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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(Rule 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
VERIO INC.
(Name of Subject Company)
VERIO INC.
(Name of Person(s) Filing Statement)
Common Stock, par value $.00l per share
Series A 6.75% Convertible Preferred Stock, par value $.001 per share
(Title of Class of Securities)
923433106 (Common Stock)
923433502 (Preferred Stock)
923433304 (Preferred Stock)
(CUSIP Number of Class of Securities)
Justin L. Jaschke
Chief Executive Officer
8005 South Chester Street, Suite 200
Englewood, Colorado 80112
(303) 645-1900
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of the person(s) filing statement)
Copies to:
Gavin B. Grover, Esq. Carla Hamre Donelson, Esq.
Morrison & Foerster llp General Counsel
425 Market Street Verio Inc.
San Francisco, California 94105 8005 South Chester Street, Suite 200
(415) 268-7000 Englewood, Colorado 80112
(303) 645-1900
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This Amendment No. 1 (the "Amendment") amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (as amended and
supplemented, the "Schedule 14D-9") filed with Securities and Exchange
Commission on May 18, 2000 by Verio Inc., a Delaware corporation ("Verio" or
the "Company"), relating to the tender offer by Chaser Acquisition, Inc., a
Delaware corporation and an indirect wholly-owned subsidiary of NTT
Communications Corporation, a limited liability joint stock company
incorporated under the laws of Japan ("NTT Communications") and a wholly-owned
subsidiary of Nippon Telegraph and Telephone Corporation, a limited liability
joint stock company incorporated under the laws of Japan ("NTT"), disclosed in
a Tender Offer Statement on Schedule TO, dated May 17, 2000 (the "Schedule
TO"), to purchase all of the issued and outstanding shares of the Company's
common stock, par value $.001 per share ("Common Stock"), (other than shares
of Common Stock already owned by NTT Communications and its subsidiaries) at a
purchase price of $60.00 per share, net to the seller in cash, without
interest thereon, all of the issued and outstanding shares of the Company's
Series A 6.75% Convertible Preferred Stock, par value $.001 per share
("Preferred Stock"), at a purchase price of $62.136 per share, plus, if the
purchase of the shares of Preferred Stock pursuant to the Offer (as defined
below) occurs after July 31, 2000, all accumulated and unpaid dividends on
such shares of Preferred Stock from August 1, 2000 to and including the
expiration date of the Offer, net to the seller in cash, without interest
thereon, and certain outstanding warrants to purchase 1,306,228 shares of
Common Stock, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated May 17, 2000 (the "Offer to Purchase"), and in the
related Letters of Transmittal (which, together with the Offer to Purchase, as
amended or supplemented from time to time, constitute the "Offer"). This
Schedule 14D-9 is being filed on behalf of the Company. Capitalized terms used
and not defined herein shall have the meanings assigned to such terms in the
Schedule 14D-9.
Item 8. Additional Information.
Item 8, subsection "Certain Litigation Matters" of the Schedule 14D-9 is
hereby amended and supplement by adding the following:
On May 17, 2000, a sixth complaint was filed in the Court of Chancery of
the State of Delaware in New Castle County against Verio, NTT and directors
of Verio, as a purported class action. This complaint, entitled Hughes v.
Halstedt, et al., seeks compensatory and rescissiory damages and injunctive
relief based on the Merger Agreement and also seeks costs and
disbursements, and attorneys' and experts' fees in connection with this
complaint. The Hughes action alleges, among other things, that the
individual defendants breached their fiduciary duties by failing to
properly determine Verio's value as a merger candidate, failing to conduct
an appropriate auction or market check or to invite other bidders and
failing to obtain adequate consideration for Verio's Common Stock.
NTT, Verio and the individual defendants believe that this complaint is
meritless and it will be defended vigorously.
Item 9. Material to Be Filed as Exhibits.
