SECURITIES PURCHASE AGREEMENT
by and among
Winter Harbor, L.L.C.,
KPR Finanz-Und Verwaltungs AG
and Red Cube International AG
dated as of August 30, 2000
SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS..........................................................1
1.1 TERMS DEFINED IN THIS SECTION........................................1
1.2 TERMS DEFINED ELSEWHERE IN THIS AGREEMENT............................4
1.3 RULES OF CONSTRUCTION................................................5
1.4 KNOWLEDGE............................................................5
ARTICLE 2 PURCHASE AND SALE OF SECURITIES......................................5
2.1 PURCHASE AND SALE....................................................5
2.2 CONSIDERATION........................................................5
2.3 NO ALLOCATION OF CONSIDERATION.......................................6
ARTICLE 3 REPRESENTATIONS OF WINTER HARBOR.....................................6
3.1 ORGANIZATION AND AUTHORITY...........................................6
3.2 AUTHORIZATION AND BINDING OBLIGATION.................................6
3.3 OWNERSHIP OF STOCK...................................................7
3.4 VOTING AUTHORITY.....................................................7
3.5 ABSENCE OF CONFLICTING AGREEMENTS; CONSENTS..........................7
3.6 DISCLOSURE...........................................................7
3.7 NO RELATED PARTY TRANSACTIONS........................................7
3.8 BROKERS AND FINDERS..................................................8
3.9 INVESTMENT MATTERS...................................................8
ARTICLE 4 REPRESENTATIONS OF RED CUBE..........................................8
4.1 ORGANIZATION AND AUTHORITY...........................................8
4.2 AUTHORIZATION AND BINDING OBLIGATION.................................8
4.3 ABSENCE OF CONFLICTING AGREEMENTS; CONSENTS..........................8
4.4 CAPITALIZATION.......................................................9
4.5 FINANCIAL STATEMENTS.................................................9
4.6 INVESTMENT...........................................................9
4.7 EXPERIENCE...........................................................9
4.8 BROKERS AND FINDERS..................................................9
4.9 DISCLOSURE..........................................................10
ARTICLE 5 COVENANTS AND AGREEMENTS............................................10
5.1 CONFIDENTIALITY.....................................................10
5.2 COOPERATION.........................................................10
5.3 REGISTRATION RIGHTS AGREEMENT.......................................10
5.4 CONSENTS............................................................10
5.5 HSR ACT FILING......................................................10
5.6 PROXY AND VOTING AGREEMENT..........................................11
5.7 NOTIFICATION........................................................12
5.8 BOARD SEATS.........................................................12
5.9 WINTER HARBOR LOCK-UP AND STANDSTILL................................12
TABLE OF CONTENTS
(continued)
Page
5.10 SIGNIFICANT TRANSACTIONS............................................12
5.11 OPTIONS.............................................................13
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF THE PARTIES AT THE FIRST CLOSING.......13
6.1 CONDITIONS TO OBLIGATIONS OF RED CUBE AT THE FIRST CLOSING..........13
6.2 CONDITIONS TO OBLIGATIONS OF WINTER HARBOR AT THE FIRST CLOSING.....14
6.3 CONDITIONS TO OBLIGATIONS OF RED CUBE AT THE SECOND CLOSING.........15
6.4 CONDITIONS TO OBLIGATIONS OF WINTER HARBOR AT THE SECOND CLOSING....16
ARTICLE 7 FIRST CLOSING AND FIRST CLOSING DELIVERIES..........................17
7.1 FIRST CLOSING.......................................................17
7.2 DELIVERIES BY WINTER HARBOR.........................................18
7.3 DELIVERIES BY RED CUBE..............................................18
ARTICLE 8 SECOND CLOSING AND SECOND CLOSING DELIVERIES........................19
8.1 SECOND CLOSING......................................................19
8.2 DELIVERIES BY WINTER HARBOR.........................................20
8.3 DELIVERIES BY RED CUBE..............................................20
ARTICLE 9 TERMINATION.........................................................20
9.1 TERMINATION BY WINTER HARBOR........................................20
9.2 TERMINATION BY RED CUBE.............................................21
9.3 TERMINATION BY MUTUAL CONSENT.......................................21
9.4 RIGHTS ON TERMINATION...............................................21
ARTICLE 10 MISCELLANEOUS......................................................21
10.1 FEES AND EXPENSES...................................................21
10.2 NOTICES.............................................................21
10.3 BENEFIT AND BINDING EFFECT..........................................22
10.4 FURTHER ASSURANCES..................................................22
10.5 GOVERNING LAW.......................................................22
10.6 JURISDICTION; SERVICE OF PROCESS....................................23
10.7 ENTIRE AGREEMENT....................................................23
10.8 AMENDMENTS; WAIVER OF COMPLIANCE; CONSENTS..........................24
10.9 COUNTERPARTS........................................................24
10.10 SURVIVAL............................................................24
10.11 SEVERABILITY........................................................24
10.12 JUDGMENT CURRENCY...................................................24
10.13 DISPUTED MATTERS....................................................24
10.14 ASSIGNMENTS; SUCCESSORS; NO THIRD-PARTY RIGHTS......................25
ARTICLE 11 INDEMNIFICATION....................................................26
11.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY WINTER HARBOR.............26
11.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY RED CUBE..................26
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TABLE OF EXHIBITS AND SCHEDULES
Exhibit A -- Securities
Exhibit B -- Option Agreement I
Exhibit C -- Option Agreement II
Exhibit D -- Registration Rights Agreement
Exhibit E -- Opinion of Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Counsel to Winter Harbor
Exhibit F -- Opinion of Heierli Rechtsanwälte, Swiss Counsel to Red Cube
Exhibit G -- Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, U.S.Counsel to Red Cube
Schedule 3.5 -- Winter Harbor Consents
Schedule 3.7 -- Winter Harbor Related Party Transactions
Schedule 4.3 -- Red Cube Consents
Schedule 4.4 -- Capitalization of Red Cube
Schedule 4.5 -- Red Cube Liabilities
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement, dated as of August 30, 2000, is
entered into by and among Winter Harbor, L.L.C., a Delaware limited liability
company ("Winter Harbor"), Red Cube International AG, an Aktiengesellschaft
organized under the laws of Switzerland ("Red Cube") and KPR Finanz-Und
Verwaltungs AG ("KPR").
PRELIMINARY STATEMENTS
Winter Harbor owns certain securities issued by I-Link Incorporated,
a Florida corporation ("I-Link"). Winter Harbor desires to sell those
securities to Red Cube, and Red Cube desires to purchase those securities, all
on the terms and conditions set forth in this Agreement.
In consideration of the mutual promises and covenants contained in
this Agreement, the parties hereto agree as follows:
AGREEMENTS
Article 1
Definitions
1.1 Terms Defined in this Section. For purposes of this Agreement, the
following terms shall have the following meanings:
"Affiliates" means affiliates as defined in Rule 12b-2 of the
Securities Exchange Act of 1934, as amended.
"Agreement" means this Securities Purchase Agreement.
"Breach" means a breach of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement, which shall be deemed to have occurred if there is
or has been any inaccuracy in or breach of, or any failure to perform or
comply with, such representation, warranty, covenant, obligation, or other
provision.
"Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banking institutions in New York City are required or
authorized by law to remain closed.
"Closing" means either the First Closing or the Second Closing, and
"Closings" means the First Closing and the Second Closing.
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"Consents" means all consents, permits, or approvals of Governmental
Authorities and other third parties necessary to permit the Closings to occur
lawfully in accordance with this Agreement.
"Dollars" or "$" means United States dollars.
"First Closing" means the consummation of the purchase and sale of
the First Closing Securities and the other transactions occurring
contemporaneously therewith, in accordance with the applicable provisions of
Article 7.
"First Closing Date" means the date on which the First Closing
occurs, as determined pursuant to Section 7.1(a).
"First Closing Securities" means those securities issued by I-Link
and held by Winter Harbor on the date of this Agreement that are designated as
"First Closing Securities" on Exhibit A. In the event of any change in the
outstanding securities of I-Link by reason of stock dividends, splits,
combinations, subdivisions or reclassifications, mergers, recapitalizations,
extraordinary dividends or distributions, exchanges of shares or the like, the
type and number of securities constituting the First Closing Securities shall
be appropriately adjusted.
"Governmental Authority" means any federal, state, local, municipal,
foreign, or other governmental authority of any nature (including any
governmental agency, branch, bureau, department, official, securities exchange
or automated quotation system, or entity and any court or other tribunal).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"I-Link Loan Documents" means the documents identified on
Schedule 3.7 as the I-Link Loan Documents.
"I-Link Shareholders Agreement" means the Shareholders Agreement,
dated as of October 10, 1997, among Medcross, Inc., a Florida corporation and
predecessor to I-Link, Winter Harbor, and certain other shareholders of I-Link.
"Legal Requirement" means applicable common law and any applicable
law, statute, regulation, rule, ordinance, order, administrative order,
treaty, standard, decree, or judgment duly enacted, adopted, or promulgated by
any Governmental Authority and having the force and effect of law.
"Person" means any natural person, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Authority.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Authority or arbitrator.
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"Required Consents" means those Consents designated on Schedule 3.5
or Schedule 4.3 as "Required Consents."
"Second Closing" means the consummation of the purchase and sale of
the Second Closing Securities and the other transactions occurring
contemporaneously therewith, in accordance with the applicable provisions of
Article 8.
"Second Closing Date" means the date on which the Second Closing
occurs, as determined pursuant to Section 8.1(a).
"Second Closing Securities" means those securities issued by I-Link
and held by Winter Harbor on the date of this Agreement that are designated as
"Second Closing Securities" on Exhibit A. In the event of any change in the
securities of I-Link by reason of stock dividends, splits, combinations,
subdivisions or reclassifications, mergers, recapitalizations, extraordinary
dividends or distributions, exchanges of shares or the like, the type and
number of securities constituting the Second Closing Securities shall be
appropriately adjusted.
"Securities Act" means the Securities Act of 1933, or any successor
federal statute, and the rules and regulations of the SEC promulgated
thereunder, in each case as amended from time to time.
"Securities" means the First Closing Securities and the Second
Closing Securities.
"Significant Transaction" means any action taken by I-Link to:
(i) amend, modify or repeal the charter or by-laws of
I-Link or the articles of incorporation, by-laws, or other
organizational document of any subsidiary, or to create, authorize,
designate or issue any class or series of equity securities of I-Link
or any subsidiary or any option, warrants or other rights to receive
any class or series of equity securities of I-Link or any subsidiary;
(ii) effect any merger, recapitalization or
consolidation with or into another entity, or enter into any binding
share exchange or similar transaction with any entity;
(iii) sell, transfer, lease or dispose of all or
substantially all of its assets in one transaction or a series of
related transactions, or liquidate, dissolve or wind-up its affairs;
(iv) sell, transfer, dispose of, lease, pledge or
encumber (a "disposition"), or engage in a series of related
dispositions, of any of its assets (including rights) having a value,
in the aggregate for such transaction or series of transactions, in
excess of $250,000, other than in the ordinary course of business;
(v) lease or otherwise acquire any assets having a
value, in the aggregate, in excess of $250,000, other than in the
ordinary course of business;
(vi) incur or prepay any indebtedness (or guarantee
obligations of others or enter into any other guarantee or credit
support arrangement) other than trade debt incurred in the ordinary
course of business;
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(vii) pay any dividend or make other distributions or
redemption payments with respect to any of its equity interests;
(viii) conduct or engage in any business other than the
business in which it is presently engaged (and such other businesses
as are reasonably ancillary thereto);
(ix) acquire, own or hold for investment any equity
interests in another entity or any option, warrant, or other debt or
equity interest convertible into or evidencing the right to acquire
(whether or not for additional consideration) any equity interest in
such entity;
(x) enter into any transaction or agreement (or amend
any agreement) with any affiliate of I-Link or any of the I-Link
shareholders;
(xi) hire, employ or discharge any of its executive
officers, managers or key employees;
(xii) initiate or settle any litigation involving an
amount in controversy in excess of $250,000;
(xiii) adopt or amend any employee benefit plan or
program, other than those employee benefit plans and programs and
amendments thereto as described in I-Link's preliminary proxy
statement filed August 11, 2000;
(xiv) enter into any commitment or series of related
commitments involving a payment or payments of an aggregate amount in
excess of $500,000.
1.2 Terms Defined Elsewhere in This Agreement. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
AAA Section 10.13(a)
Damages Section 11.1
DOJ Section 5.5
Financial Statements Section 4.5
FTC Section 5.5
I-Link Preliminary Statements
Option Agreement I Section 2.2(b)
Option Agreement II Section 2.2(c)
Red Cube Preamble
Red Cube Indemnified Persons Section 11.1
Red Cube Options Section 3.9
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Term Section
Registration Rights Agreement Section 5.3
Voting Agreement Section 5.6(b)
Voting Stock Section 5.6(a)
Winter Harbor Preamble
Winter Harbor Indemnified Persons Section 11.2
1.3 Rules of Construction. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender and any other number as the context requires. Except as
specifically otherwise provided in this Agreement in a particular instance, a
reference to a Section, Schedule, or Exhibit is a reference to a Section of this
Agreement or a Schedule or Exhibit hereto, and the terms "hereof," "herein," and
other like terms refer to this Agreement as a whole, including the Schedules and
Exhibits to this Agreement, and not solely to any particular part of this
Agreement. The descriptive headings in this Agreement 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.
1.4 Knowledge. References herein to "knowledge of Red Cube" or
"knowledge of Winter Harbor" refers to the actual knowledge of the executive
officers of such party.
Article 2
Purchase and Sale of Securities
2.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, Red Cube agrees to purchase from Winter Harbor, and Winter Harbor
agrees to sell to Red Cube, all of the Securities, free and clear of any lien,
pledge, or other security interest or encumbrance (other than any restrictions
under securities laws and restrictions under this Agreement and the I-Link
Shareholders Agreement), and all of Winter Harbor's right, title, and interest
in the I-Link Shareholders Agreement and the I-Link Loan Documents for the
consideration specified in Section 2.2.
2.2 Consideration. As consideration for the sale of the Securities, Red
Cube agrees to pay and deliver to Winter Harbor the following consideration:
(a) At the First Closing, Red Cube will pay to Winter Harbor
$35,000,000 by wire transfer of same-day funds pursuant to wire instructions
which shall be delivered by Winter Harbor to Red Cube at least two Business Days
prior to the First Closing Date.
(b) At the First Closing, Red Cube will grant to Winter Harbor an
option to purchase from Red Cube 52,499 ordinary shares of Red Cube, at a per
share purchase price in Swiss francs equal to $190.48 multiplied by the Swiss
▇▇▇▇▇ to United States dollar exchange rate as published in the Neue Züricher
Zeitung on the day of the First Closing, in accordance with an Option Agreement
substantially in the form of Exhibit C, to be entered into between Red
5
Cube and Winter Harbor at the First Closing ("Option Agreement I"). The number
and type of securities of Red Cube that may be purchased by Winter Harbor upon
exercise of the option described in this Section 2.2(b), and the purchase price
therefor, shall be subject to adjustment as provided in Option Agreement I.
(c) At the First Closing, Red Cube will grant to Winter Harbor an
option to purchase from Red Cube 58,333 ordinary shares of Red Cube, at a per
share purchase price in Swiss francs equal to $171.43 multiplied by the Swiss
▇▇▇▇▇ to United States dollar exchange rate as published in the Neue Züricher
Zeitung on the day of the First Closing, in accordance with an Option Agreement
substantially in the form of Exhibit D, to be entered into between Red Cube and
Winter Harbor at the First Closing ("Option Agreement II"). The number and type
of securities of Red Cube that may be purchased by Winter Harbor upon exercise
of the option described in this Section 2.2(c), and the purchase price therefor,
shall be subject to adjustment as provided in Option Agreement II.
(d) At the Second Closing, Red Cube will pay to Winter Harbor
$25,000,000 by wire transfer of same-day funds pursuant to wire instructions
which shall be delivered by Winter Harbor to Red Cube at least two Business Days
prior to the Second Closing Date.
2.3 No Allocation of Consideration. Red Cube and Winter Harbor agree
that the allocation of the total consideration payable to Winter Harbor pursuant
to Section 2.2 between amounts payable at the First Closing and amounts payable
at the Second Closing does not necessarily reflect the allocation of such total
consideration between the First Closing Securities and the Second Closing
Securities.
Article 3
Representations of Winter Harbor
Winter Harbor represents and warrants to Red Cube as follows:
3.1 Organization and Authority. Winter Harbor is a limited liability
company duly organized, validly existing, and in good standing under the laws of
the State of Delaware. Winter Harbor has the requisite limited liability company
power and authority to execute, deliver, and perform this Agreement and the
documents contemplated hereby according to their respective terms. Winter Harbor
is duly licensed or qualified to do business as a foreign limited liability
company under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it requires such licensing or qualification.
