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EXHIBIT 10.27
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VERIO INC.
STOCK PURCHASE AND
MASTER STRATEGIC RELATIONSHIP AGREEMENT
APRIL 7, 1998
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TABLE OF CONTENTS
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1. AGREEMENT TO SELL AND PURCHASE SHARES.......................................1
1.1 Sale and Purchase of Shares........................................1
1.2 Closing............................................................2
1.3 Legend; Stop Transfer Order........................................3
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................3
2.1 Organization, Good Standing and Qualification......................3
2.2 Authority; Binding Nature of Agreements............................3
2.3 Non-Contravention; Consents........................................4
2.4 Fully Paid and Nonassessable.......................................4
2.5 Private Placement Memorandum; Financial Statements; Taxes..........4
2.6 Absence of Changes.................................................5
2.7 Litigation.........................................................5
2.8 Intellectual Property Rights.......................................6
2.9 Compliance with Law; Governmental Approvals........................6
2.10 Capitalization.....................................................6
2.11 Brokers, etc.......................................................6
2.12 No Other Ventures..................................................7
2.13 Investment Company Act.............................................7
2.14 Insurance..........................................................7
2.15 Labor Matters......................................................7
2.16 Certain Compensation Plans.........................................7
2.17 Environmental Protection...........................................8
2.18 Properties.........................................................8
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2.19 Liabilities........................................................8
2.20 Transactions with Principals.......................................8
2.21 Registration Rights................................................9
2.22 Contracts and Other Commitments....................................9
2.23 Regulation by the FCC..............................................9
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............................9
3.1 Organization and Good Standing.....................................9
3.2 Authority; Binding Nature of Agreements............................9
3.3 Non-Contravention; Consents.......................................10
3.4 Litigation........................................................10
3.5 Brokers, etc......................................................10
3.6 Investment Representations........................................11
3.7 Company Disclosure Documents......................................12
4. CONDITIONS TO CLOSING......................................................12
4.1 Conditions to the Purchaser's Obligations.........................12
4.2 Conditions to the Company's Obligations...........................13
5. COVENANTS OF THE PARTIES...................................................15
5.1 Filings and Consents..............................................15
5.2 Covenant to Satisfy Conditions....................................15
5.3 Reservation of Shares.............................................15
5.4 Further Assurances................................................15
6. TERMINATION................................................................16
6.1 Termination.......................................................16
6.2 Effect of Termination.............................................16
7. SUCCESSORS AND ASSIGNS.....................................................16
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7.1 Successors and Assigns............................................16
7.2 Novation..........................................................16
7.3 Guarantee.........................................................17
7.4 Certain Waivers and Authorizations................................19
8. MISCELLANEOUS..............................................................20
8.1 Press Releases and Announcements..................................20
8.2 Interpretation....................................................20
8.3 Fees and Expenses.................................................21
8.4 Governing Law; Jurisdiction and Venue; Waiver of Jury Trial.......21
8.5 Specific Enforcement..............................................22
8.6 Survival..........................................................22
8.7 No Third Party Beneficiaries......................................23
8.8 Entire Agreement..................................................23
8.9 Severability......................................................23
8.10 Amendment and Waiver..............................................23
8.11 Relationship of the Parties.......................................23
8.12 Notices...........................................................24
8.13 Counterparts......................................................25
8.14 Attorney's Fees...................................................25
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ATTACHMENTS
Disclosure Schedule
Exhibit A Definitions
Exhibit B Certificate of Designation of Series X Junior Preferred Stock
Exhibit C Private Placement Memorandum
Exhibit D Form of Legal Opinion of Company Counsel
Exhibit E Form of Legal Opinion of Purchaser (and/or Assignee
and Purchaser Party Affiliate) Counsel
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STOCK PURCHASE AND MASTER STRATEGIC RELATIONSHIP AGREEMENT
This Stock Purchase and Master Strategic Relationship Agreement (this
"Agreement") is entered into as of April 7, 1998, by and between VERIO INC., a
Delaware corporation (the "Company"), and NIPPON TELEGRAPH AND TELEPHONE
CORPORATION, a Japanese corporation (the "Purchaser"). Capitalized terms used in
this Agreement and not otherwise defined are defined in Exhibit A.
WHEREAS, the Purchaser wishes to purchase from the Company, and the
Company wishes to issue and sell to the Purchaser, certain shares of the
Company's Common Stock, par value $0.001 per share (the "Common Stock");
WHEREAS, such sale and purchase of Common Stock is to occur
concurrently with the IPO;
WHEREAS, the parties hereto have entered into an Investment Agreement
dated of even date herewith (the "Investment Agreement") providing for certain
rights and obligations of such parties with respect to the Common Stock and
other matters; and
WHEREAS, the Company and an Affiliate of the Purchaser have entered
into an Outside Service Provider Agreement dated of even date herewith (the
"Outside Service Provider Agreement") providing for certain matters;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, the parties hereto, intending to be legally bound, agree as follows:
1. AGREEMENT TO SELL AND PURCHASE SHARES
1.1 SALE AND PURCHASE OF SHARES.
(a) Subject to the terms and conditions hereof, at the Closing,
the Company will issue and sell to the Purchaser, and the Purchaser will
purchase from the Company, shares of Common Stock equal in number to the lesser
of (i) 12.5% of the Diluted Common Stock (calculated as of the Closing Date and
giving effect to the sale of shares of Common Stock on the Closing Date pursuant
to this Agreement and in the IPO), or (ii) the quotient of (A) $100 million
divided by (B) the Per Share Price.
(b) Notwithstanding the provisions of paragraph (a) above, in the
event that the applicable waiting period, including any extension thereof, under
the HSR Act with respect to the purchase and sale of Common Stock contemplated
hereby shall not have been subject to early termination or expired prior to the
consummation of the IPO, then, at the Closing, in lieu of Common Stock, the
Purchaser shall purchase from the Company, and the Company shall issue and sell
to the Purchaser, shares of the Company's Series X Junior Preferred Stock (the
"Junior Preferred Stock"). The number of shares of Junior Preferred Stock to be
so purchased shall be such number that is equal to the quotient of (i) the
number of shares of Common Stock that the Purchase otherwise would have
purchased pursuant to paragraph (a) above, divided by (ii) five
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hundred (500), so that, upon a conversion immediately following the Closing of
all such shares of Junior Preferred Stock into shares of Common Stock as
provided in the Company's Certificate of Designation with respect to the Junior
Preferred Stock (the "Certificate of Designation"), the number of shares of
Common Stock resulting from such conversion would equal the number of shares of
Common Stock that the Purchaser otherwise would have purchased pursuant to
paragraph (a) above. The purchase price per share of Junior Preferred Stock
shall be equal to the product of (i) the Per Share Price, multiplied by (ii)
five hundred (500), so that the aggregate purchase price for the Junior
Preferred Stock to be purchased at the Closing shall be the aggregate purchase
price that would have been payable for the shares of Common Stock that the
Purchaser otherwise would have purchased pursuant to paragraph (a) above. The
Purchaser acknowledges and agrees that if Junior Preferred Stock is purchased by
it pursuant hereto, the Purchaser shall not be entitled to convert such Junior
Preferred Stock into Common Stock, but the Junior Preferred Stock shall be
converted into Common Stock pursuant to the terms of the Certificate of
Designation automatically upon the expiration or early termination of the
applicable waiting period, including any extension thereof, under the HSR Act. A
copy of the Certificate of Designation is attached hereto as Exhibit B and
incorporated herein by reference.
(c) The price per share of the Common Stock to be purchased
pursuant to this Agreement (the "Per Share Price") shall be the product of (i)
the IPO Price multiplied by (ii) 96.75%, provided, that if prior to the Closing
Date the Company shall sell shares of Common Stock (other than (i) in connection
with a merger, buyout or acquisition, (ii) a sale, grant or other issuance to
any employee, consultant or director of the Company or any of its Affiliates,
(iii) pursuant to any pre-existing commitment of the Company and (iv) any other
nonmaterial sales of Common Stock not exceeding $1,000,000 in value per sale) at
a price per share less than the Per Share Price as so determined, then the Per
Share Price shall be such lower price per share of Common Stock.
