Exhibit 1.2
1,100,000 shares
MAGINET CORPORATION
Common Stock
INTERNATIONAL UNDERWRITING AGREEMENT
------------------------------------
December ___, 1996
▇▇▇▇▇▇ BROTHERS INTERNATIONAL (EUROPE)
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
As Lead Managers of the several
International Managers named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers International (Europe)
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Dear Sirs:
MagiNet Corporation, a Delaware corporation (the "Company"), proposes
to sell 1,100,000 shares (the "Firm Stock") of the Company's Common Stock, par
value $.001 per share (the "Common Stock"), to the International Managers named
in Schedule 1 hereto (the "International Managers"). In addition, the Company
proposes to grant to the International Managers an option to purchase up to an
additional 165,000 shares of the Common Stock on the terms and for the purposes
set forth in Section 3 (the "Option Stock"). The Firm Stock and the Option
Stock, if purchased, are hereinafter collectively called the "Stock." This is
to confirm the agreement concerning the purchase of the Stock from the Company
by the International Managers.
It is understood by all parties that the Company is concurrently
entering into an agreement dated the date hereof (the "U.S. Underwriting
Agreement") providing for the sale by the Company of 5,060,000 shares of Common
Stock (including the over-allotment option thereunder) (the "U.S. Stock")
through arrangements with certain underwriters in the United States (the "U.S.
Underwriters"), for whom ▇▇▇▇▇▇ Brothers Inc. and ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC are
acting as ther representatives (the "Representatives"). The International
Managers and the U.S. Underwriters simultaneously are entering into an agreement
between the U.S. and international underwriting syndicates (the "Agreement
Between U.S. Underwriters and International Managers") which provides for, among
other things, the transfer of shares of Common Stock between the two syndicates.
Two forms of prospectus are to be used in connection with the offering and sale
of shares of Common Stock contemplated by the foregoing, one relating to the
Stock and the other relating to the U.S. Stock. The latter form of prospectus
will be identical to the former except for certain substitute pages as included
in the registration statement and amendments thereto referred to below. Except
as used
in Sections 2, 3, 4, 9 and 10 herein, and except as the context may otherwise
require, references herein to the Stock shall include all shares of the Common
Stock which may be sold pursuant to either this Agreement or the U.S.
Underwriting Agreement, and references herein to any prospectus whether in
preliminary or final form, and whether as amended or supplemented, shall include
both the U.S. and the international versions thereof.
1 Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-1, and amendments thereto,
with respect to the Stock have (i) been prepared by the Company in
conformity with the requirements of the United States Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
(the "Rules and Regulations") of the United States Securities and
Exchange Commission (the "Commission") thereunder, (ii) been filed with
the Commission under the Securities Act and (iii) become effective
under the Securities Act. Copies of such registration statement and the
amendments thereto have been delivered by the Company to you as the
lead managers (the "Lead Managers") of the International Managers. As
used in this Agreement, "Effective Time" means the date and the time as
of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary
Prospectus" means each prospectus included in such registration
statement, or amendments thereof, before it became effective under the
Securities Act and any prospectus filed with the Commission by the
Company with the consent of the Lead Managers pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time, including all
information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations in accordance with
Section 5(a) hereof and deemed to be a part of the registration
statement as of the Effective Time pursuant to paragraph (b) of Rule
430A of the Rules and Regulations; and "Prospectus" means such final
prospectus, as first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective (in the case of the Registration
Statement and any amendments thereto) or are filed with the Commission (in the
case of the Prospectus and any amendment or supplement thereto), conform in all
material respects to the requirements of the Securities Act and the Rules and
Regulations and do not and will not, as of the applicable effective date (as to
the Registration Statement and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or supplement thereto),
contain an untrue statement of a material fact or
2.
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Lead Managers by or on behalf
of any International Manager specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in Section
16) have been duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign corporations
in each jurisdiction in which the failure to be so qualified would have a
material adverse effect on the Company's business, financial condition, and
results of operations, taken as a whole, have all power and authority to own or
hold their respective properties and to conduct the businesses in which they are
engaged and no proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing, or seeking to revoke, limit or curtail such power and
authority or qualification.
(d) The Company has an authorized capitalization as set forth under
the heading "Capitalization" in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and conform to the description thereof
contained in the Prospectus; and except as disclosed in or contemplated by the
Prospectus or the financial statements of the Company and the related notes
thereto included in the Prospectus all of the issued shares of capital stock of
each subsidiary of the Company have been duly authorized and validly issued and
are fully paid and non-assessable and (except for directors' qualifying shares,
preemptive rights of the Company's joint venture partners, and liens and pledges
established in connection with the Company's senior secured debt) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(e) The unissued shares of the Stock to be issued and sold by the
Company to the International Managers hereunder and to the U.S. Underwriters
under the U.S. Underwriting Agreement have been duly authorized and, when issued
and delivered against payment therefor as provided herein and in the U.S.
Underwriting Agreement, will be duly authorized, validly issued, fully paid and
non-assessable; and the Stock will conform to the description thereof contained
in the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable
3.
principles (whether considered in a proceeding in equity or at law) or an
implied covenant of good faith and fair dealing.