Winter Harbor has delivered to Red Cube true and complete copies of
the certificate of formation and the limited liability company agreement of
Winter Harbor.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Winter Harbor have been duly authorized by all
necessary limited liability company action on the part of Winter Harbor. This
Agreement has been duly executed and delivered by Winter Harbor and constitutes
the legal, valid, and binding obligation of Winter
6
Harbor, enforceable against Winter Harbor in accordance with its terms except as
the enforceability of this Agreement may be affected by bankruptcy, insolvency,
or similar Legal Requirements affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
3.3 Ownership of Stock. Winter Harbor owns of record and beneficially
the Securities listed on Exhibit A, free and clear of any lien, pledge, or other
security interest or encumbrance (other than any restrictions under securities
laws and restrictions under this Agreement and the I-Link Shareholders
Agreement). The Securities represent no less than a majority of the total
outstanding shares of common stock of I-Link on a fully diluted basis. Winter
Harbor is not a party to any option, warrant, purchase right, or other contract
or commitment that could require Winter Harbor to sell, transfer, or otherwise
dispose of any Securities (other than this Agreement and the I-Link Shareholders
Agreement).
3.4 Voting Authority. Winter Harbor is not a party to any voting
agreement with respect to any of the Securities other than the I-Link
Shareholders Agreement and has not granted a revocable or an irrevocable proxy
to any Person with respect to any of the Securities other than the proxy granted
to Red Cube under Section 5.6(a) of this Agreement.
3.5 Absence of Conflicting Agreements; Consents. Except as set forth on
Schedule 3.5, and subject to the expiration or termination of all waiting
periods under the HSR Act, to the knowledge of Winter Harbor the execution,
delivery, and performance by Winter Harbor of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the lapse of time, or
both): (a) do not require the consent of any third party; (b) will not conflict
with any provision of the limited liability company agreement or certificate of
formation of Winter Harbor, each as currently in effect; (c) will not conflict
with, result in a breach of, or constitute a default under any Legal
Requirement; and (d) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of any agreement,
instrument, license, or permit to which Winter Harbor is a party or by which
Winter Harbor may be bound.
3.6 Disclosure.
(a) No representation or warranty of Winter Harbor contained in this
Agreement contains any untrue statement of a material fact, or omits to state
any material fact which is required to be stated therein or necessary in order
to make the statements contained herein or therein, in the light of the
circumstances in which they were made, not misleading.
(b) There is no fact known to any officer of Winter Harbor that may
adversely affect Winter Harbor's ability to perform its obligations hereunder.
3.7 No Related Party Transactions. Except as set forth on Schedule 3.7,
Winter Harbor does not have any interest in any property used in I-Link's
business, has no equity or other financial interest in any person that has
business dealings with I-Link or a material financial interest in any
transaction to which I-Link is a party, other than in the ordinary course of
business and at market prices and on market terms, is not engaged in competition
with I-Link, is not party to any contract with I-Link, and does not have any
claim or right against I-Link.
7
3.8 Brokers and Finders. Neither Winter Harbor nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
this Agreement or the other transactions contemplated in this Agreement except,
as disclosed by Winter Harbor to Red Cube, that Winter Harbor has employed ▇▇▇▇▇
▇. ▇▇▇▇▇ as its financial advisor.
3.9 Investment Matters. If the options granted pursuant to Option
Agreement I or Option Agreement II (the "Red Cube Options") are exercised,
Winter Harbor will be acquiring the ordinary shares of Red Cube for its own
account for investment purposes only and not with a view to, or for sale in
connection with, any resale or distribution thereof in violation of the
Securities Act. Winter Harbor acknowledges that the shares of ordinary shares of
Red Cube are not currently and will not at the time the Red Cube Options are
exercised be registered under the Securities Act or any applicable state
securities law, and that such shares may not be transferred or sold except
pursuant to the registration provisions of the Securities Act or pursuant to an
applicable exemption therefrom and pursuant to state securities laws and
regulations, as applicable.
Article 4
Representations of Red Cube
Red Cube represents and warrants to Winter Harbor as follows:
4.1 Organization and Authority. Red Cube is a corporation duly
organized, validly existing, and in good standing under the laws of Switzerland.
Red Cube has the requisite corporate power and authority to own, lease, and
operate its properties, to carry on its business in the places where such
properties are now owned, leased, or operated and such business is now
conducted, and to execute, deliver, and perform this Agreement and the documents
contemplated hereby according to their respective terms. Red Cube has delivered
to Winter Harbor true and complete copies of its organizational documents.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Red Cube have been duly authorized by all
necessary corporate action on the part of Red Cube. This Agreement has been duly
executed and delivered by Red Cube and constitutes the legal, valid, and binding
obligation of Red Cube, enforceable against Red Cube in accordance with its
terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar Legal Requirements affecting creditors'
rights generally and by judicial discretion in the enforcement of equitable
remedies.
4.3 Absence of Conflicting Agreements; Consents. Except as set forth on
Schedule 4.3, and subject to the expiration or termination of all waiting
periods under the HSR Act, to the knowledge of Red Cube, the execution,
delivery, and performance by Red Cube of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the lapse of time, or
both): (a) do not require the consent of any third party; (b) will not conflict
with any provision of any corporate organizational documents of Red Cube, each
as currently in effect; (c) will not conflict with, result in a breach of, or
constitute a default under any Legal Requirement; and (d) will not conflict
with, constitute grounds for termination of, result in a
8
breach of, constitute a default under, or accelerate or permit the acceleration
of any performance required by the terms of any agreement, instrument, license,
or permit to which Red Cube is a party or by which Red Cube may be bound.
4.4 Capitalization. The authorized and issued capital stock of Red Cube
is described on Schedule 4.4. All issued and outstanding shares of capital stock
of Red Cube have been duly and validly issued and are fully paid and
nonassessable. Except as described on Schedule 4.4, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
Red Cube to issue, sell, or otherwise cause to become outstanding any of its
capital stock, and there are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to Red Cube.
Red Cube has not violated any Legal Requirement in connection with the offer for
sale or sale and issuance of its outstanding shares of capital stock or any
other securities.
4.5 Financial Statements. Red Cube has delivered to Winter Harbor the
following financial statements (the "Financial Statements"): (a) drafts (which
drafts are subject to revisions as part of the normal process of finalizing such
drafts) consolidated financial statements for the year ended December 31, 1999
and for the period from September 30, 1998 (inception) through December 31, 1998
and (b) a draft (which draft is subject to revisions as part of the normal
process of finalizing such draft) "pro forma" financial statements for the
period ended June 30, 2000. To the knowledge of Red Cube, as of the date hereof,
the Financial Statements have been prepared from the books and records of Red
Cube, have been prepared in accordance with international accounting standards,
accurately reflect the books, records, and accounts of Red Cube, and present
fairly the financial condition of Red Cube as at their respective dates, and the
results of operations for the periods then ended. Except as set forth on
Schedule 4.5, to the knowledge of Red Cube, Red Cube has no material debt,
liability, or obligation, whether accrued, absolute, contingent, or otherwise,
except (a) liabilities reflected in the Financial Statements and (b) liabilities
(other than contingent liabilities) incurred in the ordinary course of business
since June 30, 2000.
4.6 Investment. Red Cube is acquiring the Securities for its own
account for investment purposes only and not with a view to, or for sale in
connection with, any resale or distribution thereof in violation of the
Securities Act. Red Cube acknowledges that the Securities are not registered
under the Securities Act or any applicable state securities law, and that such
Securities may not be transferred or sold except pursuant to the registration
provisions of the Securities Act or pursuant to an applicable exemption
therefrom and pursuant to state securities laws and regulations as applicable.
4.7 Experience. Red Cube is able financially to bear the risks of an
investment in the Securities. Red Cube is an "accredited investor" as defined in
Regulation D under the Securities Act. Red Cube has not been organized,
reorganized, or recapitalized specifically for the purpose of investing in
I-Link.
4.8 Brokers and Finders. Neither Red Cube nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees,
9
commissions or finders fees in connection with this Agreement or the other
transactions contemplated in this Agreement.
4.9 Disclosure.
(a) No representation or warranty of Red Cube contained in this
Agreement contains any untrue statement of a material fact, or omits to state
any material fact which is required to be stated therein or necessary in order
to make the statements contained herein or therein, in the light of
circumstances in which they were made, not misleading.
(b) There is no fact known to any officer of Red Cube that may
adversely affect Red Cube's ability to perform its obligations hereunder.
Article 5
Covenants and Agreements
5.1 Confidentiality. Except as necessary for the consummation of the
transactions contemplated by this Agreement, and except as and to the extent
required by any Legal Requirement, each party will keep confidential any
information obtained from the other party in connection with the transactions
contemplated by this Agreement.
5.2 Cooperation. The parties to this Agreement shall cooperate fully
with each other and their respective counsel and accountants in connection with
any actions required to be taken as part of their respective obligations under
this Agreement, and each party shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use commercially reasonable efforts to consummate the
transactions contemplated hereby and to fulfill their obligations under this
Agreement.
5.3 Registration Rights Agreement. At the First Closing, Red Cube and
Winter Harbor will enter into a Registration Rights Agreement substantially in
the form of Exhibit D (the "Registration Rights Agreement").
5.4 Consents. The parties will use commercially reasonable efforts to
obtain as expeditiously as possible all Consents. Each party will promptly and
regularly advise the other parties concerning the occurrence and status of any
discussions or other communications, whether oral or written, with any
Governmental Authority or other third party with respect to any Consent,
including any difficulties or delays experienced in obtaining any Consent and of
any conditions proposed, considered, or requested for any Consent.
5.5 HSR Act Filing. Red Cube agrees to (a) file, or cause to be filed,
with the U.S. Department of Justice ("DOJ") and Federal Trade Commission ("FTC")
all filings, if any, that are required in connection with the transactions
contemplated hereby under the HSR Act within five Business Days of the date of
this Agreement; (b) cooperate with I-Link in connection with such HSR Act
filings, which cooperation shall include furnishing the other with any
information or documents that may be reasonably required in connection with such
filings; (c) promptly file, after any request by the FTC or DOJ and after
appropriate negotiation with the FTC or DOJ of
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the scope of such request, any information or documents requested by the FTC or
DOJ; and (d) notify I-Link and Winter Harbor of any material communications with
the FTC or DOJ that relate to the transactions contemplated hereunder, and to
the extent practicable, permit I-Link to participate in any conferences with the
FTC or DOJ. Promptly after the signing of this Agreement, Red Cube will send a
written notice to I-Link with respect to their filing obligations under the HSR
Act. The parties agree to equally share the expenses associated with the filings
described in this Section 5.5.
5.6 Proxy and Voting Agreement.
(a) Irrevocable Proxy. Effective upon the First Closing, Winter Harbor
hereby grants to Red Cube an irrevocable proxy, with full power of substitution,
to exercise voting authority and authority to act by written consent over all
Second Closing Securities that constitute Voting Stock on all proposals or
matters submitted to all or any class or classes of Voting Stock, which proxy is
IRREVOCABLE AND COUPLED WITH AN INTEREST for purposes of Section 607.0722(5) of
the Florida Business Corporation Act. "Voting Stock" means, with respect to any
matter to be voted on by the shareholders of I-Link, shares of capital stock of
I-Link entitled to vote on such matter under the Articles of Incorporation of
I-Link and the Florida Business Corporation Act. Notwithstanding the foregoing,
before the date of the First Closing, the proxy granted in this Section 5.6
shall not apply to proposals or matters submitted to all or any class or classes
of Voting Stock if such matters or proposals are solely concerned with the
operational conduct of the business of I-Link as such business has been
conducted in its ordinary course and consistent with past practices. After the
date of the First Closing and until the termination of the parties' rights and
obligations under this Section 5.6 pursuant to subclause (d) of this Section
5.6, the proxy granted in this section shall apply to any and all proposals or
matters submitted to all or any class or classes of Voting Stock.
(b) Voting Agreement. Winter Harbor and Red Cube shall enter into a
voting agreement, effective as of September •, 2000 (the "Voting Agreement").
(c) Governmental Approvals. Notwithstanding anything in Section 5.6(a)
or Section 5.6(b) to the contrary, if the proxy provided for in Section 5.6(a)
or the voting agreement provided for in Section 5.6(b) would violate any Legal
Requirement in the absence of any consent, permit, or approval of any
Governmental Authority, then, notwithstanding Section 5.6(a) or Section 5.6(b),
the effectiveness of the proxy provided for in Section 5.6(a) or the voting
agreement provided for in Section 5.6(b), as applicable, shall be conditioned on
the receipt of each such consent, permit, or approval. Winter Harbor and Red
Cube will use their respective diligent efforts to obtain, or to assist I-Link
in obtaining, as expeditiously as possible, any such consent, permit, or
approval that, in the opinion of Red Cube and its counsel, is required for the
effectiveness of the proxy provided for in Section 5.6(a) or the voting
agreement provided for in Section 5.6(b).
(d) Termination. The rights and obligations of Red Cube and Winter
Harbor under this Section 5.6 shall automatically terminate, without further
action by Red Cube or Winter Harbor, on the earlier of (1) the fifth Business
Day following the date on which ordinary shares of Red Cube commence trading on
the SWX New Market or (2) April 2, 2001.
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5.7 Notification.
(a) Between the date of this Agreement and the First Closing Date,
Winter Harbor shall promptly notify Red Cube in writing if Winter Harbor becomes
aware of any fact or condition that causes or constitutes a breach of any of its
representations and warranties as of the date of this Agreement, or if Winter
Harbor becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of the occurrence
of discovery of such fact or condition. During the same period, Winter Harbor
shall promptly notify Red Cube of the occurrence of any breach of any covenant
of Winter Harbor in this Article 5.
(b) Between the date of this Agreement and the First Closing Date, Red
Cube shall promptly notify Winter Harbor in writing if Red Cube becomes aware of
any fact or condition that causes or constitutes a breach of any of its
representations and warranties as of the date of this Agreement, or if Red Cube
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of the occurrence of
discovery of such fact or condition. During the same period, Red Cube shall
promptly notify Winter Harbor of the occurrence of any breach of any covenant of
Red Cube in Article 5.
5.8 Board Seats. Prior to the termination of this Agreement, Winter
Harbor agrees not to remove or cause to resign the two directors elected to the
I-Link board of directors by it pursuant to its rights under the I-Link
Shareholder Agreement and as the sole holder of the shares of the Series M
Preferred Stock of I-Link, without the prior written consent of Red Cube.
5.9 Winter Harbor Lock-Up and Standstill.
(a) If Winter Harbor exercises the Red Cube Options prior to the date
which is one hundred and eighty days after Red Cube's initial public offering,
Winter Harbor will enter into an agreement containing customary restrictions on
dispositions of the ordinary shares of Red Cube acquired by Winter Harbor upon
exercise of the Red Cube Options for up to one hundred eighty days after the
consummation of Red Cube's initial public offering, provided those restrictions
are on the same terms as are imposed by the underwriters in Red Cube's initial
public offering on the other significant shareholders and the officers of Red
Cube.
5.10 Significant Transactions. Winter Harbor shall not consent to or
approve any Significant Transaction that requires the consent or approval of
Winter Harbor pursuant to the I-Link Shareholder Agreement or as a holder of the
shares of the Series M Preferred Stock of I-Link without the prior written
consent of Red Cube.
5.11 Options. In the event that Red Cube is unable to issue the Red
Cube Options that will be exercisable for ten years from the date of the grant
of such options at the first Closing, (i) Red Cube covenants and agrees to
issues options substantially in the form of the Red Cube Options with the sole
exception that such options shall terminate five years after the date of the
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grant of such options, (ii) KPR covenants and agrees to amend, as soon as
reasonably practicable, the relevant corporate documents of Red Cube so that Red
Cube is able to grant options which are exercisable for ten years from the date
of the granting of such options, and (iii) Red Cube agrees, as soon as
reasonably practicable after the amendment of its corporate documents referred
to in sub-clause (ii) of this Section, to exchange with Winter Harbor, the
options granted under sub-clause (i) of this Section for options which are
substantially in the form of the Red Cube Options.
Article 6
Conditions to Obligations of the Parties at the First Closing
6.1 Conditions to Obligations of Red Cube at the First Closing. All
obligations of Red Cube at the First Closing hereunder are subject at Red Cube's
option to the fulfillment prior to or at the First Closing Date of each of the
following conditions:
(a) Accuracy of Representations. All of Winter Harbor's representations
and warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), (1) must have been
accurate (determined without regard to any materiality limitation contained in
any such representation or warranty), in all material respects, as of the date
of this Agreement and (2) must be accurate (determined without regard to any
materiality limitation contained in any such representation or warranty), in all
material respects, as of the First Closing.