(d) At the Closing, the Purchaser shall pay the purchase price
for the shares of Common Stock or Junior Preferred Stock purchased hereunder
(the "Purchased Shares") by wire transfer of immediately available funds in U.S.
dollars to the account specified in writing by the Company.
(e) No fractional shares shall be issued upon the sale of any
Common Stock to the Purchaser pursuant to this Agreement, and the number of
shares of Common Stock to be issued to the Purchaser shall be rounded to the
nearest whole share. Fractional shares of Junior Preferred Stock may be issued
upon the sale of Junior Preferred Stock pursuant to this Agreement, if
applicable, provided, that no fractional shares of Common Stock shall be issued
upon any conversion of such Junior Preferred Stock into Common Stock, and the
number of shares of Common Stock to be then issued to the Purchaser shall be
rounded to the nearest whole share.
1.2 CLOSING.
The closing of the purchase and sale contemplated by this Agreement
(the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxxxxx LLP, 000
Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, at 10:00 a.m. (California time)
on the date of and concurrently with the
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consummation of the IPO, or on such other date or at such other place or time as
the Company and the Purchaser may mutually agree (such date, the "Closing
Date").
1.3 LEGEND; STOP TRANSFER ORDER.
All certificates representing the Purchased Shares shall bear legends
and be subject to stop transfer orders as specified in the Investment Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the disclosure schedule attached
hereto (the "Disclosure Schedule") or in the Private Placement Memorandum of the
Company dated as of March 19, 1998 (the "Private Placement Memorandum"), a copy
of which is attached hereto as Exhibit C and the text of which is incorporated
herein by reference, the Company hereby represents and warrants to the Purchaser
as follows:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Company is
duly qualified to conduct business in each jurisdiction in which the nature of
its business or the ownership of its properties requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on the condition (financial or otherwise), properties or business operations of
the Company and its subsidiaries, taken as a whole (a "Material Adverse
Effect"). The Company has all requisite corporate power and authority to carry
on its business as presently conducted.
(b) The Company, as of the date of the Private Placement
Memorandum, has no subsidiaries that constitute "significant subsidiaries"
within the meaning of Regulation S-X under the Securities Act, provided, that
the Purchaser acknowledges that the Company is engaged in a program of buyouts
and acquisitions of other Entities, and that in connection with such program the
Company may purchase shares or other securities of other Entities prior to the
Closing or increase its ownership of Entities less than wholly-owned by the
Company as of the date of the Private Placement Memorandum.
(c) The Company has delivered to the Purchaser accurate and
complete copies of the Company's certificate of incorporation and bylaws,
including all amendments thereto and the amendments thereto that are to be
effective upon consummation of the IPO.
2.2 AUTHORITY; BINDING NATURE OF AGREEMENTS.
The Company has the requisite corporate power and authority to enter
into and to perform its obligations under this Agreement and all other
Transactional Agreements. The execution, delivery and performance by the Company
of this Agreement and such other Transactional Agreements, and the consummation
or performance of the Transactions, have been duly authorized by all necessary
corporate action on the part of the Company, other than the filing of the
Certificate of Designation with the Secretary of State of the State of Delaware.
Each of this Agreement and such other Transactional Agreements constitutes, or
upon execution and delivery will constitute, the legal, valid and binding
obligation of the Company, enforceable
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against the Company in accordance with its terms, except as limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights, and (ii) laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.
2.3 NON-CONTRAVENTION; CONSENTS.
(a) Neither the execution and delivery by the Company of this
Agreement or any other Transactional Agreement, nor the consummation or
performance by the Company of any of the Transactions to be consummated or
performed by it, will directly or indirectly (with or without notice or lapse of
time): (i) violate any provision of the Company's certificate of incorporation
or bylaws; (ii) constitute or result in a breach or default by the Company, or
give rise to a right of termination on the part of any other party, or result in
the creation or imposition of any lien, claim or encumbrance on any Company
assets, under any agreement or instrument to which the Company is a party or by
which it is bound; or (iii) constitute a violation by the Company of any
Requirement of Law, except in each case for any such violation, breach, default
or termination or any such lien, claim or encumbrance which would not have a
Material Adverse Effect.
(b) Except for compliance with the terms of the HSR Act, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any Governmental Authority on the part
of the Company is required in connection with the consummation of the
Transactions, except for such consents, approvals, authorizations or orders the
absence of which, either individually or in the aggregate, would not have a
Material Adverse Effect.
2.4 FULLY PAID AND NONASSESSABLE.
The Purchased Shares, when issued, sold and delivered in accordance
with the terms of this Agreement for the consideration expressed herein, will be
duly and validly issued, fully paid, and nonassessable, and not subject to
preemptive or any other similar rights of the stockholders of the Company or
others.
2.5 PRIVATE PLACEMENT MEMORANDUM; FINANCIAL STATEMENTS; TAXES.
(a) The Private Placement Memorandum, as of the date thereof, did
not contain any untrue statement of a material fact or omit to state any
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.
(b) The financial statements of the Company included in the
Private Placement Memorandum have been prepared in accordance with U.S.
generally accepted accounting principles ("U.S. GAAP") applied on a consistent
basis during the periods involved, except (i) as may be otherwise indicated in
such financial statements or the notes thereto, (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements, or (iii) as otherwise indicated in the
Disclosure Schedule. Such financial statements fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of
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their operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments).
(c) The Company has (or, in the case of returns becoming due
after the date hereof and on or before the Closing Date, will have prior to the
Closing Date) duly filed all Company Tax Returns required to be filed by the
Company on or before the Closing Date with respect to all applicable Taxes. No
penalties or other charges are or will become due with respect to any of the
Company Tax Returns as the result of the late filing thereof in an amount which
would have a Material Adverse Effect. All of the Company Tax Returns are (or, in
the case of returns becoming due after the date hereof and on or before the
Closing Date, will be) true and complete in all material respects. The Company
either (i) has paid all Taxes due or claimed to be due by any Taxing authority
in connection with any of the Company Tax Returns or otherwise required to be
filed or paid prior to the date hereof, or (ii) to the extent such Taxes were
due prior to the date of the financial statements contained in the Private
Placement Memorandum (the "Financial Statements Date") has established in the
financial statements set forth in the Private Placement Memorandum adequate
reserves (in conformity with U.S. GAAP consistently applied) for the payment of
such Taxes, or, to the extent such Taxes were not due prior to the Financial
Statements Date, has established adequate reserves for the payment of such Taxes
in the ordinary course of business and in accordance with good business
practices; except in any of the cases described in the preceding clauses (i) and
(ii) for such Taxes the nonpayment of which would not have a Material Adverse
Effect. The amounts set up as reserves for Taxes on the financial statements set
forth in the Private Placement Memorandum are sufficient for the payment of all
unpaid Taxes, whether or not such Taxes are disputed or are yet due and payable,
for or with respect to the period through the Financial Statements Date, and for
which the Company may be liable in its own right (including, without limitation,
by reason of being a member of the same affiliated group) or as a transferee of
the assets of, or successor to, any Entity, other than any such Taxes as would
not have a Material Adverse Effect. The Company, either in its own right
(including, without limitation, by reason of being a member of the same
affiliated group) or as a transferee, does not have and on the Closing Date will
not have any liability for Taxes payable for or with respect to any periods
prior to and including the Closing Date materially in excess of the amounts
actually paid prior to the Closing Date or reserved for in financial statements
set forth in the Private Placement Memorandum, except for amounts payable for or
with respect to any periods following the Financial Statements Date.
2.6 ABSENCE OF CHANGES.
As of the date of this Agreement, there has been no change in the
Company's business or operations from the information presented in the Private
Placement Memorandum that would have a Material Adverse Effect.
2.7 LITIGATION.
As of the date hereof, there are no suits, proceedings or
investigations pending or, to the Knowledge of the Company, threatened against
the Company, which in any such case would have a Material Adverse Effect, or
which would materially adversely affect the Company's ability to perform its
obligations under this Agreement or any of the other Transactional Agreements.