(g) The execution, delivery and performance of this Agreement and the
U.S. Underwriting Agreement by the Company and the consummation of the
transactions contemplated hereby 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 material indenture, mortgage, deed of trust, loan agreement or other
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 property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the provisions of the
charter or by-laws of the Company or any of its subsidiaries or any statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets; and except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the United States Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and applicable state or
foreign securities laws in connection with the purchase and distribution of the
Stock by the International Managers and the U.S. Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery and
performance of this Agreement or the U.S. Underwriting Agreement by the Company
and the consummation of the transactions contemplated hereby and thereby.
(h) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right (other than rights which have been waived or satisfied) 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
registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company
under the Securities Act.
(i) Except as described in the Registration Statement, the Company
has not sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to Rule 144A
under, or Regulations D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, stock option plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(j) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any material
4.
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 or
contemplated in the Prospectus; and, since such date, there has not been any
change in the capital stock 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, consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole, otherwise than
as set forth or contemplated in the Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus 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, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved.
(l) To the best of the Company's knowledge, Ernst & Young LLP, who
have expressed their opinion with respect to the financial statements of the
Company, whose report appears in the Prospectus and who have delivered the
initial letter referred to in Section 7(f) hereof, are independent public
accountants as required by the Securities Act and the Rules and Regulations.
(m) Except as described in the Prospectus, and subject to the liens
and pledges established in connection with the Company's senior secured debt and
the financing activities of Prodac Prozessdatentechnik GmbH ("Prodac") and the
Company's subsidiaries in Japan and Korea, the Company or the applicable
subsidiary has good and marketable title to all real property and good and
marketable title to all personal property reflected as owned by it in the
financial statements hereinabove described (or elsewhere in the Prospectus), in
each case free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially and adversely
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; 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.
(n) The Company and each of its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is
5.
customary for companies engaged in similar businesses in similar industries and
in similar stages of development.
(o) Except as described in the Prospectus, the Company and each of
its subsidiaries own or possess adequate rights to use all material patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights and licenses necessary for
the conduct of their respective businesses and, except as described in the
Prospectus, the Company has no knowledge that the conduct of their respective
businesses will conflict with, and they have not received any notice of any
claim of conflict with, any such rights of others.
(p) 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, is reasonably
likely to have a material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries, taken as a whole; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(q) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have not
been described in the Prospectus or filed as exhibits to the Registration
Statement or incorporated therein by reference as permitted by the Rules and
Regulations.
(r) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required to be described in
the Prospectus which is not so described.
(s) No labor disturbance by the employees of the Company exists or,
to the knowledge of the Company, is imminent which could reasonably be expected
to have a material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries taken as a whole.
(t) 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
6.
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.
(u) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid
all taxes due thereon, and no tax deficiency has been determined adversely to
the Company or any of its subsidiaries which has had (nor does the Company have
any knowledge of any tax deficiency which, if determined adversely to the
Company or any of its subsidiaries, could reasonably be expected to have) a
material adverse effect on the consolidated financial position, stockholders'
equity, results of operations, business or prospects of the Company and its
subsidiaries taken as a whole.
(v) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued any securities, (ii) incurred any
material liability or obligation, direct or contingent, other than liabilities
and obligations which were incurred in the ordinary course of business, (iii)
entered into any material transaction not in the ordinary course of business or
(iv) declared or paid any dividend on its capital stock.
(w) The Company (i) makes and keeps accurate books and records and
(ii) 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.
(x) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any material respect,
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 material 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 or
(iii) is in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property or
assets may be subject or has failed to obtain any license, permit, certificate,
franchise
7.
or other governmental authorization or permit necessary to the ownership of its
property or to the conduct of its business, except where such failure, default
or violation to obtain any license is not reasonably likely to have a material
adverse effect upon the Company and its subsidiaries, taken as a whole.
(y) Neither the Company nor any of its subsidiaries, nor 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 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;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(z) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a material
adverse effect on the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; there has been no material spill, discharge,
leak, emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any toxic wastes,
medical wastes, solid wastes, hazardous wastes or hazardous substances due to or
caused by the Company or any of its subsidiaries or with respect to which the
Company or any of its subsidiaries have knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which would not
have or would not be reasonably likely to have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a material adverse effect on the general affairs,
management, consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole; and the terms
"hazardous wastes", "toxic wastes", "hazardous substances" and "medical wastes"
shall have the meanings specified in any applicable local, state, federal and
foreign laws or regulations with respect to environmental protection.
8.
(aa) Neither the Company nor any subsidiary is an "investment
company" within the meaning of such term under the United States
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
2. Purchase of the Stock by the International 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 1,100,000 shares of
the Firm Stock to the several International Managers and each of the
International Managers, severally and not jointly, agrees to purchase the number
of shares of the Firm Stock set forth opposite that International Manager's name
in Schedule 1 hereto. The respective purchase obligations of the International
Managers with respect to the Firm Stock shall be rounded among the International
Managers to avoid fractional shares, as the Lead Managers may determine.
