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EXHIBIT 4.6
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VERIO INC.
150,000 Units
consisting of
$150,000,000
13 1/2% Senior Notes due 2004
and
Warrants to purchase
2,112,480 shares of the Company's Common Stock
PURCHASE AGREEMENT
Dated as of June 17, 1997
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VERIO INC.
150,000 Units
consisting of
$150,000,000
13 1/2% Senior Notes due 2004
and
Warrants to purchase
2,112,480 shares of the Company's Common Stock
PURCHASE AGREEMENT
New York, New York
June 17, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
LAZARD FRERES & CO. LLC
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Verio Inc., a Delaware corporation (the "Company"), confirms
its agreement with Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx
Xxxxx") and Xxxxxx Freres & Co. LLC ("Lazard," and together with Xxxxxxx Xxxxx,
the "Initial Purchasers") with respect to the issue and sale by the Company (the
"Offering") and the purchase by the Initial Purchasers, acting severally and not
jointly, of the respective numbers set forth in Schedule A of Units (the
"Units") consisting of $150,000,000 aggregate principal amount of the Company's
13 1/2% Senior Notes due 2004 (the "Notes") and Warrants (the "Warrants") to
purchase 2,112,480 shares of the Company's Common Stock, par value $.001 per
share (the "Warrant Shares" and, together with the Warrants, the Notes and the
Units, the "Secu-
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rities"), determined on a fully diluted basis as of the Closing Time (as defined
herein).
The Notes are to be issued under an Indenture to be dated as
of June 24, 1997 (the "Indenture") between the Company and First Trust National
Association, as trustee (the "Trustee"). The holders of Notes, including the
Initial Purchasers, will be entitled to the benefits of a Registration Rights
Agreement (the "Registration Rights Agreement"), dated as of June 17, 1997,
between the Company and the Initial Purchasers. Pursuant to the Registration
Rights Agreement, the Company will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth therein
either (i) a registration statement under the Act registering the Exchange Notes
(as defined in the Registration Rights Agreement) to be offered in exchange for
the Notes and to use its best efforts to cause such registration statement to be
declared effective and (ii) under certain circumstances set forth therein, to
file with the Commission a shelf registration statement pursuant to Rule 415
under the Securities Act of 1933, as amended (the "Act") relating to the resale
of the Notes by holders thereof or, if applicable, relating to the resale of
Private Exchange Notes (as defined in the Registration Rights Agreement) by the
Initial Purchasers pursuant to an exchange of the Notes for Private Exchange
Notes, and to use its best efforts to cause such shelf registration statement to
be declared effective.
The Company will issue the Warrants under a Warrant Agreement
to be dated as of June 24, 1997 (the "Warrant Agreement") between the Company
and First Trust National Association, as Warrant Agent (the "Warrant Agent").
The holders of Warrants, including the Initial Purchasers, will be entitled to
the benefit of a Common Stock Registration Rights Agreement (the "Common Stock
Registration Rights Agreement"), dated as of June 17, 1997, between the Company
and the Initial Purchasers.
This agreement (this "Agreement" or the "Purchase Agreement"),
the Securities, the Exchange Notes (as defined in the Registration Rights
Agreement), the Private Exchange Notes (as defined in the Registration Rights
Agreement), the Indenture, the Warrant Agreement, the Escrow Agreement (as
defined below), the Common Stock Registration Rights Agreement and the
Registration Rights Agreement are referred to collectively as the "Operative
Documents."
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Capitalized terms used herein without definition have the
respective meanings specified in the Offering Memorandum referred to below.
Approximately $46.6 million of the net proceeds from the sale
of the Units (the "Initial Escrow Amount"), representing funds that, together
with the proceeds from the investment thereof, will be sufficient to pay the
first five interest payments on the Notes, are to be placed in a collateral
account and pledged to the Trustee, for the benefit of the holders of the Notes
and the Trustee (in its capacity as such under the Indenture) pursuant to the
Escrow Agreement, dated as of June 24, 1997 (the "Escrow Agreement") among the
Company, First Trust National Association, as Escrow Agent (the "Escrow Agent"),
and the Trustee.
The Units will be offered and sold to the Initial Purchasers
without registration under the Act, in reliance upon an exemption from the
registration requirements of the Act. The Company has prepared and delivered to
each Initial Purchaser copies of a preliminary offering memorandum dated May 27,
1997 (the "Preliminary Offering Memorandum") and has prepared and will deliver
to each Initial Purchaser, on the date hereof, copies of a final offering
memorandum dated June 17, 1997 (the "Final Offering Memorandum"), each to be
used by such Initial Purchaser in connection with its solicitation of purchases
of, or offering of, the Units. "Offering Memorandum" means, with respect to any
date or time referred to in this Agreement, the most recent offering memorandum
(whether the Preliminary Offering Memorandum or the Final Offering Memorandum,
together with any amendment or supplement to either such document), which have
been prepared and delivered by the Company to the Initial Purchasers in
connection with their solicitation of purchases of, or offering of, the Units.
The Company hereby confirms that it has authorized the use of the Preliminary
Offering Memorandum and the Final Offering Memorandum in connection with the
offer and resale of the Units by the Initial Purchasers.
The Company understands that the Initial Purchasers propose to
make an offering of the Units only on the terms and in the manner set forth in
the Offering Memorandum and Section 4 hereof, as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, (i) to
persons in the United States whom the Initial Purchasers reasonably believe to
be qualified institutional buyers ("Qualified Institutional Buyers") as defined
in Rule 144A under the Act, as amended ("Rule 144A"), in transactions under Rule
144A, (ii)
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to a limited number of other institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) and (7) under the Act ("Accredited Investors")) in
private sales exempt from registration under the Act or (iii) pursuant to offers
and sales to non-U.S. persons that occur outside the United States within the
meaning of Regulation S under the Act ("Regulation S"), pursuant to Rule 904 of
Regulation S.
SECTION 1. Representations and Warranties. (a) The Company
represents and warrants to each Initial Purchaser as of the date hereof and as
of the Closing Time (as defined in Section 3 hereof) that:
(i) As of their respective dates, none of the Offering
Memorandum nor any amendment or supplement thereto, and at all times
subsequent thereto up to and as of the Closing Time, as amended or
supplemented to such time, contained or will contain an untrue
statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with
information relating to the Initial Purchasers furnished in writing by
the Initial Purchasers to the Company expressly for use in the Offering
Memorandum or any amendment or supplement thereto.
(ii) The Company has been advised that the Units (and,
following separation of the Units, the Notes and the Warrants) have
been designated PORTAL eligible securities in accordance with the rules
and regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(iii) None of the Company, nor any of its Affiliates (as
defined in Rule 501(b) under the Act) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Act) which
could be integrated with the sale of the Securities in a manner that
would require the registration of the Securities under the Act.
(iv) None of the Company nor any of its Affiliates (as defined
in Rule 501(b) under the Act) or any person (other than the Initial
Purchasers, as to whom the Company makes no representation) acting at
the request of the Company has engaged, in connection with the offering
of the
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Securities, (A) in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Act, (B) in any
directed selling efforts within the meaning of Rule 902 under the Act
in the United States in connection with the Securities being offered
and sold pursuant to Regulation S under the Act, (C) in any manner
involving a public offering within the meaning of Section 4(2) of the
Act or (D) in any action which would require the registration of the
offering and sale of the Securities pursuant to this Agreement or which
would violate applicable state securities or "blue sky" laws.
(v) Assuming that the representations and warranties of the
Initial Purchasers contained in Section 4 are true, correct and
complete, and assuming compliance by the Initial Purchasers with their
covenants in Section 4, and assuming that the representations and
warranties contained in the Accredited Investor Letter of
Representations (the "Accredited Investor Letter") (substantially in
the form of Appendix A to the Offering Memorandum) completed by
Accredited Investors or deemed to be made by non-U.S. persons and
Qualified Institutional Buyers purchasing Units are true and correct as
of the Closing Time, and assuming compliance by such Accredited
Investors, as the case may be, with the agreements in the Accredited
Investor Letters, it is not necessary in connection with the offer,
sale and delivery of the Units to the Initial Purchasers in the manner
contemplated by, or in connection with the initial resale of such Units
by the Initial Purchasers in accordance with, this Agreement to
register the Units under the Act or to qualify any indenture in respect
of the Units under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act").
(vi) The subsidiaries of the Company listed on Schedule B
hereto (also referred to herein as the "Subsidiaries") are the only
subsidiaries of the Company that constitute "significant subsidiaries"
within the meaning of Rule 1-02(w) of Regulation S-X under the Act.
