EXHIBIT 1.1
UNDERWRITING AGREEMENT
for
6,500,000 Shares of Common Stock
By and Among
PRIVATE MEDIA GROUP, INC.
(a Nevada corporation)
and
THE SELLING SHAREHOLDERS NAMED HEREIN
and
COMMERZBANK AKTIENGESELLSCHAFT,
as Representative for the several Underwriters
Dated: ., 2002
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TABLE OF CONTENTS
UNDERWRITING AGREEMENT
SECTION 1. Representations and Warranties
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(a) Representations and Warranties by the Company
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(b) Representations and Warranties by the Selling Shareholders
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(c) Officer's Certificates
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SECTION 2. Sale and Delivery to Underwriters; Closing
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(a) Initial Securities
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(b) Additional Securities
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(c) Subscription for New Initial Securities
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(d) Borrowed Securities
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(e) Payment and Delivery
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(f) Denominations; Registration
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SECTION 3. Covenants of the Company
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(a) Compliance with U.S. Securities Regulations and Commission Requests
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(b) Compliance with German Securities Regulations
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(c) Compliance with Other Securities Regulations
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(d) Filing of Amendments
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(e) Continued Compliance with Securities Laws
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(f) Delivery of Registration Statements
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(g) Delivery of Offer Documents
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(h) Use of Proceeds
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(i) Listing
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(j) Restriction on Sale of Securities
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(k) Reporting Requirements
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(l) Public Announcements
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SECTION 4. Payment of Expenses
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(a) Expenses
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(b) Termination of Agreement
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(c) Allocation of Expenses
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SECTION 5. Conditions of Underwriters' Obligations
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(a) Effectiveness of Registration Statement
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(b) Opinion of Counsel for the Company
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(c) Opinion of Special Gaming Counsel for the Company
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(d) Opinion of Special Tax Adviser for the Company
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(e) Opinion of Nevada Counsel for the Company
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(f) Opinion of Spanish Counsel to the Company
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(g) Opinion of Counsel for the Selling Shareholders
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(h) Opinion of Counsel for the Underwriter
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(i) Officers' Certificate
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(j) Certificate of Selling Shareholders
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(k) Accountants' Comfort Letter
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(l) Bring-down Comfort Letter
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(m) Approval of Listing
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(n) No Objection
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(o) Lock-up Agreements
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(p) Sponsor Agreements
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(q) Paying Agency Agreement
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(r) Conditions to Purchase of Additional Securities
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(s) Additional Documents
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(t) Termination of Agreement
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SECTION 6. Indemnification
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(a) Indemnification of Underwriters
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(b) Indemnification of Company, Directors and Officers and Selling Shareholders
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(c) Actions against Parties; Notification
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(d) Settlement without Consent if Failure to Reimburse
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(e) Other Agreements with Respect to Indemnification
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SECTION 7. Contribution
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SECTION 8. Representations, Warranties and Agreements to Survive Delivery
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SECTION 9. Termination of Agreement
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(a) Termination; General
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(b) Liabilities
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SECTION 10. Default by One or More of the Underwriters
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SECTION 11. Default by One or More of the Selling Shareholders or the Company
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SECTION 12. Notices
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SECTION 13. Parties
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SECTION 14. Governing Law
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SECTION 15. Counterparts
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SECTION 16. Severability
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SECTION 17. Effect of Headings
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SCHEDULES
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Schedule A - List of Underwriters Sch A-1
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Schedule B - List of Selling Shareholders Sch B-1
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Schedule C - Borrowed Securities Sch C-1
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Schedule D - List of Subsidiaries Sch D-1
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Schedule E - List of Persons and Entities Subject to Lock-Up Sch E-1
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Schedule F - Underwriters' Representations Letter Sch F-1
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EXHIBITS
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Exhibit A - Form of Opinion of Company's Counsel A-1
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Exhibit B - Form of Opinion of Company's Special Gaming Counsel B-1
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Exhibit C - Form of Opinion of Company's Special Tax Counsel C-1
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Exhibit D - Form of Opinion of Company's Nevada Counsel D-1
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Exhibit E - Form of Opinion of Company's Spanish Counsel E-1
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ANNEXES
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Annex A - Form of Pricing Agreement Annex A-1
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PRIVATE MEDIA GROUP, INC.
(a Nevada corporation)
6,500,000 Shares of Common Stock
(Par Value $.001 Per Share)
UNDERWRITING AGREEMENT
., 2002
Commerzbank Aktiengesellschaft, as Representative
c/o Commerzbank Aktiengesellschaft
Kaiserplatz
60261 Frankfurt am Main
Federal Republic of Germany
Ladies and Gentlemen:
Private Media Group, Inc., a Nevada corporation (the "Company"), and the persons
listed in Schedule B hereto (the "Selling Shareholders") confirm their
respective agreements with Commerzbank Aktiengesellschaft ("Commerzbank") and
each of the other underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Commerzbank is acting as
representative (in such capacity, the "Representative"), with respect to the
sale by the Company and the Selling Shareholders, acting severally and not
jointly, and the purchase by the Underwriters, acting severally and not jointly,
of 6,500,000 shares (the "Initial Securities") of the Company's common stock,
par value $.001 per share (the "Common Stock").
It is understood that, subject to the conditions hereinafter stated, 975,000
Initial Securities are expected to be offered and sold by the Underwriters in
the United States to U.S. Persons (as such term is defined in the Agreement
Among Underwriters of even date herewith), and 5,525,000 Initial Securities are
expected to be offered and sold by the Underwriters outside the United States to
persons other than U.S. Persons. Commerzbank Capital Markets Corporation shall
act as U.S. selling agent on behalf of the Underwriters (the "Selling Agent").
The Selling Shareholders also propose to sell to the Representative not more
than an additional 900,000 shares of Common Stock (the "Additional Securities"),
if and to the extent that the Representative shall have determined to exercise
the right to purchase such Additional Securities granted to the Representative
in Section 2(b) hereof. The Initial Securities and the Additional Securities are
hereinafter collectively referred to as the "Securities".
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It is expected that, after subscription for the Securities pursuant to Section 2
hereof and after the then existing share capital of the Company has been
admitted for trading on the Neuer Markt segment of the Frankfurt Stock Exchange,
the Company, the Selling Shareholders and the Representative, on behalf of the
Underwriters, will enter into a pricing supplement to this Agreement (the
"Pricing
Agreement"), a form of which is attached as Annex B hereto. The Pricing
Agreement will set forth, among other things, the price to be paid per share for
the Initial Securities and any Additional Securities to be purchased by the
several Underwriters and the other matters set forth therein.
The Company and the Selling Shareholders understand that the Underwriters
propose to make a public offering of the Securities in the United States and the
Federal Republic of Germany, as well as private placements to Institutional
Investors in Europe and the United States, as soon as the Representative deems
advisable after this Agreement has been executed and delivered.
The Company has filed with the U.S. Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-69654) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"). The registration statement contains the Preliminary U.S. Prospectus
(as defined below). In connection with the offer and sale of the Securities in
the Federal Republic of Germany, the Company and the Representative have filed
with the Frankfurt Stock Exchange the preliminary prospectus including a German
wrapper, which was approved by the Frankfurt Stock Exchange on ., 2002 and
published on ., 2002 (the "Unvollstandiger Verkaufsprospekt/
Unternehmensbericht", or the "Preliminary International Prospectus"). Promptly
after execution and delivery of the Pricing Agreement, the Company will prepare
and file a U.S. Prospectus (as defined below) in accordance with the provisions
of Rule 430A ("Rule 430A") of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations. The information included in such U.S.