In addition, the Company grants to the International Managers an
option to purchase up to 165,000 shares of Option Stock. Such option is granted
solely for the purpose of covering over-allotments in the sale of Firm Stock and
is exercisable as provided in Section 4 hereof. Shares of Option Stock shall be
purchased severally for the account of the International Managers in proportion
to the number of shares of Firm Stock set forth opposite the name of such
International Managers in Schedule 1 hereto. The respective purchase
obligations of each International Manager with respect to the Option Stock shall
be adjusted by the Lead Managers so that no International Manager shall be
obligated to purchase Option Stock other than in 100 share amounts. The price
of both the Firm Stock and any Option Stock shall be $_____ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on the First Delivery Date or the Second Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein and in the U.S. Underwriting
Agreement.
3. Offering of Stock by the International Managers.
Upon authorization by the Lead Managers of the release of the Firm
Stock, the several International Managers propose to offer the Firm Stock for
sale upon the terms and conditions set forth in the Prospectus.
It is understood that up to 55,000 shares of the Firm Stock will
initially be reserved by the several International Managers for offer and sale
upon the terms and conditions set forth in the Prospectus and in accordance with
the rules and regulations of the National Association of Securities Dealers,
Inc. to employees and persons having business relationships with the Company and
its subsidiaries who have heretofore delivered to the International Managers
offers to purchase shares of Firm Stock in form satisfactory to the Lead
Managers, and that any allocation of such Firm Stock among such persons will be
made in accordance with timely directions received by the Lead Managers from the
Company; provided, that under no circumstances will the Lead Managers or any
International Manager be liable to the Company or to any such person for any
action taken or omitted
9.
in good faith in connection with such offering to employees and persons having
business relationships with the Company and its subsidiaries. It is further
understood that any shares of such Firm Stock which are not purchased by such
persons will be offered by the International Managers to the public upon the
terms and conditions set forth in the Prospectus.
Each International Manager agrees that, except to the extent permitted
by the Agreement Between U.S. Underwriters and International Managers, it will
not offer or sell any of the Stock in the United States or Canada.
4. Delivery of and Payment for the Stock. Delivery of and payment for
the Firm Stock shall be made at the office of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at
10:00 A.M., New York City time, on the fourth full business day following the
date of this Agreement or at such other date or place as shall be determined by
agreement between the Lead Managers and the Company. This date and time are
sometimes referred to as the "First Delivery Date." On the First Delivery Date,
the Company shall deliver or cause to be delivered certificates representing the
Firm Stock to the Lead Managers for the account of each International Manager
against payment to or upon the order of the Company of the purchase price by
wire transfer to an account designated by the Company. Time shall be of the
essence, and delivery of the Firm Stock at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each International
Manager to purchase the Firm Stock hereunder. Upon delivery, the Firm Stock
shall be registered in such names and in such denominations as the Lead Managers
shall request in writing not less than two full business days prior to the First
Delivery Date. For the purpose of expediting the checking and packaging of the
certificates for the Firm Stock, the Company shall make the certificates
representing the Firm Stock available for inspection by the Lead Managers in New
York, New York, not later than 2:00 P.M., New York City time, on the business
day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement the option granted in Section 2 may be exercised in whole or in part,
but only once, by written notice being given to the Company by the Lead
Managers. Such notice shall set forth the aggregate number of shares of Option
Stock as to which the option is being exercised, the names in which the shares
of Option Stock are to be registered, the denominations in which the shares of
Option Stock are to be issued and the date and time, as determined by the Lead
Managers, when the shares of Option Stock are to be delivered; provided,
however, that this date and time shall not be earlier than the First Delivery
Date nor earlier than the second business day after the date on which the option
shall have been exercised nor later than the fifth business day after the date
on which the option shall have been exercised. The date and time the shares of
Option Stock are delivered are sometimes referred to as the "Second Delivery
Date" and the First Delivery Date and the Second Delivery Date are sometimes
each referred to as a "Delivery Date."
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the Lead
Managers and the Company) at 10:00 A.M., New York City time,
10.
on the Second Delivery Date. On the Second Delivery Date, the Company shall
deliver or cause to be delivered the certificates representing the Option Stock
to the Lead Managers for the account of each International Manager against
payment to or upon the order of the Company of the purchase price by wire
transfer to an account designated by the Company. Time shall be of the essence,
and delivery of the Option Stock at the time and place specified pursuant to
this Agreement is a further condition of the obligation of each International
Manager to purchase the Option Stock hereunder. Upon delivery, the Option Stock
shall be registered in such names and in such denominations as the Lead Managers
shall request in the aforesaid written notice. For the purpose of expediting the
checking and packaging of the certificates for the Option Stock, the Company
shall make the certificates representing the Option Stock available for
inspection by the Lead Managers in New York, New York, not later than 2:00 P.M.,
New York City time, on the business day prior to the Second Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the Lead
Managers and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on
the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus
except as permitted herein; to advise the Lead Managers, promptly
after it receives notice thereof, of the time when any amendment to
the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Lead Managers with copies thereof; to advise the
Lead Managers, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) To furnish promptly to each of the Lead Managers and to
counsel for the International Managers a signed copy of the
Registration Statement as originally filed with the Commission, and
each amendment thereto filed with the Commission, including all
consents and exhibits filed therewith;
(c) To deliver promptly to the Lead Managers such number of the
following documents as the Lead Managers shall reasonably request: (i)
conformed copies of the
11.