Each of the Company and the Subsidiaries has been duly organized or
incorporated, as the case may be, and is validly existing and in good
standing under the laws of its jurisdiction of incorporation, with all
requisite power and authority under such laws (a) to own, lease and
operate their respective properties and to conduct their respective
businesses as now conducted and as described in the Offering Memorandum
and (b) to enter into, deliver, incur and perform their respective
obligations under the Operative Docu-
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ments, except, in the case of the foregoing subclause (a) for
authorizations, approvals, orders, leases, certificates and permits,
the failure of which to possess could not reasonably be expected to
have a Material Adverse Effect (as defined below); and are all duly
qualified to do business as foreign corporations in good standing in
all other jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses
requires such qualification, except where the failure to be so
qualified could not reasonably be expected to have a material adverse
effect (i) on the business, condition (financial or otherwise), results
of operations, business affairs or business prospects of the Company
and the Subsidiaries taken as a whole or (ii) on the ability of the
Company to perform any of its obligations under the Operative Documents
or to consummate any of the transactions contemplated hereby or thereby
(a "Material Adverse Effect"). The Company has no ISP affiliates (other
than the Subsidiaries) that would individually constitute a
"significant subsidiary" of the Company within the meaning of Rule
1-02(w) of Regulation S-X under the Act, if any such ISP affiliate were
a subsidiary of the Company.
(vii) The Units, the Exchange Notes and the Private Exchange
Notes have been duly authorized by the Company, and the Company has all
requisite corporate power and authority to execute, issue and deliver
the Units, the Exchange Notes and the Private Exchange Notes and to
incur and perform its obligations provided for therein.
(viii) The Notes, when executed, authenticated and issued in
accordance with the terms of the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee)
and when delivered against payment of the purchase price therefor as
provided in this Agreement, will constitute valid and binding
obligations of the Company, entitled to the benefits of the Indenture
and enforceable against the Company in accordance with the terms
thereof; and the Exchange Notes and the Private Exchange Notes, if any,
when executed, authenticated, issued and delivered by the Company in
exchange for the Notes in accordance with the terms of the Registration
Rights Agreement, will constitute valid and binding obligations of the
Company, entitled to the benefits of the Indenture and enforceable
against the Company in accordance with the terms thereof; subject, in
the case of each of the foregoing, to (a) applicable bankruptcy,
insolvency, reorganiza-
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tion, moratorium and similar laws affecting creditors' rights and
remedies generally, (b) general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law) and
(c) the discretion of the court before which any proceeding therefor
may be brought (clauses (a), (b) and (c) being referred to herein as
the "Enforceability Limitations") and except that the waiver of stay or
extension laws contained in Section 5.15 of the Indenture may be
unenforceable.
(ix) The Warrants and the Warrant Shares have been duly
authorized by the Company, and the Company has all requisite corporate
power and authority to execute, issue and deliver the Warrants and
Warrant Shares and to incur and perform its obligations provided for
therein. The Warrants, when executed by the Company and countersigned
by the Warrant Agent, will be entitled to the benefits of the Warrant
Agreement and will constitute valid and binding obligations of the
Company enforceable in accordance with their terms subject only to the
Enforceability Limitations. When issued in accordance with the terms
and conditions contained in the Warrant Agreement, upon exercise of the
Warrants, the Warrant Shares will be duly authorized, validly issued,
fully paid and nonassessable and will not be subject to any preemptive
or similar rights. The Warrant Shares have been duly reserved for
issuance in accordance with the terms of the Warrants and the Warrant
Agreement.
(x) This Agreement has been, and, as of the Closing Date, the
Indenture, the Warrant Agreement, the Escrow Agreement, the Common
Stock Registration Rights Agreement and the Registration Rights
Agreement will have been, duly authorized, executed and delivered by
the Company, and upon such execution by the Company (assuming the due
authorization, execution and delivery by parties thereto other than the
Company), as of the Closing Date, the Indenture, the Escrow Agreement,
the Warrant Agreement, the Common Stock Registration Rights Agreement
and the Registration Rights Agreement will constitute, the valid and
binding obligations of the Company, enforceable against the Company in
accordance with the terms hereof or thereof, subject only to the
Enforceability Limitations.
(xi) At the time of deposit with the Escrow Agent of the
Initial Escrow Amount (as such term is defined in the Escrow Agreement)
no Lien (as such term is
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defined in the Indenture) exists upon such Collateral (as such term is
defined in the Escrow Agreement) and no right or option to acquire the
same exists in favor of any other person or entity, except for the
pledge and security interest in favor of the Trustee for the benefit of
the holders of the Notes and the Trustee (in its capacity as such under
the Indenture) to be created or provided for in the Escrow Agreement,
which pledge and security interest shall constitute a first priority
perfected pledge and security interest in and to all of the Collateral.
(xii) No consent, waiver, authorization, approval, license,
qualification or order of, or filing or registration with, any court or
governmental or regulatory agency or body, domestic or foreign, is
required for the issue and sale of the Securities or the Exchange Notes
or the Private Exchange Notes, if any, the performance by the Company
of its obligations under the Operative Documents, or for the
consummation of any of the transactions contemplated hereby or thereby,
including, without limitation, the issuance and sale of the Securities
hereunder, except, such as may be required (A) in connection with the
registration under the Act of the Warrants or the Warrant Shares
(including any filing with the NASD), (B) in connection with the
registration under the Act of the Exchange Notes or the Private
Exchange Notes, if any, under the Registration Rights Agreement
(including any filing with the NASD), (C) in order to qualify the
Indenture under the Trust Indenture Act or (D) by state securities or
"blue sky" laws in connection with the offer and sale of the Securities
or the registration thereof or of the Exchange Notes or the Private
Exchange Notes pursuant to the Registration Rights Agreement.
(xiii) The issuance, sale and delivery of the Securities, the
Exchange Notes and the Private Exchange Notes, if any, the execution,
delivery and performance by the Company of this Agreement, the
Indenture, the Warrant Agreement, the Escrow Agreement, the Common
Stock Registration Rights Agreement and the Registration Rights
Agreement, and the consummation by the Company of the transactions
contemplated hereby, thereby and in the Offering Memorandum and the
compliance by the Company with the terms of the foregoing do not, and,
at the Closing Time, will not conflict with or constitute or result in
a breach or violation by the Company or any of the Subsidiaries of (A)
any of the terms or provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) by any of the
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Company or the Subsidiaries or give rise to any right to accelerate the
maturity or require the prepayment of any indebtedness under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or the Subsidiaries under any
contract, indenture, mortgage, deed of trust, loan agreement, note,
lease, license, franchise agreement, authorization, permit, certificate
or other agreement or document to which any of the Company or the
Subsidiaries is a party or by which any of them may be bound, or to
which any of them or any of their respective assets or businesses is
subject (collectively, "Contracts") (and the Company has no knowledge
of any conflict, breach or violation of such terms or provisions or of
any such default, in any such case, which has occurred or will so
result) which would have a Material Adverse Effect, (B) the articles or
by-laws (each, an "Organizational Document") of each of the Company and
the Subsidiaries or (C) any law, statute, rule or regulation, or any
judgment, decree or order, in any such case, of any domestic or foreign
court or governmental or regulatory agency or other body having
jurisdiction over the Company or any of the Subsidiaries or any of
their respective properties or assets. Schedule C hereto lists each
Contract with respect to which any conflict, breach or violation of the
terms or provisions thereof or any default with respect thereto could
have a Material Adverse Effect (each such Contract being referred to
herein as a "Material Contract").
(xiv) The Securities, the Exchange Notes, the Private Exchange
Notes, the Indenture, the Warrant Agreement, the Escrow Agreement, the
Common Stock Registration Rights Agreement and the Registration Rights
Agreement will each conform in all material respects to the
descriptions thereof in the Offering Memorandum.
(xv) The audited consolidated financial statements included in
the Offering Memorandum, including the notes thereto, present fairly
the financial position of the Company and its consolidated subsidiaries
at the dates indicated, and the statement of operations, stockholders'
deficit and cash flows of the Company and its consolidated subsidiaries
for the periods have been prepared in conformity with United States
generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The selected
financial data and the summary financial information included in the
Offering Memorandum present fairly the information shown
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therein and have been compiled on a basis consistent with that of the
financial statements included in the Offering Memorandum. KPMG Peat
Marwick LLP, which has examined certain of such financial statements as
set forth in its report included in the Offering Memorandum, is an
independent public accounting firm with respect to the Company and its
Subsidiaries within the meaning of Regulation S-X under the Act. The
pro forma financial information relating to the Company and its
Subsidiaries and the related notes thereto included in the Offering
Memorandum present fairly the information shown therein, have been
prepared in all material respects in accordance with the Commission's
rules and guidelines with respect to pro forma financial adjustments
and have been properly computed on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(xvi) Since the respective dates as of which information is
given in the Offering Memorandum, except as otherwise specifically
stated therein, there has been no (A) material adverse change in the
business, condition (financial or otherwise), results of operations,
business affairs or business prospects of the Company and the
Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business (a "Material Adverse Change"), (B) transaction
entered into by any of the Company or the Subsidiaries, other than in
the ordinary course of business, that is material to the Company and
the Subsidiaries taken as a whole or (C) dividend or distribution of
any kind declared, paid or made by the Company on its capital stock.