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2.8 INTELLECTUAL PROPERTY RIGHTS.
(a) The patents, trademarks, service marks, trade names,
copyrights and rights or licenses to use the same, and any and all applications
therefor, as well as the trade secrets and similar proprietary information,
owned or held by the Company are all that are required to enable the Company to
conduct its business as now conducted, except for such failures to own or hold
as, in the aggregate, would not have a Material Adverse Effect. To the Company's
Knowledge, the Company's operations do not infringe rights under patents,
trademarks, service marks, trade names, trade secrets, copyrights or licenses or
any other proprietary rights of others, except for any such infringement as
would not have a Material Adverse Effect.
(b) The Company has the right and authority to utilize the
processes, systems and techniques presently employed by it in the design,
development and manufacture of its present products and all rights to any
material processes, systems and techniques developed by any employee or
consultant of the Company have been and will be duly and validly assigned to the
Company, except to the extent the failure to have such right or authority or to
obtain such assignment, in the aggregate, would not have a Material Adverse
Effect.
2.9 COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS.
(a) The Company is in compliance with all applicable Requirements
of Law, except for such non-compliance as in the aggregate would not have a
Material Adverse Effect.
(b) The Company has all governmental approvals, authorizations,
consents, licenses and permits required from each Governmental Authority with
jurisdiction over the Company or its properties to conduct its business as it is
currently being conducted, except for such approvals, authorizations, consents,
licenses or permits, the failure of which to obtain, in the aggregate, would not
have a Material Adverse Effect.
2.10 CAPITALIZATION.
As of the date of the Private Placement Memorandum, the information
regarding the actual capitalization of the Company set forth under the caption
"Capitalization" in the Private Placement Memorandum is true, correct and
complete, and all of the outstanding capital stock of the Company as therein
described was duly authorized, validly issued, fully paid and nonassessable as
of the date specified in the Private Placement Memorandum.
2.11 BROKERS, ETC.
The Company has not dealt with any broker, finder, or other similar
person in connection with the offer or sale of the Common Stock or Junior
Preferred Stock pursuant to this Agreement such that it will be under any
obligation to pay any broker's fee, finder's fee or commission in connection
with such offer and sale.
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2.12 NO OTHER VENTURES.
As of the date of the Private Placement Memorandum, the Company was not
engaged in any material partnership or joint venture with any other Person.
2.13 INVESTMENT COMPANY ACT.
The Company is not an "investment company" or a company "controlled by"
an "investment company," as such terms are defined in the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.
2.14 INSURANCE.
The Company has insurance in such amounts and covering such risks as
are in accordance with normal industry practice.
2.15 LABOR MATTERS.
(a) There are no strikes, work stoppages, slowdowns or lockouts
existing or, to the Knowledge of the Company, threatened against the Company
that would have a Material Adverse Effect.
(b) To the Company's Knowledge, no key employee of the Company is
in violation of any judgment, decree or order, or any term of any employment
contract, patent disclosure agreement, other proprietary information agreement,
non-competition agreement or other contract or agreement relating to the
relationship of any such employee to any former employers, the Company or any
other party, because of the nature of the business conducted by the Company or
to the utilization by the employee of his or her best efforts with respect to
such business in his or her assigned duties at the Company, in any case which
violation would have a Material Adverse Effect.
(c) The consummation of the Transactions will not cause the
Company to incur or suffer any liability relating to, or obligation to pay,
material severance or termination amounts to any person or entity.
2.16 CERTAIN COMPENSATION PLANS.
(a) The Company does not have any material profit sharing,
deferred compensation, stock option, stock purchase, phantom stock or similar
plan that evidence rights to purchase securities of or to share in the profits
of the Company.
(b) The Company has not incurred any liability for any prohibited
transaction or funding deficiency or any complete or partial withdrawal
liability with respect to any pension, profit sharing or other plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), to which the Company makes or ever has made a contribution and in
which any employee of the Company is or has ever been a participant which,
individually or in the aggregate, would result in a Material Adverse Effect.
With respect to such plans, the Company is in compliance in all respects with
all applicable provisions of ERISA and the
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Internal Revenue Code of 1986, as amended, except where the failure to so comply
would not, individually or in the aggregate, have a Material Adverse Effect.
2.17 ENVIRONMENTAL PROTECTION.
(a) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, (i) the Company is in compliance with and not subject
to any known liability under applicable Environmental Law (as defined below),
and (ii) there is no civil, criminal or administrative action or investigation,
notice or demand letter or request for information pending or, to the Company's
Knowledge, threatened against the Company under any Environmental Law.
(b) For purposes of this Agreement, "Environmental Law" shall
mean all applicable federal, state and local laws or regulations relating to the
protection of the environment or human health, including, without limitation,
laws relating to omissions, discharges, releases or threatened releases of
"hazardous substances," as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
2.18 PROPERTIES.
The Company has good and marketable title to all real and personal
property described in the Private Placement Memorandum as being owned by it and
good and marketable title to a leasehold estate in the real and personal
property described in the Private Placement Memorandum as being leased by it,
free and clear of all liens, charges, encumbrances and restrictions, except to
the extent the failure to have such title or the existence of such liens,
charges, encumbrances or restrictions would not result in a Material Adverse
Effect.
2.19 LIABILITIES.
The Company did not have, at the Financial Statements Date, any
liabilities which in the aggregate exceeded five million dollars ($5,000,000),
which were not reflected in the balance sheet at such date included as part of
the financial statements included in the Private Placement Memorandum, nor did
it, at such date, have any contingent liabilities which in the aggregate
exceeded five million dollars ($5,000,000), which were not so reflected, in each
such case which liabilities or contingent liabilities were required by U.S. GAAP
to be reflected in such balance sheet. Since the Financial Statements Date, and
prior to the date hereof, the Company has not, other than in the ordinary course
of business, or in connection with the acquisition of other businesses and other
companies, incurred any material liabilities.
2.20 TRANSACTIONS WITH PRINCIPALS.
No present or former employee, shareholder, or officer or director of
the Company or their spouses, children or affiliates (as that term is defined in
Rule 405 under the Securities Act) is indebted to the Company in an amount in
excess of $100,000 nor is the Company indebted to any of them in such amount or,
directly or indirectly, interested in any transaction with the Company which is
material to the Company, including, without limitation, any agreement providing
for the employment of, furnishing of services by, rental of assets from or to,
or
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otherwise requiring payments to, any such employee, officer, director,
shareholder, family member or affiliate.
2.21 REGISTRATION RIGHTS.
Except as set forth in the Transactional Agreements, the Company is not
under any obligation to register any of its presently outstanding securities or
any of its securities which may hereafter be issued.
2.22 CONTRACTS AND OTHER COMMITMENTS.
Each material agreement and contract to which the Company is a party or
by which the Company is bound is in full force and effect and constitutes a
legal, valid and binding obligation of, and is legally enforceable against, the
Company and, to the Company's Knowledge, the other parties thereto, except where
the failure of the same to be in full force and effect and to be valid, binding
and enforceable would not have a Material Adverse Effect. The Company is not in
default, and, to the Company's Knowledge, the other party(ies) are not in
default, under any of such agreements or contracts, and there has not occurred
any event which to the Company's Knowledge (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute such a default, which default, or the occurrence of which default,
would result in a Material Adverse Effect.
2.23 REGULATION BY THE FCC.
At the date hereof, neither the Company nor any Affiliate of the
Company controlled by the Company is required to obtain from the Federal
Communications Commission any license or other authorization.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
3.1 ORGANIZATION AND GOOD STANDING.
The Purchaser is a corporation duly organized and validly existing
under the laws of Japan. Any Affiliate of the Purchaser that is a party to any
of the Transactional Agreements (a "Purchaser Party Affiliate") is a corporation
duly organized and validly existing under the laws of its state or other
jurisdiction of incorporation and, if such Affiliate is incorporated in the
United States, such Affiliate is in good standing under the laws of its state of
incorporation.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENTS.