Prospectus that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information." Promptly after execution and delivery of the
Pricing Agreement, the Company will also prepare an International Prospectus (as
defined below) which shall include the Rule 430A Information as well as the
information required for the listing and offering of the Securities in the
Federal Republic of Germany and the offering of the Securities to Investors in
Germany. The International Prospectus to be used in connection with sales
outside of the United States is identical to the U.S. Prospectus except for the
prospectus wrap pages. After admission of the Securities for trading on the
Neuer Markt segment of the Frankfurt Stock Exchange and approval by the
Frankfurt Stock Exchange, the Company shall publish the final prospectus on o,
2002 (the "Verkaufsprospekt/ Unternehmensbericht", or the "International
Prospectus"). The International Prospectus will be used in connection with the
public offering in the Federal Republic of Germany. Each U.S. Prospectus used
before such registration statement became effective, and any International
Prospectus that omitted the Rule 430A Information that was used after such
effectiveness and prior to the execution and delivery of the Pricing Agreement,
is herein called a "Preliminary U.S.Prospectus." The registration statement as
filed with the Commission, including the exhibits thereto, schedules thereto, if
any, at the time it became effective and including the Rule 430A Information, is
herein called the "Registration Statement." Any
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registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement", and after
such filing, the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The U.S. Prospectus, in the form in which it was filed
pursuant to Rule 424(b) of the Commission under the Securities Act, is herein
called the "U.S.Prospectus." The Preliminary U.S. Prospectus, the Preliminary
International Prospectus, the U.S. Prospectus and the International Prospectus
are hereinafter called the "Offer Documents". For purposes of this agreement,
all references to the Registration Statement, the Preliminary U.S. Prospectus or
the U.S. Prospectus or any amendment or supplement to any of the foregoing shall
be deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents and
warrants to each Underwriter and the Selling Agent as of the date hereof, as of
the date of the Pricing Agreement, as of the Closing Time referred to in Section
2(e) hereof, and as of each Date of Delivery (if any) referred to in Section
2(b) hereof, and agrees with each Underwriter and the Selling Agent, as follows:
(i) Compliance with Registration and Listing Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Additional Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
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. The Offer Documents and any supplement thereto, at their
respective times of issuance and at the Closing Time, complied and will
comply in all material respects with any applicable laws of the Federal
Republic of Germany and all applicable rules and regulations of any
competent German government, regulatory or stock exchange authority and any
other foreign jurisdictions in which the Offer Documents, as amended or
supplemented, if applicable, are distributed in connection with the offer
and sale of the Securities. No U.S. Prospectus nor any amendments or
supplements thereto, at the time the U.S. Prospectus, or any such amendment
or supplement was issued and at the Closing Time (and, if any Additional
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under
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which they were made, not misleading. The representations and warranties in
this subsection shall not apply to statements in or omissions from the
Registration Statement, or the Offer Documents made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter expressly for use in the Registration Statement or the Offer
Documents, it being understood and agreed that the only such information is
that described in Schedule F hereto.
The International Prospectus, at the time the International Prospectus was
issued and at the Closing Time (and if any Additional Securities are
purchased, at the Date of Delivery) complied and will comply in all
material respects with all applicable laws of the Federal Republic of
Germany and the listing rules of the Neuer Markt. The International
Prospectus did not contain an untrue statement of, or omit to state, a
fact, which is material for the assessment of an investment in the
Securities, within the meaning of (S)13 of the German Securities Sales
Prospectus Act (Wertpapier-Verkaufsprospektgesetz) and (S)45 German Stock
Exchange Act (Borsengesetz).
Each Preliminary U.S. Prospectus and the U.S. Prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations. Each Offer
Document delivered to the Underwriters or to the Selling Agent for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except for the International Prospectus and to the extent permitted by
Regulation S-T.
(ii) Information, Forward-Looking Statements and Projections. All of the
information (other than projections and forward looking statements) given
to the Representative and its legal and financial advisors in connection
with legal, financial and business due diligence with respect to the
Company and its Subsidiaries (as defined below) was complete and correct in
all respects material to the offering when given, and no information
requested material to the offering was omitted at any time during the
legal, financial and business due diligence process. Projections and
forward looking statements were truly and honestly given and made after due
and careful inquiry and consideration of all relevant circumstances and
were based on reasonable assumptions and were not misleading in any
material aspect.
(iii) No Public Offers Outside the United States and Germany. Neither the
Company, nor any Subsidiary (as defined below), nor any person acting with
its or their authority or on its or their behalf has, directly or
indirectly, made or will make offers or sales of any security, or solicited
offers to buy any security, under circumstances that would constitute a
public offering of the Securities in any country outside the United States
and the Federal Republic of Germany where action for that purpose is
required.
(iv) Independent Accountants. The accountants who certified the financial
statements and supporting schedules included in the Registration Statement
and the Offer Documents are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
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(v) Financial Statements. The financial statements included in the
Registration Statement and the Offer Documents, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States ("U.S. GAAP") applied on a
consistent basis throughout the periods involved. The supporting schedules,
if any, included in the Registration Statement present fairly in accordance
with U.S. GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the Offer
Documents present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement.
(vi) No Material Adverse Change in Business. Since the respective dates as
of which information is given in the Registration Statement and the Offer
Documents, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) except for quarterly Common Stock dividends on the
shares of preferred stock of the Company in amounts per share dictated by
the certificate of designation related thereto, there has been no dividend
or distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(vii) Good Standing of the Company. The Company has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Nevada and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Offer Documents and to enter into and perform its obligations under this
Agreement; and, to the extent such concept is meaningful, the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(viii) Directors and Executive Officers. The directors and executive
officers of the Company, as listed in the Offer Documents, are the
directors and officers of the Company as of the date hereof.
(ix) Good Standing of Subsidiaries. Each subsidiary of the Company listed
on Schedule D hereto (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation under the laws of the jurisdiction of its incorporation and, to
the extent such concept is meaningful, is in good standing under the laws
of such jurisdiction, has corporate power and authority to own, lease and
9
operate its properties and to conduct its business as described in the
Offer Documents and is duly qualified as a foreign corporation to transact
business and, to the extent such concept is meaningful, is in good standing
in each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Offer Documents, all of the issued and outstanding capital stock of each
such Subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the preemptive
or similar rights of any securityholder of such Subsidiary. The only
subsidiaries of the Company are the subsidiaries listed on Schedule D
hereto.
(x) Capitalization. The authorized, issued and outstanding capital stock of
the Company is as set forth in the Offer Documents in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Offer Documents or
pursuant to the exercise of convertible securities or options or the
payment of quarterly dividends in respect of the Series A Preferred Stock
of the Company referred to in the Offer Documents). The shares of issued
and outstanding capital stock of the Company, including the Securities to
be purchased by the Underwriters from the Selling Shareholders, have been
duly authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares of capital stock of the Company, including
the Securities to be purchased by the Underwriters from the Selling
Shareholders, was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
(xi) Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(xii) Authorization of Pricing Agreement. The Pricing Agreement has been
duly authorized by the Company.
(xiii) Authorization and Description of Securities. The Securities to be
purchased by the Underwriters from the Company have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the Company pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued and
fully paid and non-assessable; the Common Stock conforms to all statements
relating thereto contained in the Offer Documents and such description
conforms to the rights set forth in the instruments defining the same; no
holder of the Securities will be subject to personal liability by reason of
being such a holder; and the issuance of the Securities is not subject to
the preemptive or other similar rights of any securityholder of the
Company.
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(xiv) Restriction on Sale of Securities. Each of the Company and the
Shareholders named in Schedule E hereto has duly authorized, executed and
delivered each of the lock-up agreements to which it is a party.
(xv) Absence of Defaults and Conflicts. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement, the Pricing Agreement, and the consummation of the transactions
contemplated herein in the Registration Statement (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Offer Documents under the caption "Use of
Proceeds") and in the Offer Documents and compliance by the Company with
its obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any subsidiary pursuant to,
the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the articles of incorporation or by-laws of the Company
or any subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any subsidiary or any of their assets, properties or operations
(except for such violations of applicable laws, statutes, rules,
regulations, judgments, writs or decrees that would not result in a
Material Adverse Effect). As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any subsidiary.
(xvi) Absence of Labor Dispute. No labor dispute with the employees of the
Company or any subsidiary exists or, to the knowledge of the Company, is
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case,
may reasonably be expected to result in a Material Adverse Effect.
(xvii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Offer Documents (other
than as disclosed therein), or which might reasonably be expected to
11
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement, the
Pricing Agreement, or the performance by the Company of its obligations
hereunder; the aggregate of all pending legal or governmental proceedings
to which the Company or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not described in the
Offer Documents, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xviii) Accuracy of Exhibits. There are no contracts or documents which are
required to be described in the Registration Statement, the Offer Documents
or the documents to be filed as exhibits thereto which have not been so
described and filed as required.
(xix) Possession of Intellectual Property. The Company and its subsidiaries
own or possess, or can acquire on reasonable terms, adequate patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now operated by
them, and neither the Company nor any of its subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xx) Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree
of, any court or governmental authority or agency is necessary or required
for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder
or the consummation of the transactions contemplated by this Agreement,
except (A) such as have been already obtained or, on the date of the
Pricing Agreement, will have been obtained, under the 1933 Act or the 1933
Act Regulations or as may be required under state securities laws and (B)
such as have been obtained under the laws and regulations of jurisdictions
outside the United States in which the Securities are offered.