(xvii) The Company has the authorized, issued and outstanding
capitalization set forth in the Offering Memorandum under the caption
"Description of Capital Stock;" all of the outstanding capital stock of
the Company has been duly authorized and validly issued, is fully paid
and nonassessable and was not issued in violation of any preemptive or
similar rights (whether provided contractually or pursuant to any
Organizational Document). Except as set forth in the Offering
Memorandum under the caption "Business -- Verio Group Network," the
Company does not own, directly or indirectly, any material amount of
shares, or any other material amount of equity or long-term debt
securities or have any material equity interest in any firm,
partnership, joint venture or other entity. Except as set
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forth in the Offering Memorandum under the caption "Certain
Transactions -- Stockholders Agreement," no holder of any securities of
the Company is entitled to have such securities (other than the
Securities, the Exchange Notes and the Private Exchange Notes, if any)
registered under any registration statement contemplated by the Common
Stock Registration Rights Agreement or the Registration Rights
Agreement. All of the outstanding capital stock of each of the
Subsidiaries has been duly authorized and validly issued, is fully paid
and nonassessable and was not issued in violation of any preemptive or
similar rights (whether provided contractually or pursuant to any
Organizational Document).
(xviii) None of the Company nor the Subsidiaries is (A) in
violation of its respective Organizational Documents, (B) in default
(or, with notice or lapse of time or both, would be in default) in the
performance or observance of any obligation, agreement, covenant or
condition contained in any Contract or (C) in violation of any law,
statute, judgment, decree, order, rule or regulation of any domestic or
foreign court with jurisdiction over the Company or the Subsidiaries or
any of their respective assets or properties, or other governmental or
regulatory authority, agency or other body, other than, in the case of
clause (B) or (C), such defaults or violations which could not,
individually or in the aggregate, reasonably be expected to have or
result in a Material Adverse Effect; and any real property and
buildings held under lease by the Company or the Subsidiaries are held
by the Company or such Subsidiary, as the case may be, under valid,
subsisting and enforceable leases with such exceptions which could not,
individually or in the aggregate, reasonably be expected to have or
result in a Material Adverse Effect.
(xix) Except as set forth in the Offering Memorandum, each of
the Company and the Subsidiaries owns or possesses, or can acquire on
reasonable terms, adequate patents, patent rights, licenses,
trademarks, service marks, trade names, copyrights and know-how
(including trade secrets and other proprietary or confidential
information, systems or procedures) (collectively, "intellectual
property") necessary to conduct the business now or proposed to be
operated by it as described in the Offering Memorandum, except where
the failure to own, possess or have the ability to acquire any such
intellectual property could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect; and none of the
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Company nor the Subsidiaries has received any notice of infringement of
or conflict with (nor knows of any such infringement of or conflict
with) asserted rights of others with respect to any of such
intellectual property.
(xx) Each of the Company and the Subsidiaries has obtained all
material consents, approvals, orders, certificates, licenses, permits,
franchises and other authorizations (collectively, the "Licenses") of
and from, and has made all declarations and filings with, all
governmental and regulatory authorities, all self-regulatory
organizations and all courts and other tribunals necessary to own,
lease, license and use its properties and assets and to conduct its
businesses in the manner described in the Offering Memorandum. None of
the Company or the Subsidiaries has received any notice of proceedings
relating to the revocation or modification of, or denial of any
application for, any License which, if the subject of any unfavorable
decision, ruling or finding, could, singly or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect;
and no event has occurred which allows, or after notice or lapse of
time, or both, would allow, revocation or termination thereof or result
in any other material impairment of the rights of the holder of any
such License, except where such revocation or termination could not,
singly or in the aggregate, reasonably be expected to have or result in
a Material Adverse Effect; and the Licenses referred to above place no
restrictions on the Company or any of the Subsidiaries that are not
described in the Offering Memorandum, except where such restrictions
could not, singly or in the aggregate, reasonably be expected to have
or result in a Material Adverse Effect.
(xxi) There is no legal action, suit, proceeding inquiry or
investigation before or by any court or governmental body or agency,
domestic or foreign, now pending or, to the best knowledge of the
Company, threatened against the Company or any of the Subsidiaries or
any of their respective properties which would be required to be
disclosed in a registration statement filed under the Act which could,
individually or in the aggregate, reasonably be expected to have or
result in a Material Adverse Effect.
(xxii) Each of the Company and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns,
and has paid all taxes shown as due
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thereon; and no tax deficiency that has been asserted against any of
the Company or the Subsidiaries.
(xxiii) Except as described in the Offering Memorandum, including
the financial statements and notes thereto included therein, each of
the Company and the Subsidiaries has good and marketable title to all
real and personal property described in the Offering Memorandum as
being owned by it and good and marketable title to a leasehold estate
in the real and personal property described in the Offering Memorandum
as being leased by it, free and clear of all liens, charges,
encumbrances or restrictions, except to the extent the failure to have
such title or the existence of such liens, charges, encumbrances or
restrictions could not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect.
(xxiv) None of the Company or any of the Subsidiaries is an
"investment company" or a company "controlled by" an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(xxv) None of the Company nor any of the Subsidiaries nor any
of their respective directors, officers or controlling persons has
taken, directly or indirectly, any action designed, or which might
reasonably be expected, to cause or result, under the Act or otherwise,
in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities, the Exchange Notes or the Private Exchange Notes.
(xxvi) No strike, labor problem, dispute, slowdown, work
stoppage or disturbance with the employees of the Company or any of the
Subsidiaries exists or, to the best knowledge of the Company, is
threatened which could, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect.
(xxvii) The Company has insurance in such amounts and covering
such risks and liabilities as are in accordance with normal industry
practice.
(xxviii) Other than as disclosed in the Offering Memorandum, none
of the Company nor any Subsidiary has any material profit sharing,
deferred compensation, stock option,
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stock purchase, phantom stock or similar plans, including agreements
evidencing rights to purchase securities or to share in the profits of
the Company or any Subsidiary.
(xxix) The statistical and market-related data included in the
Offering Memorandum are based on or derived from independent sources
which the Company believes to be reliable and accurate in all material
respects or represent the Company's good faith estimates that are made
on the basis of data derived from such sources.
(xxx) The Company is, and immediately after the Closing Time
will be, Solvent. As used herein, the term "Solvent" means, with
respect to the Company on a particular date, that on such date (A) the
fair market value of the assets of the Company exceeds its respective
liabilities (including without limitation, stated liabilities and
identified contingent liabilities), (B) the present fair salable value
of the assets of the Company will exceed its respective probable
liabilities on its debts (including without limitation, stated
liabilities and identified contingent liabilities), (C) the fair market
value of the Company's total assets exceeds its total liabilities,
including identified contingent liabilities, by an amount at least
equal to the total par value of its common stock both immediately prior
to and after the Offering, (D) the Company is and will be able to pay
its debts (including without limitation, stated liabilities and
identified contingent liabilities) as such debts mature and (E) the
Company will not have unreasonably small capital with which to conduct
its present and anticipated business.
(xxxi) Except as described in the Offering Memorandum or as
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect (A) to the Company's knowledge, each of
the Company and the Subsidiaries is in compliance with and not subject
to any known liability under applicable Environmental Laws (as defined
below), (B) to the Company's knowledge, each of the Company and the
Subsidiaries (i) has made all filings and provided all notices required
under any applicable Environmental Law, and (ii) has, and is in
compliance with, all Permits required under any applicable
Environmental Laws, and (iii) each of them is in full force and effect,
(C) to the Company's knowledge, there is no civil, criminal or
administrative action, or, investigation, notice or demand letter or
request for information pending or threatened against the Company or
any of the Subsidiar-
16
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ies under any Environmental Law, and (D) to the Company's knowledge, no
lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property
owned, operated, leased or controlled by the Company or any Subsidiary.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or regulations
relating to the protection of the environment, including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
"hazardous substances," as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
(xxxii) Except as described in the Offering Memorandum, none of
the Company nor any of the Subsidiaries has incurred any liability for
any prohibited transaction or funding deficiency or any complete or
partial withdrawal liability with respect to any pension, profit
sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which the Company
or the Subsidiaries makes or ever has made a contribution and in which
any employee of the Company or any such Subsidiary is or has ever been
a participant, which, individually in the aggregate, could reasonably
be expected to have or result in a Material Adverse Effect. With
respect to such plans, each of the Company and the Subsidiaries is in
compliance in all respects with all applicable provisions of ERISA,
except where the failure to so comply could not, individually or in the
aggregate, reasonably be expected to have or a result in a Material
Adverse Effect.