(b) Winter Harbor shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by Winter Harbor prior to or on the First Closing
Date.
(c) All Required Consents shall have been obtained, all such Consents
shall be in full force and effect, and all waiting periods under the HSR Act
applicable to this Agreement or the transactions contemplated by this Agreement
to be consummated at the Closings shall have expired or been terminated.
(d) Winter Harbor shall have made or be willing to make and capable of
making all the deliveries described in Section 7.2.
(e) No Proceedings.
(i) Since the date of this Agreement, there must not have been
commenced or threatened against Winter Harbor, any Proceedings that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the transactions contemplated by this Agreement (other than any
Proceeding commenced or threatened by Red Cube or any of its affiliates).
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(ii) There must not be in effect any Legal Requirement or any
injunction or other judicial order that (A) prohibits the sale of the Securities
or the other transactions contemplated by this Agreement and (B) has been
adopted or issued, or has otherwise become effective, since the date of this
Agreement.
(f) No Claim Regarding Stock Ownership or Sale Proceeds. There must not
have been made or threatened by any Person any claim asserting that such Person
(1) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any Securities or (2) is entitled to all or any
portion of the amounts or securities payable or issuable in exchange for the
Securities.
(g) No Prohibition. Neither the consummation nor the performance of any
of the transactions contemplated by this Agreement shall, directly or indirectly
(with or without notice or lapse of time), materially contravene, or conflict
with, or result in a material violation of, or cause Red Cube to suffer any
material violation of, or cause Red Cube to suffer any material adverse
consequence under, any applicable Legal Requirement.
(h) Additional Documents. Winter Harbor must have caused to be
delivered to Red Cube such other documents as Red Cube may reasonably request
for the purpose of (A) evidencing the accuracy of the representations or
warranties of Winter Harbor, (B) evidencing the performance by Winter Harbor of,
or the compliance by Winter Harbor with, the covenants and obligations required
to be performed or complied with by Winter Harbor, (C) evidencing the
satisfaction of any condition referred to in this Section 6.1 or (D) otherwise
facilitating the consummation of any of the transactions contemplated by this
Agreement.
6.2 Conditions to Obligations of Winter Harbor at the First Closing.
All obligations of Winter Harbor at the First Closing hereunder are subject at
Winter Harbor's option to the fulfillment prior to or at the First Closing Date
of each of the following conditions:
(a) Accuracy of Representations. All of Red Cube's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), (1) must have been
accurate (determined without regard to any materiality limitation contained in
any such representation or warranty), in all material respects, as of the date
of this Agreement and (2) must be accurate (determined without regard to any
materiality limitation contained in any such representation or warranty), in all
material respects, as of the First Closing except with respect to Schedule 4.4,
which Schedule shall not be deemed to be inaccurate due to changes in the issued
capital stock of Red Cube, if such changes are the result of additional capital
increases by Red Cube that are effected through (i) sales of securities in the
ordinary course of business of Red Cube, (ii) exchange of securities in
connection with the acquisition of securities or assets in the ordinary course
of business of Red Cube, (iii) stock option grants in the ordinary course of
business of Red Cube, or (iv) the currently contemplated capital increase that
is intended, among other things, to provide financing for the transactions
contemplated herein.
(b) Covenants. Red Cube shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it prior to or on the First Closing Date.
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(c) Consents. All Required Consents shall have been obtained, all such
Consents shall be in full force and effect, and all waiting periods under the
HSR Act applicable to this Agreement or the transactions contemplated by this
Agreement to be consummated at the Closings shall have expired or been
terminated.
(d) Deliveries. Red Cube shall have made or be willing to make and
capable of making all the deliveries described in Section 7.3.
(e) No Proceedings.
(i) Since the date of this Agreement, there must not have been
commenced or threatened against Red Cube, any Proceedings that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the transactions contemplated by this Agreement (other than any
Proceeding commenced or threatened by Winter Harbor or any of its affiliates).
(ii) There must not be in effect any Legal Requirement or any
injunction or other judicial order that (A) prohibits the sale of the Securities
or the other transactions contemplated by this Agreement and (B) has been
adopted or issued, or has otherwise become effective, since the date of this
Agreement.
(f) No Prohibition. Neither the consummation nor the performance of any
of the transactions contemplated by this Agreement shall, directly or indirectly
(with or without notice or lapse of time), materially contravene, or conflict
with, or result in a material violation of, or cause Winter Harbor to suffer any
material violation of, or cause Winter Harbor to suffer any material adverse
consequence under, any applicable Legal Requirement.
(g) Additional Documents. Red Cube must have caused to be delivered to
Winter Harbor such other documents as Winter Harbor may reasonably request for
the purpose of (A) evidencing the accuracy of the representations or warranties
of Red Cube, (B) evidencing the performance by Red Cube of, or the compliance by
Red Cube with, the covenants and obligations required to be performed or
complied with by Red Cube, (C) evidencing the satisfaction of any condition
referred to in this Section 6.2 or (D) otherwise facilitating the consummation
of any of the transactions contemplated by this Agreement.
6.3 Conditions to Obligations of Red Cube at the Second Closing. All
obligations of Red Cube at the Second Closing hereunder are subject at Red
Cube's option to the fulfillment prior to or at the Second Closing Date of each
of the following conditions:
(a) Accuracy of Certain Representations. All representations and
warranties of Winter Harbor in Section 3.1, Section 3.2, and Section 3.3 (other
than the second sentence of Section 3.3) shall be true in all material respects
at and as of the Second Closing Date as though made at and as of that time,
except for changes resulting from the consummation of the First Closing.
(b) No Proceedings.
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(i) Since the date of this Agreement, there must not have been
commenced or threatened against Winter Harbor, any Proceedings that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the transactions contemplated by this Agreement (other than any
Proceeding commenced or threatened by Red Cube or any of its affiliates).
(ii) There must not be in effect any Legal Requirement or any
injunction or other judicial order that (i) prohibits the sale of the Second
Closing Securities or transactions contemplated by this Agreement and (ii) has
been adopted or issued, or has otherwise become effective, since the date of
this Agreement.
(c) No Claim Regarding Stock Ownership. There must not have been made
or threatened by any Person any claim asserting that such Person is the holder
or the beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any Second Closing Securities.
(d) No Prohibition. Neither the consummation nor the performance of any
of the transactions contemplated by this Agreement shall, directly or indirectly
(with or without notice or lapse of time), materially contravene, or conflict
with, or result in a material violation of any applicable Legal Requirement.
(e) Additional Documents. Winter Harbor must have caused to be
delivered to Red Cube such other documents as Red Cube may reasonably request
for the purpose of (A) evidencing the accuracy of the representations or
warranties of Winter Harbor, (B) evidencing the performance by Winter Harbor of,
or the compliance by Winter Harbor with, the covenants and obligations required
to be performed or complied with by Winter Harbor, (C) evidencing the
satisfaction of any condition referred to in this Section 6.3 or (D) otherwise
facilitating the consummation of any of the transactions contemplated by this
Agreement.
(f) Deliveries. Winter Harbor shall have made or be willing to make and
capable of making all the deliveries described in Section 8.2.
6.4 Conditions to Obligations of Winter Harbor at the Second Closing.
All obligations of Winter Harbor at the Second Closing hereunder are subject at
Winter Harbor's option to the fulfillment prior to or at the Second Closing Date
of each of the following conditions:
(a) Accuracy of Certain Representations. All representations and
warranties of Red Cube contained in Section 4.1 and Section 4.2 shall be true in
all material respects at and as of the Second Closing Date as though made at and
as of that time.
(b) No Proceedings.
(i) Since the date of this Agreement, there must not have been
commenced or threatened against Red Cube, any Proceedings that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the transactions contemplated by this Agreement (other than any
Proceeding commenced or threatened by Winter Harbor or any of its affiliates).
16
(ii) There must not be in effect any Legal Requirement or any
injunction or other judicial order that (A) prohibits the sale of the Second
Closing Securities or the other transactions contemplated by this Agreement and
(B) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
(c) No Prohibition. Neither the consummation nor the performance of any
of the transactions contemplated by this Agreement shall, directly or indirectly
(with or without notice or lapse of time), materially contravene, or conflict
with, or result in a material violation of any applicable Legal Requirement.
(d) Additional Documents. Red Cube must have caused to be delivered to
Winter Harbor such other documents as Winter Harbor may reasonably request for
the purpose of (A) evidencing the accuracy of the representations or warranties
of Red Cube, (B) evidencing the performance by Red Cube of, or the compliance by
Red Cube with, the covenants and obligations required to be performed or
complied with by Red Cube, (C) evidencing the satisfaction of any condition
referred to in this Section 6.4 or (D) otherwise facilitating the consummation
of any of the transactions contemplated by this Agreement.
(e) Deliveries. Red Cube shall have made or be willing to make and
capable of making all the deliveries described in Section 8.3.
Article 7
First Closing and First Closing Deliveries
7.1 First Closing.
(a) First Closing Date.
(i) Except as provided in Section 7.1(a)(ii), or as otherwise
agreed to by Red Cube and Winter Harbor, the First Closing shall take place at
10:00 a.m. on the fifth Business Day after the satisfaction of the conditions
specified in Section 6.1(c).
(ii) If on the date on which the First Closing would otherwise be
required to take place pursuant to Section 7.1(a)(i), (A) there shall be in
effect any judgment, decree, or order that would prevent or make unlawful either
Closing, or (B) any other circumstance beyond the reasonable control of Winter
Harbor or Red Cube shall exist that would prevent either Closing or the
satisfaction of any of the conditions precedent to the obligations of either
party set forth in this Agreement, then Winter Harbor or Red Cube may, at its
option, postpone the date on which the First Closing is required to take place
until such date, to be set by the postponing party on at least five Business
Days' written notice to the other party, as soon as practicable after such
judgment, decree, or order ceases to be in effect, such other circumstance
ceases to exist, or such conditions have been satisfied or are capable of being
satisfied concurrently with the First Closing; provided, however, that
postponement of the date on which the First Closing is required to take place
shall not restrict the exercise by either party of its rights under Section 9.1
or Section 9.2, as applicable.
17
(b) First Closing Place. The First Closing shall be held at the offices
of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or any other
place that is agreed upon by Red Cube and Winter Harbor.
7.2 Deliveries by Winter Harbor. At the First Closing, Winter Harbor
shall deliver to Red Cube:
(a) certificates representing the First Closing Securities (to the
extent such Securities are certificated), together with duly executed
assignments separate from certificate in form and substance sufficient to
effectuate the transfer of the First Closing Securities to Red Cube, free and
clear of any lien, pledge, or other security interest or encumbrance (other than
any restrictions under securities laws and restrictions under this Agreement and
the I-Link Shareholders Agreement).
(b) an opinion of Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to Winter Harbor,
dated as of the First Closing Date, substantially in the form of Exhibit E
hereto.
(c) the Registration Rights Agreement in the form of Exhibit D, duly
executed on behalf of Winter Harbor.
(d) Option Agreement I in the form of Exhibit B, duly executed on
behalf of Winter Harbor.
(e) Option Agreement II in the form of C, duly executed on behalf of
Winter Harbor.
(f) a certificate, dated as of the First Closing Date, executed by
Winter Harbor, certifying (1) that the representations and warranties of Winter
Harbor contained in this Agreement are true in all material respects as of the
First Closing Date as though made on and as of that date and (2) that Winter
Harbor has in all material respects performed and complied with all of its
covenants and agreements in this Agreement to be performed and complied with on
or prior to the First Closing Date.
(g) an instrument of assignment, duly executed by Winter Harbor and in
a form reasonably acceptable to Red Cube, effecting the assignment to Red Cube
of all of Winter Harbor's right, title, and interest under the I-Link
Shareholders Agreement, to the extent such rights are assignable, except insofar
as such rights relate solely to the Second Closing Securities.
(h) an instrument of assignment, duly executed by Winter Harbor and in
a form reasonably acceptable to Red Cube, effecting the assignment to Red Cube
of all of Winter Harbor's right, title and interest under the I-Link Loan
Documents.
7.3 Deliveries by Red Cube. At the First Closing, Red Cube shall
deliver to Winter Harbor:
(a) the consideration specified in Section 2.2(a).
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(b) a certificate, dated as of the First Closing Date, executed by Red
Cube, certifying (1) that the representations and warranties of Red Cube
contained in this Agreement are true in all material respects as of the First
Closing Date as though made on and as of that date and (2) that Red Cube has in
all material respects performed and complied with all of its covenants and
agreements in this Agreement to be performed and complied with on or prior to
the First Closing Date.
(c) an opinion of Heierli Rechtsanwälte, Swiss counsel to Red Cube,
dated as of the First Closing Date, substantially in the form of Exhibit F
hereto.
(d) an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, U.S. counsel to Red Cube, dated
as of the First Closing Date, substantially in the form of Exhibit G hereto.
(e) the Registration Rights Agreement in the form of Exhibit D, duly
executed on behalf of Red Cube.
(f) Option Agreement I in the form of Exhibit B, duly executed on
behalf of Red Cube.
(g) Option Agreement II in the form of Exhibit C, duly executed on
behalf of Red Cube.
Article 8
Second Closing and Second Closing Deliveries
8.1 Second Closing.
(a) Second Closing Date.
(i) Except as provided in Section 8.1(a)(ii), or as otherwise
agreed to by Red Cube and Winter Harbor, the Second Closing shall take place at
10:00 a.m. on the earlier of (A) the fifth Business Day following the date on
which ordinary shares of Red Cube commence trading on the SWX New Market and (B)
April 2, 2001.
(ii) If on the date on which the Second Closing would otherwise be
required to take place pursuant to Section 8.1(a)(i), (A) there shall be in
effect any judgment, decree, or order that would prevent or make unlawful the
Second Closing, or (B) any other circumstance beyond the reasonable control of
Winter Harbor or Red Cube shall exist that would prevent the Second Closing or
the satisfaction of any of the conditions precedent to the obligations of either
party set forth in this Agreement, then Winter Harbor or Red Cube may, at its
option, postpone the date on which the Second Closing is required to take place
until such date, to be set by the postponing party on at least five Business
Days' written notice to the other party, as soon as practicable after such
judgment, decree, or order ceases to be in effect, such other circumstance
ceases to exist, or such conditions have been satisfied or are capable of being
satisfied concurrently with the Second Closing.
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(b) Second Closing Place. The Second Closing shall be held at the
offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or
any other place that is agreed upon by Red Cube and Winter Harbor.
8.2 Deliveries by Winter Harbor. At the Second Closing, Winter Harbor
shall deliver to Red Cube:
(a) certificates representing the Second Closing Securities (to the
extent such Securities are certificated), together with duly executed
assignments separate from certificate in form and substance sufficient to
effectuate the transfer of the Second Closing Securities to Red Cube, free and
clear of any lien, pledge, or other security interest or encumbrance (other than
any restrictions under securities laws and restrictions under this Agreement and
the I-Link Shareholders Agreement).
(b) a certificate, dated as of the Second Closing Date, executed by
Winter Harbor, certifying that the representations and warranties of Winter
Harbor contained in Section 3.1, Section 3.2 and Section 3.3 (other than the
second sentence of Section 3.3) are true in all material respects as of the
Second Closing Date as though made on and as of that date, except for changes
resulting from the consummation of the First Closing.
(c) an instrument of assignment, duly executed by Winter Harbor,
effecting the assignment to Red Cube of all of Winter Harbor's rights under the
I-Link Shareholders Agreement, to the extent such rights are assignable, insofar
as such rights relate to the Second Closing Securities.
8.3 Deliveries by Red Cube. At the Second Closing, Red Cube shall
deliver to Winter Harbor:
(a) the consideration specified in Section 2.2(d).
(b) a certificate, dated as of the Second Closing Date, executed on
behalf of Red Cube by an authorized officer, certifying that the representations
and warranties of Red Cube contained in Section 4.1 and Section 4.2 are true in
all material respects as of the Second Closing Date as though made on and as of
that date.
Article 9
Termination
9.1 Termination by Winter Harbor. This Agreement may be terminated by
Winter Harbor prior to the First Closing, and the transactions contemplated by
this Agreement abandoned, if Winter Harbor is not then in material default, upon
written notice to Red Cube, upon the occurrence of any of the following:
(a) Conditions. If on the date on which the First Closing is to occur
any of the conditions precedent to the obligations of Winter Harbor set forth in
Section 6.2 of this Agreement has not been satisfied or waived in writing by
Winter Harbor.
20
(b) Judgments. If there shall be in effect on the date on which the
First Closing is to occur any judgment, decree, or order that would prevent or
make unlawful either Closing.