Item 9 of the Schedule 14D-9 is hereby amended and supplement by adding the
following exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
(a)(1)(J) Letter of Transmittal relating to warrants to purchase Common
Stock*
(a)(5)(H) Questions and Answers to Verio associates to be published on
Verio's Intranet
(a)(5)(I) Complaint of Joseph Hughes against Steven C. Halstedt, Justin L.
Jaschke, James C. Allen, Trygve E. Myhren, Paul J. Salem, Yukimasa
Ito, Arthur L. Cahoon, Verio Inc. and Nippon Telegraph and
Telephone Corporation*
</TABLE>
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* Incorporated by reference to Amendment No. 1 to the Tender Offer Statement
on Schedule TO, dated May 23, 2000, filed by Chaser Acquisition, Inc., NTT
Communications Corporation and Nippon Telegraph and Telephone Corporation.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: May 24, 2000. /s/ Justin L. Jaschke
By: _________________________________
Justin L. Jaschke
Chief Executive Officer and
Director
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Exhibit (a)(5)(H)
Questions and Answers
The following are responses to many of the questions that we have received from
associates throughout the company concerning our recently announced transaction
with NTT Communications and the tender offer that they have launched to acquire
all of Verio's outstanding stock. In the near future, you will receive
documentation that describes the process by which you can tender shares that you
own outright, as well as your vested options, to NTT Communications in
connection with the tender offer process, as well as how your options will be
handled. Those materials, which you should read carefully, will provide you
with the paperwork that you will need in order to participate in the tender
offer, and will also go into further detail about the process itself, the
background of the transaction, and other relevant information.
Morrow & Co. has been designated as the Information Agent for the entire tender
offer process, and your questions concerning the tender offer process can be
directed to them at (800) 566-9061.
The following questions and answers are being provided for the convenience of
Verio's associates, but should not be considered individual tax or investment
advice. You are each highly encouraged to consult with your own financial and
tax advisors concerning your own individual circumstances.
QUESTIONS REGARDING THE TENDER OFFER
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(1) Can you explain what a tender offer is? A tender offer is one of the ways
that one company can go about acquiring another. The acquirer makes an offer to
the shareholders of the company it wishes to acquire, offering to buy their
shares at a specified price. When the offer involves a public company like
Verio, the acquirer has to comply with various SEC requirements, including
preparing documentation that complies with the SEC requirements, and supplying
that documentation to the shareholders of the company to be acquired. Once the
acquirer gains control of the company through the tender offer, it then
completes a merger with the company it now controls, in order to acquire all of
the remaining stock. Again, that is what NTT Communications has agreed to do.
Assuming that NTT Communications successfully completes the tender offer, then
Verio will merge with a subsidiary of NTT Communications, and in that merger NTT
Communications will acquire all of the remaining shares of stock of Verio that
are not submitted in the tender.
Our Board of Directors and management are highly supportive of the acquisition,
and have recommended that our shareholders tender their shares to NTT
Communications through this process.
(2) Can you explain the basic terms of the deal Verio has signed with NTT
Communications? NTT Communications and Verio signed an agreement that
contemplates NTT Communications' acquisition of all of our outstanding stock.
They have agreed, subject to the satisfaction of various conditions, to purchase
all of Verio's outstanding common stock for $60 per share, and all of our
outstanding preferred stock for $62.136 per share. (The reason for the
difference is explained below.)
(3) Can you explain the basic process that's involved for NTT Communications to
complete the acquisition? The agreement that we signed provides for NTT
Communications to acquire Verio through the two-step tender-offer-followed-by-a-
merger process described above. The intent behind the tender process is for NTT
Communications to gather at least a majority ownership in Verio (including the
shares they already own). As part of the agreement between NTT Communications
and Verio, NTT Communications agreed to launch the tender offer for Verio's
outstanding common and preferred stock by May 17, 2000 - which it did. The
initial tender offer materials that were required to be filed by both NTT
Communications and Verio under the SEC rules have been filed. These materials
are being mailed to all of Verio's shareholders, and they also are available on
line. Those documents describe in detail the terms of the tender offer, the
conditions that must be satisfied in order for NTT Communications to complete
the tender offer, the process by which shareholders can participate in the
tender offer, and other matters.
