EXHIBIT 10.33
EXODUS COMMUNICATIONS, INC.
11 1/4% SENIOR NOTES DUE 2008
PURCHASE AGREEMENT
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June 26, 1998
Xxxxxxx, Xxxxx & Co.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
BT Alex. Xxxxx Incorporated
NationsBanc Xxxxxxxxxx Securities LLC
c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Exodus Communications, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$200,000,000 principal amount of the 11 1/4% Senior Notes due 2008 (the
"Securities").
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering circular, dated June 11, 1998 (the
"Preliminary Offering Circular") and an offering circular, dated June 26,
1998 (the "Offering Circular", in each case including the international
supplement thereto have been prepared in connection with the offering of
the Securities. Additionally, the Company has previously prepared the
following documents: the Company's Quarterly Report on Form 10-Q ("Form
10-Q") for the quarter ended March 31, 1998, ("March Form 10-Q"), Amendment
No. 1 to the March Form 10-Q, dated June 11, 1998, and the Company's
Current Reports on Form 8-K, dated June 11, 1998 and June 26, 1998
(together the "Exchange Act Reports"). Any reference (other than in
Sections 7(a) and 7(b) hereof) to the Preliminary Offering Circular or the
Offering Circular shall be deemed to refer to and include the Exchange Act
Reports, and any reference (other than in Sections 7(a) and 7(b) hereof) to
the Preliminary Offering Circular or the Offering Circular as amended or
supplemented as of any specified date after the date hereof shall be deemed
to include (i) the Exchange Act Reports and all subsequent
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documents filed with the United States Securities and Exchange Commission
(the "Commission") pursuant to Section 13(a), 13(c) or 15(d) of the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act"),
after the date of the Offering Circular and prior to such specified date
and (ii) any Additional Issuer Information (as defined in Section 5(f))
furnished by the Company, prior to the completion of the distribution of
the Securities. The Exchange Act Reports, when they were filed with the
Commission, conformed in all material respects to the applicable
requirements of the Exchange Act and the applicable rules and regulations
of the Commission thereunder. The Preliminary Offering Circular, the
Offering Circular and the Exchange Act Reports did not, as of their
respective dates, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a Purchaser through
Xxxxxxx, Sachs & Co. expressly for use therein. As of the date hereof, the
Company has not filed any documents with the Commission pursuant to Section
13(a), 13(c) or 15(d) of the Exchange Act other than the Exchange Act
Reports;
(b) Since the date of the latest audited financial statements included
in the Offering Circular, the Company has not sustained any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Offering Circular; and, since the respective dates
as of which information is given in the Offering Circular, there has not
been any change in the capital stock or long-term debt of the Company or
any material adverse change, or any development that is reasonably likely
to result in a material adverse change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company, otherwise than as set forth or contemplated in
the Offering Circular;
(c) The Company has no subsidiaries and owns no real property. The
Company has good and marketable title to all personal property owned by it,
in each case free and clear of all liens, encumbrances and defects except
such as are described in the Offering Circular or such as do not materially
affect the value of such property and do not interfere with the use made
and proposed to be made of such property by the Company; and any real
property and buildings held under lease by the Company are held by it under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company;
(d) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with power and
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authority (corporate and other) to own its properties and conduct its
business as described in the Offering Circular, and has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
(e) The execution and delivery of the Agreement and Plan of Merger
dated as of February 23, 1998 (the "Merger Agreement") between Exodus
Communications, Inc., a California corporation (the "California
Corporation"), and the Company, effecting the reincorporation of the
California Corporation under the laws of the State of Delaware, was duly
authorized by all necessary corporate action on the part of each of the
California Corporation and the Company. Each of the California Corporation
and the Company had all corporate power and authority to execute and
deliver the Merger Agreement, to file the Merger Agreement with the
Secretary of State of California and the Secretary of State of Delaware and
to consummate the reincorporation contemplated by the Merger Agreement, and
the Merger Agreement at the time of execution and filing constituted a
valid and binding obligation of each of the California Corporation and the
Company;
(f) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable;