Each of the Purchaser and each Purchaser Party Affiliate has the
requisite corporate power and authority to enter into and to perform its
obligations under this Agreement and all other Transactional Agreements to which
it is a party. The execution, delivery and performance by the Purchaser and each
Purchaser Party Affiliate of this Agreement and such other Transactional
Agreements to which they are parties, and the consummation or performance of the
Transactions, have been duly authorized by all necessary corporate action on the
part of the
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Purchaser and each Purchaser Party Affiliate which is a party thereto. Each of
this Agreement and such other Transactional Agreements constitutes, or upon
execution and delivery will constitute, the legal, valid and binding obligation
of the Purchaser and each Purchaser Party Affiliate which is a party thereto,
enforceable against the Purchaser and each Purchaser Party Affiliate, as the
case may be, in accordance with its terms, except as limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, and (ii) laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
3.3 NON-CONTRAVENTION; CONSENTS.
(a) Neither the execution and delivery by the Purchaser or any
Purchaser Party Affiliate of this Agreement or any other Transactional Agreement
to which such Entity is a party, nor the consummation or performance by the
Purchaser or any Purchaser Party Affiliate of any of the Transactions to be
consummated or performed by them, will directly or indirectly (with or without
notice or lapse of time): (i) violate any provision of the Purchaser's or any
Purchaser Party Affiliate's certificate or articles of incorporation or bylaws
or other charter documents; (ii) constitute or result in a breach or default by
the Purchaser or any Purchaser Party Affiliate, or give rise to a right of
termination on the part of any other party, or result in the creation or
imposition of any lien, claim or encumbrance on any Purchaser or any Purchaser
Party Affiliate assets, under any agreement or instrument to which the Purchaser
or any Purchaser Party Affiliate is a party or by which the Purchaser or any
Purchaser Party Affiliate is bound; or (iii) constitute a violation by the
Purchaser or any Purchaser Party Affiliate of any Requirement of Law.
(b) Except for compliance with the terms of the HSR Act and
Sections 13 and 16 of the Exchange Act, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Authority on the part of the Purchaser or any
Purchaser Party Affiliate is required in connection with the consummation of the
Transactions.
3.4 LITIGATION.
As of the date hereof, there are no suits, proceedings or
investigations pending or, to the Knowledge of the Purchaser and any Purchaser
Party Affiliate, threatened against the Purchaser or any Purchaser Party
Affiliate, which in any such case would materially adversely affect the
Purchaser's or any Purchaser Party Affiliate's ability to perform its
obligations under this Agreement or any of the other Transactional Agreements.
3.5 BROKERS, ETC.
Neither the Purchaser nor any Purchaser Party Affiliate has granted or
become obligated to pay, or has taken any action that likely would result in any
Person claiming to be entitled to receive from the Company, any brokerage
commission, finder's fee or similar commission or fee in connection with any of
the Transactions, except for the investment banking fee of Deutsche Xxxxxx
Xxxxxxxx, Inc., which shall be paid by the Purchaser.
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3.6 INVESTMENT REPRESENTATIONS.
(a) The Purchaser understands that none of the Purchased Shares
has been registered under the Securities Act. The Purchaser also understands
that the Purchased Shares are being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon the
Purchaser's representations contained in this Agreement, and that the Company is
relying upon the truth and accuracy of the Purchaser's representations,
warranties, acknowledgements and understandings set forth herein.
(b) The Purchaser is acquiring the Purchased Shares for the
Purchaser's own account for investment only, and not with the current intention
of making a public distribution thereof.
(c) The Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests. The
Purchaser, by reason of its business or financial experience, has the capacity
to protect its own interests in connection with the Transactions. The Purchaser
is an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D under the Securities Act.
(d) The Purchaser acknowledges that the Purchased Shares must be
held indefinitely and that the Purchaser must bear the economic risk of this
investment indefinitely unless the Purchased Shares are subsequently registered
under the Securities Act or an exemption from such registration is available.
Without limiting the obligations of the Company under the Investment Agreement,
the Purchaser understands that the Company has no present intention of
registering the Purchased Shares. The Purchaser also understands that there is
no assurance that any exemption from registration under the Securities Act will
be available and that, even if available, such exemption may not allow the
Purchaser to transfer all or any portion of the Purchased Shares under the
circumstances, in the amounts or at the times the Purchaser might propose.
(e) The Purchaser has been advised or is aware of the provisions
of Rule 144 under the Securities Act ("Rule 144"), which permit limited resale
of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things: (i) the availability of
certain current public information about the Company, (ii) the resale occurring
not less than one year after a party has purchased and paid for the security to
be sold, (iii) the sale being through an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said term is defined under the
Exchange Act) and (iv) the number of shares being sold during any three-month
period not exceeding specified limitations.
(f) The Purchaser initiated discussions with the Company relating
to the purchase and sale contemplated by this Agreement on an unsolicited basis
prior to February 27, 1998. The Purchaser did not receive any information
regarding such purchase and sale through any general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
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3.7 COMPANY DISCLOSURE DOCUMENTS.
(a) The Purchaser has received and reviewed a copy of the Private
Placement Memorandum, including, without limitation, the language therein under
the caption "Risk Factors."
(b) The Purchaser has been furnished with materials relating to
the Company and its proposed activities, including, without limitation, the
Private Placement Memorandum. Without limiting the Company's obligations with
respect to any representations or warranties made by the Company in this
Agreement, the Purchaser has been afforded the opportunity to obtain any
additional information deemed necessary by the Purchaser to verify the accuracy
of any representations made or information conveyed to the Purchaser. The
Purchaser confirms that all documents, records and books pertaining to its
investment in Common Stock or Junior Preferred Stock and requested by the
Purchaser have been made available or delivered to the Purchaser. The Purchaser
has had an opportunity to ask questions of and receive answers from the Company,
or from a person or persons acting on the Company's behalf, concerning the terms
and conditions of this investment. The Purchaser has relied upon, and is making
its investment decision solely upon, the Private Placement Memorandum provided
to the Purchaser by or on behalf of the Company.
4. CONDITIONS TO CLOSING
4.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS.
The Purchaser's obligations to purchase the Purchased Shares and to
take the other actions required to be taken by it at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Purchaser, in whole or in part):
(a) The representations and warranties of the Company contained
in this Agreement shall be true on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the
Closing Date, except to the extent any such representations and warranties are
stated to be made as of a specific date, in which case they shall be true as of
such date, except in each case for any inaccuracies in such representations and
warranties as would not have a Material Adverse Effect. In addition, the Company
shall have performed in all material respects all obligations required pursuant
to the terms of this Agreement or any of the other Transactional Agreements to
be performed or observed by it on or prior to the Closing.
(b) The Company shall have delivered to the Purchaser a
certificate, executed by an executive officer of the Company, dated the date of
the Closing, setting forth the Company's representation that the conditions set
forth in Section 4.1(a) above shall have been satisfied.
(c) The Purchaser Board Designee (as defined in the Investment
Agreement) shall have been appointed to a term on the Board of Directors of the
Company as provided in the Investment Agreement.
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(d) The Company shall have obtained any and all consents,
permits, waivers and approvals necessary or appropriate for consummation of the
Transactions (except for such as may be properly obtained subsequent to the
Closing), provided, that, notwithstanding anything to the contrary, the
expiration or early termination of the applicable waiting period under the HSR
Act shall not be a condition to the Purchaser's obligations hereunder.
(e) The Company shall have executed and delivered to the
Purchaser or a Purchaser Party Affiliate, as applicable, each of (i) the
Investment Agreement and (ii) the Outside Service Provider Agreement.
(f) There shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a court or governmental
agency of competent jurisdiction directing that the Transactions not be
consummated in the manner provided for in this Agreement and the other
Transactional Agreements. No action or proceeding shall have been instituted and
remain pending before a court or other governmental body of competent
jurisdiction to restrain, prohibit or otherwise challenge any of the
Transactions (or seeking material damages from the Purchaser, the Company or any
Purchaser Party Affiliate as a result thereof), other than any such action or
proceeding which would not have a Material Adverse Effect or prevent the Company
or the Purchaser from performing their respective obligations hereunder or under
any of the other Transactional Agreements.