(c) Upset Date. If the First Closing shall not have occurred on or
prior to October 9, 2000.
9.2 Termination by Red Cube. This Agreement may be terminated by Red
Cube prior to the First Closing, and the transactions contemplated by this
Agreement abandoned, if Red Cube is not then in material default, upon written
notice to Winter Harbor, upon the occurrence of any of the following:
(a) Conditions. If on the date on which the First Closing is to occur
any of the conditions precedent to the obligations of Red Cube set forth in
Section 6.1 of this Agreement has not been satisfied or waived in writing by Red
Cube.
(b) Judgments. If there shall be in effect on the date on which the
First Closing is to occur any judgment, decree, or order that would prevent or
make unlawful either Closing.
(c) Upset Date. If the First Closing shall not have occurred on or
prior to October 9, 2000.
9.3 Termination by Mutual Consent. This Agreement may be terminated
prior to the First Closing upon the mutual written agreement of the parties.
9.4 Rights on Termination. If this Agreement is terminated by either
party due to any other party's breach of any provision of this Agreement, the
terminating party shall have all rights and remedies available at law or equity.
Article 10
Miscellaneous
10.1 Fees and Expenses. Each party shall pay its own expenses incurred
in connection with the authorization, preparation, execution, and performance of
this Agreement, including all fees and expenses of counsel, accountants, agents,
and representatives, and each party shall be responsible for all fees or
commissions payable to any finder, broker, advisor, or similar Person retained
by or on behalf of such party.
10.2 Notices. All notices required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be addressed as
follows:
21
If to Winter Harbor: Winter Harbor, L.L.C.
c/o First Media, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not
constitute notice hereunder) to: Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Wild
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Red Cube: Red Cube International AG.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇-▇▇▇▇ ▇▇▇
(▇▇▇▇▇▇▇▇▇▇▇)
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief
Executive Officer
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy (which shall not
constitute notice hereunder) to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to any other or additional Persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 10.2.
Any notice shall be deemed to have been given on the day on which it is received
(or, if such day is not a Business Day or if the notice is not received during
normal business hours at the place of receipt, on the next following Business
Day). A notice mailed by registered or certified mail, postage prepaid and
return receipt requested, shall be deemed to have been received on the date of
receipt shown on the return receipt.
10.3 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
10.4 Further Assurances. The parties shall take any actions and execute
any other documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
10.5 GOVERNING LAW. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of New York (without regard to
the choice of law provisions thereof).
22
10.6 Jurisdiction; Service of Process.
(a) Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this agreement must be brought against any of
the parties in the courts of the State of New York. Each party (a) hereby
irrevocably submits to the jurisdiction of the state courts of the State of New
York and to the jurisdiction of any United States District Court in the State of
New York, for the purpose of any suit, action, or other proceeding arising out
of or based upon this agreement or the subject matter hereof brought by any
party or its successors or assigns and (b) hereby waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action,
or proceeding, any claim that it is not subject personally to the jurisdiction
of the above-named courts, that its property is exempt or immune from attachment
or execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action, or proceeding is improper or that
this agreement or the subject matter hereof may not be enforced in or by such
court, and (c) hereby waives and agrees not to seek any review by any court of
any other jurisdiction that may be called upon to grant an enforcement of the
judgment of any such New York state or federal court.
(b) Process in any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this agreement may be served
on any party anywhere in the world. Each party hereby consents to service of
process by registered mail at the address to which notices are to be given. Red
Cube further agrees that any service of process, writ, judgment or other notice
of legal process shall be deemed and held in every respect to be effectively
served upon it in connection with proceedings in the State of New York, if
delivered to Red Cube, Inc., a Delaware corporation, the offices of which are
currently located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, which Red Cube
irrevocably designates and appoints as its authorized agent for the service of
process in the courts in the State of New York. Winter Harbor further agrees
that any service of process, writ, judgment or other notice of legal process
shall be deemed and held in every respect to be effectively served upon it in
connection with proceedings in the State of New York, if delivered to CT
Corporation System, the offices of which are currently located at ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, which Winter Harbor irrevocably designates and
appoints as its authorized agent for the service of process in the courts in the
State of New York. Nothing herein shall affect the right of Winter Harbor to
serve process in any other manner permitted by applicable law. Red Cube further
agrees that final judgment against it in any such action or proceeding arising
out of or relating to this agreement shall be conclusive and may be enforced in
any other jurisdiction within or outside the United States of America by suit on
the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and of the amount of its liability. The third and fourth
sentences of this paragraph (b) shall terminate and be of no force or effect two
years after the Second Closing.
10.7 Entire Agreement. This Agreement, the Schedules and Exhibits
hereto, and all certificates and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Red Cube and Winter Harbor with respect to the subject matter of this
Agreement. This Agreement supersedes all prior negotiations among the parties
and cannot be amended, supplemented, or changed except by an agreement in
writing that makes specific reference to this Agreement and that is signed by
the party against which enforcement of any such amendment, supplement, or
modification is sought.
23
10.8 Amendments; Waiver of Compliance; Consents. This Agreement may not
be amended, altered, or modified except by a writing signed by both parties to
this Agreement. Except as otherwise provided in this Agreement, any failure of
any of the parties to comply with any obligation, representation, warranty,
covenant, agreement, or condition herein may be waived by the party entitled to
the benefits thereof, but such waiver or failure to insist upon strict
compliance with such obligation, representation, warranty, covenant, agreement,
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of either party hereto, such consent shall be given in a written
instrument signed by the party granting such consent.
10.9 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
10.10 Survival. All agreements, representations, and warranties
contained in this Agreement shall survive the execution and delivery of this
Agreement and the closing of the transactions contemplated hereby.
10.11 Severability. If any provision of this Agreement is held invalid
or unenforceable by a final determination of any court of competent
jurisdiction, the other provisions of this Agreement shall remain in full force
and effect. If any provision of this Agreement, or the application thereof to
any person or entity or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision; and (b) the remainder of this Agreement and
the application of such provision to other persons, entities, or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
10.12 Judgment Currency. This is an international transaction in which
the specification of United States dollars is of the essence, and such currency
shall be the currency of account in all events. The payment obligations of Red
Cube hereunder shall not be discharged by an amount paid in another currency,
whether pursuant to a judgment or otherwise, to the extent that the amount so
paid on prompt conversion to United States dollars under normal banking
procedures does not yield the amount of United States dollars then due.
10.13 Disputed Matters.
(a) Mediation. In the event of any dispute between one or more parties
to this Agreement that arises out of or relates to this Agreement, any party
involved in the dispute may elect to initiate mediation pursuant to the
Commercial Mediation Rules of the American Arbitration Association (or any
organization successor thereto) ("AAA"). The parties involved in the dispute
will cooperate with the AAA and with one another in the appointment of a
mediator and in scheduling the mediation proceedings. Unless otherwise agreed by
the parties involved in the dispute, the first mediation session shall be held
no later than thirty days after the date of filing the written request for
mediation, and the memorandum provided for under Rule 9 of the Commercial
Mediation Rules shall be provided to the mediator at least five Business Days
prior to the first mediation session. All offers, promises, conduct, and
statements, whether oral
24
or written, made in the course of the mediation by any of the parties, their
agents, employees, experts, and attorneys, and by the mediator or any AAA
employees, shall be confidential and inadmissible for any purposes, including
impeachment, in any arbitration or other proceeding involving the parties, but
evidence that is otherwise admissible or discoverable shall not be rendered
inadmissible or non-discoverable as a result of its use in the mediation.
Mediation under this Section 10.13(a) may continue after the commencement of
arbitration pursuant to Section 10.13(b) if the parties involved so agree.
Unless otherwise agreed by the parties involved in the dispute, the mediator
shall be disqualified from serving as arbitrator in the case.
(b) Arbitration. If a dispute between one or more parties to this
Agreement that arises out of or relates to this Agreement is not resolved
through mediation pursuant to Section 10.13(a), then, at any time more than
thirty days after the first mediation session, any party involved in the dispute
may initiate arbitration with respect to the matters submitted to mediation by
giving notice to that effect to the other party or parties involved in the
dispute and by filing the notice with the AAA in accordance with the Commercial
Arbitration Rules. Such dispute shall then be settled by arbitration in New
York, New York, in accordance with the Commercial Arbitration Rules of the AAA
or other rules agreed to by the parties involved in the dispute, by a single
arbitrator, who shall be selected by the parties involved in the dispute using
the procedures for arbitrator selection of the AAA.
(c) United States Arbitration Act. The parties acknowledge that this
Agreement evidences a transaction involving interstate commerce. Insofar as it
applies, the United States Arbitration Act shall govern the interpretation of,
enforcement of, and proceedings pursuant to the arbitration clause in this
Agreement. Except insofar as the United States Arbitration Act applies to such
matters, the agreement to arbitrate set forth in this Section 10.13 shall be
construed, and the legal relations among the parties shall be determined in
accordance with, the substantive laws of the State of New York as provided for
in Section 10.5 of this Agreement.
(d) Decision and Award. The arbitrator shall render his written
decision and award, including a statement of reasons upon which such award is
based, within thirty days after the arbitration hearing. The decision of the
arbitrator shall be in writing and shall be binding upon the parties involved in
the dispute, final and non-appealable. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof in accordance
with Section 10.6(a).
(e) Exclusivity of Arbitration. Except as provided under the United
States Arbitration Act, no action at law or in equity based upon any dispute
that is subject to arbitration under this Section 10.13 shall be instituted.
(f) Fees and Expenses. All expenses of any arbitration pursuant to this
Section 10.13, including fees and expenses of the parties' attorneys, fees and
expenses of the arbitrator, and fees and expenses of any witness or the cost of
any proof produced at the request of the arbitrator, shall be shared equally by
the parties.
10.14 Assignments; Successors; No Third-Party Rights. Neither party may
assign any of its rights and/or obligations under this Agreement to any other
party, and any such attempted
25
assignment or transfer shall be void; provided, however, that Red Cube may
assign or transfer any of its rights and/or obligations under this Agreement to
any Affiliate of Red Cube with the prior consent of Winter Harbor, which consent
shall not be unreasonably withheld or delayed. This Agreement shall apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement shall be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and permitted assigns.
Article 11
Indemnification
11.1 Indemnification and Payment of Damages by Winter Harbor. Winter
Harbor agrees to indemnify and hold harmless Red Cube and its representatives
(collectively, the "Red Cube Indemnified Persons"), for, and shall pay to the
Red Cube Indemnified Persons the amount of, any loss, liability, claim, damage
or expense (including costs of investigation and defense and reasonable
attorneys' fees), on an actual after-tax basis, whether or not involving a
third-party claim (collectively, "Damages"), arising or resulting from or in
connection with:
(a) any Breach of any representation or warranty (determined without
regard to any materiality limitation contained in any such representation or
warranty), made by Winter Harbor in this Agreement;
(b) any Breach by Winter Harbor of any covenant or obligation of Winter
Harbor in this Agreement or any covenant or obligation of Winter Harbor in this
Agreement to be performed or complied with prior to the Closing;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Winter Harbor (or any Person
acting on its behalf) in connection with any of the transactions contemplated by
this Agreement.
11.2 Indemnification and Payment of Damages by Red Cube. Red Cube
agrees to indemnify and hold harmless Winter Harbor and its representatives
(collectively, the "Winter Harbor Indemnified Persons") for, and shall pay to
such Winter Harbor Indemnified Persons the Damages, arising or resulting from or
in connection with:
(a) any Breach of any representation or warranty (determined without
regard to any materiality limitation contained in any such representation or
warranty), made by Red Cube in this Agreement;
(b) any Breach by Red Cube of any covenant or obligation of Red Cube in
this Agreement or any covenant or obligation of Red Cube in this Agreement to be
performed or complied with prior to the Closing;
26
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Red Cube (or any Person acting
on its behalf) in connection with any of the transactions contemplated by this
Agreement.
27
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Winter Harbor, L.L.C.
By: First Media, L.P., its member
By: First Media Corporation, its
general partner
/s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
Name: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
Title: Secretary and Principal Executive Officer
Red Cube International AG
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
KPR Finanz-Und Verwaltungs AG
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
28
Exhibit A to the Securities Purchase Agreement
EXHIBIT A
SECURITIES
1. First Closing Securities:
4,400 shares of Series M Preferred Stock
Promissory Notes, in the aggregate principal amount of $7,768,000,
dated January 26, 1998, February 23, 1998, March 3, 1998, March 24, 1998,
May 13, 1998, May 29, 1998, and June 8, 1998, together with all rights relating
thereto under the I-Link Loan Documents
Warrants to purchase 800,000 shares of I-Link common stock, pursuant
to a Warrant Agreement dated as of June 6, 1997, between Winter Harbor and
Medcross, Inc., a Florida corporation and predecessor to I-Link, as amended by
a First Amendment thereto dated as of August 18, 1997 and an Agreement dated
as of April 14, 1998, between I-Link and Winter Harbor
Series A Warrants to purchase 2,500,000 shares of I-Link common
stock, pursuant to a Warrant Agreement dated as of October 10, 1997, between
Winter Harbor and Medcross, Inc., a Florida corporation and predecessor to
I-Link, as amended by an Agreement dated as of April 14, 1998, between I-Link
and Winter Harbor
Series B Warrants to purchase 2,500,000 shares of I-Link common
stock, pursuant to a Warrant Agreement dated as of October 10, 1997, between
Winter Harbor and Medcross, Inc., a Florida corporation and predecessor to
I-Link, as amended by an Agreement dated as of April 14, 1998, between I-Link
and Winter Harbor
Series C Warrants to purchase 5,000,000 shares of I-Link common
stock, pursuant to a Warrant Agreement dated as of October 10, 1997, between
Winter Harbor and Medcross, Inc., a Florida corporation and predecessor to
I-Link, as amended by an Agreement dated as of April 14, 1998, between I-Link
and Winter Harbor
Series K Warrants to purchase 8,000,000 shares of I-Link common
stock, pursuant to a Series K Warrant Agreement dated as of January 15, 1999,
between Winter Harbor and I-Link
2. Second Closing Securities:
14,404 shares Series N Preferred Stock
Series D Warrants to purchase 1,734,000 shares of I-Link common
stock, pursuant to a Series ▇, ▇, ▇, ▇, ▇, ▇ and J Warrant Agreement dated as
of January 15, 1999, between Winter Harbor and I-Link
A-1
Series E Warrants to purchase 953,500 shares of I-Link common stock,
pursuant to a Series ▇, ▇, ▇, ▇, ▇, ▇ and J Warrant Agreement dated as of
January 15, 1999, between Winter Harbor and I-Link
Series F Warrants to purchase 1,229,000 shares of I-Link common
stock, pursuant to a Series ▇, ▇, ▇, ▇, ▇, ▇ and J Warrant Agreement dated as
of January 15, 1999, between Winter Harbor and I-Link
Series G Warrants to purchase 1,083,500 shares of I-Link common
stock, pursuant to a Series ▇, ▇, ▇, ▇, ▇, ▇ and J Warrant Agreement dated as
of January 15, 1999, between Winter Harbor and I-Link
Series H Warrants to purchase 609,000 shares of I-Link common stock,
pursuant to a Series ▇, ▇, ▇, ▇, ▇, ▇ and J Warrant Agreement dated as of
January 15, 1999, between Winter Harbor and I-Link
Series I Warrants to purchase 475,020 shares of I-Link common stock,
pursuant to a Series ▇, ▇, ▇, ▇, ▇, ▇ and J Warrant Agreement dated as of
January 15, 1999, between Winter Harbor and I-Link
Series J Warrants to purchase 655,980 shares of I-Link common stock,
pursuant to a Series ▇, ▇, ▇, ▇, ▇, ▇ and J Warrant Agreement dated as of
January 15, 1999, between Winter Harbor and I-Link
Series K Warrants to purchase 3,000,000 shares of I-Link common
stock, pursuant to a Series K Warrant Agreement dated as of January 15, 1999,
between Winter Harbor and I-Link
A-2
Exhibit B to the Securities Purchase Agreement
[Form OF OPTION AGREEMENT I]
STOCK OPTION AGREEMENT, dated as of [Date of First Closing] August ~,
2000 (this "Agreement"), between Red Cube International AG, an
Aktiengesellschaft organized under the laws of Switzerland ("Issuer"), and
Winter Harbor L.L.C., a Delaware limited liability company (including any
assigns under the terms of Section 15 hereof, "Grantee").