(g) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the
Indenture to be dated as of July 1, 1998 (the "Indenture") between the
Company and Chase Manhattan Bank and Trust Company, National Association,
as Trustee (the "Trustee"), under which they are to be issued, which will
be substantially in the form previously delivered to you; and the
Securities and the Indenture conform to the descriptions thereof in the
Offering Circular and are in substantially the form previously delivered to
you;
(h) The Indenture has been duly authorized and, when executed and
delivered by the Company and the Trustee, the Indenture will constitute a
valid and legally binding instrument, enforceable in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(i) That certain Exchange and Registration Rights Agreement among the
Company and the Purchasers to be dated as of July 1, 1998 (the
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"Registration Rights Agreement") has been duly authorized and, when
executed and delivered by the Company, the Registration Rights Agreement
will constitute a valid and legally binding instrument, enforceable in
accordance with its terms;
(j) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations G, T, U, and X of the Board of Governors of the
Federal Reserve System;
(k) Prior to the date hereof, neither the Company nor any of its
affiliates (as such term is defined in Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act")) has taken any
action which is designed to or which has constituted or which might have
reasonably been expected to cause or result in stabilization or
manipulation of the price of any security of the Company in connection with
the offering of the Securities;
(l) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, that
certain Escrow Agreement by and among Chase Manhattan Bank and Trust
Company, National Association (as Escrow Agent) and the Company to be dated
as of July 1, 1998 (the "Escrow Agreement"), the Registration Rights
Agreement and this Agreement, and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company is a party or by which
the Company is bound or to which any of the property or assets of the
Company is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the Company or
any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Securities or the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture, except the filing of a
notice on Form D by the Company with the Commission pursuant to Section
5(h) hereof and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Securities by the
Purchasers;
(m) The Company is not in violation of its Certificate of
Incorporation or Bylaws or in default in the performance or observance of
any material obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it
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or any of its properties may be bound;
(n) The statements set forth in the Offering Circular under the
captions "Description of Notes" insofar as they purport to constitute a
summary of the terms of the Securities, the Indenture, the Escrow Agreement
and the Registration Rights Agreement and under the captions "Certain
United States Federal Income Tax Considerations" and "Underwriting",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;
(o) Other than as set forth in the Offering Circular, there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future financial position,
stockholders' equity or results of operations of the Company; and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(p) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning
of Rule 144A under the Securities Act as securities which are listed on a
national securities exchange registered under Section 6 of the Exchange Act
or quoted in a U.S. automated inter-dealer quotation system;
(q) The Company is subject to Section 13 or 15(d) of the Exchange Act;
(r) The Company is not, and after giving effect to the offering and
sale of the Securities, will not be an "investment company", as such term
is defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act");
(s) Neither the Company nor any person acting on its behalf has
offered or sold the Securities by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities
Act or, with respect to Securities sold outside the United States to
persons who are not U.S. persons (as defined in Rule 902 under the
Securities Act), by means of any directed selling efforts within the
meaning of Rule 902 under the Securities Act and the Company, any affiliate
of the Company and any person acting on its or their behalf has complied
with and will implement the "offering restrictions" within the meaning of
such Rule 902, it being understood that the Company makes no
representations in this clause (s) as to the Purchasers;
(t) Within the six months prior to the date hereof, neither the
Company nor
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any other person acting on behalf of the Company has offered or sold to any
person any Securities, or any substantially similar securities of the
Company, other than Securities offered or sold to the Purchasers hereunder.
The Company will take reasonable precautions designed to insure that any
offer or sale, direct or indirect, in the United States or to any U.S.