(xxi) Possession of Licenses and Permits. The Company and its subsidiaries
possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental
12
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(xxii) Title to Property. The Company and its subsidiaries have good and
marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (A) are
described in the Offer Documents or (B) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company or any of
its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise,
and under which the Company or any of its subsidiaries holds properties
described in the Offer Documents, are in full force and effect, and neither
the Company nor any subsidiary has any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of the Company
or any subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary to
the continued possession of the leased or subleased premises under any such
lease or sublease.
(xxiii) Investment Company Act. The Company is not, and upon the issuance
and sale of the Securities as herein contemplated and the application of
the net proceeds therefrom as described in the Offer Documents will not be,
an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended (the "1940 Act").
(xxiv) Environmental Laws. Except as described in the Offer Documents and
except as would not, singly or in the aggregate, result in a Material
Adverse Effect, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental
Laws and are each in compliance with their requirements, (C) there are no
pending or threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (D) there are no events
or circumstances that might reasonably be
13
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.
(xxv) Gaming Laws. Except as described in the Offer Documents and except as
would not, singly or in the aggregate, result in a Material Adverse Effect,
(A) neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to gaming, without limitation,
laws and regulations relating to on-line gaming (collectively, "Gaming
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Gaming Laws and
are each in compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Gaming Law against the Company
or any of its subsidiaries and (D) there are no events or circumstances
that could reasonably be expected to form the basis of an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to any Gaming
Laws.
(xxvi) Obscenity Laws. Except as described in the Offer Documents and
except as would not, singly or in the aggregate, result in a Material
Adverse Effect, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to the
distribution of obscene materials (collectively, "Obscenity Laws"), (B) the
Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Obscenity Laws and are each in compliance
with their requirements, (C) there are no pending or, to the Company's
knowledge, threatened, administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Obscenity Law
against the Company or any of its subsidiaries and (D) there are no events
or circumstances that could reasonably be expected to form the basis of an
action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company or any of its subsidiaries
relating to any Obscenity Laws.
(xxvii) Insurance Coverage. The Company and its subsidiaries maintain
insurance covering their properties, assets, operations, personnel and
business against such risks and in such amounts as is customary for
businesses of their type and size; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew
its existing insurance coverage or obtain similar coverage as necessary to
continue its business.
14
(xxviii) Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain asset accountability; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxix) Absence of Manipulation. Such Company has not taken, and will not
take, directly or indirectly, any action which is designed to or which has
constituted or which could reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(xxx) Listing. The Company has submitted an application for the Securities
to be listed for trading on the Neuer Markt segment of the Frankfurt Stock
Exchange, will use its best efforts to obtain such listing as promptly as
possible and will furnish to the Frankfurt Stock Exchange any and all
documents, instruments, information and warranties that may be necessary or
advisable in order to obtain the listing. The Company will sign the
International Prospectus and any other necessary documents and will deliver
the same to the Frankfurt Stock Exchange prior to the Closing Time as
required. The Company will use its best efforts to maintain the listing of
the Securities on the Frankfurt Stock Exchange.
(xxxi) Stamp Duty. No stamp or other issuance or transfer taxes or duties,
and no capital gains, income, withholding or other taxes are payable to the
Federal Republic of Germany or any political subdivision or taxing
authority thereof or therein by or on behalf of the Representative merely
by virtue of the subscription by it of the Securities, or by or on behalf
of the Underwriters merely by virtue of the sale and delivery by the
Representative of the Securities to the respective accounts of the several
Underwriters in the manner contemplated by this Agreement and the Pricing
Agreement.
(b) Representations and Warranties by the Selling Shareholders. Each Selling
Shareholder severally represents and warrants to each Underwriter and to the
Selling Agent as of the date hereof, as of the date of the Pricing Agreement, as
of the Closing Time, and, if the Selling Shareholder is selling Additional
Securities on a Date of Delivery, as of each such Date of Delivery, and agrees
with each Underwriter and the Selling Agent, as follows:
(i) Accurate Disclosure. To the knowledge of such Selling Shareholder: (A)
the representations and warranties of the Company contained in Section 1(a)
hereof are true and correct; and (B) such Selling Shareholder has reviewed
and is familiar with the Registration Statement and the Offer Documents and
neither the Offer Documents nor any amendments or supplements thereto
includes any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; such
Selling Shareholder is not prompted to sell the Securities to be sold by
such Selling Shareholder
15
hereunder by any information concerning the Company or any subsidiary of
the Company which is not set forth in the Offer Documents.
(ii) Authorization of Agreements. Such Selling Shareholder has the full
right, power and authority to enter into this Agreement, the Pricing
Agreement, and a Power of Attorney and Custody Agreement (the "Power of
Attorney and Custody Agreement"), among each of the Selling Shareholders,
the Attorneys-in-Fact and the Custodian (as defined in Section 1(v) below),
the Share Lending Agreement (the "Share Lending Agreement"), between such
Selling Shareholder and the Representative, and to sell, transfer and
deliver the Securities to be sold by such Selling Shareholder hereunder and
to lend the Securities to be borrowed pursuant to the Share Lending
Agreement by the Representative. The execution and delivery of this
Agreement, the Pricing Agreement, the Power of Attorney and Custody
Agreement and the Share Lending Agreement and the sale and delivery of the
Securities to be sold by such Selling Shareholder and the loan and delivery
of the Securities to be borrowed pursuant to the Share Lending Agreement by
the Representative and the consummation of the transactions contemplated
herein and compliance by such Selling Shareholder with its obligations
hereunder have been duly authorized by such Selling Shareholder and do not
and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any tax, lien, charge or
encumbrance upon the Securities to be sold by such Selling Shareholder or
borrowed by the Representative or any property or assets of such Selling
Shareholder pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, license, lease or other agreement or
instrument to which such Selling Shareholder is a party or by which such
Selling Shareholder may be bound, or to which any of the property or assets
of such Selling Shareholder is subject, nor will such action result in any
violation of the provisions of the charter or by-laws or other
organizational instrument of such Selling Shareholder, if applicable, or
any applicable treaty, law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over such Selling Shareholder or
any of its properties.
(iii) No Public Offers Outside the United States and Germany. Neither such
Selling Shareholder nor any person acting with its authority or on its
behalf has, directly or indirectly, made or will make offers or sales of
any security, or solicited offers to buy any security, under circumstances
that would constitute a public offering of the Securities in any country
outside the United States and the Federal Republic of Germany where action
for that purpose is required.
(iv) Good and Marketable Title. Such Selling Shareholder has and will at
the Closing Time and, if any Additional Securities are purchased, on the
Date of Delivery have good and marketable title to the Securities to be
sold by such Selling Shareholder hereunder, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of
any kind, other than pursuant to this Agreement; and upon delivery of such
Securities and payment of the purchase price therefor as herein
contemplated, assuming each of the Underwriters has no notice of any
adverse claim, each Underwriter will receive good and marketable title to
the Securities purchased by it
16
from such Selling Shareholder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind.
(v) Due Execution of Power of Attorney and Custody Agreement. Such Selling
Shareholder has duly executed and delivered, in the form heretofore
furnished to the Representative, the Power of Attorney and Custody
Agreement with Berth Milton, Jr. and Johan Gillborg, or either of them, as
attorneys-in-fact (the "Attorneys-in-Fact") and Commerzbank
Aktiengesellschaft, as custodian (the "Custodian"); the Custodian is
authorized to deliver the Securities to be sold by such Selling
Shareholder; and the Attorney-in-Fact is authorized to execute and deliver
this Agreement and the Pricing Agreement and the certificate referred to in
Section 5(j) or that may be required pursuant to Section 5(r) on behalf of
such Selling Shareholder, to sell, assign and transfer to each Underwriter
the Securities to be sold by such Selling Shareholder, to determine the
purchase price to be paid by each Underwriter to such Selling Shareholder
as provided in the Pricing Agreement, to authorize the delivery of the
Securities to be sold by such Selling Shareholder hereunder, to accept
payment therefor and under the Pricing Agreement, and otherwise to act on
behalf of such Selling Shareholder in connection with this Agreement and
the Pricing Agreement.
(vi) Due Execution of the Share Lending Agreement. Such Selling Shareholder
has duly executed and delivered, in the form heretofore furnished to the
Representative, the Share Lending Agreement.
(vii) Absence of Manipulation. Such Selling Shareholder has not taken, and
will not take, directly or indirectly, any action which is designed to or
which has constituted or which could reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(viii) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by each Selling Shareholder of
its obligations hereunder, or under the Pricing Agreement under the Power
of Attorney and Custody Agreement, or in connection with the sale and
delivery of the Securities hereunder and under the Pricing Agreement or the
consummation of the transactions contemplated by this Agreement and the
Pricing Agreement, except (A) such as may have previously been made or
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities laws and (B) such as have been obtained
under the laws and regulations of jurisdictions outside the United States
in which the Securities are offered.
