EXHIBIT 4.06
Exodus Communications, Inc.
4 3/4% Convertible Subordinated Notes due July 15, 2008
________________
Purchase Agreement
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December 0, 0000
Xxxxxxx, Xxxxx & Xx.,
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
Xxxxxx Xxxxxxx & Co. Incorporated
As representative 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
$400,000,000 principal amount of the 4 3/4% Convertible Subordinated Notes due
July 15, 2008, 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 $100,000,000 additional
aggregate principal amount of Securities (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 November 24, 1999 (the
"Preliminary Offering Circular") and an offering circular, dated December
2, 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 Statements
filed pursuant to Section 14(a) of the United States Securities Exchange
Act of 1934, as amended (the "Exchange Act"), filed January 29, 1999 and
April 23, 1999, the Company's Special Definitive Proxy Statements, pursuant
to Section 14(a) of the Exchange Act, filed February 9, 1999 and May 4,
1999, the Company's Annual Report on Form 10-K for the fiscal year ended
December
31, 1998, the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1999, June 30, 1999 and September 30, 1999, each of the
Company's Current Reports on Form 8-K, and any amendments thereto, filed
January 29, 1999, February 22, 1999, March 2, 1999, June 18, 1999, August
11, 1999, October 12, 1999 and November 29, 1999 and the amendment to the
Company's registration statement on Form 8A filed November 29, 1999
(together the "Exchange Act Reports"). Any reference (other than in Section
7(a) 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) 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 September 30, 1999, 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"), other than Cohesive
Technology Solutions, Inc. ("Cohesive");
(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
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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 where the failure to be
so qualified could be reasonably expected to have a material adverse effect
on the business, financial condition or results of operations of the
Company, 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 December 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 December 1, 1999 (the "Registration Rights
Agreement") has
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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) In the event that the outstanding principal amount of the
Securities exceeds $400,000,000, the Company agrees that it will use the
net proceeds of the sale of the Securities in excess of such amount 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) 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
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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;
(m) 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;
(n) 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;
(o) 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;
(p) 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;
(q) The Company is subject to Section 13 or 15(d) of the Exchange
Act;
(r) 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");
(s) 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;
(t) 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
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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;
(u) 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
(v) KPMG 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;
(w) 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;
(x) 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
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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;
(y) 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 December 8, 1999 to the First 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 $100,000,000 aggregate principal amount of Optional Securities,
at the same principal amount purchase price set forth in clause (a) of the first
paragraph of this Section 2, for the sole purpose of
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covering sales of Securities in excess of the aggregate principal amount 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 you 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 Securities in book entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or other appropriate depository, or its designated custodian.
The Company will deliver the Securities to Xxxxxxx, Xxxxx & 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 or other appropriate depository to
credit the Securities to the account of Xxxxxxx, Sachs & Co. at DTC or other
appropriate depository. The Company will cause the certificates representing the
Securities to be made available to Xxxxxxx, Xxxxx & Co. for checking at least
twenty-four hours prior to the Time of Delivery (as defined below) at the office
of DTC or other appropriate depository 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 December
8, 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,
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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;
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(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
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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) 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
(l) 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.
11
7. The obligations of the Purchasers hereunder shall be subject, as to
the Securities to be delivered at each Time of Delivery, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such 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), (vi), (vii), (viii), (xii), (xiii), (xiv) and (xv) 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, where the failure to be so qualified would
have a material adverse effect on the business, financial condition or
results of operations of the Company;
(iv) Each significant 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; and all of the issued
shares of capital stock of each such significant subsidiary 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 (such counsel
being entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company or its significant subsidiaries);
12
(v) 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 or any of its significant subsidiaries is a party or
of which any property of the Company or any of its significant subsidiaries
is the subject which, if determined adversely to the Company or any of its
significant subsidiaries, 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
its significant subsidiaries; and, to such counsel's knowledge, no such
proceedings are threatened by governmental authorities or threatened by
others;
(vi) This Agreement has been duly authorized and duly executed and
delivered by the Company to you;
(vii) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company;
(viii) 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;
(ix) 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 or any of its significant subsidiaries' Annual Report on Form 10-
K for the year ended December 31, 1998 or any agreements entered into by
the Company or any of its significant subsidiaries after September 30, 1999
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 or any of its significant
subsidiaries has entered into since September 30, 1999) nor does such
action result in any violation of the provisions of the Certificate of
Incorporation or Bylaws of the Company or any of its significant
subsidiaries 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 significant subsidiaries or any of their
properties;
(x) 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
13
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;
(xi) Neither the Company nor any of its significant subsidiaries is
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;
(xii) The statements set forth in the Offering Circular under 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;
(xiii) 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;
(xiv) 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
(xv) 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 (xii) 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 such 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
14
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 each Time of Delivery, KPMG 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 I 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
15
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 or California 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
16
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
17
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
18
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 not so delivered but the Company
shall then be under no further liability in respect of the Securities not so
delivered 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.
19
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, 00xx 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.
20
If the foregoing is in accordance with your understanding, please sign and
return to us ten (10) 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: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ Xxxxxxx, Sachs & Co.
-------------------------------------
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Purchasers
SCHEDULE I
Principal Amount of
Optional Securities
Principal Amount of to be Purchased
Firm Securities if Maximum
Purchaser to be Purchased Option Exercised
--------- --------------- ----------------
Xxxxxxx, Sachs & Co................................ $240,000,000 $ 60,000,000
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation....................................... $ 80,000,000 $ 20,000,000
Xxxxxx Xxxxxxx & Co. Incorporated.................. $ 80,000,000 $ 20,000,000
------------ ------------
Total $400,000,000 $100,000,000
============ ============
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 Section 101 of
the AICPA Code of Professional Conduct;
(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 four 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 four
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 audited 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:
Xxxxxxx, Sachs & Co., as representatives of the Purchasers of 4 3/4%
Convertible Subordinated Notes due July 15, 2008 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.)
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