person (as defined in Rule 902 under the Securities Act) of any Securities
or any substantially similar security issued by the Company, within six
months subsequent to the date on which the distribution of the Securities
has been completed (as notified to the Company by Xxxxxxx, Xxxxx & Co.), is
made under restrictions and other circumstances reasonably designed not to
affect adversely the status of the offer and sale of the Securities in the
United States and to U.S. persons contemplated by this Agreement as
transactions exempt from the registration provisions of the Securities Act;
(u) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(v) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company are independent public accountants as required by
the Securities Act and the rules and regulations of the Commission
thereunder;
(w) The Company owns or possesses, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by it, and the Company has not received any notice of, and is
not otherwise aware of, any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any facts
or circumstances which would render invalid, or otherwise prevent or
materially inhibit the Company from utilizing, any Intellectual Property
necessary to carry on the business now conducted by the Company, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding), invalidity, prevention or inhibition, singly or in the
aggregate, is reasonably likely to result in a material adverse change in
the general affairs, management, financial position, stockholders' equity
or results of operations of the Company;
(x) Except as described in the Offering Circular and except as would
not, singly or in the aggregate, result in a material adverse change in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company, (A) the
Company is not in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or
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administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company has all permits, authorizations and approvals
required under any applicable Environmental Laws and is in compliance with
their requirements, (C) there are no pending or, to the best of the
Company's knowledge, threatened administrative, regulatory or judicial
action, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company and (D) to the best of the Company's
knowledge, there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or government body or
agency, against or affecting the Company relating to Hazardous Materials or
any Environmental Laws;
(y) To the best of the Company's knowledge after investigation, all of
the products and services of the Company (including products and services
under development) will record, store, process, calculate and present
calendar dates falling on and after (and if applicable, spans of time
including) January 1, 2000, and will calculate any information dependent on
or relating to such dates in the same manner, and with the same
functionality, data integrity and performance, as the products record,
store, process calculate and present calendar dates on or before December
31, 1999, or calculate any information dependent on or relating to such
dates (collectively, "Year 2000 Compliant"). To the best of the Company's
knowledge after investigation, the Company's internal computer and
technology products, equipment and systems are Year 2000 Compliant;
(z) The Company has duly authorized the Escrow Agreement and, when the
Company has duly executed and delivered the Escrow Agreement (assuming the
due authorization, execution and delivery thereof by the Trustee), the
Escrow Agreement will be the legally valid and binding obligation of the
Company, enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited (i) by the effect of bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws by now or hereafter in effect relating to or affecting the
rights and remedies of creditors and (ii) by the effect of general
principles of equity, whether enforcement is considered in a proceeding in
equity or at law, and the discretion of the court before which any
proceeding therefor may be brought. The description of the Escrow
Agreement in the Offering Circular is accurate in all material respects.
Upon
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the Company's purchase of the Pledged Securities (as such term is defined
in the Escrow Agreement), the Company will be the sole beneficial owner of
the Pledged Securities and no lien will exist upon the Pledged Securities
and the Escrow Account (and no right or option to acquire the same will
exist in favor of any other person or entity) other than the pledge and
security interest in favor the Trustee, for the benefit of the holders of
the Securities, to be created or provided in the Escrow Agreement, which
pledge and security interest constitutes a first priority perfected pledge
and security interest in and to all of the Collateral and the Escrow
Account;
(aa) Neither the Company nor any of its affiliates nor any person
acting on its behalf (other than the Purchasers, as to whom the Company
makes no representation) has engaged or will engage in any directed selling
efforts within the meaning of Regulation S with respect to the Securities;
(bb) The Company and its affiliates and all persons acting on its
behalf (other than the Purchasers, as to whom the Company makes no
representation) have complied in all material respects with the offering
restrictions requirements of Regulation S in connection with the offering
of the Securities outside the United States and, in connection therewith,
the Offering Memorandum contains the disclosure required by Rule 902(h)(2)
under the Securities Act; and
(cc) The Company is a "reporting issuer," as defined in Rule 902(l)
under the Securities Act.
2. (a) Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 97% of the principal amount thereof, plus accrued interest, if any,
from July 1, 1998 to the Time of Delivery hereunder, the principal amount of
Securities set forth opposite the name of such Purchaser in Schedule I hereto.
(b) The Company may offer and sell such senior notes in an aggregate
principal amount not to exceed $75,000,000, (the "Additional Securities")
within one year of the Time of Delivery of these Securities and upon
written notice to Xxxxxxx, Sachs & Co. of its intention to issue such
Additional Securities; provided, however, that each of the following
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conditions have been met:
(i) the Company shall have delivered, or caused the delivery of,
to the Escrow Agent an amount in immediately available funds
sufficient to pay, when due, the interest on such Additional
Securities on each interest payment date through and including the
interest payment date on July 1, 2000;
(ii) the Escrow Agent shall have received a certificate dated as
of the
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closing date of the offering of the Additional Securities signed by an
executive officer of the Company to the effect that the
representations and warranties of the Company contained in the Escrow
Agreement are true and correct as of the closing date of the offering
of the Additional Securities and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part
to be performed or satisfied under the Escrow Agreement and the
Indenture on or before such closing date; and
(iii) the Company shall have entered into a purchase agreement on
substantially similar terms and conditions as this Agreement and the
Exchange and Registration Rights Agreement with Xxxxxxx, Xxxxx & Co.