(b) Any certificate signed by any officer of the Company and
delivered to the Initial Purchasers or to counsel for the Initial Purchasers
pursuant to the terms of this Agreement shall be deemed a representation and
warranty by the Company to the Initial Purchasers as to the matters covered
thereby.
SECTION 2. Purchase and Sale of the Units. On the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each Initial
Purchaser, severally and not jointly, and each Initial Purchaser, severally and
not jointly, agrees to purchase from the Company, at a purchase price of $965
per Unit to be resold as provided in Section 4(iii) of this Agreement and $985
per Unit to be resold to
17
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Xxxxxx Fiber Properties, Inc., the number of Units set forth in Schedule A
attached hereto opposite the name of such Initial Purchaser.
SECTION 3. Delivery and Payment. Delivery of the Units, Notes
and Warrants and payment for the Units shall be made at 9:00 A.M., New York City
time, on June 24, 1997, or such later date and time not more than two (2)
business days thereafter as the Initial Purchasers and the Company shall agree
(such date and time of delivery and payment for the Units, Notes and Warrants
being herein called the "Closing Time"). Delivery of the Units, Notes and
Warrants shall be made to the Initial Purchasers for the respective accounts of
the Initial Purchasers against payment by the Initial Purchasers of the purchase
price thereof by wire transfer of immediately available funds in accordance with
the Escrow Agreement, as to the Initial Escrow Amount, and otherwise to the
order of the Company or as the Company may direct. Delivery of the Units, Notes
and the Warrants shall be made at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such location as the Initial
Purchasers shall reasonably designate at least two business days in advance of
the Closing Time. Xxxxxxx Xxxxx, individually and not as representative of the
Initial Purchasers, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any Initial Purchaser whose
funds have not been received by the Closing Time, but such payment shall not
relieve such Initial Purchaser from its obligations hereunder. Certificates for
the Units, Notes and Warrants shall be registered in such names and in such
denominations as the Initial Purchasers may request not less than two (2) full
business days in advance of the Closing Time.
The Company agrees to have the Units, Notes and Warrants
available for inspection, checking and packaging by the Initial Purchasers in
New York, New York, not later than 10:00 A.M. on the business day prior to the
Closing Time.
SECTION 4. Resale of the Securities. The Initial Purchasers
have advised the Company that they propose to offer the Securities for resale
upon the terms and conditions set forth in this Agreement and in the Offering
Memorandum. Each Initial Purchaser hereby represents and warrants (as to itself
only) to, and agrees with, the Company that (i) it is purchasing the Securities
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is (a) a Qualified
Institutional Buyer and is aware that the sale to it is being made in reliance
on
18
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Rule 144A under the Act, (b) an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Act (an
"Accredited Investor"), or (c) a person other than a U.S. person (a "foreign
purchaser"), which term shall include dealers or other professional fiduciaries
in the U.S. acting on a discretionary basis for foreign beneficial owners in
offshore transactions meeting the requirements of Rule 903 of Regulation S under
the Act; (ii) it acknowledges that the Securities have not been registered under
the Act and that none of the Securities may be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except as set forth
below; (iii) it shall not resell or otherwise transfer any of such Securities
prior to (a) the date which is two years (or such shorter period of time as
permitted by Rule 144(k) under the Act or any successor provision thereunder)
after the later of the date of original issuance of the Securities and (b) such
later date, if any, as may be required by applicable laws except (A) to the
Company or its Subsidiaries, (B) inside the United States to (1) an Accredited
Investor that, prior to such transfer, furnishes to the Trustee a signed letter
containing certain representations and agreements (the form of which letter can
be obtained from the Trustee), (2) a Qualified Institutional Buyer or (3) Xxxxxx
Fiber Properties, Inc., (C) outside the United States to foreign purchasers in
offshore transactions meeting the requirements of Rule 904 of Regulation S, (D)
pursuant to the exemption from registration provided by Rule 144 under the Act
(if available), (E) pursuant to an effective registration statement under the
Act or (F) pursuant to another available exemption from the registration
requirements of the Act; (iv) it agrees that it will give to each person to whom
it transfers the Securities notice of any restrictions on transfer of such
Securities; (v) it understands that all of the Securities will bear a legend
substantially similar to that set forth in the Offering Memorandum under the
caption "Notice to Investors", unless otherwise agreed by the Company and the
Trustee; (vi) it acknowledges that the Trustee will not be required to accept
for registration of transfer any Securities acquired by it, except upon
presentation of evidence satisfactory to the Company and the Trustee that the
restrictions set forth herein have been complied with; and (vii) it acknowledges
that the Company, the Trustee, and others will rely upon the truth and accuracy
of the foregoing acknowledgments, representations and agreements and agrees that
if any of the acknowledgments, representations or agreements deemed to have been
made by its purchase of the Securities are no longer accurate, it shall promptly
notify the Company and the Trustee. If it is acquiring the Securities as a
fiduciary or agent for one or more investor accounts, it rep-
19
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resents that it has sole investment discretion with respect to each such account
and it has full power to make the foregoing acknowledgments, representations and
agreements on behalf of each account.
SECTION 5. Covenants of the Company. The Company
covenants with the Initial Purchasers as follows:
(a) The Company will furnish to the Initial Purchasers and
counsel for the Initial Purchasers, without charge, such number of
copies of the Preliminary Offering Memorandum and the Final Offering
Memorandum and any amendments or supplements thereto as the Initial
Purchasers and their counsel may reasonably request.
(b) The Company will not at any time make any amendment or
supplement to the Preliminary Offering Memorandum or the Final Offering
Memorandum without the prior written consent of the Initial Purchasers.
(c) The Company will immediately notify each Initial
Purchaser and confirm such notice in writing of (x) any filing made by
the Company relating to the offering of the Securities with any
securities exchange or any other regulatory body in the United States
or any other jurisdiction and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a
notice in writing from the Initial Purchasers to the Company, any
material changes in or affecting the earnings, business affairs or
business prospects of the Company and its Subsidiaries that (i) make
any statement in the Offering Memorandum false or misleading in any
material respect or (ii) are not disclosed in the Offering Memorandum.
In such event or if at any time prior to completion of the distribution
of the Securities by the Initial Purchasers to purchasers who are not
its affiliates (as determined by the Initial Purchasers) any other
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of the Initial Purchasers or counsel for the
Initial Purchasers, to amend or supplement the Offering Memorandum in
order that the Offering Memorandum, as then amended or supplemented,
will not include 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 existing at the time it is
delivered to a purchaser, not misleading or if in the opinion of the
Initial Purchasers or counsel to the Initial Purchasers, such amendment
or supplement is neces-
20
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sary to comply with applicable law, the Company will, subject to
paragraph (b) of this Section 5, promptly prepare, at its own expense,
such amendment or supplement as may be necessary to correct such untrue
statement or omission or to effect such compliance (in form and
substance agreed upon by the Initial Purchasers and counsel to the
Initial Purchasers), so that as so amended or supplemented, the
statements in the Offering Memorandum will not include 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 existing at the time it is delivered to a purchaser, not
misleading or so that such Offering Memorandum as so amended or
supplemented will comply with applicable law, as the case may be, and
furnish to the Initial Purchasers such number of copies of such
amendment or supplement as the Initial Purchasers may reasonably
request. The Company agrees to notify the Initial Purchasers in writing
to suspend use of the Offering Memorandum as promptly as practicable
after the occurrence of an event specified in this paragraph (c), and
the Initial Purchasers hereby agree upon receipt of such notice from
the Company to suspend use of the Offering Memorandum until the Company
has amended or supplemented the Offering Memorandum to correct such
misstatement or omission or to effect such compliance.
(d) Neither the Company nor any of its Affiliates (as
defined in Rule 501(b) under the Act) will solicit any offer to buy or
offer or sell the Securities, the Exchange Notes or the Private
Exchange Notes, if any, by means of any form of general solicitation or
general advertising (as such terms are used in Regulation D under the
Act), or by means of any directed selling efforts (as defined in Rule
902 under the Act) in the United States in connection with the
Securities being offered and sold pursuant to Regulation S or in any
manner involving a public offering within the meaning of Section 4(2)
of the Act prior to the effectiveness of a registration statement with
respect to the Securities, the Exchange Notes or the Private Exchange
Notes, as applicable.
