EXHIBIT 10.54
Exodus Communications, Inc.
5% Convertible Subordinated Notes due Xxxxx 00, 0000
Xxxxxxxx Agreement
February 25, 1999
Xxxxxxx, Xxxxx & Co.,
BancBoston Xxxxxxxxx Xxxxxxxx Inc.
BT Alex. Xxxxx Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
Xxxxxxxxx & Xxxxx LLC
As representatives of the several Purchasers
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
Exodus Communications, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated
herein, to issue and sell to the Purchasers named in Schedule I hereto
(the "Purchasers") an aggregate of $200,000,000 principal amount of the
5% Convertible Subordinated Notes due March 15, 2006, convertible into
Common Stock, $0.001 par value per share ("Stock") of the Company,
specified above (the "Firm Securities") and, at the election of the
Underwriters, up to an aggregate of $50,000,000 additional aggregate
principal amount (the "Optional Securities") (the Firm Securities and the
Optional Securities which the Underwriters elect to purchase pursuant to
Section 2 hereof are herein collectively called the "Securities").
1. The Company represents and warrants to, and agrees with, each
of the Purchasers that:
(a) A preliminary offering circular, dated February 22, 1999
(the "Preliminary Offering Circular") and an offering circular,
dated February 25, 1999 (the "Offering Circular"), have been
prepared in connection with the offering of the Securities and
shares of the Stock issuable upon conversion thereof.
Additionally, the Company has previously prepared the following
documents: the Company's Special Preliminary Proxy Statement filed
pursuant to Section 14(a) of the United States Securities Exchange
Act of 1934, as amended (the "Exchange Act"), dated January 29,
1999, the Company's Special Definitive Proxy Statement filed
pursuant to Section 14(a) of the Exchange Act, dated February 9,
1999, the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and the Company's Current Reports on Form
8-K, dated January 29, 1999 and February 22, 1999 (together the
"Exchange Act Reports"). Any reference (other than in Sections
7(a) and 7(b) hereof) to the Preliminary Offering Circular or the
Offering Circular shall be deemed to refer to and include the
Exchange Act Reports, and any reference (other than in Sections
7(a) and 7(b) hereof) to the Preliminary Offering Circular or the
Offering Circular as amended or supplemented as of any specified
date after the date hereof shall be deemed to include (i) the
Exchange Act Reports and all subsequent documents filed with the
United States Securities and Exchange Commission (the
"Commission") pursuant to Section 13(a), 13(c) or 15(d) of the
Exchange Act, after the date of the Offering Circular and prior to
such specified date and (ii) any Additional Issuer Information (as
defined in Section 5(f)) furnished by the Company, prior to the
completion of the distribution of the Securities. The Exchange Act
Reports, when they were filed with the Commission, conformed in all
material respects to the applicable requirements of the Exchange
Act and the applicable rules and regulations of the Commission
thereunder. The Preliminary Offering Circular, the Offering
Circular and the Exchange Act Reports did not, as of their
respective dates, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by a Purchaser through Xxxxxxx,
Xxxxx & Co. expressly for use therein. Since December 31, 1998,
the Company has not filed any documents with the Commission
pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act other
than the Exchange Act Reports;
(b) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Offering Circular any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as
set forth or contemplated in the Offering Circular; and, since the
respective dates as of which information is given in the Offering
Circular, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any
material adverse change, or any development that is reasonably
likely to result in a material adverse change, in or affecting the
general affairs, management, financial position, stockholders'
equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Offering Circular;
(c) The Company has no subsidiary that is a "Significant
Subsidiary" of the Company within the meaning of Regulation S-X
under the Securities Act of 1933, as amended (the "Securities
Act");
(d) The Company and its subsidiaries own no real property.