(or such other underwriter as the Company shall choose in the event
that Xxxxxxx, Sachs & Co. shall decline the representation of the
Company in such offering) and such other of the Purchasers as the
Company and Xxxxxxx, Xxxxx & Co. shall mutually agree upon for the
sale and issuance of the Additional Securities.
3. Upon the authorization by Xxxxxxx, Sachs & Co. of the release of the
Securities, the several Purchasers propose to offer the Securities for sale upon
the terms and conditions set forth in this Agreement and the Offering Circular
and each Purchaser hereby represents and warrants to, and agrees with the
Company that:
(a) It will offer and sell the Securities only to: (i) persons which
it reasonably believes are "qualified institutional buyers" ("QIBs") within
the meaning of Rule 144A under the Securities Act in transactions meeting
the requirements of Rule 144A or, (ii) upon the terms and conditions set
forth in Annex I to this Agreement;
(b) Upon request of the Company, it will notify the Company upon
completion of the distribution of the Securities;
(c) It is an Institutional Accredited Investor; and
(d) It has not offered and will not offer or sell the Securities by
any form of general solicitation or general advertising, including but not
limited to the methods described in Rule 502(c) under the Securities Act.
4. (a) The Securities to be purchased by each Purchaser hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Xxxxxxx, Xxxxx & Co., for the account of each Purchaser, against
payment by or on behalf of such Purchaser of the purchase price therefor by wire
transfer, payable to the order of the Company in Federal (same day) funds, by
causing DTC to credit the Securities to the account of Xxxxxxx, Sachs & Co. at
DTC. The Company will cause the certificates representing the Securities to be
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made available to Xxxxxxx, Xxxxx & Co. for checking at least twenty-four hours
prior to the Time of Delivery (as defined below) at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on July 1, 1998 or
such other time and date as Xxxxxxx, Sachs & Co. and the Company may agree upon
in writing. Such time and date are herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by
the Purchasers pursuant to Section 7(h) hereof, will be delivered at such
time and date at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx
Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 (the "Closing Location"), and the
Securities will be delivered at the Designated Office, all at the Time of
Delivery. A meeting will be held at the Closing Location at 6:00 p.m., New
York City time, on the New York Business Day next preceding the Time of
Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review
by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to
make no amendment or any supplement to the Offering Circular which shall be
disapproved by you promptly after reasonable notice thereof; and to furnish
you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale under
the securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete
the distribution of the Securities, provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) To furnish the Purchasers with four copies of the Offering
Circular and each amendment or supplement thereto signed by an authorized
officer of the Company and with the independent accountants' report(s) in
the Offering Circular, and any amendment or supplement containing
amendments to the financial statements covered by such report(s), signed
by the accountants, and additional copies thereof in such quantities as you
may from time to time reasonably request, and if, at any time prior to the
expiration of nine months after the date of the Offering Circular, any
event
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shall have occurred as a result of which the Offering Circular as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made when such Offering Circular is delivered, not misleading, or, if for
any other reason it shall be necessary or desirable during such same period
to amend or supplement the Offering Circular, to notify you and upon your
request to prepare and furnish without charge to each Purchaser and to any
dealer in securities as many copies as you may from time to time reasonably
request of an amended Offering Circular or a supplement to the Offering
Circular which will correct such statement or omission or effect such
compliance;
(d) During the period beginning from the date hereof and continuing
until the date six months after the Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder any
securities of the Company that are substantially similar to the Securities;
(e) Not to be or become, at any time prior to the expiration of three
years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or 15(d)
of the Exchange Act, for the benefit of holders from time to time of
Securities, to furnish at its expense, upon request, to holders of
Securities and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of subsection
(d)(4)(i) of Rule 144A under the Securities Act;
(g) If requested by you, to use its best efforts to cause the
Securities to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.;
(h) To file with the Commission, not later than 15 days after the Time
of Delivery, five copies of a notice on Form D under the Securities Act
(one of which will be manually signed by a person duly authorized by the
Company); to otherwise comply with the requirements of Rule 503 under the
Securities Act; and to furnish promptly to you evidence of each such
required timely filing (including a copy thereof);
(i) To furnish to the holders of the Securities as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the date of the Offering Circular),
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consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(j) During a period of five years from the date of the Offering
Circular, to furnish to you copies of all reports or other communications
(financial or other) furnished to stockholders of the Company, and to
deliver to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
securities exchange on which the Securities or any class of securities of
the Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as you may from time to
time reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its stockholders generally or to the
Commission) provided that you agree to hold in confidence any confidential
or non-public information so provided;
(k) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Offering Circular under the caption "Use of Proceeds;" and
(l) The Company and its affiliates and all persons acting on its
behalf (other than the Purchasers, as to whom the Company makes no
representation) will comply in all material respects with the offering
restrictions requirements of Regulation S in connection with the offering
of the Securities outside the United States.