(ix) Restriction on Sale of Securities. Such Selling Shareholder has duly
authorized, executed and delivered each of the lock-up agreements to which
it is a party.
(x) Certificates Suitable for Transfer. Certificates for all of the
Securities to be sold by such Selling Shareholder pursuant to this
Agreement and the Pricing Agreement, in suitable form for transfer by
delivery or accompanied by duly executed
17
instruments of transfer or assignment in blank with signatures guaranteed,
have been placed in custody with the Custodian with irrevocable conditional
instructions to deliver such Securities to the Underwriters pursuant to
this Agreement.
(xi) No Association with NASD. Neither such Selling Stockholder nor any of
his/her/ its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, or has any other association with (within the meaning of Article I,
Section 1(m) of the By-laws of the National Association of Securities
Dealers, Inc. (the "NASD")), any member firm of the National Association of
Securities Dealers, Inc.
(xii) Stamp Taxes. No stamp or other issuance or transfer taxes or duties,
and no capital gains, income, withholding or other taxes are payable to the
Federal Republic of Germany or any political subdivision or taxing
authority thereof or therein by or on behalf of the Representative merely
by virtue of the subscription by it of the Securities, or by or on behalf
of the Underwriters merely by virtue of the sale and delivery by the
Representative of the Securities to the respective accounts of the
Underwriters in the manner contemplated by this Agreement and the Pricing
Agreement.
(c) Officer's Certificates. Any certificate signed by any officer of the Company
or any of its subsidiaries delivered to the Representative or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter and the Selling Agent as to the matters covered thereby; and
any certificate signed by or on behalf of the Selling Shareholders as such and
delivered to the Representative or to counsel for the Underwriters pursuant to
the terms of this Agreement and the Pricing Agreement shall be deemed a
representation and warranty by such Selling Shareholder to the Underwriters and
the Selling Agent as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and each Selling Shareholder, severally and not jointly, agree to sell
to each Underwriter, severally and jointly, and each Underwriter, severally and
jointly, agrees to purchase from the Company and each Selling Shareholder that
proportion of the number of Initial Securities set forth in Schedule B opposite
the name of the Company or such Selling Shareholder, as the case may be, which
the number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities. The
Underwriters, severally and jointly, shall purchase the Initial Securities at
the Subscription Price (as defined below) plus such consideration as shall be
set forth in the Pricing Agreement, and shall purchase the Additional
Securities, if any, at such consideration as shall be set forth in the Pricing
Agreement. Such number of Securities shall be subject, in each case, to any
adjustments among the Underwriters as the Representative in its sole discretion
shall make to eliminate any sales or purchases of fractional securities. The
price at which the Securities are to be offered (the "Share Offer Price"), shall
be set forth in the Pricing Agreement as mutually agreed upon by the parties
thereto on the date thereof.
18
(b) Additional Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Selling Shareholders, jointly and severally, hereby grant an option
to the Representative, to purchase up to an additional 900,000 shares of Common
Stock as set forth in Schedule B, at the Share Offer Price less the Spread (as
defined below) and an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not payable on
the Additional Securities. The option hereby granted will expire 30days after
the date of the first quotation of the Securities on the Frankfurt Stock
Exchange and may be exercised in whole or in part once only for the purpose of
covering over-allotments, which may be made in connection with the offering and
distribution of the Initial Securities, upon written notice by the
Representative to the Custodian setting forth the number of Additional
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Additional Securities.
Any such time and date of delivery (a "Date of Delivery") shall be determined by
the Representative, but shall not be later than ten full Business Days (as
defined below) after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all or
any portion of the Additional Securities, the Representative shall purchase the
total number of Additional Securities then being purchased. As used in this
Agreement, the term "Business Day" shall mean a day other than a Saturday or
Sunday on which banking institutions, the clearing agencies and the relevant
securities markets are open for business in New York and Frankfurt.
(c) Subscription for New Initial Securities. On the date hereof, the Company
shall issue 5,800,000 shares of Common Stock (the "New Initial Securities"), and
the Representative shall (x) subscribe for the New Initial Securities at a
subscription price of $.001 per New Initial Security (the "Subscription Price"),
together with such additional consideration as shall be agreed in the Pricing
Agreement, and (y) pay to the Company on the date hereof the Subscription Price
for each of the subscribed New Initial Securities for the purpose of effecting
the listing on the Neuer Markt segment of the Frankfurt Stock Exchange.
(i) The Representative shall pay the aggregate Subscription Price of the
New Initial Securities for which it has subscribed to an account of the
Company at Commerzbank Aktiengesellschaft, account no.. (the "New Initial
Securities Account"), such account to be non-interest bearing and free of
charges.
(ii) The Company shall deliver the New Initial Securities to the
Representative, by book-entry transfer at the Depositary Trust Company
("DTC") to a deposit account specified by the Representative at
Clearstream, Frankfurt, as a participant of DTC.
(iii) If the Company does not issue and deliver the New Initial Securities
to the Representative by 11:00 a.m., Central European time, on the date
hereof, the Company hereby authorizes the Representative to immediately
transfer, in same day funds, the aggregate Subscription Price from the New
Initial Securities Account to an account specified by the Representative.
In such event, the Representative and the Company may agree that the
Representative shall subscribe for the New Initial Securities at any time
on or prior to 11:00 a.m., Central European time, on the day that is five
Business Days following the date hereof. If the Representative and the
Company have not agreed on the
19
terms of such subscription on or prior to the fifth Business Day following
the date of this Agreement, all obligations of the Underwriters to purchase
the New Initial Securities shall terminate.
(iv) If the Company and the Representative do not enter into a Pricing
Agreement within . Business Days following the date of delivery of the New
Initial Securities to the Representative or if the Closing Time does not
occur within the time provided in Section 2(e) of this Agreement, then and
in any such case, the Underwriters agree to sell to the Company and the
Company agrees to purchase from the Underwriters, the New Initial
Securities in consideration of the payment of the aggregate Subscription
Price.
(d) Borrowed Securities. (i) In order to facilitate the sale of the Additional
Securities by the Underwriters, the Selling Shareholders, jointly and severally,
hereby agree to lend and the Representative agrees to borrow an aggregate number
of up to 900,000 shares of Common Stock (the "Borrowed Additional Securities"),
pursuant to the Share Lending Agreements such that they are available prior to
the Closing Time, solely for the purpose of covering over-allotments, if any, on
the sale of the Initial Securities; (ii) in order to facilitate the sale of the
Initial Securities by the Underwriters, the Selling Shareholders, jointly and
severally, hereby agree to lend and the Representative agrees to borrow an
aggregate of up to 700,000 shares of Common Stock (the "Borrowed Initial
Securities"), pursuant to the Share Lending Agreements such that they are
available prior to the Closing Time.
(e) Payment and Delivery
(i) (A) The Representative shall pay the Company, on behalf of the several
Underwriters in satisfaction of their obligation to purchase the Initial
Securities to be sold by the Company and the Selling Shareholders
hereunder, the Share Offer Price, less the aggregate Subscription Price for
the New Initial Securities paid pursuant to Section 2(c) hereof and the
aggregate amount of the gross spread, as set forth in the Pricing Agreement
the ("Spread"), in respect of the Initial Securities. Any such payment
shall be made at the offices of Shearman & Sterling at Gervinusstrasse 17,
60322 Frankfurt am Main, Federal Republic of Germany, or at such other
place as shall be agreed upon by the Representative and the Company, at
[9:00 A.M.] (Central European time) on the third Business Day after the
date of the Pricing Agreement, or such other time not later than ten
Business Days after such date as shall be agreed upon by the Representative
and the Company (such time and date of payment and delivery being herein
called "Closing Time").
(B) In addition, in the event that any or all of the Additional Securities
are purchased by the Underwriters, the Representative shall pay the Selling
Shareholders, on behalf of the several Underwriters in satisfaction of
their respective obligations to purchase the Additional Securities to be
sold by the Selling Shareholders hereunder, the Share Offer Price less the
Spread. Any such payment shall be made at the above-mentioned offices, or
at such other place as shall be agreed upon by the Representative and the
Selling Shareholders, on each
20
Date of Delivery as specified in the notice from the Representative to the
Custodian.