The Company and its subsidiaries have good and marketable title to
all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are described in
the Offering Circular or such as do not 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 and its
subsidiaries; and any real property and buildings held under lease
by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries;
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering
Circular, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, or is
subject to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction; and each
subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(f) The Company has an authorized capitalization as set forth
in the Offering Circular, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; the shares of Stock
initially issuable upon conversion of the Securities have been duly
and validly authorized and reserved for issuance and, when issued
and delivered in accordance with the provisions of the Securities
and the Indenture referred to below, will be duly and validly
issued, fully paid and non-assessable and will conform to the
description of the Stock contained in the Offering Circular; and
all of the issued and outstanding shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and (except for
directors' qualifying shares and except as otherwise set forth in
the Offering Circular) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims;
(g) The Securities have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been duly
executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to
the benefits provided by the indenture to be dated as of March 1,
1999 (the "Indenture") between the Company and Chase Manhattan
Bank and Trust Company, National Association, as Trustee (the
"Trustee"), under which they are to be issued, which will be
substantially in the form previously delivered to you; the
Indenture has been duly authorized and, when executed and delivered
by the Company and the Trustee, the Indenture will constitute a
valid and legally binding instrument, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and the Securities and the Indenture conform to the
descriptions thereof in the Offering Circular and are in
substantially the form previously delivered to you;
(h) That certain Registration Rights Agreement among the
Company and the Purchasers to be dated as of March 1, 1999 (the
"Registration Rights Agreement") has been duly authorized and,
when executed and delivered by the Company, the Registration Rights
Agreement will constitute a valid and legally binding instrument,
enforceable in accordance with its terms;
(i) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the
sale of the Securities) will violate or result in a violation of
Section 7 of the Exchange Act, or any regulation promulgated
thereunder, including, without limitation, Regulations T, U, and X
of the Board of Governors of the Federal Reserve System;
(j) Prior to the date hereof, neither the Company nor any of
its affiliates (as such term is defined in Rule 144 promulgated
under the Securities Act) has taken any action which is designed to
or which has constituted or which might have reasonably been
expected to cause or result in stabilization or manipulation of the
price of any security of the Company in connection with the
offering of the Securities;
(k) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the
Indenture, the Registration Rights Agreement and this Agreement and
the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor
will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for
the issue and sale of the Securities or the consummation by the
Company of the transactions contemplated by this Agreement, the
Indenture or the Registration Rights Agreement except such
consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Securities by the Purchasers;
(l) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in
default in the performance or observance of any material
obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which it is a party or by which it or any of its
properties may be bound;
(m) The statements set forth in the Offering Circular under
the caption "Description
of Notes" and "Description of Common Stock", insofar as they
purport to constitute a summary of the terms of the Securities, the
Indenture, the Registration Rights Agreement and the Stock, under
the caption "Certain United States Federal Income Tax
Considerations", and under the caption "Underwriting", insofar
as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;
(n) Other than as set forth in the Offering Circular, there
are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
material adverse effect on the current or future financial
position, stockholders' equity or results of operations of the
Company and its subsidiaries; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(o) When the Securities are issued and delivered pursuant to
this Agreement, the Securities will not be of the same class
(within the meaning of Rule 144A under the Securities Act as
securities which are listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S.
automated inter-dealer quotation system;
(p) The Company is subject to Section 13 or 15(d) of the
Exchange Act;
(q) The Company is not, and after giving effect to the
offering and sale of the Securities, will not be an "investment
company", as such term is defined in the United States Investment
Company Act of 1940, as amended (the "Investment Company Act");
(r) Neither the Company nor any of its subsidiaries, nor any
person acting on its or their behalf has offered or sold the
Securities by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities
Act;
(s) Within the preceding six months, neither the Company nor
any other person acting on behalf of the Company has offered or
sold to any person any Securities, or any securities of the same or
a similar class as the Securities, other than Securities offered or
sold to the Purchasers hereunder. The Company will take reasonable
precautions designed to insure that any offer or sale, direct or
indirect, in the United States or to any U.S. person (as defined in
Rule 902 under the Securities Act) of any Securities or any
substantially similar security issued by the Company, within six
months subsequent to the date on which the distribution of the
Securities has been completed (as notified to the Company by
Xxxxxxx, Xxxxx & Co.), is made under restrictions and other
circumstances reasonably designed not to affect the status of the
offer and sale of the Securities in the United States and to U.S.
persons contemplated by this Agreement as transactions exempt from
the registration provisions of the Securities Act;
(t) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Section 517.075,
Florida Statutes; and
(u) KPMG Peat Marwick LLP, who have certified certain
financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Securities Act
and the rules and regulations of the Commission thereunder;
(v) The Company owns or possesses, 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 it, and the Company has not received any notice of, and
is not 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 invalid, or
otherwise prevent or materially inhibit the Company from utilizing,
any Intellectual Property necessary to carry on the business now
conducted by the Company, and which infringement or conflict (if
the subject of any unfavorable decision, ruling or finding),
invalidity, prevention or inhibition, singly or in the aggregate,
is reasonably likely to result in a material adverse change in the
general affairs, management, financial position, stockholders'
equity or results of operations of the Company;
(w) Except as described in the Offering Circular and except as
would not, singly or in the aggregate, result in a material adverse
change in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the
Company, (A) the Company is not 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 has all permits, authorizations and
approvals required under any applicable Environmental Laws and is
in compliance with their requirements, (C) there are no pending or,
to the best of the Company's knowledge, threatened administrative,
regulatory or judicial action, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation
or proceedings relating to any Environmental Law against the
Company and (D) to the best of the Company's knowledge, there are
no events or circumstances that might reasonably be expected to
form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or government body
or agency, against or affecting the Company relating to Hazardous
Materials or any Environmental Laws;
(x) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of
its subsidiaries has a material relationship to evaluate the extent
to which the business or operations of the Company or any of its
subsidiaries will be affected by the Year 2000 Problem. Based on
such review, the Company has no reason to believe, and does not
believe, that the Year 2000 Problem will have a material adverse
effect on the general affairs, management, the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries or result in any
material loss or interference with the Company's business or
operations. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage,
retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not,
in the case of dates or time periods occurring after December 31,
1999, function at least as effectively as in the case of dates or
time periods occurring prior to January 1, 2000.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Purchasers, and each of
the Purchasers agrees, severally and not jointly, to purchase from the
Company, at a purchase price of 97.25% of the principal amount thereof,
plus accrued interest, if any, from March 3, 1999 to the Time of Delivery
hereunder, the principal amount of Firm Securities set forth opposite the
name of such Purchaser in Schedule I hereto, and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Securities as provided below, the Company agrees to issue and
sell to each of the Purchasers, and each of the Purchasers agrees,
severally and not jointly, to purchase from the Company, at the same
purchase price set forth in clause (a) of this Section 2, that portion of
the aggregate principal amount of the Optional Securities as to which
such election shall have been exercised (to be adjusted by you so as to
eliminate fractions) determined by multiplying such aggregate principal
amount of Optional Securities by a fraction, the numerator of which is
the maximum aggregate principal amount of Optional Securities which such
Purchaser is entitled to purchase as set forth opposite the name of such
Purchaser in Schedule I hereto and the denominator of which is the
maximum aggregate principal amount of Optional Securities which all of
the Purchasers are entitled to purchase hereunder.