Registration Statement as originally filed with the Commission and
each amendment thereto (in each case excluding exhibits other than
this Agreement and the computation of per share earnings) and (ii)
each Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus; and, if the delivery of a prospectus is
required at any time after the Effective Time in connection with the
offering or sale of the Stock or any other securities relating thereto
and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply
with the Securities Act, to notify the Lead Managers and, upon their
request, to prepare and furnish without charge to each International
Manager and to any dealer in securities as many copies as the Lead
Managers may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission
or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Lead
Managers, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to the Lead Managers and counsel for the
International Managers and obtain the consent of the Lead Managers to
the filing;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver
to the Lead Managers an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Lead Managers copies of all materials furnished by the
Company to its stockholders and all public reports and all reports and
financial statements furnished by the Company to the principal
national securities exchange upon which the Common Stock may be listed
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder;
12.
(h) Promptly from time to time to take such action as the Lead
Managers may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Lead
Managers 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 distribution of the Stock;
provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not
to, 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 reasonably expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock (other
than the Stock and 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 or stock purchase plans existing
on the date hereof), without the prior written consent of ▇▇▇▇▇▇
Brothers International (Europe); and to cause each officer and
director of the Company to furnish to the Lead Managers, prior to the
First Delivery Date, a letter or letters, in form and substance
satisfactory to counsel for the International Managers, pursuant to
which each such person shall agree not to, 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 by any such person at any time in the future
of) any shares of Common Stock for a period of 180 days from the date
of the Prospectus, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc.;
(j) Prior to the Effective Date, to apply for the inclusion of
the Stock on the Nasdaq National Market, and to use its best efforts
to complete that inclusion, subject only to official notice of
issuance and evidence of satisfactory distribution, prior to the First
Delivery Date;
(k) Upon the filing with the Commission of any reports on Form SR
pursuant to Rule 463 of the Rules and Regulations, to furnish a copy
thereof to the counsel for the International Managers, and to deliver
promptly to the Lead Managers a signed copy of each report on Form SR
filed by it with the Commission;
(l) To apply the net proceeds from the sale of the Stock being
sold by the Company as set forth in the Prospectus; and
(m) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment
company" within the
13.
meaning of such term under the United States Investment Company Act of
1940 and the rules and regulations of the Commission thereunder.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (C) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of producing and distributing this Agreement, the
Agreement Between U.S. Underwriters and International Managers, any
International Selling Agreement and any other related documents in connection
with the offering, purchase, sale and delivery of the Stock; (e) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of sale of the Stock; (f) the Nasdaq
National Market application fee; (g) the fees and expenses of qualifying the
Stock under the securities laws of the several jurisdictions as provided in
Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to the International Managers to
the extent reasonable and customary for such work); and (h) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement; provided that, except as specifically provided in this Section 6
and in Section 11, the International Managers shall pay the fees, costs and
expenses of their counsel and their other costs and expenses and any transfer
taxes on the Stock which they may sell and the expenses of advertising any
offering of the Stock made by the International Managers.
7. Conditions of International Managers' Obligations. The respective
obligations of the International Managers hereunder are subject to the accuracy,
when made and on each Delivery 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; provided, however, that the conditions set forth in Sections 7(e),
7(f) and 7(g) shall not apply in connection with the sale of Option Stock on the
Second Delivery Date:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied
with.
(b) No International Manager or U.S. Underwriter shall have
discovered and disclosed to the Company on or prior to such Delivery
Date that the Registration Statement or the Prospectus or any
amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for
the International Managers, is material or omits to state a fact
which, in
14.
the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the U.S.
Underwriting Agreement, the Stock, the Registration Statement and the
Prospectus, and all other legal matters relating to this Agreement and
the transactions contemplated hereby shall be reasonably satisfactory
in all material respects to counsel for the International Managers,
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.
(d) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation,
shall have furnished to the Lead Managers its written opinion, as
counsel to the Company, addressed to the International Managers and
dated such Delivery Date, in form and substance reasonably
satisfactory to the Lead Managers, 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 qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a material adverse
effect on the Company's business, financial condition, or results
of operations and has all power and authority necessary to own or
hold its properties and conduct the business in which it is
engaged;
(ii) The Company has an authorized capitalization as set forth
under the caption "Capitalization" in the Prospectus, and all of
the issued shares of capital stock of the Company (including the
shares of Stock being delivered on such Delivery Date) have been
duly authorized and validly issued, are fully paid and non-
assessable and conform to the description thereof contained in the
Prospectus;
(iii) 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 Stock pursuant to the Company's charter or
by-laws or any agreement or other instrument known to such
counsel;
(iv) The building in which the Company's principal executive
offices are located is held by the Company under valid, subsisting
and enforceable leases, with such exceptions that are not material
and do not interfere with the use made and proposed to be made of
such property and buildings by the Company;
15.