(e) Neither the Company nor any of its Affiliates (as
defined in Rule 501(b) under the Act) will offer, sell or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in the Act) which could be integrated with the sale of the
Securities in a manner that would require the registration of the
Securities under the Act.
21
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(f) The Company (A) will, so long as the Securities are
outstanding, furnish to the Trustee on a timely basis, pursuant to the
Indenture, whether or not the Company has a class of securities
registered under the Exchange Act, (i) within 135 days of the end of
each fiscal year, audited year-end consolidated financial statements of
the Company (including a balance sheet, income statement and statement
of changes of cash flow) prepared in accordance with GAAP and
substantially in the form required under Regulation S-X under the Act
and the information described in Item 303 of Regulation S-K under the
Act with respect to such period and (ii) within 60 days of the end of
each fiscal quarter, unaudited quarterly consolidated financial
statements of the Company (including a balance sheet, income statement
and statement of changes of cash flow) prepared in accordance with GAAP
and substantially in the form required by Regulation S-X under the Act
and the information described in Item 303 of Regulation S-K under the
Act with respect to such period, and (B) will furnish to the Initial
Purchasers copies of all such reports and information, together with
such other documents, reports and information as shall be furnished by
the Company to the holders of the Securities or to the Trustee. In the
event the Company is not subject to Section 13 or 15(d) of the Exchange
Act, the Company will furnish to holders of Securities and prospective
purchasers of Securities designated by such holders, upon request of
such holders or such prospective purchasers, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Act to permit
compliance with Rule 144A in connection with resales of the Securities.
(g) The Company will use its reasonable best efforts in
cooperation with the Initial Purchasers to (i) permit the Securities to
be eligible for clearance and settlement through The Depository Trust
Company and (ii) permit the Units (and, following separation of the
Units, the Notes and the Warrants) to be designated as PORTAL
securities in accordance with the rules and regulations of the NASD.
(h) Prior to the Closing Time, the Company will furnish to
each Initial Purchaser, if and as soon as they have been prepared, a
copy of any unaudited interim consolidated financial statements of the
Company for any period subsequent to the period covered by the most
recent financial statements of the Company appearing in the Offering
Memorandum which have been prepared in the ordinary course of business.
22
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(i) The Company will arrange for the registration and
qualification of the Securities for offering and sale under the
applicable securities or "blue sky" laws of such states and other
jurisdictions as the Initial Purchasers may designate in connection
with the resale of the Securities as contemplated by this Agreement and
the Offering Memorandum and will continue such qualifications in effect
for as long as may be necessary to complete the distribution of the
Securities; provided that in no event shall the Company be obligated to
(i) qualify as a foreign corporation or as a dealer in securities in
any jurisdiction where it would not otherwise be required to so qualify
but for this Section 5(i), (ii) file any general consent to service of
process in any jurisdiction where it is not at the Closing Time then so
subject or (iii) subject itself to taxation in any such jurisdiction if
it is not so subject. The Company will file such statements and reports
as may be required by the laws of each jurisdiction in which the
Securities have been qualified as above provided. The Company shall
promptly advise the Initial Purchasers of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of the Securities for offering or sale in
any jurisdiction or the institution, threatening or contemplation of
any proceeding for such purpose.
(j) The Company will use the proceeds received from the
Offering in the manner specified in the Offering Memorandum under the
heading "Use of Proceeds."
(k) The Company will not, and will not permit any of its
Affiliates (as defined in Rule 501(b) under the Act to, resell any
Securities that have been acquired by any of them.
(l) Pursuant to the Escrow Agreement, the Company will
deposit the Initial Escrow Amount into a collateral account,
representing funds that together with the proceeds from the investment
thereof will be sufficient to pay the first five interest payments on
the Notes, and will take all actions necessary to pledge, assign and
set over to the Trustee, for the benefit of the holders of the Notes
and the Trustee (in its capacity as such under the Indenture), and
irrevocably grant to the Trustee for the benefit of the holders of the
Notes and the Trustee (in its capacity as such under the Indenture) a
first priority perfected security interest in, all of its respective
right, title and interest in such collateral account, all
23
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funds held therein and all other Collateral (as such term is defined in
the Escrow Agreement) held by the Escrow Agent or on its behalf, in
order to secure the obligations and indebtedness of the Company under
the Indenture, the Escrow Agreement and the Notes.
SECTION 6. Payment of Expenses. (a) Whether or not any sale of
the Securities is consummated, the Company agrees to pay and bear all costs and
expenses incident to the performance of all of its obligations under this
Agreement, including (i) the preparation and printing of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments or supplements
thereto and the cost of furnishing copies thereof to the Initial Purchasers,
(ii) the preparation, issuance, printing and distribution of the Securities, the
Exchange Notes, the Private Exchange Notes, if any, and any survey of state
securities or "blue sky" laws or legal investment memoranda, (iii) the delivery
to the Initial Purchasers of the Securities, the Exchange Notes or the Private
Exchange Notes, (iv) the fees and disbursements of the Company's counsel and
accountants, (v) the qualification of the Securities under the applicable state
securities or "blue sky" laws in accordance with the provisions of Section 5(i)
hereof and any filing for review of the offering with the NASD, if required,
including filing fees and reasonable fees and disbursements of counsel to the
Initial Purchasers in connection therewith and in connection with the
preparation of any survey of state securities or "blue sky" laws or legal
investment memoranda, (vi) any fees charged by rating agencies for rating the
Securities, the Exchange Notes and the Private Exchange Notes, if any, (vii) the
fees and expenses of the Trustee, including the fees and disbursements of
counsel for the Trustee, (viii) all expenses (including travel expenses) of the
Company and the Initial Purchasers in connection with any meetings with
prospective investors in the Units and (ix) all expenses and listing fees in
connection with the application for designation of the Notes as PORTAL
securities and to permit the Securities, the Exchange Notes and the Private
Exchange Notes, as applicable, to be eligible for clearance through The
Depository Trust Company.
(b) If the sale of the Units provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated pursuant to Section 11 hereof or because of any failure, refusal or
inability on the part of the Company to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder other than by
reason of a default by an Initial Pur-
24
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chaser in payment for the Units at the Closing Time, the Company agrees to
reimburse the Initial Purchasers promptly upon demand for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of their
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Units.
SECTION 7. Conditions of the Initial Purchasers' Obligations.