The Company hereby grants to the Purchasers the right to purchase
at their election up to $50,000,000 aggregate principal amount of
Optional Securities, at the same purchase price set forth in clause (a)
of the first paragraph of this Section 2, for the sole purpose of
covering overallotments in the sale of Firm Securities. Any such election
to purchase Optional Securities may be exercised by written notice from
Xxxxxxx, Sachs & Co. to the Company, given within a period of 30 calendar
days after the date of this Agreement, setting forth the aggregate
principal amount of Optional Securities to be purchased and the date on
which such Optional Securities are to be delivered, as determined by you
but in no event earlier than the First Time of Delivery (as defined in
Section (4) hereof) or, unless you and the Company otherwise agree in
writing, earlier than two or later than ten business days after the date
of such notice.
3. Upon the authorization by Xxxxxxx, Xxxxx & Co. of the release
of the Firm Securities, the several Purchasers propose to offer the Firm
Securities for sale upon the terms and conditions set forth in this
Agreement and the Offering Circular and each Purchaser hereby represents
and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to persons who it
reasonably believes are "qualified institutional buyers" ("QIBs")
within the meaning of Rule 144A under the Securities Act in transactions
meeting the requirements of Rule 144A;
(b) It is an Institutional Accredited Investor;
(c) Upon request of the Company, it will notify the Company upon
completion of the distribution of the Securities; and
(d) It has not offered and will not offer or sell the Securities
by any form of general solicitation or general advertising, including but
not limited to the methods described in Rule 502(c) under the Securities
Act.
4. (a) The Securities to be purchased by each Purchaser hereunder
will be represented by one or more definitive global Securities in book
entry form which will be deposited by or on behalf of the Company with
The Depository Trust Company ("DTC") or its designated custodian. The
Company will deliver the Securities to Xxxxxxx, Sachs & Co. for the
account of each Purchaser, against payment by or on behalf of such
Purchaser of the purchase price therefor by wire transfer, payable to the
order of the Company in Federal (same day) funds, by causing DTC to
credit the Securities to the account of Xxxxxxx, Xxxxx & Co. at DTC. The
Company will cause the certificates representing the Securities to be
made available to Xxxxxxx, Sachs & Co. for checking at least twenty-four
hours prior to the Time of Delivery (as defined below) at the office of
DTC or its designated custodian (the "Designated Office"). The time and
date of such delivery and payment shall be, with respect to the Firm
Securities, 9:30 a.m., New York City time, on March 3, 1999 or at such
other time and date as you and the Company may agree upon in writing,
and, with respect to the Optional Securities, 9:30 a.m., New York City
time, on the date specified by you in the written notice given by you of
the Purchasers' election to purchase the Optional Securities, or at such
other time and date as you and the Company may agree upon in writing.