RECITALS
WHEREAS Issuer, Grantee, and KPR Finanz-Und Verwaltungs AG, an
Aktiengesellschaft organized under the laws of Switzerland, have entered into
a Securities Purchase Agreement, dated as of August ~, 2000 (the "Securities
Purchase Agreement"), pursuant to which Grantee has sold to Issuer all
securities of I-Link Incorporated, a Florida corporation, listed on Exhibit A
to the Securities Purchase Agreement; and
WHEREAS as a condition and inducement to Grantee's entering into the
Securities Purchase Agreement and in partial consideration for the sale of
securities thereunder, Issuer has agreed to grant Grantee the Option (as
defined below).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and in the Securities Purchase
Agreement, the parties hereto agree as follows:
Capitalized Terms. Capitalized terms used herein but not defined
herein shall have the meanings ascribed to such terms in the Securities
Purchase Agreement.
1. The Option. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 52,499 fully paid and non-assessable shares ("Option Shares") of Issuer's
ordinary shares ("the Ordinary Shares") in Swiss francs at a price per share
equal to $190.48 multiplied by the Swiss ▇▇▇▇▇ to United States dollar exchange
rate as published in the Neue Zuriche Zeitung on the First Closing Date (subject
to adjustment in accordance with Section 13, the "Option Price");
2. Exercise; Termination. Grantee may exercise the Option, in whole or
in part (but if such exercise is in part, then it shall be for no less than
1,000 Ordinary Shares of the Issuer), by giving a written notice thereof as
provided in Section 4 at any time and from time to time. The Option shall
terminate upon the tenth anniversary of the date hereof.
B-1
3. Notice of Exercise by Grantee; Closing. If Grantee shall be entitled
to then, each and every time it wishes to exercise the Option, it shall send to
Issuer a written notice (an "Exercise Notice" and the date of which is referred
to herein as the "Notice Date") specifying (i) the total amount payable to
Issuer on the exercise of the Option in respect of the Option Shares and (ii) a
date (the "Closing Date" with respect to each exercise of the Option) not
earlier than five Business Days nor later than 20 Business Days from the Notice
Date for the closing of such purchase (the "Closing" with respect to each
exercise of the Option); provided, that if a filing, prior notification, to or
application for approval of any regulatory authority in the U.S., Europe or
elsewhere is required in connection with such purchase, Grantee and Issuer, as
required, promptly after the giving of the Exercise Notice shall file any and
all required notices, applications or other documents necessary for approval and
shall expeditiously process the same and in such event the period of time
referred to in clause (ii) shall commence on the date on which Grantee furnishes
to Issuer a supplemental written notice setting forth the Closing Date, which
notice shall be furnished as promptly as practicable after all required
notification periods shall have expired or been terminated and all required
approvals shall have been obtained and all requisite waiting periods shall have
passed. Each of Grantee and the Issuer agrees to use its best reasonable efforts
to cooperate with and provide information to Issuer or Grantee, as the case may
be, with respect to any required filing, notice or application for approval to
such regulatory authority.
4. Payment of Purchase Price. At each Closing, Grantee shall pay to
Issuer the aggregate Option Price for the Option Shares to be purchased at such
Closing in immediately available funds by a wire transfer to a bank account
designated by Issuer; provided, that failure or refusal of Issuer to designate
such a bank account shall not preclude Grantee from exercising the Option.
Delivery of Issuer's Ordinary Shares. At each Closing, Issuer shall
deliver to Grantee in Zurich, Switzerland, or if the Grantee is not willing or
able to accept such delivery in Zurich, Switzerland then to the Grantee's
appointed depositary, agent or custodian located in Zurich, Switzerland (only if
such appointment is in writing) a certificate or certificates representing the
number of Option Shares purchased by Grantee at such Closing. If at the time of
issuance of the Option Shares hereunder, Issuer shall have issued any rights or
other securities which are attached to or otherwise associated with its Option
Shares that apply to the class of securities as a whole to which Option Shares
belong, then each Option Share shall also represent such rights or other
securities with terms substantially the same as, and at least as favorable to
Grantee as, are provided under any shareholder rights agreement or similar
agreement of Issuer then in effect.
5. Conditions to Issuer's Obligation to Deliver the Ordinary Shares.
The obligation of the Issuer to deliver the Option Shares pursuant to
Section 6 is subject to Grantee's option prior to such delivery of each of the
following conditions:
(a) the Option Price must have been fully paid by Grantee;
B-2
(b) the Grantee shall have produced evidence that it has paid all taxes
and fees required to be paid by the Grantee under Section 9 of this Agreement;
and
(c) if the Closing occurs within six months following the Issuer's
initial public offering, the Grantee shall have entered into and be subject to
the terms of the Pool Contract substantially in the form of Exhibit A attached
hereto (the "Pool Contract"), which agreement in any event shall be no more
restrictive than the agreements entered into by the other shareholders of Red
Cube as of the date hereof.
Resale Restriction. The Grantee will not sell or transfer any Option
Shares or other securities acquired by Grantee upon exercise of the Option
except pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), or in a transaction exempt from
registration under the Securities Act. Each certificate for Ordinary Shares
delivered at the Closing may be endorsed with a restrictive legend that shall
read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
resale restrictions arising under the Securities Act of 1933, as amended."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or a written opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act. In addition, such certificate or
certificates shall bear any other legend as may be required by applicable law.
Ownership of Record; Expenses. Upon each Closing the Issuer shall
record the acquisition of the Option Shares purchased at such Closing to its
share register and thereafter Grantee shall be deemed to be the holder of record
of the Options Shares issuable upon such exercise. Grantee shall pay all taxes
and other expenses that may be payable in connection with the preparation,
issuance and delivery of stock certificates in the name of any person other than
Grantee. Issuer shall pay all other expenses associated with any such exercise.
Covenants of Issuer. In addition to its other agreements and covenants
herein, Issuer agrees:
(a) not to avoid or seek to avoid (whether by charter amendment or
through reorganization, consolidation, merger, issuance of rights, dissolution
or sale of assets, or by any other voluntary act) the observance or performance
of any of the covenants, agreements or conditions to be observed or performed
hereunder by Issuer; and
B-3
(b) promptly after the date hereof to take all actions as may from time
to time be required in the event that prior filing with, notification to or
approval of any other regulatory authority in the U.S., Switzerland or elsewhere
is necessary before the Option may be exercised, cooperating fully with Grantee
in preparing and processing the required filings, notices or applications in
order to permit Grantee to exercise the Option, to purchase Option Shares
pursuant to such exercise.
Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Shares Reserved for Issuance; Capital Stock. The Option Shares
issuable in accordance with the terms of this Agreement have been duly reserved
for issuance by Issuer and upon any issuance of such shares in accordance with
the terms hereof, such Option Shares will be duly authorized, validly issued,
fully paid and non-assessable, and will be delivered free and clear of any lien,
pledge, security interest, claim or other encumbrance (other than those created
by this Agreement) and not subject to any preemptive rights.
(b) Corporate Authority. Issuer has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this Agreement
have been duly authorized by all necessary corporate action on the part of
Issuer, and, assuming the due authorization, execution and delivery of this
Agreement by Grantee, this Agreement constitutes a valid and binding agreement
of Issuer enforceable against Issuer in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(c) Absence of Conflicting Agreements; Consents. To the knowledge of
Issuer, the execution, delivery, and performance by this Agreement (with or
without the giving of notice, the lapse of time, or both): (a) do not require
the consent of any third party; (b) will not conflict with any provision of any
corporate organizational documents of Issuer, each as currently in effect; (c)
will not conflict with, result in a breach of, or constitute a default under any
Legal Requirement; and (d) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of any
agreement, instrument, license or permit to which Issuer is a party or by which
Issuer may be bound.
B-4
Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that Grantee has all requisite limited liability company
power and authority and has taken all limited liability company action necessary
in order to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby; the execution and
delivery of this Agreement have been duly authorized by all necessary limited
liability company action on the part of Grantee, and, assuming the due
authorization, execution and delivery of this Agreement by Issuer, constitutes a
valid and binding agreement of Grantee enforceable against Grantee in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Adjustments. In the event of any change in the securities constituting
the Option Shares by reason of stock dividends, splits, combinations,
subdivisions or reclassifications, mergers, recapitalizations, extraordinary
dividends or distributions, exchanges of shares or the like, the type and number
of Option Shares purchasable upon exercise of the Option and the Option Price
per Option Share as applicable, shall be appropriately adjusted, and proper
provision shall be made in the agreements governing any such transaction, so
that (i) Grantee shall be entitled to receive upon exercise of the Option the
number and class of shares, other securities, property or cash that Grantee
would have received in respect of the remaining number of Option Shares
purchasable upon exercise of the Option if the Option had been exercised and
such Option Shares had been issued to Grantee immediately prior to such event or
the record date therefor, as applicable.
Registration Rights. Any registration rights with regard to the Option
Shares shall be determined pursuant to a Registration Rights Agreement
substantially in the form of Exhibit 4 to the Securities Purchase Agreement.
Assignment. This Agreement and all rights hereunder are transferable,
in whole or in part, by the Grantee, only upon the prior written agreement of
any such transferee to assume Grantee's obligations under this Agreement.
Filings; Other Actions. Each of Grantee and Issuer will use its best
efforts to make all filings with, notices to and applications for approval of,
and to obtain consents of, all third parties and governmental authorities
necessary for the consummation of the transactions contemplated by this
Agreement.
Specific Performance. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Agreement by either party hereto
and that the obligations of the parties hereto shall be specifically enforceable
through injunctive or other equitable relief.
B-5
Severability; Etc. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision unless the substitution of such provision would materially frustrate
the express intent and purposes of this Agreement, and (b) the remainder of this
Agreement and the application of such provision to other persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction. If for
any reason a court or regulatory agency determines that Grantee is not permitted
to acquire pursuant to this Agreement the full number of Option Shares provided
in Section 2 hereof (as adjusted pursuant to Section 13 hereof) , it is the
express intention of Issuer to allow Grantee to acquire such lesser number of
Option Shares as may be permissible, without any amendment or modification
hereof.
Notices. All notices required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be addressed as
follows:
If to Grantee: Winter Harbor, L.L.C.
c/o First Media, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
constitute notice hereunder) to: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Wild
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Issuer: Red Cube International AG.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇-▇▇▇▇ ▇▇▇ (▇▇▇▇▇▇▇▇▇▇▇)
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive
Officer
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
hereunder) to: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
B-6
or to any other or additional Persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
19. Any notice shall be deemed to have been given on the day on which it is
received (or, if such day is not a Business Day or if the notice is not
received during normal business hours at the place of receipt, on the next
following Business Day). A notice mailed by registered or certified mail,
postage prepaid and return receipt requested, shall be deemed to have been
received on the date of receipt shown on the return receipt.
Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of Switzerland and any disputes arising
under or in connection with it, shall exclusively be resolved by the courts of
Zurich, Switzerland.
Expenses. Except as otherwise expressly provided herein or in the
Securities Purchase Agreement, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such expense.
Entire Agreement, Etc. This Agreement and the Securities Purchase
Agreement (including any exhibits thereto), constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties, both written and oral, between the parties with respect to the
subject matter hereof. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended to confer upon any Person, other than
the parties hereto, and their respective successors and permitted assigns, any
rights or remedies hereunder.
B-7
IN WITNESS WHEREOF, Winter Harbor and Red Cube have caused this Agreement to
be duly executed and delivered on the day and year first above written.
Winter Harbor, L.L.C.
By: First Media, L.P., its member
By: First Media Corporation, its
general partner
-----------------------------
Name:
Title:
Red Cube International AG
-----------------------------
Name:
Title:
B-8
Exhibit A to Option Agreement I
[Form of Pool Contract]
Winter Harbor L.L.C., c/o First Media, L.P. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
"Obligee"
and
KPR Finanz- und Verwaltungs AG, c/o Marks Dudler ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇-▇▇▇▇ ▇▇▇
"Beneficiary"
agree as follows:
Preamble
The Beneficiary is shareholder of Red Cube International AG, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ (former ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇,
▇▇▇▇ ▇▇▇, hereinafter referred to as "Red Cube"). The Obligee has acquired
shares (in words, "shares") in Red Cube pursuant to the Option Agreement.
These and all other Red Cube shares of the Obligee shall be included by this
Agreement.
1. Preemptive Right
The Beneficiary has a preemptive right to the shares described in the
Preamble. Accordingly, should the shares be sold, either singly or totally,
the Beneficiary shall then have the right to enter into the contract under the
same conditions as freely stipulated between the Obligee and the third party.
Should the Beneficiary not enter into the contract, then the Obligee must bind
the buyer to the same conditions as the Obligee has under this Pool Contract.
Every further transfer of the shares be it with or without remuneration, which
is not considered a sale, such as, but not limited to, gifts, exchange deals,
or similar contracts, but excluding transfers to "Affiliates" as defined in
the Securities Purchase Agreement, dated as of August ~, 2000 between the
Obligee, Red Cube and Beneficiary, to be offered to the Beneficiary at cost,
including the usual interest.
Should the Obligee not apply for all of the shares available to him when the
share capital is increased, then the Beneficiary is entitled to the Obligee's
subscription right free of charge.
The Obligee is obliged to inform the Beneficiary of each of the previously
named rights within five working days and the Beneficiary has to state within
five further working days whether it wishes to exercise the right in
question. All statements to Beneficiary must be timely received by ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇-▇▇▇▇ Bern, Tel. ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇, Fax +41
▇▇ ▇▇▇ ▇▇ ▇▇.
B-9
2. Shareholder Votes
The Obligee shall cast his votes according to the Beneficiary's instructions
and herewith transfers his voting rights to the Beneficiary. If needed the
Obligee shall authorise formally and expressively the Beneficiary to vote on
the Obligee's behalf.
On first demand the Obligee shall agree to all legal steps necessary for
voting (e.g. agree to release the shares from the deposit for voting).
3. Lock-Up in the case of an IPO
In the case of the IPO of Red Cube, the Obligee agrees to adhere to the
so-called Lock-up rules of the concerned stock exchange (e.g. sale
restrictions during a certain period of time, not to extend beyond the
duration of this Pool Contract) and those of the emitting bank (i.e.
underwriters) as well as those of Red Cube and to facilitate establishing this
as necessary (providing statements, deposits, etc.) on first demand. If Red
Cube shares must be deposited with the emitting bank for the duration of the
Lock-up, then the Obligee shall deliver his shares within 10 days to such
deposit.
Notwithstanding the above-mentioned, Red Cube and the emitting bank can in
compliance with the relevant stock exchange rules allow previous shareholders
(including the Obligee) to sell their stock at or after the IPO, provided that
each shareholder shall enjoy the same rights.
If instead of the IPO a sale by KPR or Family ▇▇▇▇▇▇ of all their shares in
Red Cube without simultaneous IPO would take place (a Trade Sale), the
Beneficiary is entitled and obliged to sell the shares of the Obligee with the
same conditions as his own. For such purpose the Obligee shall agree to all
legal steps necessary on first demand.
4. Duration
This Pool Contract and all arrangements (lock-ups, deposits, etc.) pursuant to
the Pool Contract, shall terminate no later than six months following the IPO
of Red Cube.
5. Change of share capital
All of the above-mentioned, in particular the preemptive right and shareholder
voting stipulation, automatically apply to any acquisition of the shares
stated in the preamble and in particular to the acquisition of shares
resulting from an increase in share capital.
6. Facsimile Signature
The parties agree that a facsimile signature is equally authentic to the
original signature.
7. Applicable Law and Jurisdiction
Swiss Law shall apply to this Shareholder Agreement. Any suit arising under
this Shareholder Agreement will only be brought in the courts of Zurich,
Switzerland.
B-10
................... ...............................
(place and date) (Obligee)
................... ...............................
(place and date) (Beneficiary - KPR)
B-11
Exhibit C to the Securities Purchase Agreement
[FORM OF OPTION AGREEMENT II]
STOCK OPTION AGREEMENT, dated as of [Date of First Closing] August ~,
2000 (this "Agreement"), between Red Cube International AG, an
Aktiengesellschaft organized under the laws of Switzerland ("Issuer"), and
Winter Harbor L.L.C., a Delaware limited liability company (including any
assigns under the terms of Section 15 hereof, "Grantee").
RECITALS
WHEREAS Issuer, Grantee, and KPR Finanz-Und Verwaltungs AG, an
Aktiengesellschaft organized under the laws of Switzerland, have entered into
a Securities Purchase Agreement, dated as of August ~, 2000 (the "Securities
Purchase Agreement"), pursuant to which Grantee has sold to Issuer all
securities of I-Link Incorporated, a Florida corporation, listed on Exhibit A
to the Securities Purchase Agreement; and
WHEREAS as a condition and inducement to Grantee's entering into the
Securities Purchase Agreement and in partial consideration for the sale of
securities thereunder, Issuer has agreed to grant Grantee the Option (as
defined below).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and in the Securities Purchase
Agreement, the parties hereto agree as follows:
1. Capitalized Terms. Capitalized terms used herein but not defined
herein shall have the meanings ascribed to such terms in the Securities Purchase
Agreement.