(g) The Company shall have delivered to the Purchaser a legal
opinion from counsel to the Company, in form and substance reasonably
satisfactory to the Purchaser and its counsel and addressing the matters listed
in Exhibit D hereto.
(h) On or prior to the Closing Date, the Purchaser shall have
received a certificate of the Secretary of State of the State of Delaware, dated
as of a recent date, as to the good standing of the Company.
(i) The IPO shall have been consummated or shall be consummated
concurrently with the Closing.
(j) If the Purchaser is purchasing shares of Junior Preferred
Stock pursuant to the terms hereof, the Certificate of Designation shall have
been filed with the Secretary of State of the State of Delaware.
4.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The Company's obligations to sell the Purchased Shares and to take the
other actions required to be taken by the Company at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Company, in whole or in part):
(a) The representations and warranties of the Purchaser contained
in this Agreement shall be true in all material respects on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing Date, except to the extent any such
representations and warranties are stated to be made as of a specific date, in
which case they shall be true in all material respects as of such date, and the
Purchaser and any
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Purchaser Party Affiliate shall have performed in all material
respects all obligations required pursuant to the terms of this Agreement or any
of the other Transactional Agreements to be performed or observed by either of
them on or prior to the Closing.
(b) The Purchaser shall have delivered to the Company a
certificate, executed by an executive officer of the Purchaser, dated the date
of the Closing, setting forth the Purchaser's representation that the conditions
set forth in Section 4.2(a) above shall have been satisfied.
(c) The Purchaser and any Purchaser Purchaser Party Affiliate
shall have obtained any and all consents, permits, waivers and approvals
necessary or appropriate for consummation of the Transactions (except for such
as may be properly obtained subsequent to the Closing), provided, that,
notwithstanding anything to the contrary, the expiration or early termination of
the applicable waiting period under the HSR Act shall not be a condition to the
Company's obligations hereunder.
(d) The Purchaser or a Purchaser Party Affiliate shall have
executed and delivered to the Company each of (i) the Investment Agreement and
(ii) the Outside Service Provider Agreement.
(e) There shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a court or governmental
agency of competent jurisdiction directing that the Transactions not be
consummated in the manner provided for in this Agreement and the other
Transactional Agreements. No action or proceeding shall have been instituted and
remain pending before a court or other governmental body of competent
jurisdiction to restrain, prohibit or otherwise challenge any of the
Transactions (or seeking material damages from the Purchaser, any Purchaser
Party Affiliate or the Company as a result thereof), other than any such action
or proceeding which would not have a Material Adverse Effect or prevent the
Company, the Purchaser or any Purchaser Party Affiliate from performing their
respective obligations hereunder or under any of the other Transactional
Agreements.
(f) The Purchaser shall have delivered to the Company a legal
opinion from counsel to the Purchaser and any Purchaser Party Affiliate, in form
and substance reasonably satisfactory to the Company and its counsel and
addressing the matters described in Exhibit E hereto.
(g) On or prior to the Closing Date, if the Purchaser or any
Purchaser Party Affiliate is organized in the United States, the Company shall
have received a certificate of the Secretary of State (or equivalent agency) of
the state of the Purchaser's or the Purchaser Party Affiliate's organization, as
to the good standing of such party.
(h) The IPO shall have been consummated or shall be consummated
concurrently with the Closing.
(i) Concurrently with such sale, the Purchaser shall have paid to
the Company the purchase price for the Purchased Shares.
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5. COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS.
Concurrently with execution and delivery of this Agreement, the
Purchaser and the Company shall make all filings required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), relating to the Transactions. In addition, the Purchaser will promptly
furnish all information as may be required by the Japanese Ministry of Finance
in order for the requisite approvals for the purchase and sale of the Purchased
Shares, and the consummation of the Transactions, to be obtained, and the
Company and the Purchaser will each promptly furnish all information as may be
required by the Federal Trade Commission and the Department of Justice under the
HSR Act in order for the requisite approvals for the purchase and sale of the
Purchased Shares, and the consummation of the Transactions, to be obtained or
any applicable waiting periods to be terminated or expire. Each party hereto
will cooperate with each other with respect to obtaining, as promptly as
practicable, and in any event prior to consummation of the IPO, all necessary
consents, approvals, authorizations and agreements of, and the giving of all
notices and making of all other filings with, any third parties, including
Governmental Authorities, necessary to authorize, approve or permit the
consummation of the Transactions. Each party hereto shall pay fifty percent
(50%) of the filing fee required in connection with the initial application
under the HSR Act with respect to the Transactions.
5.2 COVENANT TO SATISFY CONDITIONS.
Each party agrees to use all reasonable efforts to insure that the
conditions to the other party's obligations hereunder set forth in Section 4,
insofar as such matters are within the control of such party, are satisfied as
promptly as practicable, and in any event prior to consummation of the IPO,
provided, that notwithstanding anything herein to the contrary, the Company
shall have the sole and absolute discretion as to when, and whether, to
consummate the IPO, and may choose to cease pursuit of the IPO or to postpone
the IPO until after the termination of this Agreement, all without any liability
or obligation whatsoever to the Purchaser.
5.3 RESERVATION OF SHARES.
If the Purchaser purchases shares of Junior Preferred Stock at the
Closing pursuant to Section 1.1 hereof, then prior to or promptly following the
Closing the Company shall reserve for issuance upon any conversion of such
shares of Junior Preferred Stock such number of shares of Common Stock as would
be issued upon the conversion of all such shares of Junior Preferred Stock.
5.4 FURTHER ASSURANCES.
Each party shall execute and deliver such additional instruments,
documents or other writings as may be reasonably requested by any other party,
before or after the Closing, in order to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the other Transactional
Agreements.
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6. TERMINATION
6.1 TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by the written agreement of the Purchaser and
the Company;
(ii) by the Company or the Purchaser, if the Closing
shall not have occurred by July 31, 1998, provided, that the failure to
consummate the Closing by such date is not a result of the Company, in
the case the Company is so electing to terminate this Agreement, or of
the Purchaser or any Purchaser Party Affiliate, in the case the
Purchaser is so electing to terminate this Agreement, failing to
perform any of its obligations or breaching any of its representations
and warranties hereunder or under any of the other Transactional
Agreements; and
(iii) by the Company or the Purchaser in the event
any court or governmental agency of competent jurisdiction shall have
issued an order, decree or ruling or taken any other action
restricting, enjoining or otherwise prohibiting the Transactions and
such order, decree, ruling or other action shall have become final and
unappealable, and the parties hereto hereby agree to use all
reasonable efforts to prevent any such order, decree, ruling or other
action from becoming final and unappealable.
6.2 EFFECT OF TERMINATION.
Except for the obligations of Section 8 hereof and this Section 6.2, if
this Agreement shall be terminated pursuant to the preceding Section 6.1, all
obligations, representations and warranties of the parties hereto under this
Agreement shall terminate and there shall be no liability hereunder of any party
hereto to any other party hereto, provided, that nothing in this Section 6 shall
relieve any party of liability for breach of any warranty, covenant or agreement
herein or in any other Transactional Agreement.
7. SUCCESSORS AND ASSIGNS
7.1 SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto. Except as otherwise
expressly provided herein, neither party may assign any of its rights or
obligations hereunder without the written consent of the other party hereto.
7.2 NOVATION.
(a) From and after the date of this Agreement, the Purchaser
shall have the right, with or without the consent of the Company, to assign all
of its rights and obligations under this Agreement (other than its obligations
pursuant to this Section 7, except in the circumstances and subject to the
conditions described in Section 7.2(b)), effecting a novation of such rights and
obligations, to a direct or indirect wholly-owned subsidiary of the Purchaser
(the "Assignee"),
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provided, that any such assignment shall only be made in conjunction with an
assignment by the Purchaser to the same transferee of its rights and obligations
under the Investment Agreement, pursuant to Section 10 of the Investment
Agreement. Such assignment shall become effective immediately upon notification
by the Purchaser to the Company of such assignment.
(b) In the event of a transfer of the rights and obligations of
the Purchaser under this Agreement pursuant to a statutory reorganization of the
Purchaser prescribed in the Supplementary Provisions to the Law Concerning
Partial Amendment to the Nippon Telegraph and Telephone Corporation Law (Law No.