Such time and date for delivery of the Firm Securities is herein called
the "First Time of Delivery", such time and date for delivery of the
Optional Securities, if not the First Time of Delivery, is herein called
the "Second Time of Delivery", and each such time and date for delivery
is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including
the cross-receipt for the Securities and any additional documents
requested by the Purchasers pursuant to Section 7(i) hereof, will be
delivered at such time and date at the offices of Fenwick & West LLP, Two
Palo Alto Square, Palo Alto, California 94034 (the "Closing Location"),
and the Securities will be delivered at the Designated Office, all at
such Time of Delivery. A meeting will be held at the Closing Location at
6:00 p.m., New York City time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to
make no amendment or any supplement to the Offering Circular which shall
be disapproved by you promptly after reasonable notice thereof; and to
furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities and the shares of Stock
issuable upon conversion of the Securities for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Securities, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Purchasers with five copies of the Offering
Circular and each amendment or supplement thereto signed by an authorized
officer of the Company with the independent accountants' report(s) in the
Offering Circular, and any amendment or supplement containing amendments
to the financial statements covered by such report(s), signed by the
accountants, and additional copies thereof in such quantities as you may
from time to time reasonably request, and if, at any time prior to the
expiration of nine months after the date of the Offering Circular, any
event shall have occurred as a result of which the Offering Circular as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Offering Circular is delivered, not
misleading, or, if for any other reason it shall be necessary or
desirable during such same period to amend or supplement the Offering
Circular, to notify you and upon your request to prepare and furnish
without charge to each Purchaser and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended
Offering Circular or a supplement to the Offering Circular which will
correct such statement or omission or effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date ninety days after the date of the Offering
Circular, not to offer, sell contract to sell or otherwise dispose of,
except as provided hereunder any securities of the Company that are
substantially similar to the Securities or the Stock, including but not
limited to any securities that are convertible into or exchangeable for,
or that represent the right to receive, Stock or any such substantially
similar securities (other than (i) pursuant to employee stock and option
plans and agreements existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of
this Agreement, or (ii) pursuant to stock option agreements entered into
after the date of this Agreement, provided that no shares shall vest
under such new stock option agreements until after the date ninety days
after the date of the Offering Circular), without your prior written
consent; provided, however, that the Company may issue shares of Stock as
consideration for acquisitions of businesses occurring after the date of
the Offering Circular, provided that each recipient of any such shares
agrees in writing for the benefit of the Purchasers that all such shares
shall remain subject to restrictions identical to those contained in this
paragraph.
(e) Not to be or become, at any time prior to the expiration of
three years after the date of the latest Time of Delivery, an open-end
investment company, unit investment trust, closed-end investment company
or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, for the benefit of holders from time to time
of Securities, to furnish at its expense, upon request, to holders of
Securities and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of
subsection (d)(4)(i) of Rule 144A under the Securities Act;
(g) If requested by you, to use its best efforts to cause
Securities to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.;
(h) To furnish to the holders of the Securities as soon as
practicable after the end of each fiscal year an annual report (including
a balance sheet and statements of income, stockholders' equity and cash
flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the end
of each of the first three quarters of each fiscal year (beginning with
the fiscal quarter ending after the date of the Offering Circular), to
make available to its stockholders consolidated summary financial
information of the Company and its subsidiaries for such quarter in
reasonable detail;
(i) During a period of five years from the date of the Offering
Circular, to furnish to you copies of all reports or other communications
(financial or other) furnished to stockholders of the Company, and to
deliver to you (i) as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
securities exchange on which the Securities or any class of securities of
the Company is listed; and (ii) such additional information concerning
the business and financial condition of the Company as you may from time
to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission) provided that you agree to hold in
confidence any confidential or nonpublic information so provided;
(j) During the period of two years after the date of the Offering
Circular, the Company will not, and will use all reasonable efforts to
ensure that its "affiliates" (as defined in Rule 144 under the
Securities Act) do not, resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any
of them;
(k) The Company agrees that it will use the net proceeds of the
sale of the Securities (other than $48.475 million) to finance the
purchase or other acquisition of any property, inventory, asset or
business directly or indirectly, by the Company or any Restricted
Subsidiary used in, or to be used in, the System and Network Management
Business or for such other purposes permitted by the Senior Note
Indenture (as defined below). Neither the Company nor any of its
Restricted Subsidiaries has, as of the date hereof, incurred any Debt
under Section 1008(11) of the Senior Notes Indenture. "Debt" has the
meaning given thereto in the Senior Notes Indenture. "Restricted
Subsidiary" shall mean any subsidiary of the Company that has not been
designated an "Unrestricted Subsidiary" pursuant to the Indenture dated
as of July 1, 1998 between the Company and the Chase Manhattan Bank and
Trust Company, National Association, as trustee governing the Company's
11 1/4% Senior Notes due 2008 (as amended or supplemented from time to time,
the "Senior Notes Indenture"). "System and Network Management Business"
means: (i) server and other hardware hosting; (ii) connectivity, data
networking, telecommunications or content for computer or data networks
or systems; (iii) management of computer or data networks or systems;
(iv) technology services, equipment sales or leasing or software
licensing for computer or data networks or systems (including Internet
Protocol and any successor protocol(s) based networks); and (v)
businesses reasonably related, complementary or incidental thereto.;
(l) To reserve and keep available at all times, free of preemptive
rights, shares of Stock for the purpose of enabling the Company to
satisfy any obligations to issue shares of its Stock upon conversion of
the Securities; and
(m) To use its best efforts to list, subject to notice of
issuance, the shares of Stock issuable upon conversion of the Securities
on the Nasdaq National Market.