6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Securities and all other expenses in connection with the
preparation, printing and filing of the Preliminary Offering Circular and the
Offering Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchasers and dealers; (ii) the cost of
printing or producing any Agreement among Purchasers, this Agreement, the
Indenture, the Blue Sky and Legal Investment Memoranda, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Securities; (iii) all expenses
in connection with the qualification of the Securities for offering and sale
under state securities laws as provided in Section 5(b) hereof, including the
fees and disbursements of counsel for the Purchasers in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) the cost of preparing the Securities; (vi) the fees and expenses of the
Trustee and any agent of the Trustee and the fees and disbursements of counsel
for the Trustee in connection with the Indenture and the Securities; (vii) any
cost incurred in connection with the designation of the Securities for trading
in PORTAL; and (viii) all other costs and expenses incident to the
-12-
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Purchasers will pay
all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
counsel for the Purchasers, shall have furnished to you such opinion or
opinions, dated the Time of Delivery, with respect to the matters covered
in paragraphs (i), (ii), (v), (vi), (vii), (xi), (xii), (xiii) and (xiv) of
subsection (b) below as well as such other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(b) Fenwick & West LLP, counsel for the Company, (or such other
counsel as the Company shall deem appropriate) shall have furnished to you
their written opinion, dated the Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and corporate authority to own its
properties and conduct its business as described in the Offering
Circular;
(ii) The Company had, as of the dates specified in the Offering
Circular, duly authorized capital stock as set forth under the caption
"Capitalization" in the Offering Circular, and all of the issued and
outstanding shares of capital stock of the Company described therein
have been duly and validly authorized and issued, are non-assessable
and to such counsel's knowledge, are fully paid;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction within the United States in which
it owns or leases properties or employs personnel, or where the
failure to be so qualified would have a material adverse effect of the
business, financial condition or results of operations of the Company;
-13-
(iv) To such counsel's knowledge and other than as set forth in
the Offering Circular, there are no legal or governmental proceedings
pending to which the Company is a party or of which any property of
the Company is the subject which, if determined adversely to the
Company, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the
Company; and, to such counsel's knowledge, no such proceedings are
threatened by governmental authorities or threatened by others;
(v) This Agreement has been duly authorized, executed and
delivered by the Company to you;
(vi) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company;
(vii) The Indenture, the Escrow Agreement and the Registration
Rights Agreement have been duly authorized, executed and delivered by
the Company and constitute valid and legally binding instruments,
enforceable in accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights
and to general equity principles;
(viii) The issue and sale of the Securities being delivered at
the Time of Delivery and the compliance by the Company with all of the
provisions of the Securities, the Indenture, this Agreement, the
Escrow Agreement and the Registration Rights Agreement and the
consummation of the transactions herein and therein contemplated were
they to be completed on or prior to the date of such opinion and
assuming the absence of any applicable cure period, waiting period or
other similar provision, do not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any of the agreements filed as exhibits to the
Company's Form S-1 Registration Statement, Reg. No. 333-44469, or to
any Exchange Act Report or any agreements entered into by the Company
after March 31, 1998 that would be required to be filed as a material
agreement exhibit on Form 10-Q or any other Exchange Act Report
(provided that in determining which documents would be required to be
so filed, such counsel may rely on an officer's certificate that
specifies agreements that the Company has entered into since March 31,
1998) nor does such action result in any violation of the provisions
of the Certificate of Incorporation or Bylaws of the Company or any
statute or any order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over the
Company or any of its properties;
-14-
(ix) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issue and sale of the Securities or the consummation
by the Company of the transactions contemplated by this Agreement, the
Indenture, the Escrow Agreement or the Registration Rights Agreement,