The tender offer will expire at 12:00 midnight (EDT) on Wednesday, June 14,
2000, unless the offer is extended by NTT Communications. It is not unusual for
there to be one or more extensions of the tender
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period pending completion of the required closing conditions. Any extensions
will be announced by the issuance of a press release. During this tender offer
period, shareholders who own our stock (including associates who have purchased
stock either through option exercises, through the Employee Stock Purchase Plan
("ESPP"), at the time of the IPO, by direct purchase on the open market, or
otherwise) will have the opportunity to respond to NTT Communications' offer to
purchase their shares by complying with the tender process described in the
tender offer materials they receive.
There are a number of conditions that must be met before NTT Communications is
required to complete the purchase of shares that are tendered during the tender
offer period. These conditions include, among other things, NTT Communications'
receipt of shares in the tender offer that, together with the shares it already
owns, constitute a majority of our fully diluted outstanding stock, U.S.
antitrust clearance for the purchase from the Department of Justice and the
Federal Trade Commission under the Hart-Scott-Rodino Act, and clearance for the
acquisition from the Committee for Foreign Investment in the U.S. ("CFIUS")
under the Exon-Florio statute.
As we indicated above, initiation of the tender offer required that we and NTT
Communications file a number of rather complex and lengthy documents with the
SEC, which we've now done. As a result, the tender offer has been formally
launched. We are now working with NTT Communications to complete the
preparation and filing of the other documents required to be filed under the
Hart-Scott-Rodino and Exon-Florio statutes in order to comply with these other
regulatory requirements. The offer to purchase Verio shares will be completed,
and the shares tendered through this process actually purchased, only if and
when the various conditions to completion of the tender offer are satisfied.
As shareholders, associates who have purchased shares of Verio stock can tender
those shares to NTT Communications in the tender offer process, but NTT
Communications will not become obligated to purchase those or any other shares
tendered in the tender offer until the tender offer conditions have been
satisfied or waived and the tender offer is completed. At this time, we cannot
predict exactly when the various conditions to completion of the tender offer
might be satisfied or waived. If the tender offer is successfully completed,
then NTT Communications will proceed with the merger and, in that process, will
acquire whatever shares remain outstanding for the same cash consideration that
it pays per share in the tender offer.
(4) What happens to my vested options in the tender offer? The offer that NTT
Communications is making in the tender offer is to purchase only actually
outstanding shares, and only actual shareholders can offer their shares for
purchase by NTT Communications in the tender offer process. There is a
difference between having vested options and being a shareholder....shareholders
have purchased and hold Verio stock. If you hold vested options that have been
granted to you as part of your employment with Verio, then you can purchase the
shares that are subject to those vested options by exercising the options -
i.e., by submitting the requisite exercise documentation and paying the exercise
price that's applicable to your options. HOWEVER, YOU ARE NOT REQUIRED TO
EXERCISE YOUR VESTED OPTIONS IN ORDER TO BE PAID FOR THEM! By the terms of our
agreement with NTT Communications, your vested options automatically become the
right to receive cash following NTT Communications' completion of the tender
offer. The amount of cash you would be entitled to receive for each vested
option is equal to $60 minus the exercise price per share applicable to that
option, less required withholdings. (Again, $60 is the price per share that NTT
Communications has agreed to pay in the transaction to holders of common
stock.). As an example, if you have 1,000 vested options at an exercise price of
$40.00 per share, you would receive ($60.00 -$40.00) x 1,000, or $20,000 (less
withholdings). We will be preparing and delivering to all associates shortly
materials describing the process that must be followed in order to submit vested
options for payment. If NTT Communications completes the tender offer, then
payments for vested options will be made to all associates holding vested
options at that time who have submitted the necessary paperwork very shortly
after the date on which payment is made for the tendered to shares. Again, we'll
be distributing that paperwork shortly.
(5) What about my unvested options? What happens to them in this transaction?