6. The Company covenants and agrees with the several Purchasers
that the Company will pay or cause to be paid the following: (i) the
fees, disbursements and expenses of the Company's counsel and accountants
in connection with the issue of the Securities and the shares of Stock
issuable upon conversion of the Securities and all other expenses in
connection with the preparation, printing and filing of the Preliminary
Offering Circular and the Offering Circular and any amendments and
supplements thereto and the mailing and delivering of copies thereof to
the Purchasers and dealers; (ii) the cost of printing or producing any
Agreement among Purchasers, this Agreement, the Indenture, the Blue Sky
and Legal Investment Memoranda, closing documents (including any
compilations thereof) and any other documents in connection with the
offering, purchase, sale and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Securities and the
shares of Stock issuable upon conversion of the Securities for offering
and sale under state securities laws as provided in Section 5(b) hereof,
including the fees and disbursements of counsel for the Purchasers in
connection with such qualification and in connection with the Blue Sky
and legal investment surveys; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing the
Securities; (vi) the fees and expenses of the Trustee and any agent of
the Trustee and the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities; (vii) any cost incurred
in connection with the designation of the Securities for trading in
PORTAL and the listing on the Nasdaq National Market of the shares of
Stock issuable upon conversion of the Securities; and all other costs and
expenses incident to the performance of its obligations hereunder which
are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and
Sections 8 and 11 hereof, the Purchasers will pay all of their own costs
and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Securities by them, and any advertising expenses
connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject,
in their discretion, to the condition that all representations and
warranties and other statements of the Company herein are, at and as of
each Time of Delivery, true and correct, the condition that the Company
shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
counsel for the Purchasers, shall have furnished to you such opinion or
opinions, dated such Time of Delivery, with respect to the matters
covered in paragraphs (i), (ii), (v), (vi), (vii), (xi), (xii), (xiii)
and (xiv) of subsection (b) below as well as such other related matters
as you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to
pass upon such matters;
(b) Fenwick & West LLP, counsel for the Company (or such other
counsel as the Company shall deem appropriate) shall have furnished to
you their written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
state of Delaware, with corporate power and corporate authority to
own its properties and conduct its business as described in the
Offering Circular;
(ii) The Company had, as of the dates specified in the Offering
Circular, duly authorized capital stock as set forth under the
caption "Capitalization" in the Offering Circular, and all of the
issued and outstanding shares of capital stock of the Company
described therein have been duly and validly authorized and issued,
are non-assessable and to such counsel's knowledge, are fully paid,
and the shares of Stock initially issuable upon conversion of the
Securities have been duly and validly authorized and reserved for
issuance and, when issued and delivered in accordance with the
provisions of the Securities and the Indenture, will be duly and
validly issued and fully paid and non-assessable, and will conform
to the description of the Stock contained in the Offering Circular;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction within the United States in
which it owns or leases properties or employs personnel, or where
the failure to be so qualified would have a material adverse effect
of the business, financial condition or results of operations of
the Company;
(iv) To such counsel's knowledge and other than as set forth in
the Offering Circular, there are no legal or governmental
proceedings pending to which the Company is a party or of which any
property of the Company is the subject which, if determined
adversely to the Company, would individually or in the aggregate
have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company; and, to such counsel's knowledge, no
such proceedings are threatened by governmental authorities or
threatened by others;
(v) This Agreement has been duly authorized and duly executed
and delivered by the Company to you;
(vi) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and
legally binding obligations of the Company;
(vii) The Indenture and the Registration Rights Agreement have
been duly authorized, executed and delivered by the Company and
each constitutes a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(viii) The issue and sale of the Securities being delivered at
such Time of Delivery and the compliance by the Company with all of
the provisions of the Securities, the Indenture, the Registration
Rights Agreement and this Agreement and the consummation of the
transactions herein and therein contemplated were they to be
completed on or prior to the date of such opinion and assuming the
absence of any applicable cure period, waiting period or other
similar provision, do not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any of the agreements listed as exhibits to the
Company's Annual Report on Form 10-K for the year ended December
31, 1998 or any agreements entered into by the Company after
December 31, 1998 that would be required to be filed as a material
agreement exhibit on Form 10-Q or any other Exchange Act Report
(collectively, the "Material Agreements") (provided that in
determining which documents would be required to be so filed, such
counsel may rely on an officer's certificate that specifies
agreements that the Company has entered into since December 31,
1998) nor does such action result in any violation of the
provisions of the Certificate of Incorporation or Bylaws of the
Company or any statute or any order, rule or regulation known to
such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its properties;
(ix) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by
this Agreement, the Indenture or the Registration Rights Agreement,
except (A) such as may be required under the Securities Act in
connection with the shares of Stock issuable upon conversion of the
Securities and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Purchasers (as to which such
counsel renders no opinion) or (B) such consents, approvals,
authorizations, orders, registrations or qualifications as are
referenced in the Offering Circular;
(x) The Company is not in violation of its Certificate of
Incorporation or By-laws or, to such counsel's knowledge, in
default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any of
the Material Agreements;
(xi) The statements set forth in the Offering Circular under the
the caption "Description of Notes", and "Description of Capital
Stock", insofar as they purport to constitute a summary of the
terms of the Securities, the Indenture, the Registration Rights
Agreement and the Stock, under the caption "Certain United States
Federal Income Tax Considerations", and under the caption
"Underwriting", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are
accurate and complete in all material respects;
(xii) The Exchange Act Reports (other than the financial
statements and related notes and schedules (and financial data)
therein, as to which such counsel need express no opinion), when
they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act, and
the rules and regulations of the Commission promulgated thereunder;
(xiii) No registration of the Securities under the Securities
Act, and no qualification of an indenture under the United States
Trust Indenture Act of 1939 with respect thereto, is required for
the offer and, sale to, and initial resale of the Securities by,
the Purchasers in the manner contemplated by this Agreement; and
(xiv) The Company is not an "investment company", as such
term is defined in the Investment Company Act.