except (A) such consents, approvals, authorizations, orders,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Purchasers (as to which such
counsel renders no opinion) or (B) such consents, approvals,
authorizations, orders, registrations or qualifications as are
referenced in the Offering Circular;
(x) The Company is not in violation of its Certificate of
Incorporation or Bylaws or, to such counsel's knowledge, in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any Material Agreement;
(xi) The statements set forth in the Offering Circular insofar as
they purport to constitute a summary of the terms of the Securities,
the Indenture, the Escrow Agreement and the Registration Rights
Agreement, and under the captions "Certain United States Federal
Income Tax Considerations" and "Underwriting," insofar as they purport
to describe the provisions of the laws and documents referred to
therein, are accurate and complete in all material respects;
(xii) The Exchange Act Reports (other than the financial
statements and related notes and schedules (and financial data)
therein, as to which such counsel need express no opinion), when they
were filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act, and the rules and
regulations of the Commission promulgated thereunder;
(xiii) No registration of the Securities under the Securities
Act, and no qualification of an indenture under the Trust Indenture
Act of 1939 with respect thereto, is required for the offer and sale
to, and initial resale of the Securities by, the Purchasers in the
manner contemplated by this Agreement;
(xiv) The Company is not an "investment company," as such term is
defined in the Investment Company Act;
(xv) The Escrow Agreement has been duly and validly authorized,
executed and delivered by the Company and the Escrow Agreement is the
legally valid and binding obligation of the Company,
-15-
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by customary assumptions and
exceptions. Once the Escrow Account has been established as provided
in the Escrow Agreement, the pledge and security interest in the
Escrow Account and the Pledged Securities held in the Escrow Account
(assuming such Pledged Securities constitute securities entitlements
and are carried in such Escrow Account (as to which assumption such
counsel need not express an opinion)) created by the Company under the
Escrow Agreement in favor of the Trustee, for the benefit of the
holders of the Securities, will constitute a perfected security
interest which will be prior to any other security interest in such
account or covering such securities entitlement, the priority of which
is governed by the Uniform Commercial Code as in effect in the State
of New York on the date hereof.
In addition, such counsel shall state that, although they are not
passing upon and do not assume any responsibility for, nor have they
independently verified, the accuracy, completeness or fairness of the
statements contained in the Preliminary Offering Circular and the
Offering Circular, except for and to the extent of those referred to
in the opinion in subsection (xi) of this Section 7(b), they have
participated in certain conferences with officers and other employees
of the Company, representatives of the Company's independent certified
public accountants and representatives of the Purchasers with respect
to the preparation of the Preliminary Offering Circular and the
Offering Circular, and no facts have come to the attention of
attorneys devoting attention to the representation of the Company in
its preparation of the Preliminary Offering Circular and the Offering
Circular that have caused them to believe that, as of their respective
dates and as of the Time of Delivery, the Preliminary Offering
Circular and the Offering Circular or any further amendments thereto
made by the Company prior to such Time of Delivery (other than the
financial statements and related notes, related schedules and
financial data included therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Further,
such counsel shall state that, although they are not passing upon and
do not assume any responsibility for, nor have they independently
verified, the accuracy, completeness or fairness of the statements
contained in the Exchange Act Reports, they have participated in
certain conferences with officers and other employees of the Company,
and representatives of the Company's independent certified public
accountants with respect to the preparation of the respective Exchange
Act Reports, and no facts have come to the attention of attorneys
devoting attention to the representation of the Company in its
preparation of the respective Exchange Act Reports that have caused
them to believe that as of the dates on which the
-16-
respective Exchange Act Reports were filed with the Commission, the
Exchange Act Reports (other than the financial statements and related
notes, related schedules and financial data included therein, as to
which such counsel need express no opinion) contained an untrue
statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made when
such documents were so filed, not misleading.
