EXHIBIT 10.64
EXODUS COMMUNICATIONS, INC.
11 1/4% Senior Notes due 2008
Purchase Agreement
June 17, 1999
Xxxxxxx, 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 Xxxxxxx, Sachs & Co. (the "Purchaser") an aggregate of $75,000,000
principal amount of the 11 1/4% Senior Notes due 2008 (the "Securities").
1. The Company represents and warrants to, and agrees with, the
Purchaser that:
(a) An offering circular, dated June 17, 1999 (the "Offering
Circular"), has 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 for
the quarter ended March 31, 1999, the Company's Annual Report on Form
10-K for the year ended December 31, 1998, and the Company's Current
Reports on Form 8-K, dated January 29, 1999, February 22, 1999 and
March 2, 1999 (together the "Exchange Act Reports"). Any reference
(other than in Sections 7(a) and 7(b) hereof) to 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
Offering Circular as amended or supplemented as of any specified date
after the date hereof shall be deemed to include (i) the Exchange Act
Reports and all subsequent documents filed with the United States
Securities and Exchange Commission (the "Commission") pursuant to
Section 13(a), 13(c) or 15(d) of the 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 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 the Purchaser expressly for use therein. Since March 31, 1999, the
Company has not filed any documents with the Commission pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act other than the
Exchange Act Reports;
(b) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in
the Offering Circular any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular; and, otherwise than as set
forth or contemplated in the Offering Circular, since the respective
dates as of which information is given in the Offering Circular, there
has not been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any material adverse change, or
any development that is reasonably likely to result in a material
adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries;
(c) The Company has no subsidiary that is a "Significant
Subsidiary" of the Company within the meaning of Regulation S-X under
the Securities Act of 1933, as amended (the "Securities Act");
(d) The Company and its subsidiaries own no real property. The
Company and its subsidiaries have good and marketable title to all
personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Offering Circular or such as do not materially affect the value of
such property and do not interfere with the use made and proposed to
be made of such property by the Company and its subsidiaries; and any
real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Offering Circular, and
has been duly qualified as a foreign corporation for the transaction
of business and is in good standing under the laws of each other
jurisdiction where the failure to be so qualified could be reasonably
expected to have a material adverse effect on the business, financial
condition or results of operations of the Company, and each subsidiary
of the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation;
(f) The 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;
(g) 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;
(h) That certain Exchange and Registration Rights Agreement
between the Company and the Purchaser to be dated as of June 22, 1999
(the "Registration Rights Agreement") has been duly authorized and,
when executed and delivered by the Company, the Registration Rights
Agreement will constitute a valid and legally binding instrument,
enforceable in accordance with its terms;
(i) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Securities) will violate or result in a violation of Section 7
of the Exchange Act, or any regulation promulgated thereunder,
including, without limitation, Regulations T, U, and X of the Board of
Governors of the Federal Reserve System;
(j) Prior to the date hereof, neither the Company nor any of its
affiliates (as such term is defined in Rule 144 promulgated under the
Securities Act 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;
(k) 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 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 or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
issue and sale of the Securities or the consummation by the Company of
the transactions contemplated by this Agreement 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 Purchaser;
(l) Neither the Company nor any of its subsidiaries is 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 or any of its properties may be bound;
(m) 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;
(n) Other than as set forth in the Offering Circular, there are
no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
current or future financial position, stockholders' equity or results
of operations of the Company and its subsidiaries; and, to the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(o) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the
meaning of Rule 144A under the Securities Act) as securities which are
listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation
system;
(p) The Company is subject to Section 13 or 15(d) of the Exchange
Act;
(q) The Company is not, and after giving effect to the offering
and sale of the Securities, will not be an "investment company", as
such term is defined in the United States Investment Company Act of
1940, as amended (the "Investment Company Act");
(r) Neither the Company nor any or its subsidiaries, nor any
person acting on its or their behalf has offered or sold the
Securities by means of any general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act 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 Purchaser;
(s) Within the six months prior to the date hereof, neither the
Company nor 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 Purchaser 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 the
Purchaser), 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;
(t) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes;
(u) KPMG LLP, who have certified certain financial statements of
the Company and its subsidiaries are independent public accountants as
required by the Securities Act and the rules and regulations of the
Commission thereunder;
(v) The Company owns or possesses, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by it, and the Company
has not received any notice of, and is not otherwise aware of, any
infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances
which would render invalid, or otherwise prevent or materially inhibit
the Company from utilizing, any Intellectual Property necessary to
carry on the business now conducted by the Company, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding), invalidity, prevention or inhibition, singly or in
the aggregate, is reasonably likely to result in a material adverse
change in the general affairs, management, financial position,
stockholders' equity or results of operations of the Company;
(w) Except as described in the Offering Circular and except as
would not, singly or in the aggregate, result in a material adverse
change in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the
Company, (A) the Company is not in violation of any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively
"Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company has all permits, authorizations and approvals required under
any applicable Environmental Laws and is in compliance with their