(C) Payment shall be made to the Company and the Selling Shareholders by
wire transfer of immediately available funds to a bank account designated by
the Company and the Custodian pursuant to each Selling Shareholder's Power
of Attorney and Custody Agreement. It is understood that each Underwriter
has authorized the Representative, for its account, to accept delivery of,
receipt for, and make payment of the Share Offer Price for, the Initial
Securities and the Additional Securities, if any, which it has agreed to
purchase pursuant to the Agreement Among Underwriters dated as of ., 2002,
among the Representative and each of the Underwriters party thereto.
Commerzbank Aktiengesellschaft, individually and not as the Representative,
may (but shall not be obligated to) make payment of the Share Offer Price
for the Initial Securities or the Additional Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(ii) All Securities to be delivered pursuant to this Agreement at the
Closing Time or at any Date of Delivery shall be delivered to the several
Underwriters, against payment of the Share Offer Price, by book entry
transfer at DTC to deposit accounts specified by the Representative at
Clearstream, Frankfurt, as a participant of DTC.
(iii) The Company shall pay to the Representative on behalf of the German
listing consortium (Borseneinfuhrungskonsortium) a listing fee
(Borseneinfuhrungsprovision) of Euro 100,000, plus any applicable taxes, in
connection with the listing of the Securities on the Frankfurt Stock
Exchange. Any Spread as well as the listing fee, not otherwise deducted from
the aggregate Share Offer Price to be paid to the Company or any Selling
Shareholder, shall be paid by the Company upon demand by the Representative.
(f) Denominations; Registration. The Initial Securities and the Additional
Securities, if any, shall be distributed in such denominations and registered in
such names as the Representative may request in writing at least one full
Business Day before the Closing Time or the relevant Date of Delivery, as the
case may be.
SECTION 3. Covenants of the Company.
The Company covenants with each Underwriter and the Selling Agent as follows:
(a) Compliance with U.S. Securities Regulations and Commission Requests. The
Company, subject to Section 3(d), will comply with the requirements of Rule
430A, and will notify the Representative immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to a preliminary U.S. prospectus or
U.S. Prospectus or any amended preliminary U.S. prospectus or U.S. Prospectus
shall have been filed, (ii) of the receipt of any comments from the Commission,
(iii) of any request by the Commission for any amendment to the Registration
Statement or any
21
amendment or supplement to a preliminary U.S. prospectus or U.S. Prospectus or
for additional information, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary U.S. Prospectus, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will promptly
file such preliminary U.S. prospectus or U.S.Prospectus. The Company will make
every reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Compliance with German Securities Regulations. The Company shall comply with
the applicable German securities laws and regulations, including without
limitation the German Securities Sales Prospectus Act (Wertpapier-
Verkaufsprospektgesetz), the German Stock Exchange Act (Boersengesetz), the
German Securities Trading Act (Wertpapierhandelsgesetz), the Principles for the
Allotment of Share Issues to Private Investors (Grundsatze fur die Zuteilung von
Aktienemissionen an Privatanleger), and with all rules and regulations of the
Neuer Markt segment of the Frankfurt Stock Exchange in connection with the
listing and offering of the Securities in the Federal Republic of Germany. The
Company will promptly notify the Representative of any communication received by
it within six months following the completion of the offering from the German
Securities Trading Supervisory Authority (Bundesaufsichtsamt fur den
Wertpapierhandel), from any other governmental or other authority or regulatory
body, agency or organization that may reasonably be expected to have a Material
Adverse Effect on the offering or relating to the form, content or use of any
Offer Document, and, to the extent permitted by applicable law, the Company will
promptly provide the Representative with copies of any such communication that
is in writing.
(c) Compliance with Other Securities Regulations. The Company shall comply with
the applicable securities laws and regulations of any jurisdiction which the
Representative may reasonably request in connection with the offering of the
Securities to institutional investors.
(d) Filing of Amendments. The Company will give the Representative notice of its
intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at the
time it became effective or to an Offer Document, whether pursuant to the 1933
Act, the 1934 Act or otherwise, will furnish the Representative with copies of
any such documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to which the
Representative or counsel for the Underwriters shall reasonably object.
(e) Continued Compliance with Securities Laws. The Company shall comply with the
securities laws of the Federal Republic of Germany and the 1933 Act and the 1933
Act Regulations and otherwise as reasonably requested by the Representative so
as to permit the completion of the distribution of the Securities as
contemplated in this Agreement or the Offer Documents. If at any time when an
Offer Document is required by the securities laws of the Federal Republic of
Germany or the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the
22
opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement or amend or supplement the Offer Documents in order that
the Offer Documents shall not include any untrue statements of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Offer Documents in order to comply with the requirements of the
securities laws of the Federal Republic of Germany and the 1933 Act or the 1933
Act Regulations, the Company shall promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Offer Documents comply with such requirements, and the Company
shall furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request. No such amendment or
supplement shall be made without the consent of the Representative.
(f) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representative and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representative, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits). The copies of the Registration Statement
and each amendment thereto furnished to the Underwriters will be identical to
the electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except for the International Prospectus and to the extent permitted by
Regulation S-T.
(g) Delivery of Offer Documents. The Company has delivered to each Underwriter,
without charge, as many copies of each preliminary U.S. Prospectus as such
Underwriter reasonably requested, and the Company hereby consents to the use of
such copies for purposes permitted by the 1933 Act. The Company will furnish to
each Underwriter, without charge, during the period when the U.S. Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the U.S. Prospectus (as amended or supplemented) as each Underwriter
may reasonably request. The Company will furnish to each Underwriter, without
charge, as many copies of the International Prospectus as such Underwriter
reasonably requested. The U.S. Prospectus and any amendments or supplements
thereto furnished to each Underwriter will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
for the German Prospectus and to the extent permitted by Regulation S-T.
(h) Use of Proceeds. The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Offer Documents under
"Use of Proceeds."
(i) Listing. The Company has submitted an application for the Securities to be
listed for trading on the Neuer Markt segment of the Frankfurt Stock Exchange,
will use its best efforts to obtain such listing as promptly as possible and
will furnish to the Frankfurt Stock Exchange any and all documents, instruments,
information and warranties that may be necessary or advisable in order to obtain
the listing. The Company will sign the International Prospectus, and
23
any other necessary documents and will deliver the same to the Frankfurt Stock
Exchange prior to the Closing Time as required. The Company will use its best
efforts to maintain the listing of the Securities on the Frankfurt Stock
Exchange.
(j) Restriction on Sale of Securities. During the initial period of six months
following the first quotation of the Company's Securities on the Neuer Markt
segment of the Frankfurt Stock Exchange (the "Initial Period") and during an
additional period of six months after the expiration of the initial period (the
"Additional Period", and together with the Initial Period, the "Restricted
Period"), the Company will not directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise transfer or dispose of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, whether now
owned or hereafter acquired by the Company or with respect to which the Company
has or hereafter acquires the power of disposition, or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (i)
the Securities to be sold hereunder, (ii) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Offer Documents,
(iii) any shares of Common Stock issued or options to purchase Common Stock
granted pursuant to existing employee benefit plans of the Company referred to
in the Offer Documents, (iv) any shares of Common Stock issued pursuant to any
existing non-employee director stock plan or dividend reinvestment plan or (v)
any shares of Common Stock issued as dividends pursuant to the terms of the
Series A Preferred Stock of the Company. The Company may during the Additional
Period dispose of shares of Common Stock only with the prior written consent of
the Representative, which may be withheld for good cause.
(k) Reporting Requirements. The Company, during the period when the Offer
Documents are required to be delivered under the 1933 Act or the 1934 Act, shall
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(l) Public Announcements. The Company shall not, without the prior consent of
the Representative, and to use its best efforts to ensure that none of its
subsidiaries, make any press or public announcement or public comment, other
than in the ordinary course of business, intended to be published in the press
concerning the Company or any of its subsidiaries (or concerning the offering of
the Shares in the United States and Germany or elsewhere after the execution of
this Agreement and prior to 30 days after the Closing Time (unless the Company
is obligated to make such announcement pursuant to applicable laws or rules of
the Frankfurt Stock Exchange or the Commission or the NASD or any other
competent regulatory body, in which event the Company prior to the release
thereof will consult with the Representative, as to the text of any such
announcement).