The obligations of the Initial Purchasers to purchase and pay for the Units are
subject to the continued accuracy, as of the Closing Time, of the
representations and warranties of the Company herein contained, to the accuracy
of the statements of the Company and officers of the Company made in any
certificate pursuant to the provisions hereof, to the performance by the Company
of its obligations hereunder, and to the following further conditions:
(a)(i) At the Closing Time, the Initial Purchasers shall have
received the opinion of Xxxxxxxx & Xxxxxxxx LLP, counsel to the
Company, dated as of the Closing Time, in the form set forth below and
otherwise reasonably satisfactory to the Initial Purchasers and counsel
for the Initial Purchasers, to the effect that:
(1) The Company has been duly incorporated and is
validly existing under the laws of the State of Delaware, with
corporate power and authority to own, lease and operate its
assets and properties and conduct its business as described in
the Offering Memorandum and to enter into and perform its
obligations under this Agreement and each of the other
Operative Documents; to the best knowledge of such counsel the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect;
(2) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Offering
Memorandum under the caption "Description of Capital Stock";
(3) Each of the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction
25
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of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and to the
best knowledge of such counsel is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to
qualify or to be in good standing individually or in the
aggregate would not result in a Material Adverse Effect; all
of the issued and outstanding capital stock of each of the
Subsidiaries has been duly authorized and validly issued, is
fully paid and non-assessable and, to such counsel's knowledge
and information, except as set forth in the Offering
Memorandum under the caption "Business -- Verio Group
Network," is owned by the Company directly, free and clear of
any security interest, mortgage, pledge, lien, encumbrance,
claim or equity;
(4) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations
under this Agreement, the Securities, the Exchange Notes, the
Private Exchange Notes, the Indenture, the Warrant Agreement,
the Escrow Agreement, the Common Stock Registration Rights
Agreement and the Registration Rights Agreement; and each of
this Agreement, the Securities, the Exchange Notes, the
Private Exchange Notes, the Indenture, the Warrant Agreement,
the Escrow Agreement, the Common Stock Registration Rights
Agreement and the Registration Rights Agreement has been duly
authorized by the Company;
(5) No consent, waiver, approval, authorization,
license, qualification or order of or filing or registration
with any court or governmental or regulatory agency or body is
required for the execution and delivery by the Company of this
Agreement, the Indenture, the Warrant Agreement, the Escrow
Agreement, the Common Stock Registration Rights Agreement or
the Registration Rights Agreement or for the issue and sale of
the Securities, the Exchange Notes or the Private Exchange
Notes, if any, or the performance by the Company of its
obligations under the Operative Documents, or for the
consummation of any of the transactions contemplated hereby or
thereby, except
26
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such as may be required (A) in connection with the
registration under the Act of the Warrants and the Warrant
Shares (including any filing with the NASD), (B) in connection
with the registration under the Act of the Exchange Notes or
the Private Exchange Notes, if any, under the Registration
Rights Agreement, (C) in order to qualify the Indenture under
the Trust Indenture Act and (D) by state securities or "blue
sky" laws in connection with the purchase and distribution of
the Units by the Initial Purchasers (as to which such counsel
need express no opinion);
(6) The issuance, sale and delivery of the
Securities, the Exchange Notes and the Private Exchange Notes,
if any, the execution, delivery and performance by the Company
of this Agreement, the Indenture, the Warrant Agreement, the
Escrow Agreement, the Common Stock Registration Rights
Agreement and the Registration Rights Agreement (in each case
assuming due authorization and execution by each party other
than the Company), and the consummation by the Company of the
transactions contemplated hereby and thereby and the
compliance by the Company with the terms of the foregoing do
not, and, at the Closing Time, will not, conflict with or
constitute or result in a breach or violation by the Company
or any of the Subsidiaries of (A) any provision of the
Certificate of Incorporation or By-laws of the Company, (B)
any of the terms or provisions of, or constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) by the Company, or give rise to any
right to accelerate the maturity or require the prepayment of
any indebtedness under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary under any
Material Contract identified in Schedule C hereto or (C) any
law, statute, rule, or regulation or any order, decree or
judgment known to such counsel to be applicable to the Company
or any Subsidiary, of any court or governmental or regulatory
agency or body or arbitrator known to such counsel to have
jurisdiction over the Company or any of the Subsidiaries or
any of their respective properties or assets;
(7) The Purchase Agreement has been duly authorized,
executed and delivered by the Company;
27
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(8) The statements in the Offering Memorandum under
the headings "Summary The Offering," "Description of Capital
Stock," "Description of the Units," "Description of the
Notes," "Exchange Offer; Notes Registration Rights,"
"Description of the Warrants," and "Description of Common
Stock Registration and Other Rights" insofar as such
statements purport to summarize certain provisions of the
Securities, the Exchange Notes, the Indenture, the Warrant
Agreement, the Escrow Agreement, the Common Stock Registration
Rights Agreement and the Registration Rights Agreement,
provide a fair summary of such provisions of such agreements
and instruments;
(9) The statements in the Offering Memorandum under
the caption "Certain Federal Income Tax Considerations" fairly
and accurately summarize the material United States federal
tax consequences of owning the Securities;
(10) Each of the Indenture, the Warrant Agreement,
the Escrow Agreement, the Common Stock Registration Rights
Agreement and the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and
(assuming due authorization and execution by each party
thereto other than the Company) constitutes a valid and
binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as such
enforceability may be limited by (a) with respect to the
Indenture, the Warrant Agreement, the Common Stock
Registration Rights Agreement and the Registration Rights
Agreement, the Enforceability Limitations, including the
waiver contained in Section 5.15 of the Indenture and (b) with
respect to the Escrow Agreement, the Common Stock Registration
Rights Agreement and the Registration Rights Agreement, as to
rights of indemnification and contribution, principles of
public policy or federal or state securities laws relating
thereto;
(11) Each of the Notes, when executed and
authenticated in accordance with the provisions of the
Indenture and delivered and paid for in accordance with the
terms of this Agreement, and the Exchange Notes and the
Private Exchange Notes, if any, when executed, authenticated
and delivered in exchange for the Notes in accordance with the
terms of
28
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the Registration Rights Agreement, will be entitled to the
benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with its
terms except as the enforceability thereof may be limited by
the Enforceability Limitations; each of the Warrants, executed
by the Company and authenticated in accordance with the
provisions of the Warrant Agreement and the Warrant Shares,
when executed, authenticated and delivered in exchange for the
Warrants in accordance with the terms thereof, will be
entitled to the benefits of the Warrant Agreement and will be
valid and binding obligations of the Company, enforceable in
accordance with their terms except as the enforceability
thereof may be limited by the Enforceability Limitations;
(12) The Warrant Shares have been duly reserved by
the Company for issuance upon exercise of the Warrants in
sufficient number to cover the exercise of all of the
Warrants, and the issuance of the Warrant Shares upon exercise
of the Warrants has been duly and validly authorized, and the
Warrant Shares, when paid for and delivered in accordance with
the terms of the Warrants and the Warrant Agreement, will be
validly issued, fully paid and nonassessable, and no holder of
any securities of the Company has preemptive or similar rights
to purchase any Common Stock of the Company arising by
operation of the General Corporation law of the State of
Delaware or under the Certificate of Incorporation or By-laws
of the Company or under any Material Contract set forth in
Schedule C hereto, in any such case that are applicable to the
Warrants or the Warrant Shares;
(13) The Escrow Agreement creates a valid security
interest in favor of the Trustee in all right, title and
interest of the Company in and to the Escrow Account and the
Collateral (such counsel need not express an opinion as to the
perfection or priority of the security interest in the
Collateral created by the Escrow Agreement);
(14) To the knowledge of such counsel, other than as
described in the Offering Memorandum, no legal, regulatory or
governmental proceedings are pending to which the Company is a
party or to which the property or assets of the Company are
subject which, individually or in the aggregate, could
reasonably be
29
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expected to have a Material Adverse Effect or which,
individually or in the aggregate, could have a material
adverse effect on the power or ability of the Company to
perform its obligations under the Operative Documents or to
consummate the transactions contemplated thereby or by the
Offering Memorandum and to the knowledge of such counsel, no
such material proceedings have been threatened against the
Company or with respect to any of its respective assets or
properties;
(15) Assuming (a) the accuracy of, and compliance
with, the representations, warranties and covenants of the
Company in subsections 1(iii) and 1(iv) of the Purchase
Agreement, (b) the accuracy of, and compliance with, the
representations, warranties and covenants of the Initial
Purchasers in Section 4 of the Purchase Agreement, (c) the
accuracy of the representations and warranties of each of the
purchasers to whom the Initial Purchasers initially resell the
Securities as specified in the Accredited Investor Letter, (d)
the compliance by the Initial Purchasers with the offering and
transfer procedures and restrictions described in the Offering
Memorandum and (e) receipt by the purchasers to whom the
Initial Purchasers initially resell the Securities of a copy
of the Offering Memorandum prior to such sale, it is not
necessary in connection with the offer, sale and delivery of
the Securities or in connection with the initial resale of
such Securities in the manner contemplated by the Purchase
Agreement and the Offering Memorandum to register the
Securities under the Act or to qualify the Indenture under the
Trust Indenture Act, it being understood that no opinion is
expressed as to any subsequent resale of any Securities;
(16) None of the Company nor any of the Subsidiaries
is an "investment company" or a company "controlled by" or
required to register as an investment company as such terms
are defined in the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder;
(17) When the Units are issued and delivered pursuant
to this Agreement, such Units will not be of the same class
(within the meaning of Rule 144A) as securities of the Company
which are listed on a national securities exchange registered
under Section 6
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of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system; and
(18) Neither the consummation of the transactions
contemplated hereby nor the sale, issuance, execution or
delivery of the Units will violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System.
In addition such counsel shall state that such counsel has
participated in conferences with representatives of the Initial
Purchasers, officers and other representatives of the Company and
representatives of the independent certified accountants of the
Company, at which conferences the contents of the Offering Memorandum
and the business and affairs of the Company and the Subsidiaries were
discussed, and although such counsel has not independently verified and
does not pass upon or assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Offering
Memorandum (except and only to the extent set forth in subclauses (8)
and (9) above), on the basis of the foregoing (relying as to
materiality to the extent such counsel deemed appropriate upon the
representations and opinions of officers and other representatives of
the Company), no facts have come to the attention of such counsel which
lead such counsel to believe that the Offering Memorandum at the date
thereof or as of the Closing Time, contained or contains an untrue
statement of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need not express any comment with respect
to the financial statements, including the notes thereto and supporting
schedules, or any other financial data set forth or referred to in the
Offering Memorandum).