NTT Communications has agreed to allow Verio associates to continue to take
advantage of the inherent value in their unvested options by providing for the
conversion of these unvested options into a continued right to receive cash. So
if the tender offer is completed, each unvested option at that time will become
the unvested right to receive cash, equal to the difference between $60 and the
exercise price for that option
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(subject to standard withholdings). This right to receive cash will "vest" and
be paid over time according to the existing vesting terms applicable to your
options. In other words, following each date that your unvested options
otherwise would have vested, you will receive a cash payment equal to $60 minus
the applicable strike price applicable to those options, less standard payroll
and income tax withholdings. These payments will be made automatically through
our standard payroll processes, during the month following the month in which
your vest date occurs.
(6) What about options that were granted to some associates in lieu of 1999
bonuses? How will they be treated in the transaction with NTT Communications?
For associates who received stock options in lieu of some or all of their 1999
bonuses, these options were immediately vested. So they will be treated the same
as your other vested options.
(7) Do I go through AST and/or National Discount Brokers to participate in the
tender offer process? No, neither AST nor NDB will be involved in the actual
tender offer process or in the administration of payments made for options.
However, if you have vested options and want to exercise those options in order
to participate in the tender offer as a shareholder, then you will need to go
through the standard exercise process through AST/NDB. As we indicated above,
tender offer materials are being sent to every shareholder, and supplementary
materials will be provided to every option holder, that provide specific
instructions on what to complete and submit if you as a shareholder wish to
tender your shares in the tender offer, or you, as an option holder, wish to
receive payment for your vested options following the tender offer.
(8) Can I exercise vested shares during the tender offer process? Yes, you can
continue to exercise your options through the tender offer period (including
exercises that are made on a "cashless" basis, where the payment of your
exercise price is made through the immediate sale of some of the shares that you
exercise for, so long as we are not in a "blackout period" under our Insider
Trading Policy and so long as you are otherwise not in possession of material
inside information concerning Verio at the time). If you decide to exercise
options during this time, you should follow the standard exercise process
through AST/NDB. Per our Insider Trading Policy, we will next be in a blackout
period beginning July 7th and thereafter until three days following the public
release of our 2nd quarter earnings announcement. Any cashless exercise will be
transacted at the trading price of Verio stock when the exercise occurs (not the
$60.00 purchase price agreed to by NTT Communications).
(9) Are there reasons why I might want (or not want) to do that, and are the
reasons different if I have both ISOs (Incentive Stock Options) and NQOs (Non-
Qualified Stock Options)? As to why you might want, or not want, to exercise
your options and participate directly in the tender offer, versus just waiting
and submitting your options for payment after completion of the tender offer,
you should first keep in mind that there are yet a number of conditions to be
satisfied before the tender offer would be closed by NTT Communications. So
there is no assurance that if you exercise your options and tender your shares
that the tender offer in fact will be completed. To exercise your options, you
will either have to come up with the cash to pay the exercise price, or exercise
your shares on a cashless exercise basis (assuming we are not in a Blackout
Period at the time.) If you exercise on a cashless exercise basis, you likely
will be paying the exercise price at a discount to the $60 price that NTT
Communications has agreed to pay in the transaction. (Currently, our stock is
trading between $57 and $58 per share.)
If the options that you exercise are ISOs (rather than NQOs), by exercising and
participating in the tender offer you will not be subject to payroll or income
tax withholding on these amounts when they are paid to you. However, you will
ultimately be required to pay income tax on the amount of your gain, and may be
required to pay estimated taxes during the year prior to filing your tax return
for the year. In addition, if your shares are not sold in the tender offer,
subsequent merger or otherwise before the end of the year 2000, ISO exercises
may subject you to the "alternative minimum tax" that may also be required to be
paid before the next April 15 regular tax payment date. If you do not exercise
your vested ISOs but wait for them to be cashed out just following the
completion of tender offer, you will be subject to all applicable payroll and
income tax withholdings when those payments are made to you. NQOs will be
subject to income tax and payroll tax withholding regardless of whether you
exercise and tender the shares you receive in the tender offer, or wait to have
the options cashed out just after the tender offer closes.