requirements, (C) there are no pending or, to the best of the
Company's knowledge, threatened administrative, regulatory or judicial
action, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company and (D) to the best of the
Company's knowledge, there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
government body or agency, against or affecting the Company relating
to Hazardous Materials or any Environmental Laws;
(x) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of
its subsidiaries has a material relationship to evaluate the extent to
which the business or operations of the Company or any of its
subsidiaries will be affected by the Year 2000 Problem. Based on such
review, the Company has no reason to believe, and does not believe,
that the Year 2000 Problem will have a material adverse effect on the
general affairs, management, the current or future consolidated
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries or result in any material loss or
interference with the Company's business or operations. The "Year
2000 Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization
of data or in the operation of mechanical or electrical systems of any
kind will not, in the case of dates or time periods occurring after
December 31, 1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000;
(y) The Company has duly authorized the Escrow Agreement, the
Company has duly executed and delivered the Escrow Agreement, and 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 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;
(z) Neither the Company nor any of its affiliates nor any
person acting on its behalf (other than the Purchaser, 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;
(aa) The Company and its affiliates and all persons acting on
its behalf (other than the Purchaser, 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 Circular contains the disclosure
required by Rule 902(h)(2) under the Securities Act; and;
(bb) The Company is a "reporting issuer," as defined in
Rule 902(l) under the Securities Act.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the Purchaser, and the Purchaser agrees to
purchase from the Company, at a purchase price of 97.5% of the initial
offering price thereof, $75,000,000 in principal amount of Securities.
3. The Purchaser proposes to offer the Securities for sale upon the
terms and conditions set forth in this Agreement and the Offering Circular
and the 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 the 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 the Purchaser against payment by or on behalf
of such Purchaser of the purchase price therefor by wire transfer, payable
to the order of the Company in Federal (same day) funds, by causing DTC to
credit the Securities to the account of Xxxxxxx, Xxxxx & Co. at DTC. The
Company will cause the certificates representing the Securities to be made
available to the Purchaser 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 June 22,
1999 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 Purchaser 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 the Purchaser:
(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 Purchaser 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 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 the 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), 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 Purchaser, 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 Purchaser 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 Offering
Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchaser and dealers; (ii) the cost of
printing or producing 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 Purchaser 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 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 10 hereof, the Purchaser will pay all of its own costs and
expenses, including the fees of its counsel, transfer taxes on resale of any
of the Securities by it, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Purchaser hereunder shall be subject, in
its 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 Purchaser, 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, where the failure to be so qualified would have a
material adverse effect of the business, financial condition or
results of operations of the Company;
(iv) To such counsel's knowledge and other than as set
forth in the Offering Circular, there are no legal or
governmental proceedings pending to which the Company is a party
or of which any property of the Company is the subject which, if
determined adversely to the Company, would individually or in
the aggregate have a material adverse effect on the current or
future consolidated financial position, stockholders' equity or
results of operations of the Company; and, to such counsel's
knowledge, no such proceedings are threatened by governmental
authorities or threatened by others;
(v) This Agreement has been duly authorized, 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 Annual Report filed on form 10-K for
the year ended December 31, 1998, or to any Exchange Act Report
or any agreements entered into by the Company after March 31,
1999 that would be required to be filed as a material agreement
exhibit on Form 10-Q or any other Exchange Act Report (in each
case, a "Material Agreement") (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, 1999) nor does
such action result in any violation of the provisions of the
Certificate of Incorporation or Bylaws of the Company or any
statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction
over the Company or any of its properties;
(ix) No consent, approval, authorization, order,
registration or qualification of or with any 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 Purchaser (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 Purchaser 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, 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 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 Purchaser with respect to the preparation of 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 Offering Circular that have caused them to
believe that, as of its date and as of the Time of Delivery, the
Offering Circular or any further amendments thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related notes, related schedules and financial
data included therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Further, such counsel shall state that, although they are not
passing upon and do not assume any responsibility for, nor have
they independently verified, the accuracy, completeness or
fairness of the statements contained in the Exchange Act
Reports, they have participated in certain conferences with
officers and other employees of the Company, and representatives
of the Company's independent certified public accountants with
respect to the preparation of the respective Exchange Act
Reports, and no facts have come to the attention of attorneys
devoting attention to the representation of the Company in its
preparation of the respective Exchange Act Reports that have
caused them to believe that as of the dates on which the
respective Exchange Act Reports were filed with the Commission,
the Exchange Act Reports (other than the financial statements
and related notes, related schedules and financial data included
therein, as to which such counsel need express no opinion)
contained an untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made when such documents were so filed,
not misleading.