(v) To such counsel's knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to which the
Company is a party or of which any property or assets of the Company is the
subject which are required to be described in the Prospectus;
(vi) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion, the Prospectus
was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date specified therein
and no stop order suspending the effectiveness of the Registration Statement has
been issued and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;
(vii) The Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company prior to such Delivery
Date (other than the financial statements and notes thereto, financial schedules
and other financial and statistical data included therein, as to which such
counsel need express no opinion) comply as to form in all material respects with
the requirements of the Securities Act and the Rules and Regulations;
(viii) The statements contained in the Prospectus under the caption
"Certain United States Federal Tax Considerations for Non-U.S. Holders of Common
Stock," insofar as they describe federal statutes, rules and regulations,
constitute a fair summary thereof;
(ix) To such counsel's knowledge, there are no contracts or other
documents which are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by the Rules and
Regulations which have not been so described or filed;
(x) This Agreement and the U.S. Underwriting Agreement have each
been duly authorized, executed and delivered by the Company and each constitutes
a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to the effects of 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 issue and sale of the shares of Stock being delivered on
such Delivery Date by the Company and the compliance by the Company with all of
the provisions of this Agreement and the U.S. Underwriting Agreement and
16.
the consummation of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default
under, any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel
to which the Company is a party or by which the Company is bound
or to which any of the property or assets of the Company is
subject (but excluding any such document or agreement which is
governed by the laws of any foreign jurisdiction), nor will such
actions result in any violation of the provisions of the charter
or by-laws of the Company or any statute or any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of its
properties or assets; and, except for the registration of the
Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the
International Managers and the U.S. Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any federal or state court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement or the U.S. Underwriting Agreement by the Company and
the consummation of the transactions contemplated hereby and
thereby; and
(xii) To such counsel's knowledge, and except as disclosed in
the Prospectus, there are no contracts, agreements or
understandings between the Company and any person granting such
person the right (other than rights which have been waived or
satisfied) 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 registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by
the Company under the Securities Act.
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 California and the General Corporation Law
of the State of Delaware and that such counsel is not admitted in the State of
Delaware; (ii) state that no opinion is given with respect to the matters on
which the Company's other counsel are opining, and (iii) limit the disclosure or
publication of the opinion to the International Managers and the U.S.
Underwriters. Such counsel shall also have furnished to the Lead Managers a
written statement, addressed to the International Managers and dated such
Delivery Date, in form and substance satisfactory to the Representatives, to the
effect that (x) such counsel has acted as counsel to the Company on a regular
basis, has acted as counsel to the Company in connection with previous financing
transactions and has
17.
acted as counsel to the Company in connection with the preparation of the
Registration Statement, and (y) based on the foregoing, no facts have come to
the attention of such counsel which lead it to believe that the Registration
Statement, as of the Effective Date, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, or that the
Prospectus as of its date or as of such Delivery Date contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(e) The Lead Managers shall have received from ▇▇▇▇▇▇▇, Phleger &
▇▇▇▇▇▇▇▇ LLP, counsel for the International Managers, such opinion or opinions,
dated such Delivery Date, with respect to the issuance and sale of the Stock,
the Registration Statement, the Prospectus and other related matters as the Lead
Managers may reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
(f) At the time of execution of this Agreement, the Lead Managers
shall have received from Ernst & Young LLP, a letter, in form and substance
satisfactory to the Lead Managers, addressed to the International Managers and
dated the date hereof (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 and (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings.
(g) With respect to the letter of Ernst & Young LLP, referred to in
the preceding paragraph and delivered to the Lead Managers concurrently with the
execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Lead Managers a letter (the "bring-down letter") of such
accountants, addressed to the International Managers and dated such Delivery
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 the 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
Prospectus, as of a date not more than five days prior to the date of the bring-
down letter), the conclusions and findings of such firm with respect to the
18.
financial information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set forth in
the initial letter.
(h) The Company shall have furnished to the Lead Managers a
certificate of the Company, dated such Delivery Date, executed by its Chairman
of the Board, its President or a Vice President and its chief financial officer
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 such Delivery Date;
the Company has complied with all its agreements contained herein; and
the conditions set forth in Sections 7(a) and 7(i) have been
fulfilled; and
(ii) They have carefully examined the Registration Statement and
the Prospectus and (A) as of the Effective Date, the Registration
Statement and Prospectus did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date no event has occurred
which should have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(i) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus 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 or contemplated in the Prospectus or (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the Company or
any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
consolidated financial position, stockholders' equity or results of operations
of the Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in any such case described in clause (i)
or (ii), is, in the judgment of the Lead Managers, so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Stock being delivered on such Delivery Date on the terms and in
the manner contemplated in the Prospectus.
(j) 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 or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such
19.
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of a majority in interest of the
several International Managers, impracticable or inadvisable to proceed with the
public offering or delivery of the Stock being delivered on such Delivery Date
on the terms and in the manner contemplated in the Prospectus.
(k) The Nasdaq National Market shall have approved the Stock for
inclusion, subject only to official notice of issuance and evidence of
satisfactory distribution.
(l) The closing under the U.S. Underwriting Agreement shall have
occurred concurrently with the closing hereunder on the First Delivery Date.