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Again, the financial and tax consequences of exercising or not exercising
options to you specifically are highly dependent on your individual
circumstances, so you really should consult with your own tax and financial
advisors on these issues and their impact on you specifically.
(10) The announcement stated that common stock will be purchased at $60.00 per
share and preferred stock will be purchased at $62.136 per share. What is the
difference between the common stock and preferred stock that results in this
different price? NTT Communications agreed to pay $60 per share of common stock
to acquire Verio. When it was first issued, our preferred stock was sold at a
price per share that at the time was not related to the trading price of our
common stock. As a result, the preferred stock was made convertible into common
stock, not on a one-share-for-one-share basis, but rather at a ratio of 1.0356
shares of common stock for each share of preferred stock. If you apply that
ratio to the price that NTT Communications has agreed to pay for the common
stock, it comes to $62.136 per share. Or, put another way, if each preferred
share was converted into common stock and then participated in the tender offer
as a common shareholder, they'd get exactly the same amount of cash as they do
if they participate directly as a preferred shareholder (without taking into
account certain dividend rights that are unique to the preferred shares).
TAX QUESTIONS
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(11) If I own shares outright and participate in the tender offer as an actual
shareholder, will the payments that I receive from NTT Communications for those
shares upon completion of the tender be taxed as ordinary income or will I
qualify for capital gains treatment? As we've pointed out, we are not in a
position to give associates specific tax advice that is dependent on your
particular situation. So the first thing we want to advise you to do is be sure
to discuss your particular tax situation and the tax consequences of this
transaction to you with your own tax advisor. However, we are providing the
following information in order to help you to understand the general tax
implications of this transaction.
Generally, for federal income tax purposes if you sell shares that you own to
NTT Communications in the tender offer, you would generally recognize gain (or
loss) equal to the difference between the amount of cash received and your tax
basis for the shares that you sell. (In this case, the sale would take place
upon completion of the tender offer.) Except for shares you acquire upon the
exercise of stock options or under the ESPP, your tax basis for the shares you
sell is the amount you paid for the shares. For shares you acquire upon the
exercise of stock options or under the ESPP, your tax basis is equal to the
amount you paid for the shares plus (i) in the case of NQOs, the amount of
ordinary income you recognize upon exercise of the option, (ii) in the case of
ISOs, the amount of ordinary income recognized upon such sale if the sale occurs
within the longer of two years from the date the option was granted and one year
from the date of exercise and (iii) in the case of the ESPP, the amount of
ordinary income recognized upon such sale (which amount will vary depending on
whether the sale occurred during the longer of two years from the first day of
the applicable purchase period and one year from the applicable purchase date
under the ESPP). The gain (or loss) typically will be capital gain (or loss)
for the shares that you own. The capital gains rate that applies to this gain
depends on the period of time that the stock you sell was held. Except for
shares that you acquire upon the exercise of ISOs and shares acquired through
the ESPP, any such capital gain (or loss) will be long term if, as of the date
of sale, you have held the shares for more than one year, or will be short term
if, as of that date, you have held the shares for one year or less. Gain (or
loss) on shares received through the ESPP is always treated as ordinary income
and never as capital gain (or loss) to the extent of the 15% discount in the
purchase price. Gain (or loss) on shares received upon exercise of ISOs or
through the ESPP (in excess of the 15% discount in the purchase price) qualify
for long term capital gains treatment if the sale occurs more than two years
from the date of initial grant of the option (which in the case of acquisitions
through the ESPP means the first day of the applicable Purchase Period in which
the shares were acquired) AND more than one year after the actual purchase date
of the shares. If either of the two-year or one-year holding periods is not
met, then gain (or loss) on shares received upon exercise of ISOs is treated as
ordinary income subject to tax in an amount equal to the lesser of (i) the
difference between the amount of cash received and the exercise price, or (ii)
the difference between the fair market value of the shares on the date the ISO
is exercised and the exercise price, and gain (or loss) on shares received
through the ESPP is treated as ordinary income subject to tax in an amount equal
to the difference between the fair market value of the shares at the time the
shares were acquired over the amount you paid for the shares. Any gain in
excess of the amount taxed as ordinary income will be treated as long- or short-
term capital
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gain depending on whether the stock was held for more than 12 months. The excess
of net long term capital gains over net short term capital losses is currently
taxed at a maximum federal income tax rate of 20% for noncorporate taxpayers.