In rendering such opinions, such counsel (A) need not express
any opinion with regard to the application of laws of any jurisdiction
other than the Federal law of the United States, the General
Corporation Law of the State of Delaware and the laws of the States of
Colorado and New York and (B) may rely, as to matters of fact, to the
extent they deem proper on representations or certificates of
responsible officers of the Company and certificates of public
officials.
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References to the Offering Memorandum in this subsection
(a)(i) include any supplements thereto at or prior to the Closing Time.
(ii) At the Closing Time, the Initial Purchasers shall have
received the opinion of Xxxxx Xxxxx Xxxxxxxx, Esq., General Counsel to
the Company, dated as of the Closing Time, in the form set forth below
and otherwise reasonably satisfactory to the Initial Purchasers and
counsel for the Initial Purchasers, to the effect that:
(1) To the knowledge of such counsel, other than as
described in the Offering Memorandum, no legal, regulatory or
governmental proceedings are pending to which the Subsidiaries
is a party or to which the property or assets of the
Subsidiaries are subject which, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect or which, individually or in the aggregate,
could have a material adverse effect on the power or ability
of the Company to perform its obligations under the Operative
Documents or to consummate the transactions contemplated
thereby or by the Offering Memorandum and to the knowledge of
such counsel, no such material proceedings have been
threatened against the Subsidiaries or with respect to any of
their respective assets or properties; and
(2) None of the Company or the Subsidiaries is in
violation of its respective Organizational Documents; to the
knowledge of such counsel, no default by the Company or any of
the Subsidiaries exists in the due performance or observance
of any material obligation, agreement, covenant or condition
contained in any Material Contract which could reasonably be
expected to have a Material Adverse Effect; and to the
knowledge of such counsel, none of the Company nor the
Subsidiaries is in breach or violation of any law, statute,
rule or regulation, or any judgment, decree or order of any
governmental or regulatory agency or other body having
jurisdiction over the Company or any of the Subsidiaries or
any of their respective properties or assets such that any
such breach or violation could reasonably be expected to have
a Material Adverse Effect.
In addition such counsel shall state that such counsel has
participated in conferences with representatives
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of the Initial Purchasers, officers and other representatives of the
Company and representatives of the independent certified accountants of
the Company, at which conferences the contents of the Offering
Memorandum and the business and affairs of the Company and the
Subsidiaries were discussed, and although such counsel has not
independently verified and does not pass upon or assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Memorandum, on the basis of the
foregoing (relying as to materiality to the extent such counsel deemed
appropriate upon the representations and opinions of officers and other
representatives of the Company), no facts have come to the attention of
such counsel which lead such counsel to believe that the Offering
Memorandum at the date thereof or as of the Closing Time, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
(it being understood that such counsel need not express any comment
with respect to the financial statements, including the notes thereto
and supporting schedules, or any other financial data set forth or
referred to in the Offering Memorandum).
In rendering such opinions, such counsel (A) need not express
any opinion with regard to the application of laws of any jurisdiction
other than the Federal law of the United States, the General
Corporation Law of the State of Delaware and the laws of the State of
Colorado and (B) may rely, as to matters of fact, to the extent she
deems proper on representations or certificates of responsible officers
of the Company and certificates of public officials.
References to the Offering Memorandum in this subsection
(a)(ii) include any supplements thereto at or prior to the Closing
Time.
(b) The Initial Purchasers shall have received the opinion,
dated as of the Closing Time, of Xxxxxx Xxxxxx & Xxxxxxx, counsel for
the Initial Purchasers, with respect to certain matters set forth in
clauses (8), (10) (assuming the due authorization, execution and
delivery of each of the Indenture, Warrant Agreement, Escrow Agreement,
Common Stock Registration Rights Agreement and Xxxxxxxx-
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tion Rights Agreement by each party thereto), (11) and (15) of
subsection (a) of this Section 7.
In rendering such opinions, such counsel (A) need not express
any opinion with regard to the application of laws of any jurisdiction
other than the Federal laws of the United States, the General
Corporation Law of the State of Delaware and the laws of the State of
New York and (B) may rely, as to matters of fact, to the extent they
deem proper on representations or certificates of responsible officers
of the Company and certificates of public officials.
In addition, such counsel shall additionally state that such
counsel has participated in conferences with officers and other
representatives of the Company and representatives of the independent
accountants for the Company at which conferences the contents of the
Offering Memorandum and related matters were discussed, and although
such counsel has not verified and does not pass upon and does not
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Offering Memorandum, on the basis of
the foregoing (relying as to materiality to the extent such counsel
deemed appropriate upon the representations and opinions of officers
and other representatives of the Company), no facts have come to the
attention of such counsel which lead such counsel to believe that the
Offering Memorandum, at the date thereof or as of the Closing Time,
contained or contains an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no
comment with respect to the financial statements, including the notes
thereto, or any other financial or statistical data found in or derived
from the internal accounting and other records of the Company and its
subsidiaries set forth or referred to in the Offering Memorandum).
(c) The following conditions contained in clauses (i) and
(ii) of this subsection (c) shall have been satisfied at and as of the
Closing Time and the Company shall have furnished to the Initial
Purchasers a certificate, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated as of the Closing Time, to the effect that the signers
of such certificate have carefully examined the
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Offering Memorandum, any amendment or supplement to the Offering
Memorandum, and this Agreement and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the Closing Time with the same effect as
if made at the Closing Time and the Company has complied with
all the agreements and satisfied all the conditions under this
Agreement on its part to be performed or satisfied in all
material respects at or prior to the Closing Time; and
(ii) since the date of the most recent financial
statements included in the Offering Memorandum (exclusive of
any amendment or supplement thereto), there has been no
Material Adverse Change, whether or not arising in the
ordinary course of business. As used in this subparagraph, the
term "Offering Memorandum" means the Offering Memorandum in
the form first used to confirm sales of the Securities.
(d) At the time that this Agreement is signed and at the
Closing Time, KPMG Peat Marwick LLP shall have furnished to the Initial
Purchasers a letter or letters, dated respectively as of the date of
this Agreement and as of the Closing Time, in form and substance
satisfactory to the Initial Purchasers, confirming that they are
independent certified public accountants within the meaning of the Act
and the applicable published rules and regulations thereunder and
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to Initial Purchasers with respect to
financial statements and certain financial information contained in the
Offering Memorandum, in form and substance satisfactory to counsel for
the Initial Purchasers.
(e) Subsequent to the date hereof or, if earlier, the dates
as of which information is given in the Offering Memorandum (exclusive
of any amendment or supplement thereto), there shall not have been any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company and its
Subsidiaries the effect of which is, in the sole judgment of the
Initial Purchasers, so material and adverse as to make it impractical
or inadvisable to proceed with the purchase and the delivery of the
Units as contemplated by the Offering Memorandum (exclusive of any
amendment or supplement thereto).
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(f) At the Closing Time, counsel for the Initial Purchasers
shall have been furnished with such information, certificates and
documents as they may reasonably require for the purpose of enabling
them to pass upon the issuance and sale of the Units as contemplated
herein and related proceedings, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of
the conditions, herein contained; and all opinions and certificates
mentioned above or elsewhere in this Agreement shall be reasonably
satisfactory in form and substance to the Initial Purchasers and
counsel for the Initial Purchasers.
(g) The Company and the Trustee shall have entered into the
Indenture.
(h) The Company and the Warrant Agent shall have entered
into the Warrant Agreement.
(i) The Company and the Initial Purchasers shall have
entered into the Registration Rights Agreement.
(j) The Company, the Trustee and the Escrow Agent shall have
entered into the Escrow Agreement.
(k) The Company and the Initial Purchasers shall have
entered into the Common Stock Registration Rights Agreement.
(l) Xxxxxx Fiber Properties, Inc. shall have purchased
50,000 Units as provided in the Offering Memorandum under the caption
"Plan of Distribution."
(m) Xxxxxx Fiber Properties, Inc. shall have agreed in
writing, to the satisfaction of Xxxxxxx Xxxxx, not to, directly or
indirectly, offer, sell, grant any option to purchase or otherwise
dispose of any Securities or Exchange Notes (other than in connection
with the exchange of Notes for Exchange Notes provided for in the
Registration Rights Agreement).
If any condition specified in this Section 7 shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Initial Purchasers by notice to the Company, and such
termination shall be without liability of any party to any other party except as
provided in Section 6. Notwithstanding any such termination, the provisions of
Sections 8, 9, 13 and 16 shall remain in effect.
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Notice of such cancellation shall be given to the Company in writing or by
telephone, facsimile transmission or telegraph confirmed in writing. The Company
shall furnish to the Initial Purchasers such conformed copies of such opinions,
certificates, letters and documents in such quantities as the Initial Purchasers
and counsel for the Initial Purchasers shall reasonably request.