24
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay or cause to be paid all expenses incident to
the performance of its and the Selling Shareholders' obligations under this
Agreement, in each case plus VAT as incurred, including (i) the preparation,
printing and filing of the Registration Statement and Offer Documents (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
costs and expenses of the Underwriters and of any advisors or consultants
engaged by the Company to assist with the preparation of materials for "road
show" presentations to be made to prospective investors, (iv) all out-of-pocket
expenses incurred by the Underwriters in connection with marketing activities,
(v) the preparation, issuance and delivery of the certificates for the
Securities to the Underwriters, including any stock or other transfer taxes and
any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters, (vi) the fees and disbursements of the Company's
counsel, accountants and other advisors, (vii) the printing and delivery to the
Underwriters of copies of each Offer Document and any amendments or supplements
thereto, (viii) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities, (ix) the fees and expenses of any transfer agent
or registrar for the Securities, (x) the fees and expenses incurred in
connection with the listing of the Securities on the Neuer Markt segment of the
Frankfurt Stock Exchange, and (xi) the reasonable fees and expenses of Shearman
& Sterling and any local or regulatory counsel for the Underwriters in
connection with the transaction contemplated by this agreement (xii) the fees
and expenses of Andersen incurred in connection with the performance of
financial due diligence.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 10 hereof, the Company shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
(c) Allocation of Expenses. The provisions of this Section shall not affect any
agreement that the Company and the Selling Shareholders may make for the sharing
of such costs and expenses.
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company and the Selling
Shareholders contained in Section 1 hereof or in certificates of any officer of
the Company or any subsidiary of the Company or on behalf of any Selling
Shareholder delivered pursuant to the provisions hereof, to the performance by
the Company and the Selling Shareholders of their respective covenants and other
obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933
25
Act or proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the Underwriters. A
U.S. Prospectus containing the Rule 430A Information shall have been filed with
the Commission in accordance with Rule 424(b) (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A).
(b) Opinion of Counsel for the Company. At Closing Time, the Representative
shall have received the favorable opinion, dated as of Closing Time, of Guzik &
Associates counsel for the Company, substantially to the effect set forth in
Exhibit A hereto.
(c) Opinion of Special Gaming Counsel for the Company. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Hall Dickler Kent Friedman & Wood LLP, special gaming counsel for the
Company, substantially to the effect set forth in Exhibit B hereto.
(d) Opinion of Special Tax Adviser for the Company. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of [Name], special tax counsel for the Company, substantially to the
effect set forth in Exhibit C hereto.
(e) Opinion of Nevada Counsel for the Company. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Woodburn and Wedge, Nevada counsel for the Company, substantially to
the effect set forth in Exhibit D hereto.
(f) Opinion of Spanish Counsel to the Company. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of E.B.A.M.E. Y Associats, Spanish counsel for the Company, substantially
to the effect set forth in Exhibit E hereto.
(g) Opinion of Counsel for the Selling Shareholders. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Guzik & Associates, counsel for the Selling Shareholders, in form and
substance satisfactory to counsel for the Underwriters.
(h) Opinion of Counsel for the Underwriter. At Closing Time, the Representative
shall have received the favorable opinion, dated as of Closing Time, of Shearman
& Sterling, counsel for the Underwriters, with respect to such matters as it may
reasonably require. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
New York, the federal law of the United States and the laws of the Federal
Republic of Germany, upon the opinions of counsel satisfactory to the
Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of
public officials.
(i) Officers' Certificate. At Closing Time, there shall not have been, since the
date hereof or since the respective dates as of which information is given in
the Offer Documents, any material adverse change in the condition, financial or
otherwise, or in the earnings, business
26
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, and
the Representative shall have received a certificate of the chief executive
officer and president of the Company and of the chief financial officer of the
Company, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Section 1(a)
hereof are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or, to such officers' knowledge, are
contemplated by the Commission.
(j) Certificate of Selling Shareholders. At Closing Time, the Representative
shall have received a certificate of an Attorney-in-Fact on behalf of each
Selling Shareholder, dated as of Closing Time, to the effect that (i) the
representations and warranties of each Selling Shareholder contained in Section
1(b) hereof are true and correct in all respects with the same force and effect
as though expressly made at and as of Closing Time and (ii) each Selling
Shareholder has complied in all material respects with all agreements and all
conditions on its part to be performed under this Agreement at or prior to
Closing Time.
(k) Accountants' Comfort Letter. At the time of the execution of this Agreement,
the Representative shall have received from Ernst & Young a letter dated the
date of the International Prospectus, in form and substance satisfactory to
counsel for the Underwriters, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Offer Documents.
(l) Bring-down Comfort Letter. (i) At the time of the execution of the Pricing
Agreement, the Representative shall have received from Ernst & Young a letter
dated as of such date, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (k) of this section and (ii) at
Closing Time, the Representative shall have received from Ernst & Young a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (k) of this
Section, except that the specified date referred to shall be a date not more
than three Business Days prior to Closing Time.
(m) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the Neuer Markt segment of the Frankfurt Stock Exchange,
subject only to official notice of issuance.
(n) No Objection. The NASD has confirmed that it has not raised any objection
with respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(o) Lock-up Agreements. At the date of this Agreement, the Representative shall
have received the lock-up agreements signed by the persons listed on Schedule E
hereto.
27
(p) Sponsor Agreements. The execution and delivery of designated sponsor
agreements between the Company and Commerzbank and Wolfgang Steubing AG,
respectively, by the date hereof.
(q) Paying Agency Agreement. In connection with the offering and listing in the
Federal Republic of Germany, the execution and delivery of a paying agency
agreement between the Company and Commerzbank.
(r) Conditions to Purchase of Additional Securities. In the event that the
Underwriters exercises their option provided in Section 2(b) hereof to purchase
all or any portion of the Additional Securities, the representations and
warranties of the Company and the Selling Shareholders contained herein and the
statements in any certificates furnished by the Company, any subsidiary of the
Company and the Selling Shareholders hereunder shall be true and correct as of
each Date of Delivery and, at the relevant Date of Delivery, the Representative
shall have received:
(i) Officers' Certificate. A certificate, dated such Date of Delivery, of
the chief executive officer and president of the Company and of the chief
financial officer of the Company confirming that the certificate delivered
at Closing Time pursuant to Section 5(i) hereof remains true and correct as
of such Date of Delivery.
(ii) Certificate of Selling Shareholders. A certificate, dated such Date of
Delivery, of an Attorney-in-Fact on behalf of each Selling Shareholder
confirming that the certificate delivered at Closing Time pursuant to
Section 5(j) hereof remains true and correct as of such Date of Delivery.
(iii) Opinion of Counsel for the Company. The favorable opinion of Guzik &
Associates, counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery, relating to the
Additional Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(b)
hereof.
(iv) Opinion of Special Gaming Counsel for the Company. The favorable
opinion of Hall Dickler Kent Friedman & Wood LLP, special gaming counsel
for the Company, in form and substance satisfactory to counsel for the
Underwriter, dated such Date of Delivery, relating to the Additional
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(c) hereof.
(v) Opinion of Special Tax Adviser for the Company. The favorable opinion
of [Name], special tax counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Additional Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(d) hereof.
(vi) Opinion of Nevada Counsel for the Company. The favorable opinion of
Woodburn and Wedge, Nevada counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters dated such Date of Delivery,
relating to the
28
Additional Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(e) hereof.
(vii) Opinion of Spanish Counsel for the Company. The favorable opinion of
E.B.A.M.E. Y Associats, Spanish counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters dated such Date of
Delivery, relating to the Additional Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required
by Section 5(f) hereof.
(viii) Opinion of Counsel for the Selling Shareholders. The favorable
opinion of Guzik & Associates, counsel for the Selling Shareholders, in
form and substance satisfactory to counsel for the Underwriters, dated such
Date of Delivery, relating to the Additional Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(g) hereof.
(ix) Opinion of Counsel for the Underwriters. The favorable opinion of
Shearman & Sterling, counsel for the Underwriters, dated such Date of
Delivery, relating to the Additional Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required
by Section 5(h) hereof.
(x) Bring-down Comfort Letter. A letter from Ernst & Young, in form and
substance satisfactory to the Underwriters and dated such Date of Delivery,
substantially in the same form and substance as the letter furnished to the
Underwriter, pursuant to Section
5(k) hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five days prior to
such Date of Delivery.
(s) Additional Document. At Closing Time and at each Date of Delivery counsel
for the Underwriters shall have been furnished with such documents and opinions
as they may require for the purpose of enabling them to pass upon the issuance
and sale of the Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company
and the Selling Shareholders in connection with the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and substance to
the Representative and counsel for the Underwriters.