2. The Option. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 58,333 fully paid and non-assessable shares ("Option Shares") of Issuer's
ordinary shares ("the Ordinary Shares") in Swiss francs at a price per share
equal to $171.43 multiplied by the Swiss ▇▇▇▇▇ to United States dollar exchange
rate as published in the Neue Zuriche Zeitung on the First Closing Date (subject
to adjustment in accordance with Section 13, the "Option Price");
3. Exercise; Termination. Grantee may exercise the Option, in whole or
in part (but if such exercise is in part, then it shall be for no less than
1,000 Ordinary Shares of the Issuer), by giving a written notice thereof as
provided in Section 4 at any time and from time to time. The Option shall
terminate upon the tenth anniversary of the date hereof.
C-1
4. Notice of Exercise by Grantee; Closing. If Grantee shall be entitled
to then, each and every time it wishes to exercise the Option, it shall send to
Issuer a written notice (an "Exercise Notice" and the date of which is referred
to herein as the "Notice Date") specifying (i) the total amount payable to
Issuer on the exercise of the Option in respect of the Option Shares and (ii) a
date (the "Closing Date" with respect to each exercise of the Option) not
earlier than five Business Days nor later than 20 Business Days from the Notice
Date for the closing of such purchase (the "Closing" with respect to each
exercise of the Option); provided, that if a filing, prior notification, to or
application for approval of any regulatory authority in the U.S., Europe or
elsewhere is required in connection with such purchase, Grantee and Issuer, as
required, promptly after the giving of the Exercise Notice shall file any and
all required notices, applications or other documents necessary for approval and
shall expeditiously process the same and in such event the period of time
referred to in clause (ii) shall commence on the date on which Grantee furnishes
to Issuer a supplemental written notice setting forth the Closing Date, which
notice shall be furnished as promptly as practicable after all required
notification periods shall have expired or been terminated and all required
approvals shall have been obtained and all requisite waiting periods shall have
passed. Each of Grantee and the Issuer agrees to use its best reasonable efforts
to cooperate with and provide information to Issuer or Grantee, as the case may
be, with respect to any required filing, notice or application for approval to
such regulatory authority.
5. Payment of Purchase Price. At each Closing, Grantee shall pay to
Issuer the aggregate Option Price for the Option Shares to be purchased at such
Closing in immediately available funds by a wire transfer to a bank account
designated by Issuer; provided, that failure or refusal of Issuer to designate
such a bank account shall not preclude Grantee from exercising the Option.
6. Delivery of Issuer's Ordinary Shares. At each Closing, Issuer shall
deliver to Grantee in Zurich, Switzerland, or if the Grantee is not willing or
able to accept such delivery in Zurich, Switzerland then to the Grantee's
appointed depositary, agent or custodian located in Zurich, Switzerland (only if
such appointment is in writing) a certificate or certificates representing the
number of Option Shares purchased by Grantee at such Closing. If at the time of
issuance of the Option Shares hereunder, Issuer shall have issued any rights or
other securities which are attached to or otherwise associated with its Option
Shares that apply to the class of securities as a whole to which Option Shares
belong, then each Option Share shall also represent such rights or other
securities with terms substantially the same as, and at least as favorable to
Grantee as, are provided under any shareholder rights agreement or similar
agreement of Issuer then in effect.
7. Conditions to Issuer's Obligation to Deliver the Ordinary Shares.
The obligation of the Issuer to deliver the Option Shares pursuant to
Section 6 is subject to Grantee's option prior to such delivery of each of the
following conditions:
(a) the Option Price must have been fully paid by Grantee;
C-2
(b) the Grantee shall have produced evidence that it has paid all taxes
and fees required to be paid by the Grantee under Section 9 of this Agreement;
and
(c) if the Closing occurs within six months following the Issuer's
initial public offering, the Grantee shall have entered into and be subject to
the terms of the Pool Contract substantially in the form of Exhibit A attached
hereto (the "Pool Contract"), which agreement in any event shall be no more
restrictive than the agreements entered into by the other shareholders of Red
Cube as of the date hereof.
8. Resale Restriction. The Grantee will not sell or transfer any Option
Shares or other securities acquired by Grantee upon exercise of the Option
except pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), or in a transaction exempt from
registration under the Securities Act. Each certificate for Ordinary Shares
delivered at the Closing may be endorsed with a restrictive legend that shall
read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
resale restrictions arising under the Securities Act of 1933, as amended."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or a written opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act. In addition, such certificate or
certificates shall bear any other legend as may be required by applicable law.
9. Ownership of Record; Expenses. Upon each Closing the Issuer shall
record the acquisition of the Option Shares purchased at such Closing to its
share register and thereafter Grantee shall be deemed to be the holder of record
of the Options Shares issuable upon such exercise. Grantee shall pay all taxes
and other expenses that may be payable in connection with the preparation,
issuance and delivery of stock certificates in the name of any person other than
Grantee. Issuer shall pay all other expenses associated with any such exercise.
10. Covenants of Issuer. In addition to its other agreements and
covenants herein, Issuer agrees:
(a) not to avoid or seek to avoid (whether by charter amendment or
through reorganization, consolidation, merger, issuance of rights, dissolution
or sale of assets, or by any other voluntary act) the observance or performance
of any of the covenants, agreements or conditions to be observed or performed
hereunder by Issuer; and
C-3
(b) promptly after the date hereof to take all actions as may from time
to time be required in the event that prior filing with, notification to or
approval of any other regulatory authority in the U.S., Switzerland or elsewhere
is necessary before the Option may be exercised, cooperating fully with Grantee
in preparing and processing the required filings, notices or applications in
order to permit Grantee to exercise the Option, to purchase Option Shares
pursuant to such exercise.
11. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Shares Reserved for Issuance; Capital Stock. The Option Shares
issuable in accordance with the terms of this Agreement have been duly reserved
for issuance by Issuer and upon any issuance of such shares in accordance with
the terms hereof, such Option Shares will be duly authorized, validly issued,
fully paid and non-assessable, and will be delivered free and clear of any lien,
pledge, security interest, claim or other encumbrance (other than those created
by this Agreement) and not subject to any preemptive rights.
(b) Corporate Authority. Issuer has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this Agreement
have been duly authorized by all necessary corporate action on the part of
Issuer, and, assuming the due authorization, execution and delivery of this
Agreement by Grantee, this Agreement constitutes a valid and binding agreement
of Issuer enforceable against Issuer in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(c) Absence of Conflicting Agreements; Consents. To the knowledge of
Issuer, the execution, delivery, and performance by this Agreement (with or
without the giving of notice, the lapse of time, or both): (a) do not require
the consent of any third party; (b) will not conflict with any provision of any
corporate organizational documents of Issuer, each as currently in effect; (c)
will not conflict with, result in a breach of, or constitute a default under any
Legal Requirement; and (d) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of any
agreement, instrument, license or permit to which Issuer is a party or by which
Issuer may be bound.
C-4
12. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that Grantee has all requisite limited
liability company power and authority and has taken all limited liability
company action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby; the execution and delivery of this Agreement have been duly authorized
by all necessary limited liability company action on the part of Grantee, and,
assuming the due authorization, execution and delivery of this Agreement by
Issuer, constitutes a valid and binding agreement of Grantee enforceable against
Grantee in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
13. Adjustments. In the event of any change in the securities
constituting the Option Shares by reason of stock dividends, splits,
combinations, subdivisions or reclassifications, mergers, recapitalizations,
extraordinary dividends or distributions, exchanges of shares or the like, the
type and number of Option Shares purchasable upon exercise of the Option and the
Option Price per Option Share as applicable, shall be appropriately adjusted,
and proper provision shall be made in the agreements governing any such
transaction, so that (i) Grantee shall be entitled to receive upon exercise of
the Option the number and class of shares, other securities, property or cash
that Grantee would have received in respect of the remaining number of Option
Shares purchasable upon exercise of the Option if the Option had been exercised
and such Option Shares had been issued to Grantee immediately prior to such
event or the record date therefor, as applicable.
14. Registration Rights. Any registration rights with regard to the
Option Shares shall be determined pursuant to a Registration Rights Agreement
substantially in the form of Exhibit 4 to the Securities Purchase Agreement.
15. Assignment. This Agreement and all rights hereunder are
transferable, in whole or in part, by the Grantee, only upon the prior written
agreement of any such transferee to assume Grantee's obligations under this
Agreement.
16. Filings; Other Actions. Each of Grantee and Issuer will use its
best efforts to make all filings with, notices to and applications for approval
of, and to obtain consents of, all third parties and governmental authorities
necessary for the consummation of the transactions contemplated by this
Agreement.
17. Specific Performance. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be specifically
enforceable through injunctive or other equitable relief.
C-5
18. Severability; Etc. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision unless the substitution of such provision would materially frustrate
the express intent and purposes of this Agreement, and (b) the remainder of this
Agreement and the application of such provision to other persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction. If for
any reason a court or regulatory agency determines that Grantee is not permitted
to acquire pursuant to this Agreement the full number of Option Shares provided
in Section 2 hereof (as adjusted pursuant to Section 13 hereof) , it is the
express intention of Issuer to allow Grantee to acquire such lesser number of
Option Shares as may be permissible, without any amendment or modification
hereof.
19. Notices. All notices required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be addressed as
follows:
If to Grantee: Winter Harbor, L.L.C.
c/o First Media, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
constitute notice hereunder) to: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Wild
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Issuer: Red Cube International AG.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇-▇▇▇▇ ▇▇▇ (▇▇▇▇▇▇▇▇▇▇▇)
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive
Officer
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
hereunder) to: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
C-6
or to any other or additional Persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
19. Any notice shall be deemed to have been given on the day on which it is
received (or, if such day is not a Business Day or if the notice is not
received during normal business hours at the place of receipt, on the next
following Business Day). A notice mailed by registered or certified mail,
postage prepaid and return receipt requested, shall be deemed to have been
received on the date of receipt shown on the return receipt.
20. Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of Switzerland and any disputes arising
under or in connection with it, shall exclusively be resolved by the courts of
Zurich, Switzerland.
21. Expenses. Except as otherwise expressly provided herein or in the
Securities Purchase Agreement, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such expense.
22. Entire Agreement, Etc. This Agreement and the Securities Purchase
Agreement (including any exhibits thereto), constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties, both written and oral, between the parties with respect to the
subject matter hereof. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended to confer upon any Person, other than
the parties hereto, and their respective successors and permitted assigns, any
rights or remedies hereunder.
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IN WITNESS WHEREOF, Winter Harbor and Red Cube have caused this Agreement to
be duly executed and delivered on the day and year first above written.
Winter Harbor, L.L.C.
By: First Media, L.P., its member
By: First Media Corporation, its
general partner
Name:
Title:
Red Cube International AG
Name:
Title:
C-8
Exhibit A to Option Agreement II
[Form of Pool Contract]
Winter Harbor L.L.C., c/o First Media, L.P. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
"Obligee"
and
KPR Finanz- und Verwaltungs AG, c/o Marks Dudler ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇-▇▇▇▇ ▇▇▇
"Beneficiary"
agree as follows:
Preamble
The Beneficiary is shareholder of Red Cube International AG, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ (former ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇,
▇▇▇▇ ▇▇▇, hereinafter referred to as "Red Cube"). The Obligee has acquired
shares (in words, "shares") in Red Cube pursuant to the Option Agreement.
These and all other Red Cube shares of the Obligee shall be included by this
Agreement.
8. Preemptive Right
The Beneficiary has a preemptive right to the shares described in the
Preamble. Accordingly, should the shares be sold, either singly or totally,
the Beneficiary shall then have the right to enter into the contract under the
same conditions as freely stipulated between the Obligee and the third party.
Should the Beneficiary not enter into the contract, then the Obligee must bind
the buyer to the same conditions as the Obligee has under this Pool Contract.
Every further transfer of the shares be it with or without remuneration, which
is not considered a sale, such as, but not limited to, gifts, exchange deals,
or similar contracts, but excluding transfers to "Affiliates" as defined in
the Securities Purchase Agreement, dated as of August ~, 2000 between the
Obligee, Red Cube and Beneficiary, to be offered to the Beneficiary at cost,
including the usual interest.
Should the Obligee not apply for all of the shares available to him when the
share capital is increased, then the Beneficiary is entitled to the Obligee's
subscription right free of charge.
The Obligee is obliged to inform the Beneficiary of each of the previously
named rights within five working days and the Beneficiary has to state within
five further working days whether it wishes to exercise the right in
question. All statements to Beneficiary must be timely received by ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇-▇▇▇▇ Bern, Tel. ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇, Fax +41
▇▇ ▇▇▇ ▇▇ ▇▇.
C-9
9. Shareholder Votes
The Obligee shall cast his votes according to the Beneficiary's instructions
and herewith transfers his voting rights to the Beneficiary. If needed the
Obligee shall authorise formally and expressively the Beneficiary to vote on
the Obligee's behalf.
On first demand the Obligee shall agree to all legal steps necessary for
voting (e.g. agree to release the shares from the deposit for voting).
10. Lock-Up in the case of an IPO
In the case of the IPO of Red Cube, the Obligee agrees to adhere to the
so-called Lock-up rules of the concerned stock exchange (e.g. sale
restrictions during a certain period of time, not to extend beyond the
duration of this Pool Contract) and those of the emitting bank (i.e.
underwriters) as well as those of Red Cube and to facilitate establishing this
as necessary (providing statements, deposits, etc.) on first demand. If Red
Cube shares must be deposited with the emitting bank for the duration of the
Lock-up, then the Obligee shall deliver his shares within 10 days to such
deposit.
Notwithstanding the above-mentioned, Red Cube and the emitting bank can in
compliance with the relevant stock exchange rules allow previous shareholders
(including the Obligee) to sell their stock at or after the IPO, provided that
each shareholder shall enjoy the same rights.
If instead of the IPO a sale by KPR or Family ▇▇▇▇▇▇ of all their shares in
Red Cube without simultaneous IPO would take place (a Trade Sale), the
Beneficiary is entitled and obliged to sell the shares of the Obligee with the
same conditions as his own. For such purpose the Obligee shall agree to all
legal steps necessary on first demand
11. Duration
This Pool Contract and all arrangements (lock-ups, deposits, etc.) pursuant to
the Pool Contract, shall terminate no later than six months following the IPO
of Red Cube.
12. Change of share capital
All of the above-mentioned, in particular the preemptive right and shareholder
voting stipulation, automatically apply to any acquisition of the shares
stated in the preamble and in particular to the acquisition of shares
resulting from an increase in share capital.
13. Facsimile Signature
The parties agree that a facsimile signature is equally authentic to the
original signature.
14. Applicable Law and Jurisdiction
Swiss Law shall apply to this Shareholder Agreement. Any suit arising under
this Shareholder Agreement will only be brought in the courts of Zurich,
Switzerland.
C-10
................... ...............................
(place and date) (Obligee)
................... ...............................
(place and date) (Beneficiary - KPR)
C-11
Exhibit D to the Securities Purchase Agreement
[FORM OF INCIDENTAL REGISTRATION RIGHTS AGREEMENT]
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of [Date of
First Closing], by and between Red Cube International AG, a Swiss corporation
(the "Company"), and Winter Harbor, L.L.C. (the "Stockholder").
1. Recitals.
WHEREAS, pursuant to a Securities Purchase Agreement dated as of o,
2000 by and among the Stockholder, the Company and KPR Finanz-Und Verwaltungs AG
(the "Securities Purchase Agreement"), the Company has granted the Stockholder
on the date hereof an option to purchase from the Company 52,499 ordinary shares
of the Company subject to adjustment in accordance with an Option Agreement
dated the date hereof ("Option Agreement I") and has granted the Stockholder on
the date hereof an option to purchase from the Company 58,333 ordinary shares of
the Company subject to adjustment in accordance with a second Option Agreement
dated the date hereof ("Option Agreement II"); and
WHEREAS, the execution of this Agreement by the parties hereto is a
condition to the obligation of the parties to consummate the transactions
contemplated by the Securities Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement and in the Securities Purchase Agreement, the parties agree as
follows:
2. Registration.
2.1 Incidental Registration.
(a) Right to Include Registrable Securities. If (i) the Company
proposes to register any shares of Common Stock or any securities convertible
into Common Stock under the Securities Act by registration and (ii) if any of
its current significant shareholders are given the opportunity to have any of
their securities (referred to in subclause (i) of this section) registered as
part of such registration by the Company, then irrespective of whether such
party elects to have its shares registered, the Company will give prompt written
notice to the Stockholder prior to the filing of any registration statement with
respect thereto of the Stockholders' rights under this Section 2.1. Upon the
written request of the Stockholder made within 30 days after the receipt of any
such notice, the Company will use its commercially reasonable efforts to include
those Registrable Securities with respect to which the Stockholder has requested
registration in such registration statement; provided, however, that, no less
than five days prior to the effective date of such registration statement, the
Stockholder shall have the right to withdraw its request to have its Registrable
Securities included in such registration statement; provided, further, however,
that if, at any time after giving written notice of its intention to register
any securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to the
Stockholder and (i) in the case of a determination not to
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register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
other securities. Notwithstanding anything to the contrary herein, the Company
shall not be required to register any of the Stockholder's Registrable
Securities if no other shareholder of the Company is given the opportunity to
participate in the registration of any securities of the Company.