(c) On the date of the Offering Circular prior to the
execution of this Agreement and also at the Time of Delivery, KPMG LLP
shall have furnished to you a letter or letters, dated the respective
dates of delivery thereof, in form and substance satisfactory to you,
to the effect set forth in Annex II hereto;
(d) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Offering Circular any loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the Offering
Circular there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Offering Circular, the effect of which, in any such case described in
Clause (i) or (ii), is in the judgment of the Purchaser 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 effect of any
such event specified in this Clause (iv) in the judgment of the
Purchaser 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 Purchaser, 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 the 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 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 the Purchaser for any legal or other expenses reasonably
incurred by the 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 the Offering Circular or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
the Purchaser expressly for use therein.
(b) The Purchaser will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the
Company may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in 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 the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by the Purchaser
expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to, or
an admission of, fault, culpability or a failure to act, by or on
behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchaser 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 Purchaser 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 Purchaser 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
Purchaser, 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
Purchaser 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 Purchaser agree that it
would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation 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), the
Purchaser shall not 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 the Purchaser has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
(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 the Purchaser within the meaning of the
Securities Act; and the obligations of the Purchaser under this
Section 8 shall be in addition to any liability which the Purchaser
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. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Purchaser, as set
forth in 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 Purchaser or any controlling person of the 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.
10. If for any other reason, any Securities are not delivered by or
on behalf of the Company as provided herein, the Company will reimburse the
Purchaser through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Purchaser 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.
11. All statements, requests, notices and agreements hereunder shall
be in writing, and if to the Purchaser shall be delivered or sent by mail,
telex or facsimile transmission to you at Xxxxxxx, Xxxxx & Co., 00 Xxx Xxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration Department; and
if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to the
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 the Purchaser's 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.
12. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchaser, the Company and, to the extent provided in
Sections 8 and 9 hereof, the officers and directors of the Company and each
person who controls the Company or the Purchaser, and their respective
heirs, executors, administrators, successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement.
No purchaser of any of the Securities from the Purchaser shall be deemed a
successor or assign by reason merely of such purchase.
13. Time shall be of the essence of this Agreement.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one
and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and the Purchaser plus one for each
counsel counterparts hereof, and upon the acceptance hereof by you, this
letter and such acceptance hereof shall constitute a binding agreement
between the Purchaser and the Company.
Very truly yours,
EXODUS COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President, Finance
Chief Operating Officer and
Chief Financial Officer
Accepted as of the date hereof:
Xxxxxxx, Sachs & Co.
By: /s/ Xxxxxxx, Xxxxx & Co.
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
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. The Purchaser represents
that it has offered and sold the Securities, and will offer and sell the
Securities (i) as part of its 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, the Purchaser agrees that
neither it, its affiliates nor any persons acting on its or its 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. The 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.
The 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 Purchaser 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) The 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 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) The 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. The 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. The 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 the Purchaser's
express written consent and then only at its own risk and expense.
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants
shall furnish letters to the Purchaser 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 Purchaser, or any increases in any items
specified by the Purchaser, 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 Purchaser, or any increases in any items
specified by the Purchaser, in each case as compared with the
comparable period of the preceding year and with any other
period of corresponding length specified by the Purchaser,
except in each case for decreases or increases which the
Offering Circular discloses have occurred or may occur or which
are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (iv) above, they have carried out certain
specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Purchaser, 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.
June __, 1999
Dear KPMG LLP:
Xxxxxxx, Xxxxx & Co., the Purchaser 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.)