Please keep in mind that the foregoing rules may not apply to associates who are
not citizens or residents of the U.S. And again, we encourage you to discuss
the specific tax consequences of this transaction to you with your own tax
advisor.
(12) Can the NTT Communications "right to receive cash" program allow for
employee options to be exercised and held for a period of time so the tax is
paid at long-term capital gains rates? No. Once the tender offer and merger
are completed, all outstanding Verio shares, including shares received on
exercise of options, will be converted to the right to receive cash. As soon as
the tender offer is completed, your unexercised vested options immediately will
convert to the right to receive cash, and your unvested options automatically
will convert to the right to receive cash payments over time as the vesting
dates currently applicable under your option agreements occur. Once this
conversion occurs, you are no longer dealing with stock options, but rather cash
compensation. So thereafter capital gains treatment is no longer applicable.
(13) A future "right to receive cash" implies to me that these rights could be
deferred from one tax year into another. Can we get some clarification on this?
The definitive mechanics of the payout schedule for the future cash payments are
being finalized; however, it is anticipated that all payments for vesting dates
that occur in any given month will be paid during the following month.
(14) If I have both ISOs and NQOs, will they be treated differently in the
payout process? The primary difference between an ISO and a NQO is the tax
treatment afforded to the two. For example, with an ISO, no payroll or income
taxes are withheld when the option is exercised, even though the value of the
stock is higher than the exercise price at the time of exercise. On the other
hand, payroll and income taxes must be withheld at the time of exercise of an
NQO based on the spread between the exercise price and the fair market value of
the stock acquired upon exercise. In this transaction, the difference between
the treatment of ISOs and NQOs will be whether withholding is required at the
time of exercise (if the options are exercised before the tender offer is
completed). Because following the tender offer all unvested options and all
vested but unexercised options convert into the right to receive cash,
thereafter there will be no difference between what were previously ISOs and
NQOs. So if you exercise options to prior to the completion of the tender
offer, you would be subject to income tax withholding on the gain inherent in
your NQOs, but there would be no income tax withholding if you exercise ISOs.
(15) What are the applicable "withholdings" that will be withheld from the cash
payments? Associates who exercise vested ISOs and participate in the tender
with the shares so acquired would avoid withholding of payroll and income taxes
on the proceeds paid by NTT Communications for those shares on completion of the
tender offer. (However, you may be required to pay estimated taxes in that
case, in order to avoid tax penalties, and the exercise of ISOs may also trigger
alternative minimum tax if your shares are not sold in the tender offer,
subsequent merger or otherwise before the end of the year 2000). These are
matters that you'll have to discuss with your own tax advisor.) Withholding of
income taxes and payroll taxes would be made upon any exercise of NQOs based on
the difference between the exercise price and the fair market value of the
shares at the time of exercise. The same withholdings would apply to the net
cash proceeds paid by NTT Communications if vested ISOs or NQOs are held and
cashed out just following the tender offer. Cash payments made following the
closing upon the vesting of the rights to receive cash that replace unvested
options (whether ISOs or NQOs) will be subject to income and payroll tax
withholding. Payroll taxes include such things as FICA and medicare taxes.
BENEFITS FOLLOWING THE TRANSACTION
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(16) Will Verio offer Japanese language classes? We will be looking into
programs offering Japanese language courses that associates can access.