In addition, such counsel shall state that, although they
are not passing upon and do not assume any responsibility for, nor
have they independently verified, the accuracy, completeness or
fairness of the statements contained in the Preliminary Offering
Circular and the Offering Circular, except for and to the extent of
those referred to in the opinion in subsection (xi) of this
Section 7(b), they have participated in certain conferences with
officers and other employees of the Company, representatives of the
Company's independent certified public accountants and
representatives of the Purchasers with respect to the preparation
of the Preliminary Offering Circular and the Offering Circular, and
no facts have come to the attention of attorneys devoting attention
to the representation of the Company in its preparation of the
Preliminary Offering Circular and the Offering Circular that have
caused them to believe that, as of their respective dates and as of
the Time of Delivery, the Preliminary Offering Circular and the
Offering Circular or any further amendments thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related notes, related schedules and financial data
included therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading. Further, such counsel shall
state that, although they are not passing upon and do not assume
any responsibility for, nor have they independently verified, the
accuracy, completeness or fairness of the statements contained in
the Exchange Act Reports, they have participated in certain
conferences with officers and other employees of the Company, and
representatives of the Company's independent certified public
accountants with respect to the preparation of the respective
Exchange Act Reports, and no facts have come to the attention of
attorneys devoting attention to the representation of the Company
in its preparation of the respective Exchange Act Reports that have
caused them to believe that as of the dates on which the respective
Exchange Act Reports were filed with the Commission, the Exchange
Act Reports (other than the financial statements and related notes,
related schedules and financial data included therein, as to which
such counsel need express no opinion) contained an untrue statement
of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made when such
documents were so filed, not misleading.
(c) On the date of the Offering Circular prior to the execution of
this Agreement and also at such Time of Delivery, KPMG Peat Marwick LLP
shall have furnished to you a letter or letters, dated the respective
dates of delivery thereof, in form and substance satisfactory to you, to
the effect set forth in Annex II hereto;
(d) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Offering Circular, and (ii) since the respective dates as of which
information is given in the Offering Circular there shall not have been
any change in the capital stock or long-term debt of the Company or any
of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Offering Circular, the effect of which, in any such case described
in Clause (i) or (ii), is in the judgment of the Purchasers so material
and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities being delivered at
such Time of Delivery on the terms and in the manner contemplated in this
Agreement and in the Offering Circular;
(e) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt
securities;
(f) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or the Nasdaq
National Market; (ii) a suspension or material limitation in trading in
the Company's securities on the Nasdaq National Market; (iii) a general
moratorium on commercial banking activities declared by either Federal or
New York State authorities; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this Clause (iv) in the judgment of the Purchasers makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities being delivered at such Time of Delivery on
the terms and in the manner contemplated in the Offering Circular; or (v)
the occurrence of any material adverse change in the existing financial,
political or economic conditions in the United States or elsewhere which,
in the judgment of the Purchasers, would materially and adversely affect
the financial markets or markets for the Securities or other debt
securities;
(g) The Securities have been designated for trading on PORTAL;
(h) At such Time of Delivery, a Listing of Additional Shares
Application shall have been previously received by the Nasdaq National
Market for the purpose of duly listing the shares of Stock issuable upon
conversion of the Securities being delivered at such Time of Delivery;
(i) The Company shall have furnished to you executed copies of the
Indenture and the Registration Rights Agreement; and
(j) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its obligations hereunder to
be performed at or prior to such Time of Delivery, as to the matters set
forth in subsection (d) of this Section and as to such other matters as
you may reasonably request.