(c) On the date of the Offering Circular prior to the execution of
this Agreement and also at the Time of Delivery, KPMG Peat Marwick LLP
shall have furnished to you a letter or letters, dated the respective dates
of delivery thereof, in form and substance satisfactory to you, to the
effect set forth in Annex II hereto;
(d) (i) The Company shall not have sustained since the date of the
latest audited financial statements included in the Offering Circular any
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Offering Circular, and (ii) since the respective
dates as of which information is given in the Offering Circular there shall
not have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Offering Circular, the effect of which, in any such
case described in Clause (i) or (ii), is in the judgment of the Purchasers
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Securities on the
terms and in the manner contemplated in this Agreement and in the Offering
Circular;
(e) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Securities Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities;
(f) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; or on NASDAQ; (ii) a
suspension or material limitation in trading in the Company's securities on
NASDAQ; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York or California State authorities;
(iv) the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war, if
the
-17-
effect of any such event specified in this Clause (iv) in the judgment of
the Purchasers makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities on the terms and in the
manner contemplated in the Offering Circular; or (v) the occurrence of any
material adverse change in the existing financial, political or economic
conditions in the United States or elsewhere which, in the judgment of the
Purchasers, would materially and adversely affect the financial markets or
markets for the Securities or other debt securities;
(g) The Securities have been designated for trading on PORTAL;
(h) The Company shall have furnished to you executed copies of the
Indenture, the Escrow Agreement and the Registration Rights Agreement; and
(i) The Company shall have furnished or caused to be furnished to you
at the Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth
in subsections (a) and (e) of this Section and as to such other matters as
you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Circular or
the Offering Circular, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein not misleading, and will reimburse
each Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through Xxxxxxx, Xxxxx & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue
-18-
statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Offering Circular
or the Offering Circular or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
such Purchaser through Xxxxxxx, Sachs & Co. expressly for use therein; and
will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof)
-19-
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from the
offering of the Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Purchasers on the other in connection with
the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Purchasers on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Purchasers, in each
case as set forth in the Offering Circular. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company on the one hand or the Purchasers on the other and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation
(even if the Purchasers were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages
or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at
which the Securities underwritten by it and distributed to investors were
offered to investors exceeds the amount of any damages which such Purchaser
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in proportion
to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Purchaser within
-20-
the meaning of the Securities Act; and the obligations of the Purchasers
under this Section 8 shall be in addition to any liability which the
respective Purchasers may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to
each person, if any, who controls the Company within the meaning of the
Securities Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by
any Purchaser you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering Circular,
or in any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion may
thereby be made necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount
of such Securities which remains unpurchased does not exceed one-eleventh
of the aggregate principal amount of all the Securities, then the Company
shall have the right to require each non-defaulting Purchaser to purchase
the principal amount of Securities which such Purchaser agreed to purchase
hereunder and, in addition, to require each non-defaulting Purchaser to
purchase its pro rata share (based on the principal amount of Securities
which such Purchaser agreed to purchase hereunder) of the Securities of
such defaulting Purchaser or Purchasers for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount
of Securities which remains unpurchased exceeds one-eleventh of the
aggregate principal amount of all the Securities, or if the Company shall
not exercise the right described in subsection (b) above to require non-
defaulting Purchasers to purchase Securities of a defaulting Purchaser or
Purchasers, then this Agreement shall thereupon terminate,
-21-
without liability on the part of any non-defaulting Purchaser or the
Company, except for the expenses to be borne by the Company and the
Purchasers as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall
relieve a defaulting Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Purchasers in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxx Xxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to a
Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Purchaser at its address set forth in
its Purchasers' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns,
-22-
and no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Securities from any Purchaser shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
-23-
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Purchasers plus one for each
counsel counterparts hereof, and upon the acceptance hereof by you, on behalf of
each of the Purchasers, this letter and such acceptance hereof shall constitute
a binding agreement between each of the Purchasers and the Company. It is
understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
EXODUS COMMUNICATIONS, INC.
By: /s/ K.B. Xxxxxxxxxxxxx
--------------------------------
Name: K.B. Xxxxxxxxxxxxx
------------------------------
Title: President & CEO
-----------------------------
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
BT Alex. Xxxxx Incorporated
NationsBanc Xxxxxxxxxx
Securities LLC
By: /s/ Xxxxxxx, Xxxxx & Co.
--------------------------------
Name: Xxxxxxx, Sachs & Co.
------------------------------
Title:
On behalf of the Purchasers
-24-
SCHEDULE I
PRINCIPAL
AMOUNT OF
SECURITIES
TO BE
PURCHASER PURCHASED
--------- ---------
Xxxxxxx, Xxxxx & Co. $107,000,000.00
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation 73,000,000.00
B T Xxxx Xxxxx Incorporated 10,000,000.00
NationsBanc Xxxxxxxxxx Securities LLC 10,000,000.00
TOTAL $200,000,000.00
===============
-25-
ANNEX I
(1) The Securities have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with Regulation
S under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act. Each Purchaser represents that it has
offered and sold the Securities, and will offer and sell the Securities (i) as
part of their distribution at any time and (ii) otherwise until 40 days after
the later of the commencement of the offering and the Time of Delivery, only in
accordance with Rule 903 of Regulation S or Rule 144A under the Securities Act.