(t) Termination of Agreement. If any condition specified in this Section shall
not have been fulfilled when and as required to be fulfilled, this Agreement,
or, in the case of any condition to the purchase of Additional Securities on a
Date of Delivery which is after the Closing Time, the obligations of the several
Underwriters to purchase the relevant Additional Securities, may be terminated
by the Representative by notice to the Company at any time at or prior to
Closing Time or such Date of Delivery, as the case may be, and such termination
shall be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company and the Selling Shareholders,
severally and not jointly, agree to indemnify and hold harmless each Underwriter
and each
29
person, if any, who controls any Underwriter or any participating
affiliate of any Underwriter, within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act or [Section 17 of the German Stock Corporation
Act] to the extent and in the manner set forth in clauses (i), (ii), (iii) and
(iv) below, provided, however, that the obligations of each of the Selling
Shareholders under this Section 6(a) shall not include any amounts under clause
(iv) below, and the liability of each Selling Shareholder shall be limited to an
amount equal to the net proceeds received by such Selling Shareholder under this
Agreement and the Pricing Agreement with respect to the Securities.
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue statement of a
material fact included in any Offer Document (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of the violation of any applicable
laws or regulations of foreign jurisdictions where Securities have been
offered;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation of
the nature referred to in Section 6(a)(ii)(A) hereof; provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the
Company and the Selling Shareholders; and
(iv) against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by the Representative), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission or
in connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof, to the extent that any such expense is not paid under
(i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter, or any participating affiliate of any Underwriter, through the
Representative expressly for use in the Registration Statement (or any amendment
30
thereto), including the Rule 430A Information or any Offer Document (or any
amendment or supplement thereto), it being understood and agreed that the only
such information is that described in Schedule F hereto, and provided further,
that the liability of each Selling Shareholder under this indemnity agreement
shall apply only to losses, liability, claims, damages or expenses to the extent
arising out of any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by such Selling Shareholder expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information or any Offer Document (or any amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers and Selling Shareholders.
Each Underwriter and each participating affiliate of any Underwriter, severally
and not jointly, agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, and each Selling Shareholder and each
person, if any, who controls any Selling Shareholder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, or any Offer Document (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter, or any participating affiliate of any Underwriter,
through the Representative expressly for use in the Registration Statement (or
any amendment thereto) or such Offer Document (or any amendment or supplement
thereto), it being understood and agreed that the only such information is that
described in Schedule F hereto.
(c) Actions against Parties; Notification. Each indemnified party shall give
notice as promptly as reasonably practicable to each indemnifying party of any
action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by the Representative, and,
in the case of parties indemnified pursuant to Section 6(b) above, counsel to
the indemnified parties shall be selected by the Company. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld or delayed), settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could
31
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) and Section 6(a)(iii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) Other Agreements with Respect to Indemnification. The provisions of this
Section shall not affect any agreement among the Company and the Selling
Shareholders with respect to indemnification.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters and/or any participating affiliate of any
Underwriter on the other hand from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Shareholders on the one hand and of the Underwriters
and/or any participating affiliate of any Underwriter on the other hand in
connection with the statements or omissions, or in connection with any violation
of the nature referred to in Section 6(a)(ii)(A) hereof, which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Selling Shareholders on
the one hand and the Underwriters and/or any participating affiliate of any
Underwriter on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the Selling Shareholders and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus.
The relative fault of the Company and the Selling Shareholders on the one hand
and the Underwriters and/or any participating affiliate of any Underwriter on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue
32
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Selling Shareholders
or by the Underwriters or by any participating affiliate of any Underwriter and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission or any violation of the nature
referred to in Section 6(a)(ii)(A) hereof.
The Company and the Selling Shareholders on the one hand and the Underwriters
and any participating affiliate of any Underwriter on the other hand agree that
it would not be just and equitable if contribution pursuant to this Section 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 above in this Section.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Underwriter nor any
participating affiliate of any Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter or any participating
affiliate of any Underwriter has otherwise been required to pay by reason of any
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 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an Underwriter
or any participating affiliate of any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act or [Section 17 of the German
Stock Corporation Act] shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Company or such Selling Shareholder, as the case may be. The Underwriters'
and any participating affiliate of the Underwriter's respective obligations to
contribute pursuant to this Section are several in proportion to the number of
Initial Securities set forth opposite their respective names in Schedule A
hereto and not joint.
The provisions of this Section shall not affect any agreement among the Company
and the Selling Shareholders with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries or the
Selling Shareholders submitted pursuant
33
hereto shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person or
any participating affiliate of any Underwriter or by or on behalf of the Company
or the Selling Shareholders, and shall survive delivery of the Securities to the
Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative may terminate this Agreement, by
notice to the Company and the Selling Shareholders, at any time at or prior to
Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in an
Offer Document, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, the
Federal Republic of Germany, or the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representative,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the Neuer Markt segment of
the Frankfurt Stock Exchange or the Nasdaq National Market, or if trading
generally on the Neuer Markt segment of the Frankfurt Stock Exchange or in the
Nasdaq National Market has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the Neuer Markt segment of the Frankfurt Stock Exchange, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either U.S.
Federal, New York, Nevada, Spanish or German authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8
shall survive such termination and remain in full force and effect.
Upon the termination of this Agreement, the Representative shall sell the New
Initial Securities to the Company at the aggregate Subscription Price as
provided in Section 2(c) hereof and shall redeliver the Borrowed Securities to
the Selling Shareholders as provided in the Share Lending Agreement. The
Representative's obligation to sell the New Initial Securities to the Company
and redeliver the Borrowed Initial Securities and the Borrowed Additional
Securities to the Selling Shareholders shall survive the termination of this
Agreement and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the Representative shall have
the right, within 24 hours thereafter, to make arrangements for one or
34
more or the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24 hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the number of
Securities to be purchased on such date, the non-defaulting Underwriters shall
be obligated, each severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after Closing Time, the obligation of the
Underwriters to purchase and of the Company to sell the Additional Securities to
be purchased and sold on such Date of Delivery shall terminate without liability
on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of this
Agreement or, in the case of a Date of Delivery which is after Closing Time,
which does not result in a termination of the obligation of the Underwriters to
purchase and the Selling Shareholders to sell the relevant Additional
Securities, as the case may be, either (i) the Representative or (ii) the
Company shall have the right to postpone Closing Time or the relevant Date of
Delivery, as the case may be, for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or the Offer Documents
or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section.
SECTION 11. Default by One or More of the Selling Shareholders or the Company.
(a) If a Selling Shareholder shall fail at Closing Time or at a Date of Delivery
to sell and deliver the number of Securities which such Selling Shareholder is
obligated to sell hereunder, and the remaining Selling Shareholders do not
exercise the right hereby granted to increase, pro rata or otherwise, the number
of Securities to be sold by them hereunder to the total number to be sold by all
Selling Shareholders as set forth in Schedule B hereto, then the Underwriters
may, at the option of the Representative, by notice from the Representative to
the Company and the non-defaulting Selling Shareholders, either (i) terminate
this Agreement without any liability on the part of any non-defaulting party
except that the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full
force and effect or (ii) elect to purchase the Securities which the
non-defaulting Selling Shareholders and the Company have agreed to sell
hereunder. No action taken pursuant to this Section shall relieve any Selling
Shareholder so defaulting from liability in respect of such default.
(b) In the event of a default by any Selling Shareholder as referred to in this
Section, each of the Representative, the Company and the non-defaulting Selling
Shareholders shall have the right to postpone Closing Time or the relevant Date
of Delivery for a period not exceeding
35
seven days in order to effect any required change in the Registration Statement
or Prospectus or in any other documents or arrangements.
(c) If the Company shall fail at Closing Time or at a Date of Delivery to sell
the number of Securities that it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any
non-defaulting party; provided, however, that the provisions of Sections 1, 4,
6, 7 and 8 shall remain in full force and effect. No action taken pursuant to
this Section shall relieve the Company from liability in respect of such
default.
SECTION 12. Notices.
All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters and the Selling Agent shall be
directed to Commerzbank at Kaiserplatz 60261, Frankfurt am Main, Federal
Republic of Germany, attention of Arne Frank, with a copy to Shearman & Sterling
at 9 Appold Street, London, EC2A 2AP, U.K., attention of Thomas J. Friedmann;
notices to the Company shall be directed to it at Carretera de Rubi 22, 08190
Sant Cugat del Vall & #egrave;s, Barcelona, Spain, attention of Chief Financial
Officer, with a copy to Guzik & Associates at 1800 Century Park East, Fifth
Floor, Los Angeles, CA 90067, U.S.A., attention of Samuel S. Guzik; and notices
to the Selling Shareholders shall be directed to Guzik & Associates at 1800
Century Park East, Fifth Floor, Los Angeles, CA 90067, U.S.A., attention of
Samuel S.Guzik.