(m) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, shall
have furnished to the Lead Managers on the First Delivery Date its written
opinion, as U.S. counsel to each of MagiNet Israel, Inc., a California
corporation ("MagiNet Israel"), MagiNet South Africa, Inc., a California
corporation ("MagiNet South Africa"), Pacific Pay Video Limited, a California
corporation ("PPVL"), and MagiNet International Corporation, a California
corporation ("MagiNet International"), addressed to the International Managers,
in form and substance reasonably satisfactory to the Lead Managers, to the
effect that:
(i) Each of MagiNet Israel, MagiNet South Africa, PPVL, and
MagiNet International (collectively, the "California Subsidiaries")
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of California and has all
power and authority necessary under California law to hold their
respective properties and conduct their respective businesses;
(ii) MagiNet Israel has an authorized capitalization of 1,000
shares of Common Stock, of which 100 shares are issued and
outstanding; MagiNet South Africa has an authorized capitalization of
100 shares of Common Stock, all of which are issued and outstanding;
PPVL has an authorized capitalization of 15,000,000 shares of Common
Stock, of which 100 shares are issued and outstanding, and 8,978,930
shares of Preferred Stock, none of which are outstanding; and MagiNet
International has an authorized capitalization of 1,000 shares of
Common Stock, of which 100 shares are issued and
20.
outstanding. The Company owns all the outstanding shares of each of
the California Subsidiaries free and clear of all liens, encumbrances,
equities or claims, except for liens and pledges established in
connection with the Company's senior secured debt. All such
outstanding shares have been duly authorized and validly issued, and
are fully paid and nonassessable;
(iii) There are no preemptive or other rights to subscribe for or
purchase, nor any restrictions upon the voting or transfer of, any
shares of stock of such California Subsidiary pursuant to the charter
or by-laws of such California Subsidiary or any agreement or other
instrument known to such counsel.
(iv) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
to which such California Subsidiary is a party or of which any
property or assets of such California Subsidiary are subject which are
required to be described in the Prospectus.
(n) For each of MagiNet Israel, MagiNet South Africa, MagiNet
Australia Pty Limited, MagiNet (H.K.) Ltd., MagiNet, KK Ltd., MagiNet New
Zealand Limited, MagiNet (Singapore) Pte. Ltd., MagiNet Taiwan, Inc., and
Pacific Pay Video (Thailand) Co. Ltd. (collectively, the "Foreign
Subsidiaries"), the Lead Managers shall have received on the First Delivery Date
an opinion of foreign counsel for each such Foreign Subsidiary in form and
substance reasonably satisfactory to the Lead Managers, as is customary in local
practice in such jurisdiction, and subject to such reasonable qualifications as
such local counsel shall require to the effect that:
(i) Such Foreign Subsidiary has been duly incorporated and is
validly existing and in good standing and duly qualified to conduct
business under the laws of the country in which it is incorporated
and/or operates, provided that with respect to the due incorporation
and valid existence of MagiNet Israel and MagiNet South Africa, local
counsel shall not be required to deliver such opinion, which shall be
delivered by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional
Corporation as described above;
(ii) The capitalization of such Foreign Subsidiary is as set
forth in such opinion, including the number of shares authorized for
issuance and the number of shares outstanding as of the First Delivery
Date (excluding MagiNet Israel and MagiNet South Africa, which opinion
shall be delivered by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional
Corporation, as described above);
(iii) All issued shares of the capital stock of such Foreign
Subsidiary have been duly authorized and validly issued and are fully
paid and
21.
nonassessable (excluding MagiNet Israel and MagiNet South Africa,
which opinion will be delivered by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation, as described above) and, subject to the
liens and encumbrances established in connection with the Company's
senior secured debt, are owned directly or indirectly by the Company;
(iv) There are no preemptive rights or other rights to subscribe
for or to purchase, nor any restrictions upon the voting or transfer
of, any shares of the capital stock of such Foreign Subsidiary
pursuant to the charter documents of any such Foreign Subsidiary
(except for MagiNet Israel and MagiNet South Africa, which opinion
will be delivered by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional
Corporation, as described above) or any agreement or other instrument
known to such counsel;
(v) To the best of such counsel's knowledge, there are no legal
or governmental proceedings pending to which such Foreign Subsidiary
is a party or of which any property or assets of such Foreign
Subsidiary are subject which, if determined adversely to such foreign
subsidiary, would have a material adverse effect on the business,
operating results or financial condition of such Foreign Subsidiary;
(vi) The issue and sale to the public of shares of the Company's
Common Stock pursuant to the Registration Statement will not result in
a breach or violation of any of the terms or provisions of any
contract material to such Foreign Subsidiary's business, operating
results or financial condition, which contracts shall be listed on a
schedule reasonably satisfactory to the Lead Managers attached to such
opinion, nor will such actions result in any violation of the charter
or bylaws of such Foreign Subsidiary; and
(vii) Each of the hotel contracts to which such Foreign Subsidiary
is a party, to be identified in a schedule of such contracts
reasonably satisfactory to the Lead Managers, constitutes a legal,
valid, and binding obligation of the parties thereto, enforceable in
accordance with its terms.
(o) Bruckhaus ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have furnished to the Lead
Managers on the First Delivery Date its written opinion, as counsel to each of
MagiNet GmbH and Prodac (collectively, the "German Subsidiaries"), in form and
substance reasonably satisfactory to the Lead Managers, as is customary in
local practice in Germany, and subject to such reasonable qualifications as such
counsel shall require to the effect that:
22.