(b) Priority. If the managing underwriter of any underwritten
offering shall inform the Company that the number or type of securities
requested to be included in such registration would in its judgment adversely
affect such offering, and the Company has so advised the Stockholder in writing,
then the Company will include in such registration, to the extent of the number
and type that the Company is so advised can be sold in (or during the time of)
such offering, first, all securities proposed by the Company to be sold for its
own account, and then, pro rata (based on the number of shares proposed to be
included in such registration), shares of the Registrable Securities requested
to be included in such registration pursuant to this Section 2.1 along with all
other securities proposed to be registered by any other parties to which the
Company has granted registration rights.
(c) Expenses. Except as provided herein, the Company shall pay all
Registration Expenses with respect to such registration (whether any offering is
effected or not).
2.2 Registration Procedures. In effecting the registration of any
Registrable Securities under the Securities Act as provided in Sections 2.1, the
Company will, unless provided otherwise in this Agreement, as expeditiously as
possible:
(a) prepare and file with the Commission the requisite registration
statement to effect such registration, and thereafter use its commercially
reasonable efforts to cause such registration statement to become effective;
provided, however, that the Company may discontinue any registration of its
securities that are not Registrable Securities (and, under the circumstances
specified in Section 2.1(a), its securities that are Registrable Securities) at
any time prior to the effective date of the registration statement relating
thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by
such registration statement;
(c) furnish to the Stockholder such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act and each such amendment and supplement thereto, in conformity
with the requirements of the Securities Act, and such other documents, as the
Stockholder may reasonably request;
D-2
(d) use its commercially reasonable efforts (x) to register or
qualify all Registrable Securities covered by such registration statement under
such other securities or blue sky laws of such States of the United States of
America where an exemption is not available and the Stockholder shall reasonably
request, (y) to keep such registration or qualification in effect for so long as
such registration statement remains in effect and (z) to take such other action
that may be reasonably necessary to enable the Stockholder to consummate the
disposition in such jurisdictions of the Registrable Securities to be sold by
the Stockholder, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this subparagraph
(d) be obligated to be so qualified or to consent to general service of process
in any such jurisdiction;
(e) use its commercially reasonable efforts to cause all
Registrable Securities covered by such registration statement to be registered
with or approved by such other federal or state governmental agencies or
authorities as may reasonably be necessary in the opinion of counsel to the
Company to enable the Stockholder to consummate the disposition of such
Registrable Securities;
(f) notify the Stockholder at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and at the request of the
Stockholder promptly prepare and furnish to it a reasonable number of copies of
a supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made;
provided, that the Company shall not be required, pursuant to this Section
2.2(f), to disclose to the Stockholder any non-public information that it is
not, whether pursuant to this Agreement or any other agreement, otherwise
obligated to disclose to the Stockholder;
(g) otherwise use its commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and, if required,
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months, but not more than
18 months, beginning with the first full calendar month after the effective date
of such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder;
(h) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date not
later than the effective date of such registration;
(i) within a reasonable time not to exceed ten business days prior
to filing a registration statement or prospectus or any amendment or supplement
thereto (only with respect to Registrable Securities), furnish to the
Stockholder copies of such registration statement
D-3
or prospectus as proposed to be filed, which documents will be subject to the
reasonable review and comments of the Stockholder during such period, and the
Company will not file any registration statement or any prospectus or any
amendment or supplement thereto containing any statements with respect to the
Stockholder or the distribution of the Registrable Securities to be included in
such registration statement for sale by the Stockholder if the Stockholder
reasonably objects in writing;
(j) after the filing of any registration statement, promptly notify
the Stockholder of the effectiveness thereof and of any stop order issued or
threatened by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered and promptly notify the
Stockholder of the lifting or withdrawal of any such order;
(k) furnish, in the case of an underwritten public offering, to the
Stockholder a signed counterpart of (i) an opinion of counsel to the Company
addressed to the Stockholder (on which opinion the Stockholder shall be entitled
to rely) and (ii) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the case may
be, as the Stockholder reasonably requests; and
(l) use its commercially reasonable efforts to cause any
Registrable Securities covered by a registration statement to be listed on the
principal U.S. exchange or exchanges or qualified for trading on the principal
U.S. over-the-counter market or listed on the automated quotation market on
which securities of the same class and series as the Registrable Securities (or
into which such Registrable Securities will be or have been converted) are then
listed, traded, or quoted upon the sale of such Registrable Securities pursuant
to such registration statement.
The Company may require the Stockholder, as a seller of Registrable
Securities as to which any registration is being effected, to furnish promptly
to the Company such information regarding such selling Stockholder and the
distribution of such Registrable Securities as the Company may from time to time
reasonably request in writing, and such selling Stockholder agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information furnished to the Company by such selling Stockholder not
materially misleading.
The Stockholder agrees by acquisition of such Registrable
Securities that, upon receipt of any notice from the Company of the happening of
any event of the kind described in subparagraph (f) of this Section 2.2, the
Stockholder will forthwith discontinue the Stockholder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until the Stockholder's receipt of the copies of the
supplemented or amended prospectus contemplated by subparagraph (f) of this
Section 2.2 and, if so directed by the Company, will deliver to the Company all
copies, other than permanent file copies, then in the Stockholder's possession
of the prospectus relating to such Registrable Securities current at the time of
receipt of such notice.
D-4
2.3 Underwritten Offerings.
(a) Arrangement with Underwriters. If the Company proposes to
register any of its securities under the Securities Act as contemplated by
Section 2.1 and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by the Stockholder, use its
commercially reasonable efforts to arrange for such underwriters to include all
the Registrable Securities to be offered and sold by the Stockholder among the
securities of the Company to be distributed by such underwriters, subject to the
provisions of Sections 2.1(a) and 2.1(b). The Stockholder, in requesting
distribution of Registered Securities by such underwriters, shall agree to be,
and shall become, party to the underwriting agreement between the Company and
such underwriters.
(b) Underwriting Discounts and Commission. The Stockholder shall
pay all underwriting discounts and commissions of the underwriter or
underwriters with respect to the Registrable Securities sold.
2.4 Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Stockholder and each person, if any, who controls the Stockholder within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) insofar
as such losses, claims, damages or liabilities arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement or any amendment thereof, any preliminary prospectus
or prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) relating to the Registrable Securities,
or arise out of or are based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities arise out of or are based upon any such untrue statement
or omission or alleged untrue statement or omission arising out of or based upon
written information furnished to and relied upon by the Company by the
Stockholder expressly for use therein. The Company also agrees to indemnify any
underwriter of the Registrable Securities so offered and each person, if any,
who controls such underwriter on substantially the same basis as that of the
indemnification by the Company of the Stockholder provided in this Section
2.4(a).
(b) The Stockholder agrees to indemnify and hold harmless the
Company, its directors and the officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) insofar as such losses,
claims, damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or any amendment thereof, any preliminary prospectus or
prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) relating to the Registrable
D-5
Securities, or arise out of or are based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only with reference to written
information furnished to and relied upon by the Company by or on behalf of the
Stockholder expressly for use in a registration statement, any preliminary
prospectus, prospectus or any amendments or supplements thereto. The Stockholder
also agrees to indemnify any underwriter of the Registrable Securities so
offered and each person, if any, who controls such underwriter on substantially
the same basis as that of the indemnification by the Stockholder of the Company
provided in this Section 2.4(b). The Stockholder will not be liable under this
Section 2.4(b) with respect to any losses, claims, damages or liabilities (a) to
the extent the untrue statement, omission, or allegation thereof upon which such
losses, claims, damages or liabilities are based was made in any prospectus used
after such time as the Stockholder advised the Company that the filing of a
post-effective amendment or supplement thereto was required, or (b) in an amount
that exceeds the net proceeds received by the Stockholder from the sale of
Registrable Securities pursuant to the applicable registration statement.
(c) Each party indemnified under paragraph (a) or (b) above shall,
promptly after receipt of notice of a claim or action against such indemnified
party in respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the claim or action; provided, that the failure
to notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party on account of the indemnify agreement contained
in paragraph (a) or (b) above except to the extent that the indemnifying party
was actually prejudiced by such failure, and in no event shall such failure
relieve the indemnifying party from any other liability that it may have to such
indemnified party. If any such claim or action shall be brought against an
indemnified party, and it shall have notified the indemnifying party thereof,
unless in such indemnified party's reasonably judgment a conflict of interest
between such indemnified party and indemnifying parties may exist in respect of
such claim, 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 2.4 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof. Any indemnifying
party against whom indemnity may be sought under this Section 2.4 shall not be
liable to indemnify an indemnified party and shall be deemed fully and
unconditionally released if such indemnified party settles such claim or action
without the written consent of the indemnifying party. The indemnifying party
may not agree to any settlement of any such claim or action, other than solely
for monetary damages for which the indemnifying party shall be responsible
hereunder, the result of which any remedy or relief shall be applied to or
against the indemnified party, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld. In any
action hereunder as to which the indemnifying party has assumed the defense
thereof, the indemnified party shall continue to be entitled to participate in
the defense thereof, with counsel of its own choice, but the indemnifying party
shall not be obligated hereunder to reimburse the indemnified party for the
costs thereof.
(d) If the indemnification provided for in this Section 2.4 shall
for any reason be unavailable (other than in accordance with its terms) to an
indemnified party in respect
D-6
of any loss, liability, cost, claim or damage 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, liability, cost, claim or damage in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Stockholder on the one
hand and the underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to stated a material fact relates to
information supplied such indemnified party or such indemnifying parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by an indemnified
party as a result of the loss, cost, claim, damage or liability, or action in
respect thereof, referred to above in this paragraph (d) shall be deemed to
include, for purposes of this paragraph (d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or clam. The Company and the Stockholder agree that
it would not be just and equitable if contributions pursuant to this Section 2.4
were determined by pro rata allocation (even if the underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this paragraph.
Notwithstanding any other provisions of this Section 2.4, the Stockholder shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of the Stockholder were offered
to the public exceeds the amount of any damages which such Stockholder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Indemnification and contribution similar to that specified in
the preceding paragraphs of this Section 2.4 (with appropriate modifications)
shall be given by the Company, the Stockholder and underwriters with respect to
any required registration or other qualification of securities under any state
law or regulation or United States, Swiss or other governmental authority.
(f) The obligations of the parties under this Section 2.4 shall be
in addition to any liability which any party may otherwise have to any other
party.
3. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission or any
other similar agency then having jurisdiction to enforce the Securities Act or
the Exchange Act.
"Common Stock" shall mean the common stock of the Company, and any
other class of equity securities of the Company into which such stock is
reclassified or reconstituted.
D-7
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any other similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934, as
amended, shall include a reference to the comparable section, if any, of any
such similar federal statute.
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint securities company, government (or an agency or political
subdivision thereof) or other entity of any kind, and shall include any
successor (by merger or otherwise) of any such entity.
"Registrable Securities" means (i) any securities issued or
issuable by the Company to the Stockholder pursuant to Option Agreement I or
Option Agreement II and (ii) any securities of the Company issued or issuable
with respect to any securities referred to in clause (i) whether by way of
conversion, exchange, dividend, or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, or other
reorganization or otherwise. As to any particular Registrable Securities, once
issued, such securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall be
eligible for resale pursuant to Rule 144(k) (or any successor provision) under
the Securities Act, (c) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not, in the opinion of counsel for the Stockholder, require registration
of them under the Securities Act or (d) they shall have ceased to be
outstanding.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 2, including, without
limitation, all registration and filing fees, all fees of the New York Stock
Exchange, Inc., other national securities exchanges or automated quotation
systems or the National Association of Securities Dealers, Inc., all fees and
expenses of complying with securities or "blue sky" laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "comfort" letters required by or incident
to such performance and compliance, any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (excluding any underwriting
discounts or commissions with respect to the Registrable Securities) and the
fees and expenses of one counsel to the Stockholder. In the event the Company
determines, in accordance with Section 2.1(a), not to register any securities
with respect to which it had given written notice of its intention to so
register to the Stockholder, all of the costs of the type (and subject to any
limitation to the extent) set forth in this definition and incurred by the
Stockholder in connection with such registration on or prior to the date the
Company notifies the Stockholder of such determination shall be deemed
Registration Expenses.
"Securities Act" means the Securities Act of 1933, as amended, or
any other similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act of
D-8
1933, as amended, shall include a reference to the comparable section, if any,
of any such similar federal statute.
4. Rule 144. The Company shall use its commercially reasonable efforts
to enable the Stockholder to sell its Registrable Securities without
registration under the Securities Act within the limitation of the provisions of
(a) Rule 144 under the Securities Act, as such Rule may be amended from time to
time, (b) any similar rules or regulations hereafter adopted by the Commission,
as such Rule may be amended from time to time. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the Stockholder.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the Stockholder for purposes of any request or other
action by the Stockholder pursuant to this Agreement. If the beneficial owner of
any Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.
7. Notices. All notices, demands and other communications provided for
or permitted hereunder shall be made in accordance with Section 10.2 of the
Securities Purchase Agreement.
8. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
9. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of each of the
Holders shall be enforceable to the fullest extent permitted by law.
10. Entire Agreement. This Agreement, together with the Securities
Purchase Agreement, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement and the Securities Purchase Agreement supersede all prior agreements
and understandings among the parties with respect to such subject matter.
11. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
D-9
12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
13. Counterparts. This Agreement may be executed in multiple
counterparts, each of which when so executed shall be deemed an original and all
of which taken together shall constitute one and the same instrument.
D-10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective representatives hereunto duly
authorized as of the date first above written.
Winter Harbor, L.L.C.
By: First Media, L.P., its member
By: First Media Corporation, its general partner
Name:
Title:
Red Cube International AG
By:
Name:
Title:
D-11
Exhibit E to the Securities Purchase Agreement
[First Closing Date]
Red Cube International AG
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇-▇▇▇▇ ▇▇▇ (▇▇▇▇▇▇▇▇▇▇▇)
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
Re: Securities Purchase Agreement
Ladies and Gentlemen:
We have acted as special counsel to Winter Harbor, L.L.C., a Delaware
limited liability company ("Winter Harbor"), in connection with the Securities
Purchase Agreement (the "Purchase Agreement"), dated as of August __, 2000,
among Winter Harbor, Red Cube International AG ("Red Cube"), and KPR
Finanz-Und Verwaltungs AG ("KPR"). This opinion is rendered to you pursuant
to Section 7.2(b) of the Purchase Agreement. Capitalized terms used herein
that are defined in the Purchase Agreement but are not otherwise defined
herein shall have the meanings ascribed to them in the Purchase Agreement.
In connection with our representation of Winter Harbor as set forth
above, we have examined the following documents (collectively the
"Transaction Documents"):
1. the Purchase Agreement;
2. the Registration Rights Agreement, dated as of the date of this
opinion, between Winter Harbor and Red Cube;
3. the Option Agreement, dated as of the date of this opinion, between
Winter Harbor and Red Cube, with respect to 52,499 ordinary shares of Red Cube;
4. the Option Agreement, dated as of the date of this opinion, between
Winter Harbor and Red Cube, with respect to 58,333 ordinary shares of Red Cube;
and
5. the Voting Agreement, dated as of August __, 2000, between Winter
Harbor and Red Cube.
We have also examined the certificate of formation and operating
agreement of Winter Harbor (collectively, the "Organizational Documents") and
resolutions adopted by the board of directors of First Media Corporation
(acting as general partner of the member of Winter Harbor) relating to the
Purchase Agreement and the transactions contemplated thereby, all in the forms
certified to us by an officer of First Media Corporation as being true and
complete copies of the foregoing. We have relied, as to factual matters, on
certificates, facsimiles, and telephonic
E-1
confirmation issued or given by public officials, and upon the representations
and warranties in the Purchase Agreement, and related documents and information
furnished to us by Winter Harbor in the form of certificates or otherwise. As to
all factual matters material to the opinions set forth herein, we have relied
upon and assumed the accuracy of such certificates with respect to the facts
stated therein. We have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to us
as originals, and the conformity to original documents of all documents
submitted to us as copies.