SECTION 13. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Selling Agent, the Company and the Selling Shareholders and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Selling Agent, the Company and the Selling
Shareholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Selling Agent, the Company and the
Selling Shareholders and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 14. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
SECTION 15. Counterparts.
This agreement may be executed by any one or more of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall constitute one and the same instrument.
SECTION 16. Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be unenforceable or invalid under applicable law, such
provision shall be ineffective only to the extent of such unenforceability or
invalidity and be
36
replaced by such valid and enforceable provision which the parties bona fide
consider to match as closely as possible the invalid or unenforceable provision,
attaining the same or a similar economic effect. The remaining provisions of
this Agreement shall under all circumstances continue to be binding and in full
force and effect.
SECTION 17. Effect of Headings.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
37
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company and the Attorney-in-Fact for the Selling
Shareholders a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the Underwriters, the
Company and the Selling Shareholders in accordance with its terms.
Very truly yours,
PRIVATE MEDIA GROUP, INC.
By
Name:
Title:
By
As Attorney-in-Fact acting on behalf of the Selling Shareholders named in
Schedule B hereto
CONFIRMED AND ACCEPTED,
as of the date first above written:
COMMERZBANK AKTIENGESELLSCHAFT
38
By
Authorized Signatory
For itself and as Representative of the several
Underwriters named in Schedule A hereto.
COMMERZBANK CAPITAL MARKETS CORPORATION
in its capacity as U.S. Selling Agent
By
Authorized Signatory
39
SCHEDULE A
Number of Initial
Name of Underwriter Securities
Commerzbank Aktiengesellschaft ........................... .
Wolfgang Steubing AG ..................................... .
Total .................................................... 6,500,000
40
SCHEDULE B
Securities Maximum Number of
Number of Initial to be Additional Securities
Sold to be Sold
Private Media Group, Inc. ............ 5,800,000 0
Churchbury Limited ................... 700,000 0
Perrystone Trading Limited ........... 0 850,000
Ulf Sslund ........................... 0 50,000
Total ................................ 6,500,000 900,000
41
SCHEDULE C
Name Maximum Number of Borrowed
Initial Securities
Churchbury Limited .............................. 700,000
Total ........................................... 700,000
Name Maximum Number of Borrowed
Additional Securities
Perrystone Trading Limited, PT&C ................ 850,000
Ulf Sslund ...................................... 50,000
Total ........................................... 900,000
42
SCHEDULE D
Private Media Group, Inc. Subsidiaries
Name of Subsidiary Place of Incorporation
Cine Craft, Ltd. Gibraltar
Coldfair Holdings Ltd Cyprus
Frasierside Holdings Ltd. Cyprus
Milcap Media, Ltd. Cyprus
Milcap Publishing Group AB Sweden
Milcap Publishing Group Italy Srl Italy
Milcap Media Group S.L. Spain
Peachtree Entertainment Distribution AB Sweden
Private North America, Ltd. California, U.S.A.
Private Benelux B.V. The Netherlands
Private France SAS France
Symbolic Productions S.L. Spain
Private.Com PLC The United Kingdom
Viladalt S.L. Spain
43
SCHEDULE E
Name Address
Philip Christmas Malaga, Spain
Javier Sanchez Barcelona, Spain
Johan Gillborg Barcelona, Spain
Bo Rodebrant Stockholm, Sweden
Robert Tremont Barcelona, Spain
Marten Kull Escaldes-Engordany, Andorra
Berth Milton Barcelona, Spain
Ferran Mirapeix Barcelona, Spain
Bajari Properties Limited Douglas, Isle of Man
Slingsby Enterprises Limited Gibraltar
Solidmark (Gibraltar) Limited Gibraltar
Pressmore Licencing Limited Nassau, Bahamas
Senate Limited Gibraltar
Chiss Limited Gibraltar
44
SCHEDULE F
Prospectus
(a) The names of the Underwriters appearing on the cover page and on the back
cover page of the Offer Documents;
(b) The information appearing in the table immediately following the first
paragraph under the heading "Underwriting" in the Offer Documents;
(c) The information appearing in the fifth paragraph under the heading
"Underwriting" in the Offer Documents;
(d) The information with respect to the agreement among underwriters in the
eight paragraph under the heading "Underwriting" in the Offer Documents;
(e) The information with respect to stabilization by the Underwriters in the
first sentence of the fifteenth paragraph and the first bullet point of the
thirteenth paragraph under the heading "Underwriting" in the Offer Documents;
and
(f) The information with respect to short positions of the Underwriters in the
second and third bullet points of the thirteenth paragraph under the heading
"Underwriting" in the Offer Documents.
45
Annex A
FORM OF PRICING AGREEMENT
PRICING AGREEMENT dated ., 2002 (the "Agreement") among
(1) Private Media Group, Inc. (the "Company"),
(2) The selling shareholders listed on Schedule B to the Underwriting Agreement
referred to below (each a "Selling Shareholder" and together, the "Selling
Shareholders"), and
(3) Commerzbank Aktiengesellschaft (the "Representative"), acting on behalf of
itself and the several Underwriters named in Schedule A to the Underwriting
Agreement.
RECITAL
The Company, the Selling Shareholders and the Underwriters have agreed, subject
to the terms and conditions stated herein and in the Underwriting Agreement
dated ., 2002 (the "Underwriting Agreement"), between the Company and Selling
Shareholders on the one hand and the Representative and the other Underwriters
on the other hand, that the Company will issue and sell and the Selling
Shareholders will sell to the Underwriters, and the Underwriters, severally and
not jointly, will purchase from the Company and the Selling Shareholders, the
Initial Securities. The parties hereto desire to establish herein the Share
Offer Price to be paid by the Underwriters for the Initial Securities pursuant
to Section 2 of the Underwriting Agreement.
ARTICLE 1 - DEFINITIONS
Unless otherwise defined herein, terms defined in the Underwriting Agreement are
used herein as therein defined.
ARTICLE 2 - PURCHASE AND SALE; OFFER PRICE
The parties hereto agree that the Share Offer Price for the Initial Securities
and Additional Securities to be sold in the Federal Republic of Germany and
other countries, excluding the United States, shall be Euro . per Share.
Underwriting commissions, discounts and fees shall be as set forth on Schedule A
hereto.
The parties hereto agree that the Share Offer Price for the Initial Securities
and Additional Securities to be sold in the United States, shall be U.S dollar o
per Share. Underwriting commissions, discounts and fees shall be as set forth on
Schedule A hereto.
46
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
(a) The Company hereby represents and warrants to each of the Underwriters:
(1) This Agreement has been duly authorized, executed and delivered by the
Company.
(2) The Registration Statement has become effective and no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(3) The representations and warranties of the Company set forth in Section
1 of the Underwriting Agreement are accurate as though expressly made at
and as of the date hereof.
(b) Each of the Selling Shareholders hereby severally represents and warrants to
each of the Underwriters:
(1) This agreement has been duly authorized, executed and delivered by such
Selling Shareholder.
(2) The representations and warranties of such Selling Shareholder set
forth in Section 1 of the Underwriting Agreement are accurate as though
expressly made at and as of the date hereof.
ARTICLE 4 - APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, whereupon this instrument, along with all counterparts,
will become a binding agreement among the Underwriters, the Company and the
Selling Shareholders in accordance with its terms.
47
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company and the Attorney-in-Fact for the Selling
Shareholders a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the Underwriters, the
Company and the Selling Shareholders in accordance with its terms.
Very truly yours,
PRIVATE MEDIA GROUP, INC.
By
Name:
Title:
By
As Attorney-in-Fact acting on behalf of the Selling Shareholders named in
Schedule B of the Underwriting Agreement
CONFIRMED AND ACCEPTED,
as of the date first above written:
COMMERZBANK AKTIENGESELLSCHAFT
By
Authorized Signatory
For itself and as Representative of the Other
Underwriters named in Schedule A of the
Underwriting Agreement.
48
(Pricing Agreement)
SCHEDULE A
German and International Offering:
Offer Price and
Commissions
EUR
Share Offer Price per Share ............................... Euro
Gross Spread per Share .................................... Euro
Concession per Share ...................................... Euro
Dealer Reallowance per Share .............................. Euro
U.S. Offering:
Offer Price and
Commissions
EUR
Share Offer Price per Share ............................... U.S.$
Gross Spread per Share .................................... U.S.$
Concession per Share ...................................... U.S.$
U.S. Dealer Reallowance per Share ......................... U.S.$
Per Share amounts are quoted and priced in euro, and translated to U.S. dollars
at an exchange rate of $ . to Euro 1.00.
49