(i) Each of the German Subsidiaries has been duly incorporated
and is validly existing and duly qualified to conduct business in good
standing under the laws of Germany;
(ii) The capitalization of each of the German Subsidiaries is as
set forth in such opinion, including the number of shares authorized
for issuance and the number of shares outstanding as of the First
Delivery Date;
(iii) All issued shares of the capital stock of each of the German
Subsidiaries have been duly authorized and validly issued and are
fully paid and nonassessable and, subject to the liens and
encumbrances established in connection with the Company's senior
secured debt, are owned directly or indirectly by the Company or
MagiNet GmbH, as the case may be;
(iv) There are no preemptive rights or other rights to subscribe
for or to purchase, nor any restrictions upon the voting or transfer
of, any shares of the capital stock of either of the Germany
Subsidiaries pursuant to the charter documents of such German
Subsidiary or any agreement or other instrument known to such counsel;
(v) To the best of such counsel's knowledge, there are no legal
or governmental proceedings pending to which either German Subsidiary
is a party or of which any property or assets of either German
Subsidiary are subject which, if determined adversely to such German
Subsidiary, would have a material adverse effect on the business,
operating results or financial condition of such German Subsidiary;
(vi) The issue and sale to the public of shares of the Company's
Common Stock pursuant to the Registration Statement will not result in
a breach or violation of any of the terms or provisions of any
contract material to such German Subsidiary's business, operating
results or financial condition, which contracts shall be listed on a
schedule reasonably satisfactory to the Lead Managers attached to such
opinion, nor will such actions result in any violation of the charter
or bylaws of such German Subsidiary; and
(vii) Each of the hotel contracts to which Prodac or any
subsidiary of Prodac is a party, to be identified in a schedule of
such contracts reasonably satisfactory to the Lead Managers,
constitutes a legal, valid, and binding obligation of the parties
thereto, enforceable in accordance with its terms.
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 reasonably satisfactory
to counsel for the International Managers.
23.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each International
Manager, its officers and employees and each person, if any, who controls any
International Manager 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 Stock), to which that International
Manager, officer, employee 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 (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 Stock
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 International Manager in connection with, or relating in any
manner to, the Stock 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 under 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 acts or failures to act undertaken or omitted to be taken
by such International Manager through its gross negligence or willful
misconduct), and shall reimburse each International Manager and each such
officer, employee or controlling person promptly upon demand for any legal or
other expenses reasonably incurred by that International 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 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 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 written information concerning such International Manager
furnished to the Company through the Lead Managers by or on behalf of any
International Manager specifically for inclusion therein; and provided further
that as to any Preliminary Prospectus this indemnity agreement shall not inure
to the benefit of any International Manager 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
any Preliminary Prospectus if a copy of the Prospectus was not sent to such
person by such International Manager as required by the Securities Act and if
the untrue statement or omission has been corrected in the Prospectus unless
such failure to send a Prospectus resulted from non-compliance by the Company
with Section 5(c) hereof. The foregoing indemnity agreement is in
24.
addition to any liability which the Company may otherwise have to any
International Manager or to any officer, employee or controlling person of that
International Manager.
(b) Each International 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 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 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, 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 written information concerning such International Manager
furnished to the Company through the Lead Managers by or on behalf of that
International Manager specifically for inclusion therein, 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 incurred. The foregoing indemnity agreement is in addition to
any liability which any International Manager may otherwise have to the Company
or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
8 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 8, 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 8 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 8.
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 8 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 those other International Managers and their respective
officers, employees and controlling persons who may be subject to liability
arising out of any claim
25.
in respect of which indemnity may be sought by the International Managers
against the Company under this Section 8 if, in the reasonable judgment of the
Lead Managers, it is advisable for the Lead Managers and those International
Managers, officers, employees and controlling persons to be jointly represented
by separate counsel, and in that event the reasonable fees and expenses of such
separate counsel shall be paid by the Company. 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 the consent of
the indemnifying party 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.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(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, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the International Managers on the
other from the offering of the Stock 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 on the one hand and the
International Managers 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 International 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 Stock purchased
under this Agreement (before deducting expenses) received by the Company on the
one hand, and the total underwriting discounts and commissions received by the
International Managers with respect to the shares of the Stock purchased under
this Agreement, on the other hand, bear to the total gross proceeds from the
offering of the shares of the Stock 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 or the International Managers, 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 International Managers agree that it would not be just and equitable if
contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation (even if the International Managers were treated as one entity for
such purpose) or by any other method of
26.
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 8 shall be deemed to include, for purposes of
this Section 8(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 8(d), no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the Stock underwritten by it and distributed to
the public was offered to the public exceeds the amount of any damages which
such International Manager has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The International
Managers' obligations to contribute as provided in this Section 8(d) are several
in proportion to their respective underwriting obligations and not joint.
(e) The International Managers severally confirm that the statements
with respect to the public offering of the Stock by the International Managers
set forth on the cover page of, the legend concerning over-allotments on the
inside front cover page of and the concession and reallowance figures appearing
under the caption "Underwriting" in, the Prospectus are correct, and the
International Managers confirm and the Company acknowledges that such statements
constitute the only information concerning such International Managers furnished
in writing to the Company by or on behalf of the International Managers
specifically for inclusion in the Registration Statement and the Prospectus.