98 of 1997) (the "Amendment"), the Purchaser shall ensure that all the rights
and obligations of the Purchaser under this Agreement and the ownership of the
Purchased Shares are transferred to the said successor entity without any
dilution or adverse effect on the enforceability of such obligations. Subject to
the aforesaid, the Company: (i) agrees that such a reorganization by itself
shall not constitute a default by the Purchaser or any successor entity of the
Purchaser under this Agreement and shall not constitute grounds for termination
of this Agreement by any of such parties; (ii) anything to the contrary herein
or elsewhere notwithstanding, consents to the transfer of all the rights and
obligations of the Purchaser under this Agreement (including, without
limitation, its obligations pursuant to Sections 7.3 and 7.4 hereof) to a
successor entity as part of such reorganization; (iii) consents to the transfer
of the Purchaser Shares to a successor entity as part of such reorganization;
and (iv) anything to the contrary herein or elsewhere notwithstanding, agrees to
absolutely and irrevocably release the Purchaser from its obligations under this
Agreement and the other Transactional Agreements upon such reorganization,
provided, in each case, that the successor entity shall be subject to the terms
and conditions of this Agreement and the other Transactional Agreements,
including, without limitation, the representations and warranties of the
Purchaser herein and in the other Transactional Agreements, and shall deliver to
the Company a written agreement to such effect, in form and substance reasonably
satisfactory to the Company, and provided, further, in each case, that the
successor entity is either one of the Regional Companies or the Long Distance
Company currently contemplated in the Amendment.
7.3 GUARANTEE.
(a) The Purchaser hereby absolutely, unconditionally and
irrevocably guarantees (i) the full and complete performance by each Assignee
and each Purchaser Party Affiliate of all covenants and obligations to be
performed by it under this Agreement, the Investment Agreement and all other
Transactional Agreements, and (ii) the payment of any and all damages, losses,
claims, demands, recoveries, deficiencies, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) which the Company
or any of its successors, assigns or Affiliates may suffer or incur in
connection with, resulting from or arising out of any breach by any Assignee or
any Purchaser Party Affiliate of any such covenants and obligations, which
guarantee shall be effective from and after the date hereof or, in the case of
any Assignee, automatically upon the effectiveness of the related assignment
pursuant to Section 7.2(a).
(b) Without limiting the generality of the preceding paragraph
(a), the Purchaser agrees that, in the event that any Assignee or any Purchaser
Party Affiliate fails to perform any of its duties and obligations under this
Agreement or any of the other Transactional Agreements, and monetary claims by
the Company or any of its successors, assigns or Affiliates arising out of or
with respect to such failure to perform have been determined (by any judgment of
a court, by
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an arbitral award, by execution of a settlement agreement or by final resolution
under the terms of the relevant Transactional Agreement) to be payable to the
Company or any such successor, assign or Affiliate ("Payment Determination"),
then the Purchaser shall promptly pay over to the Company or such successor,
assign or Affiliate all of the amounts so determined to be due to it within
thirty (30) days after such Payment Determination, if and to the extent that the
Assignee or the Purchaser Party Affiliate, as applicable, shall have failed to
pay such amounts within such time period. The Purchaser agrees that it will pay
and perform all obligations of the Assignee or the Purchaser Party Affiliate, as
applicable, established through any Payment Determination made as a result of
any litigation, arbitration or other proceeding, even though such litigation,
arbitration or any other proceeding may be appealed or is appealable by the
Purchaser, the Assignee or the Purchaser Party Affiliate.
(c) In addition to all other amounts to which it may be entitled
hereunder, in the event that the Company or any of its successors, assigns or
Affiliates recovers any amounts from the Purchaser or any Affiliate of the
Purchaser pursuant to this Section 7 or otherwise in connection with the matters
giving rise to the Purchaser's guarantee obligation hereunder, the Company or
any such successor, assign or Affiliate shall be entitled to recover from the
Purchaser all costs and expenses (including, without limitation, court costs and
reasonable attorneys' fees and expenses) incurred by the Company or any such
successor, assign or Affiliate in connection with the enforcement of this
Section 7 against the Purchaser and all actions or proceedings, in any way,
manner or respect arising out of or relating to the enforcement by the Company
of its rights under this Section 7 against the Purchaser. In the event that the
Company or any of its successors, assigns or Affiliates seeks to enforce this
Section 7 against the Purchaser and is finally judicially determined not to be
entitled to any recovery with respect to the matter for which the Purchaser's
guarantee hereunder was sought to be enforced, the Purchaser shall be entitled
to recover from the Company all costs and expenses (including, without
limitation, court costs and reasonable attorneys' fees and expenses) incurred by
the Purchaser in connection with the Purchaser's defending such enforcement
action.
(d) In the event that the Purchaser assigns its rights and
obligations under this Agreement pursuant to Section 7.2(a) above, (i) the
Purchaser and the Assignee shall be deemed to have made, jointly and severally,
the representations and warranties contained in Section 3 hereof, each with
respect to itself as if it were the "Purchaser" for purposes of such
representations and warranties, provided, that, with respect to the
representation and warranties in Section 3.1 hereof, the Assignee shall be
deemed to have represented and warranted that it is a corporation duly organized
and validly existing under the laws of its state or other jurisdiction of
incorporation and, if the Assignee is incorporated in the United States, that it
is in good standing under the laws of its state of incorporation; and (ii) each
of the conditions to the Company's obligations described in Section 4.2 shall be
deemed to include references to both the Purchaser and the Assignee, with
respect to each as if it were the "Purchaser." Without limiting the generality
of the foregoing, in the event of any such assignment, it shall be a condition
to the obligation of the Company to sell the Purchased Shares and to take the
other actions required to be taken by it at the Closing that each of the
Purchaser and the Assignee shall have delivered an opinion from their respective
counsel, in form and substance reasonably satisfactory to the Company and its
counsel and addressing the matters listed in Exhibit E hereto, with respect to
itself.
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7.4 CERTAIN WAIVERS AND AUTHORIZATIONS.
In connection with any assignment by the Purchaser pursuant to
Section 7.2(a) above and the guarantee by the Purchaser pursuant to Section 7.3
above:
(a) The Purchaser hereby irrevocably waives, to the fullest
extent permitted by law: (i) all statutes of limitations defenses; (ii) any
defense based upon any legal disability or any discharge or limitation of the
liability of any Assignee or any Purchaser Party Affiliate, whether consensual
or arising by operation of law or by any bankruptcy, reorganization,
receivership, insolvency or similar debtor-relief proceeding, or from any other
cause; (iii) presentment, demand, protest and notice of any kind, including,
without limitation, notices of nonperformance, protest and dishonor; and (iv)
any right to require the Company to proceed against any Assignee, any Purchaser
Party Affiliate or any other party or to pursue any other remedy in the
Company's power whatsoever.
(b) The Purchaser's obligations under Section 7.3 shall be
primary obligations and are independent of those of any Assignee or any
Purchaser Party Affiliate. The Company may bring a separate action against the
Purchaser, without first proceeding against any Assignee, any Purchaser Party
Affiliate or any other Person and without pursuing any other remedy. The
Company's rights hereunder shall not be exhausted by any action of the Company
until all obligations of all Assignees and all Purchaser Party Affiliates have
been performed and there shall be no outstanding default thereunder, and all
obligations of the Purchaser otherwise shall have been performed.
(c) To the fullest extent permitted by law, the Company may at
any time and from time to time, without the consent of or notice to the
Purchaser, without incurring any responsibility to the Purchaser, and without
impairing or releasing the obligations of the Purchaser hereunder, upon or
without any terms or conditions and in whole or in part:
(i) exercise or refrain from exercising any rights
against any Assignee or any Purchaser Party Affiliate or others or
otherwise act or refrain from acting;
(ii) subordinate, release, settle or compromise any of the
obligations of any Assignee or any Purchaser Party Affiliate;
(iii) consent to or waive any breach of, or any act,
omission or default under, this Agreement, the Investment Agreement or any
other Transactional Agreements, or otherwise agree with any Assignee or any
Purchaser Party Affiliate to amend, modify or supplement any such
Agreements or any other instrument or agreement; or
(iv) substitute, add or release any one or more
guarantors.