Accordingly, each Purchaser agrees that neither it, its affiliates nor any
persons acting on its or their behalf has engaged or will engage in any directed
selling efforts with respect to the Securities, and it and they have complied
and will comply with the offering restrictions requirement of Regulation S.
Each Purchaser agrees that, at or prior to confirmation of sale of Securities
(other than a sale pursuant to Rule 144A), it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Securities from it during the distribution
compliance period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the offering and the
closing date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above have
the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the Securities, except with its affiliates or with the prior written consent of
the Company.
(2) Notwithstanding the foregoing, Securities may be offered, sold and
delivered by the Purchasers in the United States and to U.S. persons pursuant to
Section 3(a)(i) of this Agreement without delivery of the written statement
required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to
-26-
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom, and (c) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996 of Great Britain or is a person to whom
the document may otherwise lawfully be issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any of
the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Xxxxxxx, Sachs & Co.'s express written consent and then only at its own
risk and expense.
-27-
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Securities
Exchange Act of 1934 (the "Exchange Act") and the applicable published
rules and regulations thereunder;
(ii) In our opinion, the consolidated financial statements and
financial statement schedules audited by us and included in the Offering
Circular comply as to form in all material respects with the applicable
requirements of the Exchange Act and the related published rules and
regulations;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Offering Circular
agrees with the corresponding amounts (after restatements where applicable)
in the audited consolidated financial statements for such five fiscal
years;
(iv) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Offering Circular, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in
the Offering Circular are not in conformity with generally accepted
accounting principles applied on the basis substantially consistent
with the basis for the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Offering Circular;
(B) any other unaudited income statement data and balance sheet
items included in the Offering Circular do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements
included in the Offering Circular;
(C) the unaudited financial statements which were not included in
the Offering Circular but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet items included in
the Offering Circular and referred to in Clause (B) were not
determined on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the Offering
Circular;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to form
in all material respects with the applicable accounting requirements
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Offering Circular or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated net current assets or stockholders' equity or other
items specified by the Purchasers, or any increases in any items
specified by the Purchasers, in each case as compared with amounts
shown in the latest balance sheet included in the Offering Circular
except in each case for changes, increases or decreases which the
Offering Circular discloses have occurred or may occur or which are
described in such letter; and
(F) for the period from the date of the latest financial statements
included in the Offering Circular to the specified date referred to in
Clause (E) there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of consolidated net
income or other items specified by the Purchasers, or any increases in
any items specified by the Purchasers, in each case as compared with
the comparable period of the preceding year and with any other period
of corresponding length specified by the Purchasers, except in each
case for decreases or increases which the Offering Circular discloses
have occurred or may occur or which are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs
(iii) and (iv) above, they have carried out
29
certain specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Purchasers, which
are derived from the general accounting records of the Company and its
subsidiaries, which appear in the Offering Circular, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found them
to be in agreement.
30
June 26, 1998
Dear KPMG Peat Marwick LLP:
Xxxxxxx, Xxxxx & Co., as representatives of the Purchasers of 11 1/4%
Senior Notes due 2008 to be issued by Exodus Communications, Inc. (the
"Company"), will be reviewing certain information relating to the Company that
will be included (incorporated by reference) in the Offering Circular. This
review process, applied to the information relation to the issue, is (will be)
substantially consistent with the due diligence review process that we would
perform if this placement of securities were being registered pursuant to the
Securities Act of 1933 (the Act). It is recognized however that what is
"substantially consistent" may vary from situation to situation and may not be
the same as that done in a registered offering of the same securities for the
same issuer and whether the procedures being, or to be, followed will be
"substantially consistent" will be determined by us on a case-by-case basis. We
are knowledgeable with respect to the due diligence review process that would be
performed if this placement of securities were being registered pursuant to the
Act. We hereby request that you deliver to us a "comfort" letter concerning the
financial statements of the issuer and certain statistical and other data
included in the offering document. We will contact you to identify the
procedures we wish you to follow and the form we wish the comfort letter to
take.
Very truly yours,
(Xxxxxxx, Sachs & Co.)