9. Defaulting International Managers.
If, on either Delivery Date, any International Manager defaults in the
performance of its obligations under this Agreement, the remaining non-
defaulting International Managers shall be obligated to purchase the Stock which
the defaulting International Manager agreed but failed to purchase on such
Delivery Date in the respective proportions which the number of shares of the
Firm Stock set opposite the name of each remaining non-defaulting International
Manager in Schedule 1 hereto bears to the total number of shares of the Firm
Stock set opposite the names of all the remaining non-defaulting International
Managers in Schedule 1 hereto; provided, however, that the remaining non-
defaulting International Managers shall not be obligated to purchase any of the
Stock on such Delivery Date if the total number of shares of the Stock which the
defaulting International Manager or International Managers agreed but failed to
purchase on such date exceeds 9.09% of the total number of shares of the Stock
to be purchased on such Delivery Date, and any remaining non-defaulting
International Manager shall not be obligated to purchase more than 110% of the
number of shares of the Stock which it agreed to purchase on such Delivery Date
pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the
remaining non-defaulting International Managers, or those other underwriters
satisfactory to the Lead Managers who so agree, shall have the right, but shall
not be obligated, to purchase, in such proportion as may be agreed upon among
them, all the Stock to be purchased on such Delivery Date. If the remaining
International Managers
27.
or other underwriters satisfactory to the Lead Managers do not elect to purchase
the shares which the defaulting International Manager or International Managers
agreed but failed to purchase on such Delivery Date, this Agreement (or, with
respect to the Second Delivery Date, the obligation of the International
Managers to purchase, and of the Company to sell, the Option Stock) shall
terminate without liability on the part of any non-defaulting International
Manager or the Company, except that the Company will continue to be liable for
the payment of expenses to the extent set forth in Sections 6 and 11. As used in
this Agreement, the term "International Manager" includes, for all purposes of
this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 9, purchases Firm Stock which a
defaulting International Manager agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting International
Manager of any liability it may have to the Company for damages caused by its
default. If other underwriters are obligated or agree to purchase the Stock of
a defaulting or withdrawing International Manager, either the Lead Managers or
the Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the International Managers may be necessary in the Registration
Statement, the Prospectus or in any other document or arrangement.
10. Termination. The obligations of the International Managers
hereunder may be terminated by the Lead Managers by notice given to and received
by the Company prior to delivery of and payment for the Firm Stock if, prior to
that time, any of the events described in Sections 7(i) or 7(j) shall have
occurred or if the International Managers shall decline to purchase the Stock
for any reason permitted under this Agreement.
11. Reimbursement of International Managers' Expenses. If the
Company shall fail to tender the Stock for delivery to the International
Managers by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed, or because any
other condition of the International Managers' obligations hereunder required to
be fulfilled by the Company is not fulfilled, the Company will reimburse the
International Managers for all reasonable out-of-pocket expenses (including fees
and disbursements of counsel) incurred by the International Managers in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company shall pay the full amount thereof to the Lead Managers. If
this Agreement is terminated pursuant to Section 10 by reason of the default of
one or more International Managers, the Company shall not be obligated to
reimburse any defaulting International Manager on account of those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the International Managers, shall be delivered or sent
by mail, telex or facsimile transmission to ▇▇▇▇▇▇ Brothers
International (Europe), Three World Financial Center, New York, New
York 10285, Attention: Syndicate Department
28.
(Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the case of any notice pursuant
to Section 8(c), to the Director of Litigation, Office of the General
Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇;
(b) 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: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chief Executive Officer (Fax: ▇▇▇-▇▇▇-▇▇▇▇) with a copy to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇);
provided, however, that any notice to an International Manager pursuant to
Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission
to such International Manager at its address set forth in its acceptance telex
to the Lead Managers, which address will be supplied to any other party hereto
by the Lead Managers upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the International Managers by ▇▇▇▇▇▇ Brothers International
(Europe), on behalf of the Lead Managers.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the International Managers, 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
(A) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any International Manager within the
meaning of Section 15 of the Securities Act and for the benefit of each U.S.
Underwriter (and controlling persons thereof) who offers or sells any shares of
Common Stock in accordance with the terms of the Agreement Between U.S.
Underwriters and International Managers and (B) the indemnity agreement of the
International Managers contained in Section 8(b) of this Agreement shall be
deemed to be for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement 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 13, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the International Managers
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Stock 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.
15. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
29.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of California
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.
30.
If the foregoing correctly sets forth the agreement between the
Company and the International Managers, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
MAGINET CORPORATION
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Accepted:
▇▇▇▇▇▇ BROTHERS INTERNATIONAL (EUROPE)
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
For themselves and as Lead Managers
of the several International Managers named
in Schedule 1 hereto
By ▇▇▇▇▇▇ BROTHERS INTERNATIONAL (EUROPE)
By________________________________
Authorized Representative
SCHEDULE 1
Number of
International Managers Shares
---------------------- ---------
▇▇▇▇▇▇ Brothers International (Europe)......................
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC.......................................
Total
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