(d) The obligations of the Purchaser hereunder shall continue to
be effective if any obligations of any Assignee or any Purchaser Party Affiliate
are rescinded or nullified, or any payment made thereby must otherwise be
restored or returned to such party, or any trustee, receiver, custodian,
liquidator or other similar officer thereof (and is so returned) upon the
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bankruptcy of such party or upon or as a result of the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to such party.
(e) The obligations of the Purchaser hereunder shall continue to
be effective notwithstanding any other provision hereof or any amendment or
modification of this Agreement or any of the other Transactional Agreements, or
any assignment or any rejection thereof which may occur in any bankruptcy or
proceeding concerning any Assignee or any Purchaser Party Affiliate, whether
permanent or temporary, and whether or not assented to by any of the parties to
this Agreement or any of the other Transactional Agreements.
(f) Without notice to or further assent from the Purchaser, any
of the terms and conditions respecting the duties and obligations of any
Assignee or any Purchaser Party Affiliate under this Agreement and the other
Transactional Agreements may be waived or modified by any of such parties and
the Company, and the time of payment of any amount due or the time of
performance of any obligation of such parties may be compromised, settled or
extended in writing by such parties and the Company. The obligations of the
Purchaser hereunder shall not be discharged or impaired or otherwise affected by
(i) any extension or renewal of this Agreement or any of the other Transactional
Agreements or any obligations of any Assignee or any Purchaser Party Affiliate
thereunder, without notice or further assent from the Purchaser; (ii) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Agreement or any of the other Transactional Agreements; (iii) any
permitted assignment or delegation by the Company, or any of its successors and
assigns, of its rights and obligations under this Agreement or any of the other
Transactional Agreements; or (iv) any other act or thing which may or might in
any manner or to any extent vary the risk of the Purchaser or which would
otherwise operate as a discharge of the Purchaser as a matter of law.
8. MISCELLANEOUS
8.1 PRESS RELEASES AND ANNOUNCEMENTS.
All press releases and announcements concerning the investment
contemplated by this Agreement and the other Transactions shall be mutually
agreed to by the Company and the Purchaser, except for any such disclosure
required by law which, in the case of such disclosure by the Company, shall, to
the extent practicable under the circumstances, be first discussed with the
Purchaser and, in the case of such disclosure by the Purchaser, shall, to the
extent practicable under the circumstances, be first discussed with the Company.
The foregoing provisions of this Section 8.1 shall not prohibit or restrict in
any way disclosure by the Company with respect to this Agreement and the other
Transactional Agreements in connection with any financing, strategic
transaction, acquisition or disposition involving the Company or any of its
Affiliates, provided, that such disclosure shall be first discussed to the
extent reasonably practicable with the Purchaser.
8.2 INTERPRETATION.
(a) The various section headings are inserted for purposes of
reference only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
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(b) Each party hereto acknowledges that it has been represented
by competent counsel and participated in the drafting of this Agreement and the
other Transactional Agreements, and agrees that any applicable rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in connection with the construction or
interpretation of this Agreement and the other Transactional Agreements.
(c) The original and controlling version of this Agreement and
the other Transactional Agreements shall be the version using the English
language. All translations of this Agreement or any of the other Transactional
Agreements into other languages shall be for the convenience of the parties
only, and shall not control the meaning or application of this Agreement or any
of the other Transactional Agreements. All notices and other communications
required or permitted by this Agreement or any other Transactional Agreement
must be in English, and the interpretation and application of such notices and
other communications shall be based solely upon the English language version
thereof.
(d) When a reference is made in this Agreement or any other
Transactional Agreement to a Section, Exhibit or Schedule, such reference shall
be to a Section of, Exhibit to or Schedule to this Agreement or such other
Transactional Agreement, unless otherwise indicated.
8.3 FEES AND EXPENSES.
Each party hereto shall be solely responsible for the payment of the
fees and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement and the other
Transactional Agreements, except to the extent expressly set forth in this
Agreement and the other Transactional Agreements. Without limiting the
generality of the foregoing, the Purchaser shall pay all stamp and other taxes,
if any, which may be payable in respect of the issuance, sale and delivery to
the Purchaser or any Assignee of Common Stock or Junior Preferred Stock pursuant
to the terms of this Agreement, or upon any conversion of any Common Stock, and
shall save the Company harmless against any loss or liability resulting from
nonpayment or delay in the payment of any such tax.
8.4 GOVERNING LAW; JURISDICTION AND VENUE; WAIVER OF JURY TRIAL.
(a) This Agreement is to be construed in accordance with and
governed by the internal laws of the State of New York (as permitted by Section
5-1401 of the New York General Obligations Law (or any similar successor
provision)) without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of New York to the rights and duties of the parties.
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in the County of
Denver, Colorado. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of
Denver, Colorado (and each
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appellate court located in the State of Colorado) in connection with any
such legal proceeding, including to enforce any settlement, order or award;
(ii) agrees that each state and federal court located in
the County of Denver, Colorado shall be deemed to be a convenient forum;
and
(iii) waives and agrees not to assert (by way of motion, as
a defense or otherwise), in any such legal proceeding commenced in any
state or federal court located in the County of Denver, Colorado, any
claim that such party is not subject personally to the jurisdiction of
such court, that such legal proceeding has been brought in an inconvenient
forum, that the venue of such proceeding is improper or that this
Agreement or the subject matter of this Agreement may not be enforced in
or by such court.
(c) Each party hereto agrees to the entry of an order to enforce
any resolution, settlement, order or award made pursuant to this Section by the
state and federal courts located in the County of Denver, Colorado and in
connection therewith hereby waives, and agrees not to assert by way of motion,
as a defense, or otherwise, any claim that such resolution, settlement, order or
award is inconsistent with or violative of the laws or public policy of the laws
of the State of New York or any other jurisdiction.
(d) The Purchaser has irrevocably designated Corporation Service
Company, of Xxx Xxxxx Xxxxxx Xxxxx, 0000 Xxxxxxxx, Xxxxxx, Xxxxxxxx 00000, as
agent for service of process hereunder and the above named is authorized and
directed to accept service of process on behalf of the Purchaser in any suit
regarding the Transactions or otherwise related to this Agreement or the other
Transactional Agreements.
(e) Each party to this Agreement hereby knowingly, voluntarily,
and intentionally waives the right to a trial by jury in respect of any
litigation arising out of, under or in connection with this Agreement, this
waiver being a material inducement for each such party to enter into this
Agreement.
8.5 SPECIFIC ENFORCEMENT.
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific intent or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which they may be entitled by law or equity.
8.6 SURVIVAL.
The representations and warranties of the parties hereunder shall
survive the Closing for one (1) year, and thereafter shall terminate and be of
no force or effect.
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8.7 NO THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns and are not for the benefit
of, nor may any provision hereof be enforced by, any other Person.
8.8 ENTIRE AGREEMENT.
This Agreement, the other Transactional Agreements and the other
documents delivered expressly hereby, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein. Without limiting the generality of the foregoing, by
execution of this Agreement and the Investment Agreement, each party hereto
hereby terminates the Mutual Nondisclosure/Non-Solicitation Agreement dated as
of February 12, 1998 between the Company and the Purchaser, and such
Nondisclosure Agreement is hereby terminated.
8.9 SEVERABILITY.
The provisions of this Agreement shall be severable, and any
invalidity, unenforceability or illegality of any provision or provisions of
this Agreement shall not affect any other provision or provisions of this
Agreement, and each term and provision of this Agreement shall be construed to
be valid and enforceable to the full extent permitted by law.
8.10 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
mutual written consent of the Company and the Purchaser.
(b) No failure to exercise and no delay in exercising any right,
power or privilege granted under this Agreement shall operate as a waiver of
such right, power or privilege. No single or partial exercise of any right,
power or privilege granted under this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Agreement are cumulative and are not
exclusive of any rights or remedies provided by law.