8. (a) The Company will indemnify and hold harmless each
Purchaser against any losses, claims, damages or liabilities, joint or
several, to which such Purchaser may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to make the
statements therein not misleading, and will reimburse each Purchaser for
any legal or other expenses reasonably incurred by such Purchaser in
connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through Xxxxxxx,
Xxxxx & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company
may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Circular or the Offering Circular, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Purchaser through Xxxxxxx, Sachs & Co. expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal expenses of other counsel or any
other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs
of investigation. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of,
or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such
action 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) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Purchasers on the other from the offering
of the Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection
(c) above, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Company on the one hand and the Purchasers on the
other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Purchasers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by the Purchasers, in each case as set forth in the
Offering Circular. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company on the one hand or
the Purchasers on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The Company and the Purchasers agree that it
would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Purchasers 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 subsection (d). The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Purchaser 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 investors were
offered to investors exceeds the amount of any damages which such
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be
in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any,
who controls any Purchaser within the meaning of the Securities Act; and
the obligations of the Purchasers under this Section 8 shall be in
addition to any liability which the respective Purchasers may otherwise
have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who
controls the Company within the meaning of the Securities Act.
9. (a) If any Purchaser shall default in its obligation to
purchase the Securities which it has agreed to purchase hereunder at a
Time of Delivery, you may in your discretion arrange for you or another
party or other parties to purchase such Securities on the terms contained
herein. If within thirty-six hours after such default by any Purchaser
you do not arrange for the purchase of such Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to you to purchase
such Securities on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for
the purchase of such Securities, or the Company notifies you that it has
so arranged for the purchase of such Securities, you or the Company shall
have the right to postpone such Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Offering Circular, or in any other documents or
arrangements, and the Company agrees to prepare promptly any amendments
to the Offering Circular which in your opinion may thereby be made
necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to
such Securities.
(b) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal
amount of such Securities which remains unpurchased does not exceed
one-eleventh of the aggregate principal amount of all the Securities to
be purchased at such Time of Delivery, then the Company shall have the
right to require each non-defaulting Purchaser to purchase the principal
amount of Securities which such Purchaser agreed to purchase hereunder at
such Time of Delivery and, in addition, to require each non-defaulting
Purchaser to purchase its pro rata share (based on the principal amount
of Securities which such Purchaser agreed to purchase hereunder) of the
Securities of such defaulting Purchaser or Purchasers for which such
arrangements have not been made; but nothing herein shall relieve a
defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal
amount of Securities which remains unpurchased exceeds one-eleventh of
the aggregate principal amount of all the Securities to be purchased at
such Time of Delivery, or if the Company shall not exercise the right
described in subsection (b) above to require non-defaulting Purchasers to
purchase Securities of a defaulting Purchaser or Purchasers, then this
Agreement (or, with respect to the Second Time of Delivery, the
obligation of the Purchasers to purchase and of the Company to sell the
Optional Securities) shall thereupon terminate, without liability on the
part of any non-defaulting Purchaser or the Company, except for the
expenses to be borne by the Company and the Purchasers as provided in
Section 6 hereof and the indemnity and contribution agreements in Section
8 hereof; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several
Purchasers, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of any Purchaser or any
controlling person of any Purchaser, or the Company, or any officer or
director or controlling person of the Company, and shall survive delivery
of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any
Purchaser except as provided in Sections 6 and 8 hereof; but, if for any
other reason, any Securities are not delivered by or on behalf of the
Company as provided herein, the Company will reimburse the Purchasers
through you for all out-of-pocket expenses approved in writing by you,
including fees and disbursements of counsel, reasonably incurred by the
Purchasers in making preparations for the purchase, sale and delivery of
the Securities, but the Company shall then be under no further liability
to any Purchaser except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of
the Purchasers, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any
Purchaser made or given by you jointly or by Xxxxxxx, Xxxxx & Co. on
behalf of you as the representatives.
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Purchasers shall be delivered or sent by mail,
telex or facsimile transmission to you as the representatives in care of
Xxxxxxx, Sachs & Co., 00 Xxx Xxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Registration Department; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address
of the Company set forth in the Offering Circular, Attention: Secretary;
provided, however, that any notice to a Purchaser pursuant to Section
8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Purchaser at its address set forth in its
Purchasers' Questionnaire, or telex constituting such Questionnaire,
which address will be supplied to the Company by you upon request. Any
such statements, requests, notices or agreements shall take effect upon
receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchasers, the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and
each person who controls the Company or any Purchaser, and their
respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of
this Agreement. No purchaser of any of the Securities from any Purchaser
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. 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 respective counterparts shall
together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please
sign and return to us counterparts hereof, and upon the acceptance hereof
by you, on behalf of each of the Purchasers, this letter and such
acceptance hereof shall constitute a binding agreement between each of
the Purchasers and the Company. It is understood that your acceptance of
this letter on behalf of each of the Purchasers is pursuant to the
authority set forth in a form of Agreement among Purchasers, the form of
which shall be submitted to the Company for examination upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
EXODUS COMMUNICATIONS, INC.