In rendering this opinion, we have assumed that each Transaction
Document and other instrument executed and delivered by any party other than
Winter Harbor has been duly authorized by all necessary action on the part of
such party, has been duly executed and delivered by such party, and
constitutes the valid, legally binding, and enforceable obligation of such
party. When a statement in this opinion is made "to our knowledge," it means
that none of the attorneys in our firm involved in representing Winter Harbor
in connection with the transactions contemplated by the Purchase Agreement has
actual existing knowledge that the statement is false; it does not mean that
any of such attorneys necessarily has actual existing knowledge of facts that
would suggest the statement is true.
This opinion is limited to the law of the District of Columbia, the
Delaware Limited Liability Company Act, and the federal law of the United
States of America (collectively, "Applicable Law"), except that (a) Applicable
Law includes only laws and regulations that a lawyer exercising customary
professional diligence would recognize as being applicable to the transactions
contemplated by the Purchase Agreement and excludes those laws and regulations
set forth in Section 19 of the Legal Opinion Accord of the American Bar
Association Section of Business Law (1991) and (b) insofar as our opinion in
paragraph 3 relates to the Voting Agreement or to Section 5.6 of the Purchase
Agreement, Applicable Law includes the Florida Business Corporation Act. You
understand that we are not admitted in the State of Florida or the State of
Delaware and therefore do not purport to be experts in the laws of the State
of Florida or the State of Delaware; insofar as our opinion in paragraph 3
relates to the Voting Agreement or to Section 5.6 of the Purchase Agreement,
we have relied with your consent on an opinion of Holland & Knight LLP.
Our opinions are given as if the Purchase Agreement and the other
Transaction Documents were governed by the laws of the District of Columbia.
You recognize that the express terms of the Purchase Agreement and the other
Transaction Documents provide that they are to be governed by the laws of
other jurisdictions, which may be different from the law of the District of
Columbia in certain relevant respects. We express no opinion as to choice of
law or conflicts of law rules, or the laws of any states or jurisdictions
other than as specified above.
Statements in this opinion as to the legality, validity, binding
effect, or enforceability of any Transaction Document are subject to (a)
limitations imposed by bankruptcy, insolvency, reorganization, moratorium, and
other laws and related court decisions of general applicability relating to or
affecting creditors' rights generally, (b) the application of general
equitable principles, (c) with respect to rights to indemnity, if any,
limitations imposed by federal or state securities laws or public policies
embodied therein, (d) limitations imposed by laws and judicial decisions that
have imposed duties on standards of conduct (including obligations of good
faith, fair dealing, and reasonableness) upon contracting parties, (e)
limitations on the enforceability of
E-2
any contractual provision specifying that provisions of an agreement may only be
waived in writing, and (f) limitations on the enforceability of waivers of
equitable rights and defenses.
On the basis of the foregoing, and reliance thereon, and subject to the
assumptions, limitations, qualifications, and exceptions contained herein, we
are of the opinion that:
1. Winter Harbor is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
2. Winter Harbor has the limited liability company power and authority
to execute and deliver the Transaction Documents and to carry out and perform
its obligations thereunder. The execution, delivery, and performance by Winter
Harbor of the Transaction Documents have been duly and validly authorized by all
necessary limited liability company action on the part of Winter Harbor.
3. Each Transaction Document constitutes the valid and legally binding
obligation of Winter Harbor, enforceable against Winter Harbor in accordance
with its terms.
4. The execution, delivery, and performance of the Purchase Agreement
and the Transaction Documents by Winter Harbor, to our knowledge, (a) do not
require the consent of any third party under any provision of Applicable Law or
under the terms of any contract of which we have actual knowledge that is
binding on Winter Harbor; (b) do not conflict with any provision of the
Organizational Documents, (c) do not conflict with, result in a breach of, or
constitute a default under any provision of Applicable Law, or (d) do not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of any contract of which we have actual
knowledge that is binding on Winter Harbor.
This opinion is as of the date hereof, and we expressly disclaim any
duty to update this opinion in the future in the event there are any changes in
fact or law that may affect any matter addressed herein. This opinion is
rendered only to Red Cube and is solely for its benefit in connection with the
above transactions, this opinion may not be relied upon by Red Cube for any
other purpose, or quoted in whole or in part or otherwise referred to in any of
its financial statements or other public release, nor is it to be filed with any
governmental agency or other person without the prior written consent of this
firm, except as is required by law, and this opinion may not be relied upon by
any other person, firm or corporation for any purpose without our prior written
consent.
Very truly yours,
DOW, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
PLLC
By:______________________________
_____________,
Member
E-3
Exhibit F to the Securities Purchase Agreement
[LAWYERS LETTERHEAD]
[FIRST CLOSING DATE]
Winter Harbor, L.L.C.
c/o First Media, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
In connection with the sale by Winter Harbor L.L.C., a Delaware
limited liability company ("Winter Harbor"), pursuant to the Securities
Purchase Agreement, dated as of August ~, 2000 by and among Winter Harbor, Red
Cube International AG, an Aktiengesellschaft organized under the laws of
Switzerland ("Red Cube") and KPR Finanz-Und Verwaltung AG, also an
Aktiengesellschaft organized under the laws of Switzerland ("KPR") (the
"Securities Purchase Agreement") of certain securities of I-Link Incorporated,
a Florida corporation, listed on Exhibit A (the "Securities") and each of the
two the Stock Option Agreements, each dated as of August ~, 2000, each by and
between Winter Harbor and Red Cube (collectively, the Stock Option Agreements
and the Securities Purchase Agreement, the "Agreements"), I, as legal counsel
for Red Cube, have examined such bylaws, all notarized documents concerning
Red Cube, company records, and other documents and material agreements that
have been provided by the legal department of Red Cube as I have considered
necessary or appropriate for purposes of this opinion. I have not been
retained as tax counsel and consequently, I express no opinion whatsoever as
to the tax treatment, tax implications, tax effects of any transaction. I am a
member of the Zurich Bar and do not hold myself to be an expert in laws other
than the laws of Switzerland. Accordingly, my opinion is confined to Swiss
law. I have abstained from examining any issues of any other jurisdiction and
therefore no opinion on matters other than Swiss law issues is to be inferred.
All capitalized terms not defined herein are defined in, and any reference to
a Section, Schedule or Exhibit is a reference to a Section of, or a Schedule
or Exhibit to, the Securities Purchase Agreement. Upon the basis of such
examination it is my opinion that:
Red Cube is a corporation (Aktiengesellschaft) duly organized and
validly existing under the laws of Switzerland. Red Cube has the requisite
corporate power and authority to own, lease, and operate its properties in
Switzerland, to carry on its business in the places where such properties are
now owned, leased, or operated and such business is now conducted, and to
execute, deliver, and perform the Agreements and the documents contemplated
hereby and referenced therein (together, the "Transaction Documents")
according to their respective terms.
The execution, delivery, and performance of the Agreements, and all
other Transaction Documents to which Red Cube is a party, by Red Cube have
been duly authorized by all necessary corporate action on the part of Red
Cube. The Agreements and all other Transaction
F-1
Documents to which Red Cube is a party have been duly executed and delivered by
Red Cube and constitute the legal, valid, and binding obligations of Red Cube,
enforceable against Red Cube in accordance with their terms except as the
enforceability of the Agreements and any Transaction Document may be affected
included but not limited by bankruptcy, insolvency, fraudulent transfer or
similar laws of general application or Legal Requirements affecting creditors'
rights generally and by judicial discretion in the enforcement of equitable
remedies. Enforceability may further be limited in view of general principles of
the abuse of right (Rechtsmissbrauch as per Art. 2 para. 2 of the Swiss Civil
Code).
Except as set forth on Schedule 4.3, and subject to the expiration or
termination of all waiting periods under the HSR Act, and under the condition
that none of the parties achieves a turnover of CHF 100 Mio. (Art. 9 of the
Swiss federal antitrust law, Kartellgesetz) the execution, delivery, and
performance by Red Cube of the Agreements and the Transaction Documents (with
or without the giving of notice, the lapse of time, or both): (a) do not
require the consent of any third party; (b) will not conflict with any
provision of the relevant corporate organizational documents of Red Cube, each
as currently in effect; (c) will not conflict with, result in a breach of, or
constitute a default under any Swiss legal requirement; and (d) will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of any agreement, instrument, license, or
permit to which Red Cube is a party or by which Red Cube may be bound.
The authorized and issued capital stock of Red Cube described on
Schedule 4.4 is accurately described as of today's date. All issued and
outstanding shares of capital stock of Red Cube have been duly and validly
issued and are fully paid. To the best of my knowledge and except as described
on Schedule 4.4.a and 4.4.b there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require Red Cube to
issue, sell, or otherwise cause to become outstanding any of its capital
stock.. Red Cube has not violated any Swiss legal requirement in connection
with the offer for sale or sale and issuance of its outstanding shares of
capital stock or any other securities.
In connection with my opinion set forth in parts (a) and (d) of
paragraph (3), I have relied on Red Cube to alert me to the existence of any
such agreement, instrument, license or permit to which such parts relate to
and only express an opinion as to such agreements, instruments, licenses or
permits of which I am aware.
The foregoing opinion is limited to the laws of Switzerland and I am
expressing no opinion as to the effect of the laws of any other jurisdiction.
I understand that, with respect to all matters of New York law, you are
relying on the opinion, dated the date hereof, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇. This
opinion is rendered solely to you (Winter Harbor). It may not be used,
circulated, quoted, referred to or relied upon by any person other than the
persons to whom it is addressed (Winter Harbor), nor for any other purpose
than in connection to the Securities Purchase Agreement without my prior
written consent in each instance. This opinion is strictly limited to the
matters stated in it and does not apply by implication to other matters.
F-2
This letter and all given opinions shall be governed and construed by
the laws of Switzerland. The ordinary courts of the canton of Zurich (1) have
exclusive jurisdiction with respect to all disputes arising from or in
connection with this letter and the given opinions.
Very truly yours,
F-3
Exhibit G to the Securities Purchase Agreement
[▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LETTERHEAD]
[First Closing Date]
Winter Harbor, L.L.C.
c/o First Media, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
In connection with the sale by Winter Harbor L.L.C., a Delaware
limited liability company ("Winter Harbor"), pursuant to the Securities
Purchase Agreement, dated as of August ~, 2000 by and among Winter Harbor, Red
Cube International AG, an Aktiengesellschaft organized under the laws of
Switzerland (the "Company") and KPR Finanz-Und Verwaltungs AG, also an
Aktiengesellschaft organized under the laws of Switzerland ("KPR") (the
"Securities Purchase Agreement") of certain securities of I-Link Incorporated,
a Florida corporation, listed on Exhibit A to the Securities Purchase
Agreement (the "Securities"), we, as special U.S. counsel for the Company and
KPR, have examined such corporate records, certificates and other documents,
and such questions of New York State and Federal law, as we have considered
necessary or appropriate for purposes of this opinion. Upon the basis of such
examination, it is our opinion that the Securities Purchase Agreement has been
duly executed and delivered by the Company and KPR under the laws of the State
of New York; assuming that it has been duly authorized, executed and delivered
by the Company and KPR under the laws of Switzerland and that it has been duly
authorized, executed and delivered by Winter Harbor, the Securities Purchase
Agreement constitutes a valid and legally binding obligation of the Company
and KPR enforceable against the Company and KPR in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
The foregoing opinion is limited to the Federal laws of the United
States and the laws of the State of New York, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction. We note that you are
relying as to all matters of Swiss Law on the opinion of Heierli
Rechtsanwaelte, delivered to you pursuant to Section 7.3 of the Securities
Purchase Agreement.
G-1
We have relied as to certain matters on information obtained from
public officials, officers of the Company and KPR and other sources believed
by us to be responsible, and we have assumed that the signatures on all
documents examined by us are genuine, assumptions which we have not
independently verified.
Very truly yours,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
G-2
Schedule 3.5 - Winter Harbor Consents
None.
Schedule 3.7 - Winter Harbor Related Party Transactions
1. Transactions with I-Link. The arrangements between I-Link and Winter
Harbor are described in documents filed by I-Link with the Securities and
Exchange Commission, and those descriptions are incorporated in this schedule by
reference.
2. I-Link Loan Documents. The following documents constitute the I-Link
Loan Documents:
(a) Promissory Notes, in the aggregate principal amount of $7,768,000,
dated January 26, 1998, February 23, 1998, March 3, 1998, March 24, 1998, May
13, 1998, May 29, 1998, and June 8, 1998
(b) Agreement, dated as of April 14, 1998, between I-Link, as
"Borrower," and Winter Harbor, as "Lender"
(c) Pledge Agreement, dated as of April 14, 1998, between I-Link, as
"Pledgor," and Winter Harbor, as "Pledgee"
(d) Security Agreement, among I-Link Systems, Inc., a Utah corporation,
I-Link Communications, Inc., a Utah corporation, MiBridge, Inc., a Utah
corporation, I-Link Worldwide, L.L.C., a Delaware limited liability company, as
"Debtors," and Winter Harbor as "Secured Party"
(e) Agreement, dated as of January 15, 1999, between I-Link, as
"Borrower," and Winter Harbor, as "Lender"
(f) First Amendment to Security Agreement, dated as of January 15,
1999, among I-Link, I-Link Systems, Inc., a Utah corporation, I-Link
Communications, Inc., a Utah corporation, MiBridge, Inc., a Utah corporation,
I-Link Worldwide, L.L.C., a Delaware limited liability company, Vianet
Technologies, Ltd., an Israeli corporation, as "Debtors," and Winter Harbor, as
"Secured Party"
(g) First Amendment to Pledge Agreement, dated as of January 15, 1999,
between I-Link, as "Pledgor," and Winter Harbor, as "Pledgee"
(h) Second Amendment to Loan Agreement, dated as of April 15, 1999,
between I-Link, as "Borrower," and Winter Harbor, as "Lender"
Agreement, dated April 2000, between I-Link and Winter Harbor, extending the
due date for the convertible debt until April 15, 2001
Schedule 4.3 - Red Cube Consents
None.
Schedule 4.4 - Capitalization of Red Cube
1. Red Cube has a share capital of CHF 105 million capital, which is
divided into 10.5 million registered shares of CHF 10.00 nominal value. All
shares have been fully paid. Furthermore Red Cube possesses CHF 20 million in
authorized stock. As of the date hereof Red Cube has not increased its capital
as authorized.
2. The shareholders of Red Cube have pre-emptive rights with respect to
the issuance of new shares of Red Cube, except when such shares are issued in
order to acquire the assets or securities of another company.
3. Red Cube has a total of CHF 24 million conditional capital which can
be used for issuing employee shares, or respectively for the pre-emptive rights
of such shares, used for or in connection with financing joint ventures or
cooperation agreements (CHF 9 million). If such options or the respective
pre-emptive rights are exercised, then the present shareholders are precluded
from exercising their pre-emptive rights.
4. Red Cube has recently issued warrants to Internet Holdings for: (i)
105,000 shares (exercisable after one year for a period of two years) at a
strike price in Swiss francs equivalent to $190.48 U.S. dollars, (ii) 105,000
shares (exercisable after two years for a period of two years) at a strike price
in Swiss francs equivalent to $428.57 U.S. dollars, and (iii) 105,000 shares
(exercisable after three years for a period of two years) at a strike price in
Swiss francs equivalent to $666.67 U.S. dollars.
Schedule 4.5 - Red Cube Liabilities
On March 30, 2000 Red Cube International Ltd. acquired 100% of Catel Carrier
Telekommunikation (Schweiz) AG ("Catel"). Red Cube believes that at the time
of the acquisition, the Catel board did not disclose all material information
as was required pursuant to the purchase agreement. According to Swiss Law, if
Red Cube International Ltd. could prove such allegations in court, it would
have the right to unwind the contract and would not be subject to any of the
liabilities described below. The following three main claims with respect to
the Catel acquisition:
1. Asplan / Aebi. There are two employment contracts in which the
respective employees claim that certain amounts are owed to them
thereunder. According to the former board of Catel, these contracts had
already been terminated and the employees were not entitled to the
claimed amounts. The maximum claim against Catel would be approximately
CHF 1.5 million.
2. ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ is a Catel employee who is entitled to fixed 5-year
commissions based on sales. There is a dispute concerning the proper
amount of commissions to which this employee is entitled and
potentially could amount to several million Swiss francs.
3. ▇▇▇▇▇▇▇ / Customers. This concerns the contracts with value-added
services suppliers. In certain cases, Catel was under the obligation to
provide blocks of German and Austrian phone numbers, which ultimately
couldn't be delivered. Catel could be subject to damages due to its
inability to perform under such contracts.