8.11 RELATIONSHIP OF THE PARTIES.
For all purposes of this Agreement and the other Transactional
Agreements, each of the parties hereto and their respective Affiliates shall be
deemed to be independent entities and, anything in this Agreement or the other
Transactional Agreements to the contrary notwithstanding, nothing herein shall
be deemed to constitute the parties hereto or any of their respective Affiliates
as partners, joint venturers, co-owners, an association or any entity separate
and apart from each party itself, nor shall this Agreement or any other
Transactional Agreement make any party hereto an employee or agent, legal or
otherwise, of the other parties for any purposes whatsoever. This Agreement does
not create or constitute, and shall not be construed as creating or
constituting, a voting trust agreement under the Delaware General Corporation
Law or any other applicable corporation law. None of the parties to this
Agreement or any other
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Transactional Agreement is authorized to make any statements or representations
on behalf of any other party or in any way to obligate any other party, except
as expressly authorized in writing by the other parties. Anything in this
Agreement or any other Transactional Agreement to the contrary notwithstanding,
no party hereto or thereto shall assume nor shall be liable for any liabilities
or obligations of the other parties, whether past, present or future.
8.12 NOTICES.
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to be
notified; (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (iii)
five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) two (2) days after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the parties
hereto at the respective addresses set forth below, or as notified by such party
from time to time at least ten (10) days prior to the effectiveness of such
notice:
if to the Purchaser: Nippon Telegraph and Telephone Corporation
Global Communications Headquarters
Tokyo Opera City Tower
00-0 Xxxxx-xxxxxxxx 0-xxxxx
Xxxxxxxx-xx
Xxxxx 000-00 Xxxxx
Attention: Tatsuo Kawasaki
Facsimile: 00-0-0000-0000
with a copy to: NTT America, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxx
Facsimile: (000) 000-0000
and a copy to: Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
if to the Company: Verio Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
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with a copy to: Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
8.13 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
8.14 ATTORNEY'S FEES.
If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
NIPPON TELEGRAPH AND TELEPHONE CORPORATION
By: /s/ JUN-ICHIRO MIYAZU
----------------------------------------
Name: Jun-Ichiro Miyazu
Title: President
VERIO INC.
By: /s/ XXXXXX XXXXXXX
----------------------------------------
Xxxxxx Xxxxxxx
Chief Executive Officer
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
AFFILIATE. "Affiliate" shall mean, with respect to any specified
Person, a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under the common control with,
the Person specified.
AMENDMENT. "Amendment" shall have the meaning specified in Section 7.2
of the Agreement.
ASSIGNEE. "Assignee" shall have the meaning specified in Section 7.2 of
the Agreement.
BUSINESS DAY. "Business Day" shall mean any day other than a Saturday
or Sunday or other day on which commercial banks in California are authorized or
required by law to close.
CERTIFICATE OF DESIGNATION. "Certificate of Designation" shall have the
meaning specified in Section 1.1 of the Agreement.
CLOSING. "Closing" shall have the meaning specified in Section 1.2 of
the Agreement.
CLOSING DATE. "Closing Date" shall have the meaning specified in
Section 1.2 of the Agreement.
COMMON STOCK. "Common Stock" shall have the meaning specified in the
Recitals to the Agreement.
COMPANY TAX RETURNS. "Company Tax Returns" shall mean all federal,
state, local, foreign and other applicable tax returns and declarations of
estimated tax reports required to be filed by the Company (without regard to
extensions of time permitted by law or otherwise).
DILUTED COMMON STOCK. "Diluted Common Stock" shall mean the sum of (i)
the number of shares of Common Stock outstanding at the time the determination
is made plus (ii) the number of shares of Common Stock issuable upon the
exercise or conversion of all then outstanding rights, warrants, options,
convertible securities or indebtedness, exchangeable securities or indebtedness,
or other rights, exercisable for or convertible or exchangeable into, directly
or indirectly, Common Stock, whether at the time of issue or upon the passage of
time or the occurrence of some future event.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall have the meaning
specified in Section 2 of the Agreement.
DOLLARS OR $. "Dollars" or "$" shall mean United States Dollars.
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ENTITY. "Entity" shall mean any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ENVIRONMENTAL LAW. "Environmental Law" shall have the meaning specified
in Section 2.17 of the Agreement.
ERISA. "ERISA" shall have the meaning specified in Section 2.16 of the
Agreement.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
FINANCIAL STATEMENTS DATE. "Financial Statements Date" shall have the
meaning specified in Section 2.5 of the Agreement.
GOVERNMENTAL AUTHORITY. "Governmental Authority" means any nation or
government, any state or other political subdivision thereof and any Entity
properly exercising executive, legislative, judicial, regulatory or
administrative functions of government.
HSR ACT. "HSR Act" shall have the meaning specified in Section 5.1 of
the Agreement.
INVESTMENT AGREEMENT. "Investment Agreement" shall have the meaning
specified in the Recitals to the Agreement.
IPO. "IPO" shall mean an underwritten initial public offering of Common
Stock pursuant to an effective registration statement filed by the Company under
the Securities Act.
IPO PRICE. "IPO Price" shall mean the "Price to the Public" or other
per share offering price for Common Stock stated on the face of the final
prospectus relating to the IPO.
JUNIOR PREFERRED STOCK. "Junior Preferred Stock" shall have the meaning
specified in Section 1.1 of the Agreement.
KNOWLEDGE. "Knowledge" means (i) with respect to the Company, the
actual knowledge of the Chief Executive Officer and the Chief Financial Officer,
and (ii) with respect to the Purchaser and any Purchaser Party Affiliate or
assignee of the Purchaser, the actual knowledge of the president of NTT America,
Inc. and Xxxx Xxxxxx, Director of Business Strategy of the Purchaser.
MATERIAL ADVERSE EFFECT. "Material Adverse Effect" shall have the
meaning specified in Section 2.1 of the Agreement.
OUTSIDE SERVICE PROVIDER AGREEMENT. "Outside Service Provider
Agreement" shall have the meaning specified in the Recitals to the Agreement.
PER SHARE PRICE. "Per Share Price" shall have the meaning specified in
Section 1.1 of the Agreement.
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PERSON. "Person" shall mean any individual, Entity or Governmental
Authority.
PRIVATE PLACEMENT MEMORANDUM. "Private Placement Memorandum" shall have
the meaning specified in Section 2 of the Agreement. References in the Agreement
to the Private Placement Memorandum shall include the financial statements and
notes thereto included in the Private Placement Memorandum.
PURCHASED SHARES. "Purchased Shares" shall have the meaning specified
in Section 1.1 of the Agreement.
PURCHASER PARTY AFFILIATE. "Purchaser Party Affiliate" shall have the
meaning specified in Section 3.1 of the Agreement.
REQUIREMENTS OF LAW. "Requirements of Law" shall mean, as to any
Person, the certificate of incorporation and bylaws or other organizational or
governing documents of such Person, and all federal, state, local and foreign
laws, rules and regulations, including, without limitation, securities,
antitrust, communications, licensing, health, safety, labor and trade laws,
rules and regulations, and all orders, judgments, decrees and other
determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
RULE 144. "Rule 144" shall have the meaning specified in Section 3.6 of
the Agreement.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
TAXES. "Taxes" shall mean all federal, state, local and foreign taxes
(including, without limitation, income, profit, franchise, sales, use, real
property, personal property, ad valorem, excise, employment, social security and
wage withholding taxes) and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, license fees, registration fees,
withholdings, or other similar charges of every kind, character or description
imposed by any governmental or quasi-governmental authorities, and any interest,
penalties or additions to tax imposed thereon or in connection therewith.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean (i) the
Agreement, (ii) the Investment Agreement and (iii) the Outside Service Provider
Agreement.
TRANSACTIONS. "Transactions" shall mean all of the transactions
contemplated by the respective Transactional Agreements, including, without
limitation, the issuance of the Purchased Shares by the Company to the Purchaser
in accordance with the Agreement.
U.S. GAAP. "U.S. GAAP" shall have the meaning specified in Section 2.5
of the Agreement.
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