By:
__________________________
Name:
Title:
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
BancBoston Xxxxxxxxx Xxxxxxxx Inc.
BT Alex. Xxxxx Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
Xxxxxxxxx & Xxxxx LLC
By: _____________________________________
(Xxxxxxx, Sachs & Co.)
On behalf of each of the Purchasers
[Signature Page to Purchase Agreement]
SCHEDULE I
Principal
Amount of
Optional
Securities to
Principal be Purchased
Amount of Firm if Maximum
Securities to Option
Purchaser be Purchased Exercised
----------------------------------- --------------- ---------------
Xxxxxxx, Xxxxx & Co............. $120,000,000 $30,000,000
BancAmerica Xxxxxxxxx Xxxxxxxx.. 20,000,000 5,000,000
BT Alex. Xxxxx Incorporated..... 20,000,000 5,000,000
Xxxxxxxxx Lufkin & Xxxxxxxx
Securities Corporation........ 20,000,000 5,000,000
Xxxxxxxxx & Xxxxx LLC........... 20,000,000 5,000,000
--------------- ---------------
Total $200,000,000 $50,000,000
=============== ===============
ANNEX I
Pursuant to Section 7(d) of the Purchase Agreement, the accountants
shall furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of
the Securities Exchange Act of 1934 (the "Exchange Act") and the
applicable published rules and regulations thereunder;
(ii) In our opinion, the consolidated financial statements and
financial statement schedules audited by us and included in the
Offering Circular comply as to form in all material respects with
the applicable requirements of the Exchange Act and the related
published rules and regulations;
(iii) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years
included in the Offering Circular agrees with the corresponding
amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years;
(iv) On the basis of limited procedures not constituting an
audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest
available interim financial statements of the Company and its
subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial
statements included in the Offering Circular, inquiries of
officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Offering Circular are not in
conformity with generally accepted accounting principles
applied on the basis substantially consistent with the basis
for the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Offering Circular;
(B) any other unaudited income statement data and balance
sheet items included in the Offering Circular do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included in the Offering Circular;
(C) the unaudited financial statements which were not
included in the Offering Circular but from which were derived
any unaudited condensed financial statements referred to in
Clause (A) and any unaudited income statement data and
balance sheet items included in the Offering Circular and
referred to in Clause (B) were not determined on a basis
substantially consistent with the basis for the audited
consolidated financial statements included in the Offering
Circular;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Offering Circular do not
comply as to form in all material respects with the
applicable accounting requirements or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in
the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which
were outstanding on the date of the latest financial
statements included in the Offering Circular or any increase
in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by
the Purchasers, or any increases in any items specified by
the Purchasers, in each case as compared with amounts shown
in the latest balance sheet included in the Offering Circular
except in each case for changes, increases or decreases which
the Offering Circular discloses have occurred or may occur or
which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Offering Circular to the specified
date referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or
per share amounts of consolidated net income or other items
specified by the Purchasers, or any increases in any items
specified by the Purchasers, in each case as compared with
the comparable period of the preceding year and with any
other period of corresponding length specified by the
Purchasers, except in each case for decreases or increases
which the Offering Circular discloses have occurred or may
occur or which are described in such letter; and
(v) In addition to the examination referred to in their
report(s) included in the Offering Circular and the limited
procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (iv) above, they
have carried out certain specified procedures, not constituting an
audit in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial
information specified by the Purchasers, which are derived from the
general accounting records of the Company and its subsidiaries,
which appear in the Offering Circular, and have compared certain of
such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have
found them to be in agreement.
___________, 1999
Dear KPMG Peat Marwick:
Xxxxxxx, Sachs & Co., as representatives of the Purchasers of __%
Convertible Subordinated Notes due 2006 to be issued by Exodus
Communications, Inc. (the "Company"), will be reviewing certain
information relating to the Company that will be included (incorporated
by reference) in the Offering Circular. This review process, applied to
the information relation to the issue, is (will be) substantially
consistent with the due diligence review process that we would perform if
this placement of securities were being registered pursuant to the
Securities Act of 1933 (the Act). It is recognized however that what is
"substantially consistent" may vary from situation to situation and may
not be the same as that done in a registered offering of the same
securities for the same issuer and whether the procedures being, or to
be, followed will be "substantially consistent" will be determined by
us on a case-by-case basis. We are knowledgeable with respect to the due
diligence review process that would be performed if this placement of
securities were being registered pursuant to the Act. We hereby request
that you deliver to us a "comfort" letter concerning the financial
statements of the issuer and certain statistical and other data included
in the offering document. We will contact you to identify the procedures
we wish you to follow and the form we wish the comfort letter to take.
Very truly yours,
________________________________________
(Xxxxxxx, Xxxxx & Co.)