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(17) What languages besides Japanese would you recommend employees brush up on
to further an international career with NTT Communications? Verio already has
an international presence in Europe. Employees wishing to pursue
internationally based positions might consider language courses in German,
Spanish, French, Dutch, and of course, Japanese. Please refer to our website
for possible job opportunities in our International operations.
(18) Does the acquisition affect the 401k plan? And will there be 401k
matching? The NTT Communications announcement does not directly affect our 401k
plan or other existing benefit programs. We will be reviewing total benefit
program information with NTT Communications personnel; however, there are no
current plans to alter our existing benefit structure, except that the 401k plan
will no longer offer a Verio Stock Fund as one of its investments.
(19) How is the ESPP program affected in this announcement? Under the terms of
our agreement with NTT Communications, just prior to the closing of the tender
offer, there will be an early termination of the current Purchase Period under
the ESPP. At that point, the ESPP will terminate. The mechanism by which the
value represented by your participation in the ESPP is converted to cash will be
addressed in a separate letter.
(20) Can you explain what a "blackout period" is? Will they continue to apply
after the deal with NTT Communications closes? A "Blackout Period" is defined
in our Insider Trading Policy and refers to the period during which no Verio
employee may buy or sell Verio stock. The Blackout Period begins on the 7th day
following the end of each calendar quarter and continues until 3 days following
the date we publicly announce our earnings results for that quarter. Our
standard blackout periods will continue for so long as we continue to have
publicly traded stock - i.e., until the merger is completed and our stock is
100% owned by NTT Communications. So, for example, a Blackout Period will begin
on July 7 and continue until three days following the date that our 2nd quarter
earnings results are publicly disclosed. Once the merger transaction is
completed, we will no longer have publicly traded stock, so of course at that
point there would no longer be Blackout Periods.
(21) Can you explain what the "quiet period" means with respect to our 401k
Plan? The blackout period as defined in our Insider Trading Policy is different
from the "quiet period" that we are experiencing with our 401k plan. With the
transfer of our 401k plan from The Principal to Merrill Lynch, there is a period
of time called a "quiet period" during which no transactions are processed. The
purpose of the quiet period is to ensure that a full reconciliation of accounts
can be completed pre and post transfer of employee account information. This
quiet period bears no relation to our transaction with NTT Communications.
(22) Is it possible to rollover the proceeds of the cash payouts we receive from
NTT Communications into our 401k account? The proceeds that are received by
associates for the shares that they tender to NTT Communications and for the
options that are cashed out by NTT Communications thereafter cannot be rolled
over to the Verio 401k.
LONG TERM INCENTIVE PLANS
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(23) When does Verio/NTT Communications anticipate being able to answer the
question of long-term incentives? NTT Communications and Verio have already
begun the conversations surrounding long term incentive plans. Both parties are
eager to develop and implement a program as soon as possible. We cannot,
however, provide an exact completion date at this time, although we hope to have
such a program in place by the time that the transaction closes or shortly
thereafter.
VERIO STRATEGY and OPERATIONS
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(24) What about other suitors? As mentioned on the all associate call, part of
our agreement with NTT Communications is that we are precluded from soliciting
other competitive bids, and from discussing alternative transactions with other
third parties that may submit unsolicited bids except in limited circumstances.
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(25) Where can we get more information about NTT Communications? Information on
NTT Communications can be obtained through their website(s). Justin Jaschke is
conducting Town Hall Meetings in several of Verio's offices. During the Town
Hall Meetings, Justin provides information on NTT Communications' structure, the
combined strengths of the companies, and our operational priorities. Please be
sure to attend one of the meetings! We will also make available Justin's
presentation on the intranet.
(26) Is NTT Communications going to add some cash to advertising or other
operational initiatives? NTT Communications will be looking at our operations
and will be addressing operational priorities with Verio. Clearly, they have
agreed to invest a very significant amount of money to acquire Verio, and are
eager for Verio to succeed.
(27) Will Verio stay private after the merger or will it be taken public? This
decision will be entirely up to NTT Communications. But for the foreseeable
future, Verio would remain a wholly owned subsidiary of NTT Communications.
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