the right to employ counsel to represent jointly
the Lead Managers and their respective officers, employees
and controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may
be sought by the Lead Managers against the Company and the
Principal Subsidiaries or any Selling Shareholders under
this Section 17 if, in the reasonable judgment of the Lead
Managers, it is advisable for the Lead Managers, officers,
employees and controlling persons to be jointly represented
by separate counsel, and in that event the
43
fees and expenses of such separate counsel shall be paid by
the Company, the Principal Subsidiaries and the Selling
Shareholders. 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 includes an unconditional release of each
indemnified party from all liability arising out of such
claim, action, suit or proceeding, 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 or liability by
reason of such settlement or judgment.
17.5 If the indemnification provided for in this Section 17 shall
for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Sections 17.1, 17.2 or
17.3 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, (i) in
such proportion as shall be appropriate to reflect the
relative benefits received by the Company, the Principal
Subsidiaries, and the Selling Shareholders on the one hand
and the Lead Managers on the other from the Offering of the
Shares or (ii) 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, the Principal Subsidiaries, and the Selling
Shareholders on the one hand and the Lead Managers on the
other with respect to the
44
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, the Principal
Subsidiaries, and the Selling Shareholders on the one hand
and the Lead Managers 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 Shares purchased
under this Agreement (before deducting expenses) received by
the Company, the Principal Subsidiaries, and the Selling
Shareholders, on the one hand, and the total underwriting
discounts, commissions and fees received by the Lead
Managers with respect to the Shares purchased under this
Agreement, on the other hand, bear to the total gross
proceeds from the offering of the Shares under this
Agreement, in each case as set forth in the table on the
cover page of the Prospectus. 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, the Principal Subsidiaries, the
Selling Shareholders or the Lead Managers, the intent of the
parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or
omission. For purposes of the preceding two sentences, the
net proceeds deemed to be received by the Company shall be
deemed to be also for the benefit of the Principal
Subsidiaries and information supplied by the Company shall
also be deemed to have been supplied by the Principal
Subsidiaries. The Company, the Principal Subsidiaries, the
Selling Shareholders and the Lead Managers agree that it
would not be just and equitable if contributions pursuant to
this Section 17.5 were to be determined by pro rata
allocation (even if the Lead Managers were treated as one
entity for such purpose) 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 17.5 shall be deemed to
include, for purposes of this Section 17.5, any legal or
other expenses reasonably incurred by such indemnified party
in connection with
45
investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 17.5, no Lead
Manager shall be required to contribute any amount in excess
of the amount by which the amount of any damages which such
Lead Manager has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission
or alleged omission exceeds the amount by which the total
price at which the Shares underwritten by it and distributed
to the public was offered to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the United States Securities Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Lead Managers' obligations
to contribute as provided in this Section 17.5 are several
in proportion to their respective underwriting obligations
and not joint.
17.6 The Lead Managers severally confirm that the statements with
respect to the Offering of the Shares set forth on the cover
page of, and under the caption "Underwriting",
"Responsibility for the Contents of this Prospectus", "The
Offering", "Description of Capital Stock-German Take-Over
Code", "The German Equity Market", "German Tax Matters"
"Clearing and Transferability of Shares" (as far as such
section pertains to German clearing procedures) in the
Prospectus are correct and constitute the only information
furnished in writing to the Company by or on behalf of the
Lead Managers specifically for inclusion in the Registration
Statement and the Prospectus.
18. Miscellaneous
18.1 The parties shall keep information relating to, or disclosed
in the Offering and the Registration, strictly confidential
except to the extent publication of such information is
required by the SEC, FSE or other governmental agency.
46
18.2 Modifications and amendments of this Agreement must be in
writing unless there is another statutory form requirement.
The foregoing applies also to the modification or deletion
of this provision.
18.3 Should any of the terms of this contract be entirely or
partially invalid or become invalid, this shall not effect
the validity of any other terms of the contract. The parties
will be deemed to have agreed upon a term or condition that
reflects as closely as possible the economic objectives
aimed at by the parties when entering into the invalid term
or condition.
18.4 THIS CONTRACT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF GERMANY.
Place of performance and - as far as permitted by applicable
statute - forum for all disputes arising in connection with
this agreement shall be Frankfurt am Main.
We would request you to countersign the second copy of this offer as a sign of
your agreement.
Yours Sincerely,
--------------------------------- --------------------------
DG BANK PARIBAS
DEUTSCHE GENOSSENSCHAFTSBANK AG
----------------------------------
POET HOLDINGS INC.
--------------------------------- --------------------------
POET SOFTWARE CORP. POET SOFTWARE GMBH
--------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ (AS JOINT REPRESENTATIVE OF THE SELLING SHAREHOLDERS)
47
Schedule 1
[TABLE OF SELLING SHAREHOLDERS AND SELLING SHAREHOLDERS' ACCOUNTS, SUCH ACCOUNT
DETAILS TO INCLUDE INFORMATION ON THE IDENTITY OF THE ACCOUNT-CARRYING BANK'S
GERMAN CORRESPONDENCE BANK - WSGR]
48
Schedule 2
SHAREHOLDERS TO PROVIDE BORROWED SHARES
SHAREHOLDER NAME VOLUME OF BORROWING OPTION EXERCISED
BY
LEAD MANAGERS
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ 570,000
49
Annex A
[FORM OF AUDITOR'S COMFORT LETTER.]
50
Annex B
[FORM OF WSGR LEGAL OPINION.]