SECTION 8. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Initial Purchasers, their respective affiliates, and each person, if any, who
controls any Initial Purchaser or their respective affiliates within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, and their respective
directors, officers, employees and agents, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum or the Final Offering
Memorandum (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Sections 8(c) and 8(d) below) any
such settlement is effected with the written consent of the Company;
and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of one counsel chosen by
Xxxxxxx Xxxxx (in addition to any local counsel)), reasonably incurred
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
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provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Xxxxxxx Xxxxx expressly for use in the Preliminary
Offering Memorandum or the Final Offering Memorandum (or any amendment or
supplement thereto).
The foregoing indemnity with respect to any untrue statement
contained in or any omission from the Preliminary Offering Memorandum shall not
inure to the benefit of any Initial Purchaser (or any Affiliate or person who
controls such Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) from whom the person asserting such loss,
liability, claim, damage or expense purchased any of the Securities that are the
subject thereof if such person was not sent or given a copy of the Final
Offering Memorandum (or any amendment or supplement thereto), if the Company
shall have previously furnished copies thereof to the Initial Purchaser in
accordance with this Agreement, at or prior to the written confirmation of the
sale of such Securities to such person and the untrue statement contained in or
the omission from the Preliminary Offering Memorandum was corrected in the Final
Offering Memorandum (or any amendment or supplement thereto).
(b) Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section 8, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Preliminary
Offering Memorandum or Final Offering Memorandum (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Initial Purchaser through Xxxxxxx Xxxxx expressly for use
in the Preliminary Offering Memorandum or Final Offering Memorandum (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, enclosing a
copy of all papers properly served on such indemnified party, but failure to so
notify an indemnifying party shall not relieve such indemnify-
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ing party from any liability hereunder to the extent it is not materially
prejudiced as a result thereof and in any event shall not relieve it from any
liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 8(a) above,
one counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and,
in the case of parties indemnified pursuant to Section 8(b) above, counsel to
the indemnified parties shall be selected by the Company. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
that counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. Notwithstanding the
foregoing, if it so elects within a reasonable time after receipt of such
notice, an indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume the defense of such action with counsel chosen
by it and approved by the indemnified parties defendant in such action (which
approval shall not be unreasonably withheld), unless such indemnified parties
reasonably object to such assumption on the ground that there may be legal
defenses available to them which are different from or in addition to those
available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one counsel (in addition to local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 or Section 9 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
the offer and sale of any Securities 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.
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(d) If at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as to which such indemnified party is liable pursuant to Section
8(a), (b) or (c), as the case may be, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by Section
8(a)(ii) effected without its written consent if (i) such settlement is entered
into more than 45 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
SECTION 9. Contribution. If the indemnification provided for
in Section 8 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other hand from the offering of the Units
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Initial Purchasers on
the other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company on the one hand
and the Initial Purchasers on the other hand in connection with the offering of
the Units pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Units
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Initial Purchasers, bear to
the aggregate initial offering price of the Units.
The relative fault of the Company on the one hand and the
Initial Purchasers on the other hand shall be determined by reference to, among
other things, whether any such untrue or
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alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Initial Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Initial 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 Section
9. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 9 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 9, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Units purchased by it were offered to
subsequent purchasers exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 9, each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Initial Purchaser, and each director of the Company, each executive officer
of the Company and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 9 are several in
proportion to the number of Units set forth opposite their respective names in
Schedule A hereto and not joint.
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SECTION 10. Representations, Warranties and Agreements To
Survive Delivery. All representations, warranties, indemnities, agreements and
other statements of the Company and its officers and of the Initial Purchasers
contained in or made pursuant to this Agreement shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Initial Purchaser or controlling person, or by or on behalf of the Company,
and shall survive delivery and payment for the Units to the Initial Purchasers.
SECTION 11. Termination of Agreement.
(a) Termination: General. (a) The Initial Purchasers may
terminate this Agreement, by notice to the Company, at any time at or prior to
the Closing Time if (i) there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Offering Memorandum and on or prior to the Closing Time, any Material Adverse
Change with respect to the Company and the Subsidiaries, taken as a whole and
whether or not arising in the ordinary course of business, or (ii) since the
date of this Agreement and on or prior to the Closing Time, (A) there has
occurred any outbreak of hostilities or escalation of existing hostilities or
other national or international calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case, the effect of which on the financial
securities markets of the United States is such as to make it, in the judgment
of any Initial Purchaser, impracticable to market the Units or to enforce
contracts for the sale of the Units, or (B) trading in any securities of the
Company has been suspended or limited by the Commission or trading generally on
the New York Stock Exchange, the American Stock Exchange or the over-the-counter
market has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities generally have been required,
by any such exchange or by order of the Commission, the NASD or any other
governmental authority or (C) a general banking moratorium has been declared by
either Federal or New York authorities. As used in this Section 11(a), the term
"Offering Memorandum" means the Offering Memorandum in the form first used to
confirm sales of the Units.
(b) If this Agreement is terminated pursuant to this Section
11, such termination shall be without liability of any party to any other party
except as provided in Section 6 hereof, provided that Sections 1, 8, 9, 13 and
16 shall survive such termination and remain in full force and effect.
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(c) This Agreement may also terminate pursuant to the
provisions of Section 7, with the effect stated in such Section.
SECTION 12. Default by One of the Initial Purchasers. If one
of the Initial Purchasers shall fail at the Closing Time to purchase the Units
which it is obligated to purchase under this Agreement (the "Defaulted Units"),
the other Initial Purchasers shall have the right, but not the obligation,
within 24 hours thereafter, to make arrangements for the nondefaulting Initial
Purchasers, or any other Initial Purchasers, to purchase all, but not less than
all, of the Defaulted Units in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the other Initial Purchasers shall not have
completed such arrangements within such 24-hour period, then this Agreement
shall terminate without liability on the part of any nondefaulting Initial
Purchaser.
No action pursuant to this Section shall relieve any
defaulting Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the non-defaulting Initial Purchasers or
the Company shall have the right to postpone the Closing Time for a period not
exceeding seven days in order to effect any required changes in the Offering
Memorandum or in any other documents or arrangement.
SECTION 13. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Initial Purchasers shall be directed to the Initial Purchasers c/o Merrill Xxxxx
& Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, North Tower, World
Financial Center, New York, New York 10281-1305, attention: Xxxxxx Xxxxxx,
Managing Director; and notices to the Company shall be directed to Verio Inc.,
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000, attention:
Xxxxx Xxxxx Xxxxxxxx, Esq., with a copy to Xxxxxxxx & Xxxxxxxx LLP, 1290 Avenue
of the Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, attention: Xxx Xxxxxxxxxx, Esq.
SECTION 14. Information Supplied by the Initial Purchasers.
The statements set forth in the first two sentences of the last paragraph on the
front cover page and in the table and in the fifth paragraph under the heading
"Plan of Distribution" in the Offering Memorandum (to the extent such statements
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relate to the Initial Purchasers) constitute the only information furnished by
the Initial Purchasers to the Company for the purposes of Sections 1 and 8
hereof.
SECTION 15. Parties. This Agreement shall inure to the benefit
of and be binding upon the Initial Purchasers and the Company and its successors
and legal representatives. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Initial Purchasers, their respective affiliates and the Company and its
successors and legal representatives and the controlling persons and officers,
directors, employees and agents referred to in Sections 8 and 9 and their heirs
and legal representatives, any legal or equitable right, remedy or claim under,
by virtue of or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the Initial Purchasers their respective
affiliates and the Company and its successors and legal representatives, and
said controlling persons and officers, directors, employees and agents and their
heirs and legal representatives, and said controlling persons and officers,
directors, employees and agents and their heirs and legal representatives, and
for the benefit of no other person, firm or corporation. No purchaser of Units
from any Initial Purchaser shall be deemed to be a successor by reason merely of
such purchase.
SECTION 16. Governing Law and Time. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. Specified
times of day refer to New York time.
SECTION 17. Counterparts. This Agreement may be executed in
one or more counterparts and, when each party has executed a counterpart, all
such counterparts taken together shall constitute one and the same agreement.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement by and between the Initial Purchasers and the Company in accordance
with its terms.
Very truly yours,
VERIO INC.
By: /s/ Xxxxx Xxxxx Xxxxxxxx
------------------------------------
Name: Xxxxx Xxxxx Xxxxxxxx
Title: Vice President,
General Counsel and Secretary
Confirmed and accepted as of the date first above written:
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
LAZARD FRERES & CO. LLC
By: Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated
By: /s/ X. Xxxxxx
----------------------------
Name: X. Xxxxxx
Title: Vice President
